2019 RESULTS PRESENTATION - 26 SEPTEMBER 2019 - Ethos Capital

 
2019 RESULTS PRESENTATION - 26 SEPTEMBER 2019 - Ethos Capital
2019 RESULTS PRESENTATION
26 SEPTEMBER 2019

                            0
2019 RESULTS PRESENTATION - 26 SEPTEMBER 2019 - Ethos Capital
Introduction

           Portfolio overview
CONTENTS

           Valuation overview

           Liquidity analysis

           Conclusion

                                1
2019 RESULTS PRESENTATION - 26 SEPTEMBER 2019 - Ethos Capital
Market conditions, cost pressures and uncertainty provide a tough investment backdrop!
                               Key drivers impacting top-line performance…                                                                                       Key cost of sales drivers…

                                                                                                                                                                 Petrol price
                                Quarterly GDP growth (%)                                                                                                                                                                                                        Fund VI
                                                                                                                              Fund VI                                                          1900
Impact of key market drivers

                                                      8.0
                                                                                                                                                                                                                                                                            MM Fund

                                                                                                                                                                  Price (95ul; coastal; c/l)
                                                                                                                                                                                               1700
                                                                                                                                               MM Fund
                                                      6.0                                                                                                                                      1500
                                                                                                                                                                                                                                                                                                 2011 - 2018
                                                                                                                                                                                               1300
                                                      4.0                                                                                                                                                                                                                                          CAGR:
                                                                                                                                                                                               1100
                               Quarterly growth (%)

                                                      2.0                                                                                                                                       900
                                                                                                                                                                                                                                                                                                  6.2%
                                                      0.0                                                                                                                                       700
                                                                                                                                                                                                500
                                                      -2.0                                                                                                                                         2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

                                                      -4.0
                                                                                                                                                                   Electricity price                                                                            Fund VI
                                                      -6.0                                                                                                                                                                                                                                82.5
                                                                                                                                                                                               90.0                                                                                81.8
                                                                                                                                                                                                                                                                            75.4

                                                                                                                                                                   Average price c/kWh sold
                                                      -8.0                                                                                                                                                                                                           67.6
                                                                                                                                                                                               70.0                                                           62.8
                                                          2006   2007   2008   2009   2010   2011   2012      2013     2014     2015    2016    2017     2018                                                                                          58.5                                      2011 - 2018
                                                                                                                                                                                                                                                50.3                                               CAGR:
                                                                                                                                                                                               50.0                                      42.2
                                                                                                                                                                                                                                                                            MM Fund
                                     Annual GDP per capita (ZAR)
                                                                                                                                                                                                                           25.0
                                                                                                                                                                                                                                  31.9                                                           10.0%
                                                                                                                              Fund VI                                                          30.0   17.0   18.1   19.6
                                             56,500
                                                                                                                                                                                               10.0
                                             56,000
                                                                                                                                                                                                      2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
                                             55,500
                                                                                                                                                                   Foreign Exchange Rate
                                             55,000
                                                                                                                                                                                               16.0                                                             Fund VI
                                             54,500
                                                                                                                                                                                               14.0
                                             54,000

                                                                                                                                                                   Average USDZAR
                                                                                                                                                MM Fund
                                             53,500
                                                                                                                                                                                               12.0                                                                                              2011 - 2018
                                                                                                                                                                                                                                                                                                   CAGR:
                                                                                                                                                                                               10.0
                                             53,000
                                                                                                                                                                                                                                                                             MM Fund              9.0%
                                             52,500                                                                                                                                             8.0

                                             52,000                                                                                                                                             6.0
                                                             2006   2007   2008   2009   2010   2011   2012     2013     2014    2015    2016     2017    2018                                        2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
                                                                                                                                                                                                                                                                                                               2
2019 RESULTS PRESENTATION - 26 SEPTEMBER 2019 - Ethos Capital
The difficult operating environment has lent itself to opportunities across the funds

                                  Large Equity
                                                 • Fund VI finished investing phase and commenced exit phase – two exits Kevro and Eaton
                                                 • Intensive focus on portfolio companies with strong traction in restructurings and cost reductions
Update on a fund by fund basis

                                                 • Fund VII in investment phase – two deals Channel Vas and Echo – strong pipeline of
                                                   opportunities
                                                                                                                                                       ZAR2.6 billion
                                                 • Focus on key investment themes and deep value opportunities with cyclical upside
                                                                                                                                                           Invested
                                                                                                                                                           ZAR2.1bn in
                                                                                                                                                         new investments
                                  Mid Market                                                                                                               ZAR500m in
                                                                                                                                                         follow on capital
                                                 • MMF is 65% invested and the team’s focus is on maximising outcomes in the portfolio
                                                 • Promising signs across the mid-market equity assets (Echo, Gammatek, Synerlytic, Kevro)
                                                   Autozone, Twinsaver and Eazi Access remain under pressure
                                                 • Very significant SA focussed investment pipeline – can afford to be selective

                                  Mezzanine
                                                  • Strong pipeline of opportunities in East African structured equity growth capital
                                                  • Negotiations on two transactions nearing completion
                                                                                                                                                       ZAR2.9 billion
                                                  • Chibuku had a challenging year operationally given weather conditions and other exogenous                Raised
                                                    issues in Malawi
                                                                                                                                                        ZAR2bn for Fund VII
                                                                                                                                                         R254m for EMP3
                                                                                                                                                        R640m for Ai Fund I
                                       Ai        • Strong traction in fund raising
                                                 • Differentiated value add impact on Channel Vas and Vertice
                                                 • Investment in Tyme Bank
                                                 • Strong pipeline of opportunities

