Annual Financial Report

RNS Number : 8431M

JZ Capital Partners Ltd

12 May 2015

JZ CAPITAL PARTNERS LIMITED (the "Company" or "JZCP")

(a closed-end investment company incorporated with limited liability under the laws of Guernsey with registered number 48761)

ANNUAL RESULTS FOR THE 12 MONTHS ENDED 28 FEBRUARY 2015

12 May 2015

JZ Capital Partners Limited (LSE:JZCP.L or "JZCP"), the London listed private equity fund that invests in high quality US and European microcap companies and US real estate, announces its annual results for the twelve-month period ended 28 February 2015.

Results Highlights

· NAV Total Return of 8.9% including:

o NAV of US$705.5 million (28/2/13: US$666.5 million)

o Pre-dividend NAV of US$11.16 (28/2/14: US$10.25)

o Distribution of US$0.31 per share paid in the year (FY 28/2/14: US$0.30 per share)

· Second interim dividend declared of US$0.175 (FY 28/2/14: US$0.16 per share), implying a dividend yield of 5.1% (as at 28/2/15)

· NAV growth in 22 of the last 24 quarters

· Strong five-year total shareholder return of 79.8%

Portfolio Highlights

· Significant investment activity with US$226.5 million invested across the US micro cap (US$52.6 million), European micro cap (US$48.8 million) and real estate portfolios (US$68.1 million).

· Real estate portfolio now includes assets in Miami, Florida building on the success in Brooklyn, New York.

· US$219.4 million of proceeds from realisations, primarily from the sale of four US micro cap businesses and our remaining Safety Insurance stock.

· At the end of the period, the total portfolio consisted of 53 micro cap businesses across eight industries in the US and Europe and 27 properties located across New York and Miami.

Strategic Initiatives

· Successful Implementation of several strategic initiatives following shareholder approval:

o Amendments to the Company's investment policy to enable the Investment Adviser to take advantage of a wider range of investment opportunities.

o US$65 million issuance of Convertible Unsecured Loan Stock (CULS) - providing a more flexible capital structure, additional capital for investments and greater liquidity in advance of repayment of ZDPs in 2016.

Outlook

· Balance sheet remains strong with a healthy pipeline of realisation and investment opportunities over the next 12 months.

David Zalaznick, JZCP's Founder and Investment Adviser, said: "Our Company has delivered strong NAV growth, driven by our portfolio of high quality assets across the US and Europe that continue to demonstrate good earnings and revenue growth.

"The US real estate portfolio has grown considerably over the past year, where we continue to execute on our opportunistic and value oriented investment strategy. Most recently, we have acquired properties in Miami's Wynwood and Design District neighbourhoods, both of which draw strong parallels to our real estate assets in Williamsburg, Brooklyn.

"We look ahead to 2015 with confidence knowing that JZCP has a strong balance sheet to take advantage of the healthy pipeline of realisation and investment opportunities."

David Macfarlane, Chairman of JZCP, said: "It has been a significant twelve months, both strategically and operationally for the Company. Whilst the underlying assets have continued to perform steadily, we have been busy preparing the Company for a more secure, long-term future. With the strengthened balance sheet position and newly amended and more flexible investment strategy the Company will be able to taking advantage of investment opportunities across asset classes and further enhance returns for our shareholders."

Presentation details:

There will be an analyst and investor presentation to discuss JZCP's recent financial performance and portfolio developments at 11:30 on 12 May 2015 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD. It can be accessed by dialing +44 (0)20 3427 1917 (UK) or +1 718 971 5738 (US) with the participant access code 3705203.

A playback facility will be available two hours after the conference call concludes. This facility may be accessed by dialing +44 (0)20 3427 0598 (UK) or +1 347 366 9565 (US) with the participant access code 3705203.

For further information:

Ed Berry / Kit Dunford +44 (0) 20 3727 1143

FTI Consulting

David Zalaznick +1 212 485 9410

Jordan/Zalaznick Advisers, Inc.