                                                                                                                                                                              3
Highlights of the operating results

                                     # of Portfolio Companies   NAV per Share      Growth in NAV per share
Key performance metrics

                                               19                  R11.34                      3%

                                          EV / EBITDA           Capital Invested       Capital Invested
                                             (Actual)                                       (Proforma)

                                              6.9x                R1.43bn                 R1.58bn

                                        Net Debt / EBITDA        Total Assets      Proforma invested capital
                                             (Actual)                                  (as % of Total Assets)

                                             1.9x                 R1.93bn                     82%

                                                                                                                4
Introduction

           Portfolio overview
CONTENTS

           Valuation overview

           Liquidity analysis

           Outlook

                                5
Portfolio overview and value contribution
                         Exposure to 19 portfolio companies across various sectors and vintages   Invested Capital by sector / geography

                                                                                                                        3%
                                                                                                               15%

                                                                                                        4%                          30%

                                                                                                      10%
Portfolio overview

                                                                                                         12%

                                                                                                                         26%

                                                                                                       Banking                  Consumer goods
                                                                                                       FinTech                  Industrials
                                                                                                       Media                    MedTech
                                                                                                       Telco services

                                                                                                         40%

                                                                                                                                     60%

                                                                                                     South Africa       Sub Saharan Africa
                                                                                                                                                 6
Fund investments in 2019   Significant investment in the past 12 months across six new portfolio companies

                             867

                             712

                              Net new
                              investments

                                                                                                             7
Net asset value contribution and “age” of the investment portfolio

                                                                18%

                                                                                  Assets owned for more than one year
                                          46%
Portfolio composition

                                                                                  Assets owned for less than one year

                                                                  36%

                                          Cash   Assets < 1yr     Assets > 1 yr

                                                                                                                        8
Successful exit of Eaton Towers

                             Investment / Exit date:                    June 2015 / October 2019          Ethos consortium ownership:         14.4%
                             Business:                                  Telecommunications                Fund VI Invested Capital:           R405m
Portfolio company overview

                             Ethos Fund VI ownership:                   4.8%                              Gross returns (ZAR):                2.4x TMB / 23.4% IRR

                                                                                                                            Pan-regional presence

                             Eaton Towers is a leading independent pan-African tower company
                                     with over 5,000 tower sites across five countries
                                                                                                                              5               Presence across Ghana, Uganda, Kenya,
                                                                                                                                              Burkina Faso and Niger

                                                                                                                            Blue chip customer base

                             Key investment themes
                                                                                                                              A++             Airtel Africa, MTN, Orange, Vodafone and
                                                                                                                                              Safaricom, amongst others

                                                                                                                            Balanced portfolio exposure

                                                                                                                              50%            EBITDA margin increased from 30% to >50%
                                                                                                                                              over life of investment
                                                                                                                                                                                                 9
Channel VAS update
                                 Date of investment                             October 2018                        % of EC Invested Capital           26%
                                 Total Ethos ownership                          17.5% (increasing to 20%)           % of EC NAV                        21%                          % of Ethos       LTM change
                                                                                                                                                                                   Capital NAV:        in NAV:
                                 EC Invested Capital                            R372m                               Current valuation                  R408m (1.14x TMB)
                                                                                                                                                                                     21%             +R53m
Portfolio company overview

                                 LTM Return                                     +R53m (14%)                         Dividends received, valuation largely unchanged

                                 Channel VAS provides Airtime Credit Services and Mobile Financial                                        Global presence
                                      Services to prepaid mobile subscribers through MNOs                                                                 Presence across 4 continents and >25 countries
                                  Key investment themes
                                                                                                                                           >25            (most of which are in sub-Saharan Africa) – six
                                                                                                                                                          new deployments since May 2018

                                                                                                                                          Accessible customer base

                                                                                                                                           650m           Access to +650m mobile subscribers

                                        Financial                Increasingly          Rising        Ai and hyper
                                                                                                                                          Daily advances
                                        Inclusion                                                                                                         +$5m advances distributed daily, with over 6
                                                                                                                                           +$5m
                                                                  connected          consumer          decision-
                                                                 populations         spending           making                                            million transactions per day (US$799m
                                                                                                                                                          advanced YTD vs US$566m in 2018)

                                                                                                                                          Default rates
                                                 1.7 billion adults remain unbanked *
                                                                                                                                           20%           Y-o-Y LfL EBITDA growth LTM June 2019

                                                                                                                                                                                                                  10
Kevro update
                             Date of investment                             October 2017           % of EC Invested Capital:                       13%

                             Total Ethos ownership                              27.6%              % of EC NAV:                                    11%
                                                                                                                                                                                          % of Ethos    LTM change
                             EC Invested Capital                                R185m              Current valuation:                              R202m (1.10x TMB)                     Capital NAV:     in NAV:
Portfolio company overview

                             LTM Return                                       +R9m (5%)            Multiple unchanged, gearing benefit                                                     11%          +R9m
                             KEY HIGHLIGHTS
                              Weak economic environment adversely impacted end customers
                              Service level challenges, recent improvements point to greenshoots
                             ✓ Relatively strong financial performance in a difficult market, focus on new product strategies to drive growth
                             ✓ COO appointed
                             ✓ Full strategy review & operating model re-assessment completed
                             ✓ Operational projects to improve service levels and enhance efficiencies
                                     o New Warehouse and IT systems
                             ✓ All the above projects to be funded by internally generated cashflows
                             ✓ Delivered 1st B-BBEE rating in FY2018. This year rating was enhanced the business achieved a Level 4 rating