Andrew Maiden +44 (0) 1481 745368

JZ Capital Partners

About JZCP

JZCP is a London listed private equity fund which invests in high quality microcap companies, real estate and other debt and equity opportunities globally but with a particular focus on opportunities in the US and Europe. Its corporate objective is to create a portfolio of investments providing a superior overall return comprised of a current yield and significant capital appreciation. JZCP receives investment advice from Jordan/Zalaznick Advisers, Inc. ("JZAI") which is led by David Zalaznick and Jay Jordan. They have worked together for 30 years and are supported by teams of investment professionals in New York, Chicago, London and Madrid. JZAI's experts work with the existing management of micro cap companies to help build better businesses, create value and deliver strong returns for investors. For more information please visit www.jzcp.com.

The financial information set out below does not constitute the Company's statutory accounts for the year ended 28 February 2015. All figures are based on the audited financial statements for the year ended 28 February 2015.

The announcement is prepared on the same basis as will be set out in the audited financial statements for the year ended 28 February 2015.

The annual report and audited financial statements for the year ended 28 February 2015 will shortly be posted to shareholders and will also be available on the company website: www.jzcp.com.

Chairman's Statement

I am pleased to report the results of JZ Capital Partners ("JZCP" or the "Company") for the twelve month period ended 28 February 2015.

Market Backdrop and Performance

The Company's buoyant performance over the last twelve months has been set against the beginnings of a sustained global recovery taking place, which has been supported by low energy prices and loose monetary policy.

Performance in the Eurozone overall has improved, helped by measures taken by the ECB to boost prices and growth in the form of quantitative easing. Further afield, the US Federal Reserve ended its US$4.5 trillion bond-buying programme in October, but committed to keeping record low interest rates for a considerable time. The end of the fiscal year was dominated by financial turmoil in Greece and with the outcome still uncertain, it has the potential to further unsettle markets.

Within this market environment, the Board is pleased to announce that JZCP has produced another strong set of full year results, having achieved pre-dividend NAV growth of 8.9%, increasing from US$10.25 to US$11.16 at the end of the period. The Company's history of consistent NAV growth reflects the quality of the underlying portfolio as the majority of assets across the US and European micro cap and the new real estate strategies continue to perform well. Our shareholders have benefitted from this track record with the Company delivering solid long-term total shareholder return performance of 79.8% over the five years to 28 February 2015, compared to 64.8% from the FTSE All Share.

Strategic Developments

It has been a significant year, both strategically and operationally for the Company. The recent amendments to the Company's investment policy, which enable the Investment Adviser to take advantage of a wider range of investment opportunities as well as providing the flexibility to adapt as market opportunities warrant, received shareholder approval earlier this year.

This is a significant step forward for the Company, the success of which has largely been due to its opportunistic investment strategy and its ability to deploy capital in a nimble manner and the Board believes it will provide a solid foundation on which to continue growing the Company.

Portfolio Update

It has been one of the most active investment periods to date for the Company, putting US$226.5 million to work across the three main portfolios - US and European micro cap and US real estate - whilst realisations generated US$219.4 million, primarily from the sale of four US micro cap businesses and our remaining Safety Insurance stock.

The US and European micro cap strategies continue to be the fundamental drivers and key differentiators of the Company's investment strategy, whilst US real estate becomes an increasingly significant proportion of the Company's portfolio. At the end of the period, the total portfolio consisted of 53 businesses across eight industries in the US and Europe and 27 properties located across New York and Miami.

US Micro cap

The US micro cap portfolio continues to perform well and further progress has been made with investments and realisations. The portfolio has seen a valuation increase of US$0.47 cents per share, led by significant uplifts from the sale of Milestone Aviation (US$0.27) and Dental Services Group (US$0.22). Highlights included an investment of US$9.1 million in Paragon Water Systems, a designer and manufacturer of portable water filtration systems for use in homes and commercial locations, and a number of highly accretive add-on acquisitions to our Industrial Services Solutions vertical.

European Micro cap

Our value-orientated approach in Europe has further diversified geographically with an investment made in Italy during the period to add to the existing eight investments in Spain and the single assets in the UK and Germany, which combined represent 24.7% of total assets.

During the period, the Company invested €3.2 million in Fincontinuo, a leading independent consumer lending platform in Italy. The Company is investing alongside Avenue Capital and expects to invest a total of approximately €20 million. The Company also invested an additional €2.4 million in One World Packaging, a manufacturer of highly advanced biodegradable packaging. Post-period, the Company made its first investment in Denmark through the acquisition of S.A.C., a van leasing company, for €7.6 million.