                                 Constructing New Warehouse Facility                                                      ERP & WMS System

                                               “1 Box”                                                                                          Integrate Ops & Systems
                                                 - Increased pallet locations                                                                    - Enhance inventory management
                                                 - Warehousing, picking mezz & branding                                                          - Improve quality of BI in support of
                                                 Allows Kevro to consolidate into one site;                                                        decision-making processes
                                                 expected to drive efficiencies

                                                                                                                                                                                                                     11
Primedia update
                              Date of investment                              December 2017           % of EC Invested Capital:                   12% (including SKT)

                              Total Ethos ownership                         19.9% + 5.0% (EC)         % of EC NAV:                                10% (including SKT)
                                                                                                                                                                                  % of Ethos    LTM change
                              EC capital investment                                R172m              Current valuation:                          R194m (1.13x TMB)              Capital NAV:     in NAV:
Portfolio company overview

                              LTM Return                                           +R6m               Primedia largely flat, SKT value increase                                       10%       +R6m

                             KEY HIGHLIGHTS
                              Weak advertising market (industry radio and outdoor advertising spend both down YoY)
                              Most corporate advertising budgets have been cut
                              Lower occupancy in static billboards offset to some extent by the performance of digital billboards
                             ✓ Relatively strong financial performance given difficult operating conditions
                             ✓ Market share gains in broadcasting limited the revenue decline
                             ✓ Significant investment (LTM and going forward) in digital billboards
                             ✓ Sold SK Entertainment (proceeds used to repay debt)
                             ✓ Unbundled SK Theatres (movies business) to shareholders, new Chairman, CEO and CFO
                             ✓ Strategic review and operating model changes in SKT resulted in significant improvement in YoY profitability

                                                     Strategic re-focus                                                                Market share
                                                     Sold SKE and unbundled SKT to create a                                            Growth in radio market share in broadcasting
                                                     focussed broadcasting and outdoor                                                 was a significant positive in 2019
                                                     advertising business

                                                                                         Digitization of Outdoor billboards
                                                                                         Capital expenditure in digitising billboards and
                                                                                         creating “new age” solutions for advertisers showing
                                                                                         good momentum

                                                                                                                                                                                                             12
Echo update
                             Date of investment                            February 2018          % of EC Invested Capital:                    11%

                             Total Ethos ownership                       31% (inc. to >65%)       % of EC NAV:                                 9%
                                                                                                                                                                                % of Ethos    LTM change
                             EC Invested Capital                          R26m (+R152m)           Current valuation:                           R28m (1.07x TMB)                Capital NAV:     in NAV:
Portfolio company overview

                             LTM Return                                     +R2m (+7%)            Effectively held at cost of investment                                          9%          +R2m

                             KEY HIGHLIGHTS
                              Delayed implementation of Gondwana acquisition primarily due to regulatory challenges – likely to close in October 2019
                             ✓ Strong growth year on year with increased market share
                             ✓ Appointed Group CFO and Head of Product Innovation
                             ✓ Business successfully delivered its 1st B-BBEE rating under the ICT Codes and obtained a level 4 rating
                             ✓ Investment in new sales force - strong momentum in delivering against sales targets (87% of target achieved in 6 months)
                             ✓ Strategic review and operational model assessment project being scoped and will be completed by end January 2020
                             ✓ Strong acquisition targets pipeline:
                                    – Zambia
                                    – Kenya

                                                  SSA presence                                                                   Market opportunity
                                                                                                                                               The B2B service market is
                                                  9      Countries                                                               $9.9bn        growing faster than any other
                                                                                                                                               segment of ICT in SSA
                                                  Growth in FTTX connections                                                     Growth in Africa’s data consumption
                                                         SSA severely underserved outside
                                                x3       SA; FTTX connections projected to                                       +42 %         CAGR to 2021
                                                         grow three-fold to 2020

                                                                                                                                                                                                           13
Synerlytic update
                             Date of investment                         April 2019    % of EC Invested Capital:                7%

                             Total Ethos ownership                         93.4%      % of EC NAV:                             5%
                                                                                                                                                                        % of Ethos                      LTM change
                             EC Invested Capital                           R92m       Current valuation:                       R105m (1.14x TMB)                       Capital NAV:                       in NAV:
Portfolio company overview

                             LTM Return                                +R13m (14%)    Multiple unchanged, EBITDA growth (head office savings)                              5%                            R13m

                                           SSA & MEI presence                        Ai capabilities
                                                                                     Already processing 5% of samples
                                           13        Countries                       using recently developed algorithms

                                                                                                                                                                                           Pakistan
                                                                                                                                                                               UAE                                 India

                                                                                     Healthy M&A pipeline across
                                           Significant barriers to entry                                                               Ghana
                                                                                                                                                  DRC
                                                                                     various geographies                       Ivory Coast

                                           Holds globally applicable                 1x acquisition completed,                                                                   Zambia
                                           accreditations                            additional opportunities being assessed                 Angola

                                                                                                                                              Botswana                          Zimbabwe

                                                                                                                                             Namibia                       Mozambique

                                                                                                                                                            South Africa

                                                                                                                                                         Synerlytic Lab footprint                     Agent labs

                                                                                                                                                                                                                           14
Gammatek update
                              Date of investment                             September 2018           % of EC Invested Capital:                    6%