The Company's investments in Europe are mainly made through the EuroMicrocap Fund 2010, LP.

Real Estate

The Board is pleased with the significant progress the Company has made in building a balanced portfolio of retail and residential properties in conjunction with our partner, RedSky Capital. We're delighted to report that the portfolio now includes assets in Miami, Florida building on the success in Brooklyn, New York.

During the period, the Company invested US$11.7 million to acquire its first property in Miami, located in the Wynwood neighbourhood, and post-period, a further US$16.4 million to acquire three properties, one located in the Wynwood neighbourhood and two located in the Design District neighbourhood of Miami. As of May 2015, JZCP has invested approximately US$185.9 million in 30 properties with an approximate total capitalization of US$684.9 million.

Realisations

There have been six significant realisations generating most of the US$219.4 million received during the period. The Company realised its investment in Safety Insurance, a provider of personal property and casualty insurance through two block trades, totalling US$57.3 million. The Company also realised its investment in Milestone Aviation, the world's largest helicopter leasing company for US$41.8 million. In addition, the Company received proceeds of US$50.5 million from the sale of Dental Services Group, a network of laboratories across North America providing dentists and dental practices with a wide range of laboratory services.

Capital Structure

The Company's debt comprises a short term loan of US$50 million due for repayment in June 2015, the US$65.7 million of CULS which we raised last year, the Zero Dividend Preference Shares ("ZDPs") due to be redeemed at £76.6 million, approximately US$118 million at current rates in June 2016, and US$40 million in a margin facility secured by our UK gilts and corporate bonds.

Discussions are at an advanced stage for the procurement of a new long term loan agreement for [US$100 million]. Part of this will be applied in repayment of the short term loan of US$50 million. In light of this new long term loan, the Board no longer intends to issue a second tranche of CULS.

It is important to note that the Company finished the year with US$125 million in cash net of margin loan and marketable securities, in excess of the amount required for the repayment of ZDPs in 2016.

It is the plan of the Board and the Investment Adviser that the redemption of the ZDPs in June 2016 will, whilst allowing for a continued investment programme, be funded through a combination of existing liquidity, a programme of realisations principally of identified US micro cap investments and select refinancings of assets within the US real estate portfolio.

Distributions

In accordance with their policy of distributing 3.0% of NAV per annum in two equal instalments, the Directors declared a second dividend of 17.5 cents per share for the six months ended 28 February 2015, compared to 16.0 cents for the period ended 28 February 2014. Having already paid a first interim dividend of 15.0 cents, this implies an annualised yield as at 28 February 2015 of 5.1%.

NAV Discount

We are disappointed with the discount to NAV at which JZCP's shares currently trade. The Directors' view remains that, while all available options are regularly assessed, the conventional discount control devices have no long-term effect for a listed private equity company and that the solutions to the issue lie in the combination of a less restrictive and a clear investment policy, coupled with continued strong performance and a healthy realisation pipeline.

Outlook

We have worked hard during the period better to prepare the Company for a more secure, long-term future. The Board believes the Company is well positioned to use its strong balance sheet position and newly amended and more flexible investment strategy to take advantage of opportunities to acquire high quality companies at reasonable prices in both the US and Europe and significant value-add opportunities in the New York and Miami property markets.

David Macfarlane

Chairman

11 May 2015

Report of the Directors

The Directors present their annual report together with the audited financial statements of JZ Capital Partners Limited (the "Company") for the year ended 28 February 2015.

Principal activities

JZ Capital Partners Limited is a closed-ended investment company with limited liability which was incorporated in Guernsey on 14 April 2008 under The Companies (Guernsey) Law, 1994. The Company is subject to The Companies (Guernsey) Law, 2008. The Company's Capital consists of Ordinary shares, Zero Dividend Preference ("ZDP") shares and Convertible Unsecured Loan Stock ("CULS"). In July 2014, the Company issued approximately US$65 million of CULS. The Company's Ordinary shares, ZDP Shares and CULS are traded on the London Stock Exchange's Specialist Fund Market. The Company's Ordinary share and ZDP share listings on the Channel Islands Securities Exchange was cancelled on 22 December 2014.

The Company's objective is to create a portfolio of investments providing a superior overall return comprised of a current yield and significant capital appreciation.