                              Total Ethos ownership                                51.0%              % of EC NAV:                                 5%
                                                                                                                                                                                       % of Ethos    LTM change
                              EC capital investment                                R98m               Current valuation:                           R98m (1.0x TMB)                    Capital NAV:     in NAV:
Portfolio company overview

                              LTM Return                                            R0m               Held at cost of investment                                                         5%              -

                             KEY HIGHLIGHTS
                              Weak consumer environment, post-paid up-trade cycle getting longer
                              Geopolitical impacts (Huawei volume sell through impacted by US-China trade war)
                             ✓ Relatively strong financial performance given difficult operating conditions
                             ✓ Finalising appointment of CFO
                             ✓ Appointed Independent Non-Executive Chairman
                             ✓ Business successfully delivered its 1st B-BBEE rating under the ICT Codes and obtained a level 4 rating
                             ✓ Increasing the proportion of exclusive customers to total customers
                             ✓ In-store incentive app launched to leverage capacity of non-Gammatek staff
                             ✓ Strategic review and operational model assessment project underway

                                                     New channels targeted                                                               Poised to increase market share
                                                     Assessing bolt-on acquisitions to                                                   Key competitor recently filed for business
                                                     diversify channel and products                                                      rescue
                                                     beyond the core (e.g. Audio)

                                                                                         Geographic expansion options
                                                                                         Exploring market entry strategies for East Africa
                                                                                         and models to supply into other international
                                                                                         markets

                                                                                                                                                                                                                  15
Vertice update
                             Date of investment                               May 2018         % of EC Invested Capital:                   4%

                             Total Ethos ownership                             >75%            % of EC NAV:                                3%
                                                                                                                                                                                      % of Ethos     LTM change
                             EC Invested Capital                               R58m            Current valuation:                          R61m (1.05x TMB)                          Capital NAV:      in NAV:
Portfolio company overview

                             LTM Return                                  +R3m (+5%)            Effectively held at cost of investment                                                   3%            +R3m

                                                                                                                             KEY HIGHLIGHTS
                                                                                                                             ✓ Strong growth year on year through increased market share, new
                                                                                                                               products and acquisition-led growth
                                                                                                                             ✓ Appointed new CEO with strong technology background
                                                                                                                             ✓ Strong Ai potential both in terms of new business growth but also product
                                                                                                                               utilisation and differentiation
                                                                                                                             ✓ Strong acquisition pipeline with new acquisition opportunities well
                                   CARDIO-   WOUND    ORTHO         SURGERY     NEUROLOGY   BLOOD
                                                                                                         DISEASE
                                                                                                       DIAGNOSTIC
                                                                                                                               advanced
                                  VASCULAR    CARE
                                                                                                       SOLUTIONS
                                                                                                                             ✓ Significant investment in IT systems to facilitate platform consolidation and
                                                                                                                               roll out
                                                                                                                             ✓ Potential for ex-South Africa growth is significant

                                                     Established
                                    Biotech                                   Technology            AI and Data
                                                      uniquely
                                    Infotech                                    platform              Science
                                                        skilled
                                  convergence                                  and scale
                                                     distribution

                                                                                                                                                                                                                  16
MTN Zakhele Futhi update
                               Date of investment                            July 2017          % of EC Invested Capital:               3%

                               Total Ethos ownership                             4.1%           % of EC NAV:                            2%
                               EC Invested Capital                             R43m             Current valuation:                      R41m (0.96x TMB)           % of Ethos    LTM change
                                                                                                                                                                  Capital NAV:     in NAV:
Portfolio company overview

                               LTM Return                                    -R2m (-2%)         Marked to market off MTN share price                                 2%           -R2m
                               KEY HIGHLIGHTS
                               • New management team in place
                               • “BRIGHT” Strategy fully adopted and being implemented Strategic Initiatives on course:
                                  Share price lagging strong operation performance
                                  Business remains susceptible to external policy, regulatory shocks
                                 ✓ Travelstart exited and Jumia listed on NYSE
                                 ✓ Mascom exit in progress (subject to regulatory approvals), MTN Cyprus (exited) and MTN Ghana Listed.
                                 ✓ MTN Nigeria Listed. Move to underpin stability with regulators and other local authorities
                                 ✓ Governance enhanced with establishment of senior advisory council and re-instatement of in-country VP’s across the footprint
                                 ✓ Options being explored re Tower assets (could unlock c. R20bn for MTN)
                             12 month share price analysis

                             120

                             100

                              80

                                                                                               c.50% INCREASE IN
                              60                                                                  SHARE PRICE
                                                                                                                                                                                              17
Tyme Bank
                                Date of investment                                                          June 2019                        % of EC Invested Capital:                                              3%

                                Total Ethos ownership                                                              8%                        % of EC NAV:                                                           2%                                               % of Ethos      LTM change
                                                                                                                                                                                                                                                                    Capital NAV:       in NAV:
                                EC Invested Capital                                                             R46m                         Current valuation:                                                     R46m (1.0x TMB)
                                                                                                                                                                                                                                                                       2%                -
Portfolio company overview

                                LTM Return                                                                       R0m                         Held at cost of investment

                                                                                                                                                                                                      Proven acquisition model
                                                                                                                                                                                                                                          >770,000 customers signed up since launch in
                                                                                                                                                                                                            770k                          November 2018

                                                                                                                                                                                                       Large distribution footprint

                                           Financial
                                           inclusion
                                                                          50%+
                                                                        Smartphone
                                                                                                             Disruptive
                                                                                                                                        AI and hyper
                                                                                                                                          decision-
                                                                                                                                                                                                            14k                            Kiosks in 700+ stores with Tyme ambassadors,
                                                                                                                                                                                                                                           and access to cash at 14,000+ till points
                                                                                                            technology
                                                                         use in SA                                                         making
                                                                                                                                                                                                         Compelling low cost proposition
                                                       80% of customers underserved*
                                                Highly attractive South African banking sector
                                                                                                                                                                                                            R32                                 Half the cost of lowest cost banking competitor

                                                                                                                                                                                                         Behavioural products

                                                                                                                                                                                                                  ✓
                                                                                                                                                                                                                                                Products designed using behavioural economics
                                   - Unique and exclusive distribution platform through Pick n Pay and Boxer stores
                                                                                                                                                                                                                                                promoting responsible and inclusive access to
                                     with proprietary access to rich consumer data
                                                                                                                                                                                                                                                banking
                                   - Industry leading, low cost operational platform
                                   - Established and operational cloud-based technology platform operating at scale                                                                                      Attractive financial dynamics

                                                                                                                                                                                                              25%
                                   - Reputable, experienced team with ability to scale the platform globally                                                                                                                                     Technology and business model designed to
                                                                                                                                                                                                                                                 attain industry leading cost-to income ratio

                             * FinScope South Africa 2015, 2016 and 2017 consumer surveys. “Adequately served” defined as individuals having a balanced portfolio of products that are suited specifically to their financial wants and needs
                                                                                                                                                                                                                                                                                                  18
                                                                                                                                                                                                                                                                                                  18
Performance of selected portfolio companies

                                                                    AUTOMOTIVE PARTS RETAILER &
                                                                                                                                        FMCG                                     INDUSTRIAL EQUIPMENT
                                                                          WHOLESALER
Portfolio company overview

                             Date of investment                                 Dec 2016                                             Dec 2016                                           Dec 2016

                             % of Ethos Capital NAV                                 2%                                                   4%                                                 2%

                             Current value                                R40m (-R46m YoY)                                      R74m (-R9m YoY)                                   R34m (-R12m YoY)

                             LTM Return / TMB                                 -54% / 0.51x                                         -11% / 0.89x                                       -26% / 0.64x

                                                              Consumer sector                                     Consumer sector                                   Construction sector
                                                              USD:ZAR                                             USD:ZAR                                           Eskom: long-term contracts ending
                              NON CONTROLLABLES (INDUSTRY)                                                         Pulp price (global commodity)

                                                              Poor category planning and inventory                Significant operational inefficiencies            Over-capacitation
                                    CONTROLLABLES              management

                                                             o Strategic review and reset                         o   Strategic review and reset                     o   Strategic review and reset
                                                             o C-suite capacitation                               o   New CEO                                        o   New CEO
                                                             o Cost savings (R64m - closure of non performing     o   C-suite capacitation                           o   C-suite capacitation
                                 ETHOS FOCUS OVER LTM          stores)                                            o   Cost savings (R53m – operational efficiency)   o   Cost savings (R39m – S189 & cost controls)
                                                             o Debt restructure                                   o   Debt restructure                               o   Debt restructure

                                                             ✓ Recovery plan in place with significant budgeted   ✓ Significant traction on improving OEEs;          ✓ Successfully diversifying away from
                                                               y-o-y growth in EBITDA driven by rationalisation     saleable volumes ahead of budget                   construction; Good growth in new industry
                                                               of store footprint, leadership augmentation and    ✓ Positive momentum in run rate                      verticals; construction = 54% of revenue at
                                   CURRENT OUTLOOK             enhanced inventory management                                                                           acquisition vs. 45% currently

                                                                                                                                                                                                                      19
Investment Strategy – backing key investment trends

                              Key themes                              Recent investments    Most likely sectors

                              LSM migration-led growth in consumer
                              goods
Key investment trends

                                                                                                     Retail

                              Growing connectivity and data access                                Convenience
                                                                                                     FMCG
                                                                                                 Manufacturing
                              Lowest cost-to-serve, scalable
                              businesses                                                            Logistics
                                                                                               Financial Services
                                                                                               Business Services
                              High impact, differentiated services
                                                                                                      ICT
                                                                                           Telecommunication Services
                              Technology-driven disruption to                                 Technology Enablers
                              “business as usual”
                                                                                                   Medtech

                              Transportable business models scaling
                              across countries

                                                                                                                        20
Introduction

           Portfolio overview
CONTENTS

           Valuation overview

           Liquidity analysis

           Outlook

                                21
Portfolio composition and valuation metrics
                                  Portfolio composition                                                                       Key valuation metrics

                                                                                                        NAV discount   8.0x                                                                                31.3%
                                                 % of NAVPS                  % of NAVPS
                                                                                                                                                                       31%
                                                                                                                                  6.9x
                                                                                                                       7.0x                                                                                31.2%
Portfolio Composition

                                                    80%                         88%

                                                                                                                       6.0x                                                                                31.2%
                                                     9.06                       10.03

                                                                                                            31%        5.0x                                                                                31.1%

                              NAV
                                                                                                                       4.0x                                                                                31.1%