The Company's Investment Policy is to target predominantly private investments, seeking to back exceptional management teams to deliver on attractive investment propositions. In executing strategy, the Company takes a long term view. The Company seeks to invest directly in its target investments, although it may also invest through other collective investment vehicles. The Company may also invest in listed investments, whether arising on the listing of its private investments or directly.

The Company is focused on investing in the following areas:

(a) small or micro cap buyouts in the form of debt and equity and preferred stock;

(b) real estate or real estate linked investments and natural resources investments;

(c) debt opportunities, including mezzanine investments, comprising loans and high-yield securities, and listed bank debt, including both senior secured debt and second lien loans; and

(d) other debt and equity opportunities, including distressed debt and structured and off-balance sheet financings, derivatives and publicly traded securities.

The Investment Adviser takes a dynamic approach to asset allocation and, though it doesn't expect to, in the event that the Company were to invest 100% of gross assets in one area, the Company will, nevertheless always seek to maintain a broad spread of investment risk. Exposures are monitored and managed by the Investment Adviser under the supervision of the Board.

The Investment Adviser is able to invest globally but with a particular focus on opportunities in the United States and Europe.

The above Investment Policy received shareholder approval at the EGM held on 26 February 2015. Shareholders also agreed to remove the limit of 40% of gross assets that applied to investing in businesses outside the United States.

Business review

The total profit attributable to Ordinary shareholders for the year ended 28 February 2015 was US$59,210,000 (year ended 28 February 2014: profit of US$55,454,000). The revenue return for the year was US$20,802,000 (year ended 28 February 2014: US$29,178,000), after charging directors fees and administrative expenses of US$2,378,000 (year ended 28 February 2014: US$2,486,000) and Investment Adviser's base fee of US$12,976,000 (year ended 28 February 2014: US$11,220,000). The revenue return for the prior year includes a write back of an income incentive of US$4,411,000 charged against the revenue return for the year ended 29 February 2012. The net asset value ("NAV") of the Company at the year end was US$705,510,000 (28 February 2014: US$666,456,000) equal to US$10.85 (28 February 2014: US$10.25) per Ordinary share.

For the year ended 28 February 2015, the Company had US$9,473,000 of cash outflows resulting from operating activities (year ended 28 February 2014: outflows of US$7,296,000).

A review of the Company's activities and performance is detailed in the Chairman's Statement and the Investment Adviser's Report. The valuation of the listed and unlisted investments is detailed below.

Dividends

It is the Board's policy to distribute an amount equivalent to 3% of the Company's net assets in the form of dividends.

For the year ended 28 February 2015 an interim dividend of 15.0 cents per Ordinary share (total US$9,752,791) was declared by the Board on 29 October 2014 and paid on 28 November 2014.

A second interim dividend of 17.5 cents per Ordinary share (total US$11,378,256) was declared by the Board on 11 May 2015.

Directors

The Directors listed below are all non-executive, have served on the Board throughout the year and were in office at the end of the year and subsequent to the date of this report.

David Macfarlane (Chairman)

Patrick Firth

James Jordan

Tanja Tibaldi

Christopher Waldron

All Directors are independent.

Annual General Meeting

The Company's Annual General Meeting is due to be held on 19 June 2015.

Share capital, purchase of own shares and CULS

Details of the ZDP shares and the Ordinary shares can be found in Notes 18 and 19. During the year the Company did not buy back any of its own shares.

The beneficial interests of the Directors in the Ordinary shares of the Company are shown below:

	Number of Ordinary shares 1 March 2014	Ordinary shares purchased/ (sold)	Number of Ordinary shares 28 February 2015
David Macfarlane	50,000	5,000	55,000
James Jordan	30,000	-	30,000
Tanja Tibaldi	2,000	-	2,000
Patrick Firth	4,000	-	4,000
Christopher Waldron	2,000	-	2,000
	88,000	5,000	93,000

The beneficial interests of the Directors in the CULS of the Company are shown below:

	Number of CULS of £10 nominal value issued during the year	Number of CULS of £10 nominal value at 28 February 2015
David Macfarlane	734	734
Tanja Tibaldi	367	367
Patrick Firth	734	734
	1,835	1,835

None of the Directors held any interest in the Zero Dividend Preference shares during the year. There have been no changes in the Directors' interests between 28 February 2015 and the date of this report.