                             11.34
                                                                                                                                                                                           31%
                                                                                                                       3.0x                                                                                31.0%

                                                                                                            7.80                                      1.9x
                                                                                                                       2.0x                                                                                31.0%

                                                                                                                       1.0x                                                                                30.9%
                                                     2.28
                                                                                1.31
                                                                                                                          -                                                                                30.9%
                                                 30 Jun 19                    Adjusted                    30 Jun 19            EV / EBITDA    Net debt / EBITDA   Discount to NAV Discount to peer group

                                                              Cash   Invested Capital     Share price
                        * Share price as at 30 June, 2019
                                                                                                                                                                                                            2222
Market implied valuation analysis

                                   Portfolio valued at a 31% discount to the peer group...                         .....market “look-through” values portfolio at 4.8x EV / EBITDA

                                                                                                                                                                                       6.9x
                                       100
                                                                                                                                                    2.28                               1.9x

                                                                                             NAV BASED VALUATION
Valuation over view

                                                          31%

                                                                                                                                11.34
                                                                69                                                                                                      9.06           5.0x

                                                                            31%
                                                                                                                                 NAV                 Cash            Invested NAV    Valuation

                                                                                  48
                                                                                                                                                                                       4.8x

                                                                                              SHARE BASED VALUATION*
                                                                                                                                                    2.28                               1.9x

                                                                                                                                 7.80

                                                                                                                                                                         5.52          2.9x

                                   Peer group             Ethos portfolio   Implied market
                                    company                 company           company
                                    valuations              valuations        valuations

                                                                                                                                 NAV                 Cash            Invested NAV    Valuation
                      * Share price as at 30 June, 2019                                                                                                                                          23
Growth rates and market implied EV / LTM EBITDA multiples of the portfolio
                                       Sales growth by company                                       Net debt / EBITDA by company

                                                                                                          3
                                                                                              3
Portfolio company performance

                                          4
                                                                                                                         3                   8
                                                                                                                                                                   2
                                                                                  6
                                                           4                                 477         443
                                         393
                                                                                                                       291                  296                  270
                                                                                 269
                                                          201                                                                                                                       1

                                                                                                                                                                                    40
                                         0% -  5% -  15%        0x -  1.5x -  3x -  4.5x
                                                           Value - R'm        Number
                                                                                                                                   Value - R'm      Number

                                        EBITDA growth by company                                     Market implied EV / EBITDA by company

                                                                                               6                               6
                                                               3

                                                                                             527                             851
                                               5           465                     3                                                                     5

                                                                                                           4
                                                                                  175                                                                   297
                                              173                                                                                                                              2
                                                                                                          137
                                                                                                                                                                               55

                                          -10% -  0% -  15%        4.5x -  5.5x -  6.5x

                                                               Value - R'm     Number                                          Value - R'm         Number
                                                                                                                                                                                          24
Portfolio company returns

                                       4.0     1.6       5.0     0.9         0.7        0.2         2.4      1.7      1.6         1.3       1.1        0.0         0.9      1.9         6.9        4.3        4.3      3.4      4.5
Portfolio company performance

                                                                          Positive value contribution

                                      1.71x

                                              1.54x

                                                        1.38x                                                                                        New assets at cost

                                                                                                                                                                                              Negative value contribution
                                                                1.15x       1.14x     1.14x        1.11x    1.10x    1.08x       1.07x     1.05x
                                                                                                                                                      1.00x       1.00x
                                                                                                                                                                           0.96x
                                                                                                                                                                                       0.92x      0.89x

                                                                                                                                                                                                             0.73x
                                                                                                                                                                                                                      0.64x
                                                                                                                                                                                                                               0.51x

                                      Eaton     Ster     RTT    Chibuku    Channel   Synerlytic     Bevco   Kevro   Primedia     Echotel   Vertice   TymeBank Gammatek      MTN        Waco      Twinsaver   Neopak    Eazi   Autozone
                                              Kinekor                        Vas

                                                                           Fund VI                Mid Market Fund              Mezzanine Fund                Direct investment/Ai

                                                                                                                                                                                    Age of investment in years

                                                                                                                                                                                                                                         25
Introduction

           Portfolio overview
CONTENTS

           Valuation overview

           Liquidity analysis

           Outlook

                                26
Fund commitments and levels of undrawn capital by Fund

                                141       950        48        250                  1,250                 150             371           3,161

                                 6                   1                                                                    12
Current Fund commitments

                                          360                                                              54
                                                                                                                                        1,531

                                                                                    887

                                                               211

                                EF VI    EMMF I     EHP       EMP 3                 EF VII               EaiF I    Direct Investments   Total

                                                               Invested/Committed            Undrawn commitments

                                                                     Ethos Capital commitment to underlying fund (Rm)

                                                                                                                                                27
Ethos Capital liquidity benchmarked against international peers

                                                    Total commitment ratio = (Invested Capital + Undrawn Commitments) / Net Asset Value
Relative liquidity benchmarks

                                        173%
                                                                                                                                               163%
                                                                139%
                                                                                    125%                                    126%
                                                                                                        109%

                                     Harbourvest                 Hg                 APAX               Princess            Pantheon         Ethos Capital

                                                    Commitment coverage ratio = (Cash + Unutilised Debt Facilities) / Undrawn Commitments

                                                                                     63%
                                                                                                                              59%                58%

                                         48%                     50%
                                                                                                         44%

                                      Harbourvest                Hg                  APAX               Princess           Pantheon          Ethos Capital
                                                                                                                                                             28
Liquidity profile analysis based on current commitments

                                                                                                                                                                                              Realisations         Existing outflows           Available liquidity
                                    3,000                         308                                                                                      12%                                                                                                       3,000
Available liquidity and outlook

                                                                                                                                                                                32%

                                                                                                                                              19%           Estimated
                                    2,500                                                                                                                    outflows                                                                                                2,500
                                                                                                                                                              by year
                                                                                                                                                                                                                                                       2,143
                                                                                                 1,452
                                                                                                                                                     19%                  19%
                                    2,000                                                                                                                                                                                                                            2,000

                                                                                                                                                                                                                                       1,514
                                                3,161
                                    1,500                                                                                                     FY20        FY21    FY22    FY23        FY24                                                                           1,500
                                                                                 2,853

                                                                                                                  493
                                    1,000                                                                                                                                                                                                                            1,000

                                                                                                                                  500                                                        537
                                     500                                                                                                                                                                     365                                                     500
                                                                                                                                                                                                                         293
                                                                                                                                                     69

                                                                                                                                                                    339
                                         -                                                                                                                                                                                                                           -

                                    (500)                                                                                                                                                                                                                            (500)
                                                Total           Fees adj        Net             Invested      Current cash    Debt facility     Treasury         Commitment                  FY20        FY21           FY22            FY23           FY24
                                             commitments                     commitments         capital                                         shares             gap

                                   * Available liquidity = Cash plus Debt Facility less Net Investment outflows / Realisation inflows                                                                                                                                        29
Relative share price to NAV discount   South African listed PE firms trade at 2x the discount of international peers

                                         55%

                                         45%

                                                                                                                                Average = 36%

                                         35%

                                                                                                                           2x
                                         25%
                                                                     Average = 18%

                                         15%

                                         5%

                                         -5%

                                        -15%

                                        -25%

                                                                                     Discount to NAV   3 Year NAV Growth
                                        -35%
                                                                                                                                                30
Introduction

           Portfolio overview
CONTENTS

           Valuation overview

           Liquidity analysis

           Outlook

                                31
Outlook

                    Unlikely to be any short term improvement in business confidence and corporate investment

                          Outside of South Africa, growth remains strong although currency and political risks remain elevated
Outlook

                             Growth in NAV likely to increase as the portfolio is c.80% invested

                             Investment pipeline remains strong but given the market conditions and lack of competition, focus remains on being
                             extremely selective on deals

                          Liquidity management remains a key focus but Board remains focused on ways to enhance shareholder value

                    Board continues to assess strategic options that could unlock value for shareholders

                                                                                                                                                  32
DISCLAIMER
THE INFORMATION CONTAINED HEREIN IS PROVIDED FOR INFORMATIONAL AND DISCUSSION PURPOSES ONLY AND IS NOT, AND MAY NOT BE RELIED ON IN ANY MANNER AS, LEGAL, TAX OR INVESTMENT ADVICE OR AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY AN INTEREST IN ANY OF THE
ETHOS PRIVATE EQUITY FUNDS OR LISTCO (TOGETHER THE “FUNDS”). A PRIVATE OFFERING OF INTERESTS IN THE FUNDS WILL ONLY BE MADE PURSUANT TO A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM (THE “OFFERING MEMORANDUM”) AND SUBSCRIPTION DOCUMENTS, WHICH WILL BE
FURNISHED TO QUALIFIED INVESTORS ON A CONFIDENTIAL BASIS AT THEIR REQUEST FOR THEIR CONSIDERATION IN CONNECTION WITH SUCH OFFERING. THE INFORMATION CONTAINED HEREIN WILL BE QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OFFERING MEMORANDUM, WHICH CONTAINS
ADDITIONAL INFORMATION ABOUT THE INVESTMENT OBJECTIVE, TERMS AND CONDITIONS OF AN INVESTMENT IN THE FUNDS AND ALSO CONTAINS TAX INFORMATION AND RISK DISCLOSURES THAT ARE IMPORTANT TO ANY INVESTMENT DECISION REGARDING THE FUNDS. NO PERSON HAS BEEN
AUTHORISED TO MAKE ANY STATEMENT CONCERNING THE FUNDS OTHER THAN AS SET FORTH IN THE OFFERING MEMORANDUM AND ANY SUCH STATEMENTS, IF MADE, MAY NOT BE RELIED UPON. THE INFORMATION CONTAINED HEREIN MUST BE KEPT STRICTLY CONFIDENTIAL AND MAY NOT BE
REPRODUCED OR REDISTRIBUTED IN ANY FORMAT WITHOUT THE APPROVAL OF THE FUNDS. NOTWITHSTANDING THE FOREGOING, EACH INVESTOR AND PROSPECTIVE INVESTOR (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT THEREOF) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT
LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE FUNDS AND ITS INVESTMENTS AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT ARE PROVIDED TO SUCH INVESTOR OR PROSPECTIVE INVESTOR RELATING TO SUCH TAX TREATMENT AND
TAX STRUCTURE, PROVIDED, HOWEVER, THAT SUCH DISCLOSURE SHALL NOT INCLUDE THE NAME (OR OTHER IDENTIFYING INFORMATION NOT RELEVANT TO THE TAX STRUCTURE OR TAX TREATMENT) OF ANY PERSON AND SHALL NOT INCLUDE INFORMATION FOR WHICH NONDISCLOSURE IS REASONABLY
NECESSARY IN ORDER TO COMPLY WITH APPLICABLE SECURITIES LAWS.

AN INVESTMENT IN THE FUNDS WILL INVOLVE SIGNIFICANT RISKS, INCLUDING THE LOSS OF THE ENTIRE INVESTMENT. THE FUNDS WILL BE ILLIQUID, AS THERE IS NO SECONDARY MARKET FOR INTERESTS IN THE FUNDS AND NONE IS EXPECTED TO DEVELOP. RESTRICTIONS APPLY TO TRANSFERS AND
WITHDRAWALS OF INTERESTS IN THE FUNDS, AND THE INVESTMENT PERFORMANCE OF THE FUNDS MAY BE VOLATILE. THE FEES AND EXPENSES CHARGED IN CONNECTION WITH AN INVESTMENT IN THE FUNDS MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY
OFFSET PROFITS. BEFORE DECIDING TO INVEST IN THE FUNDS, PROSPECTIVE INVESTORS SHOULD READ THE MEMORANDUM OF THE FUNDS AND PAY PARTICULAR ATTENTION TO THE INVESTMENT CONSIDERATIONS CONTAINED IN THE MEMORANDUM. INVESTORS SHOULD HAVE THE FINANCIAL ABILITY AND
WILLINGNESS TO ACCEPT THE RISK CHARACTERISTICS OF THE FUNDS’ INVESTMENTS.

IN CONSIDERING ANY PERFORMANCE DATA CONTAINED HEREIN, YOU SHOULD BEAR IN MIND THAT PAST OR TARGETED PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL ACHIEVE COMPARABLE RESULTS OR THAT TARGET RETURNS WILL BE
MET. IN ADDITION, THERE CAN BE NO ASSURANCE THAT UNREALISED INVESTMENTS WILL BE REALISED AT THE VALUATIONS SHOWN AS ACTUAL. REALISED RETURNS WILL DEPEND ON, AMONG OTHER FACTORS, FUTURE OPERATING RESULTS, THE VALUE OF THE ASSETS AND MARKET CONDITIONS AT THE
TIME OF DISPOSITION, ANY RELATED TRANSACTION COSTS, AND THE TIMING AND MANNER OF SALE, ALL OF WHICH MAY DIFFER FROM THE ASSUMPTIONS ON WHICH THE VALUATIONS CONTAINED HEREIN ARE BASED. THE IRRS PRESENTED ON A “GROSS” BASIS DO NOT REFLECT ANY MANAGEMENT FEES,
CARRIED INTEREST, TAXES AND ALLOCABLE EXPENSES BORNE BY INVESTORS, WHICH IN THE AGGREGATE MAY BE SUBSTANTIAL. ALL IRRS PRESENTED ARE ANNUALISED AND CALCULATED ON THE BASIS OF MONTHLY INVESTMENT INFLOWS AND OUTFLOWS. NOTHING CONTAINED HEREIN SHOULD BE
DEEMED TO BE A PREDICTION OR PROJECTION OF FUTURE PERFORMANCE OF THE FUNDS.

PROSPECTIVE INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND EVALUATION OF THE INFORMATION CONTAINED HEREIN. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISER AND TAX ADVISER AS TO LEGAL, BUSINESS, TAX AND RELATED MATTERS
CONCERNING THE INFORMATION CONTAINED HEREIN.

EXCEPT WHERE OTHERWISE INDICATED HEREIN, THE INFORMATION CONTAINED HEREIN IS BASED ON MATTERS AS THEY EXIST AS OF THE DATE OF PREPARATION OF THIS PRESENTATION AND NOT AS OF ANY FUTURE DATE. THE INFORMATION PROVIDED HEREIN WILL NOT BE UPDATED OR OTHERWISE
REVISED TO REFLECT INFORMATION THAT SUBSEQUENTLY BECOMES AVAILABLE, OR CIRCUMSTANCES EXISTING OR CHANGES OCCURRING AFTER THE DATE HEREOF.

CERTAIN INFORMATION CONTAINED IN THIS PRESENTATION CONSTITUTES “FORWARD-LOOKING STATEMENTS,” WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “ANTICIPATE,” “TARGET,” “PROJECT,” “ESTIMATE,” “INTEND,”
“CONTINUE” OR “BELIEVE,” OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. DUE TO VARIOUS RISKS AND UNCERTAINTIES, ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD-LOOKING
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CERTAIN INFORMATION CONTAINED IN THIS PRESENTATION IS BASED ON OR DERIVED FROM INFORMATION PROVIDED BY INDEPENDENT THIRD-PARTY SOURCES. ETHOS BELIEVES THAT SUCH INFORMATION IS ACCURATE AND THAT THE SOURCES FROM WHICH IT HAS BEEN OBTAINED ARE RELIABLE. ETHOS
CANNOT GUARANTEE THE ACCURACY OF SUCH INFORMATION, HOWEVER, AND HAS NOT INDEPENDENTLY VERIFIED THE ASSUMPTIONS ON WHICH SUCH INFORMATION IS BASED.

THIS PRESENTATION IS BEING PROVIDED ON A CONFIDENTIAL BASIS. ACCORDINGLY, THIS PRESENTATION MAY NOT BE REPRODUCED IN WHOLE OR IN PART, AND MAY NOT BE DELIVERED TO ANY PERSON WITHOUT THE PRIOR WRITTEN CONSENT OF THE FUNDS.

                                                                                                                                                                                                                                                                           33
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