Discount management programme

The Directors review the share price in relation to Net Asset Value on a regular basis and determine whether to take any action to manage the discount. For additional information refer to Note 20 of the Financial Statements.

Substantial shareholders

As at 28 February 2015 and as at 8 May 2015 the Company has been notified in accordance with applicable listing rules of the following interests in the Ordinary share capital of the Company:

	As at 8 May 2015		As at 28 February 2015
	Ordinary	% of Ordinary	Ordinary	% of Ordinary
	shares	shares	shares	shares
Edgewater Growth Capital Partners L.P.	13,494,037	20.75	13,494,037	20.75
Jordan Family Trust	7,719,240	11.87	7,719,240	11.87
David W. Zalaznick	6,000,443	9.23	6,000,323	9.23
Abrams Capital Management	5,694,389	8.76	5,694,389	8.76
Leucadia Financial Corporation L.P.	4,527,563	6.96	4,527,563	6.96
First Eagle Investment Management LLC	2,780,395	4.28	2,691,535	4.14
Jefferies International Ltd	2,300,000	3.54	2,300,000	3.54

The percentage of Ordinary shares shown above represents the ownership of voting rights at the year end, before weighting for votes on Directors.

It is the responsibility of the shareholders to notify the Company of any change to their shareholdings when it reaches 3% of shares in issue and any change which moves up or down through any whole percentage figure above 3%.

Ongoing charges

Ongoing charges for the years ended 28 February 2015 and 28 February 2014 have been prepared in accordance with the Association of Investment Companies ("AIC") recommended methodology. The Ongoing charges for the year ended 28 February 2015 were 2.34% (28 February 2014: 2.14%) excluding incentive fees and 5.23% including incentive fees (28 February 2014: 3.54%).

Principal risks and uncertainties

As an investment fund, our principal risks are those that are associated with our investment portfolio. Given the nature of the portfolio, the principal risks are associated with the financial and operating performance of the underlying investments, along with market risk associated with the publicly-listed equities.

Statement of Directors' responsibilities

The Directors are responsible for preparing Financial Statements in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and the Companies (Guernsey) Law, 2008 for each financial period which give a true and fair view of the state of affairs of the Company and its profit or loss for that period. International Accounting Standard 1 - Presentation of Financial Statements requires that financial statements present fairly for each financial period the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the preparation and presentation of financial statements". In virtually all circumstances a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards.

In preparing Financial Statements the Directors are required to:

* ensure that the Financial Statements comply with the Memorandum & Articles of Incorporation and IFRS;

* select suitable accounting policies and apply them consistently;

* present information including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information

* make judgements and estimates that are reasonable and prudent;

* prepare the Financial Statements on the going concern basis, unless it is inappropriate to presume that the Company will continue in business; and

* provide additional disclosures when compliance with the specific requirements of IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance.

The Directors confirm that they have complied with these requirements in preparing the Financial Statements.

Responsibility statement of the Directors in respect of the Financial Statements

Each of the Directors confirms to the best of each person's knowledge and belief that:

(a) The Annual Report and Accounts have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and give a true and fair view of the financial position and profit of the Company as at and for the year ended 28 February 2015.

(b) The Annual Report includes information detailed in the Chairman's Report, Investment Adviser's, Investment Manager's and Directors' Reports, Audit Committee Report and Notes to the Annual Financial Statements required by:

(i) DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency Rules, being a fair review of the development and performance of the Company business and the position of the Company together with a description of the principal risks and uncertainties facing the Company; and

(ii) DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of important events that have occurred since the end of the financial year and the likely future development of the Company.

Directors' statement

So far as each of the Directors is aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all the steps they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. In the opinion of the Board, the Annual Report and Accounts taken as a whole, are fair, balanced and understandable and provide the information necessary to assess the Company's performance, business model and strategy.

Approved by the Board of Directors and agreed on behalf of the Board on 11 May 2015.

David Macfarlane Patrick Firth

Chairman Director

Audit Committee Report

Dear Shareholder,

We present below the Audit Committee's Report for 2015, setting out the responsibilities of the Audit Committee and its key activities in 2014/2015. The Audit Committee has reviewed the Company's financial reporting, the independence and effectiveness of the external auditor and the internal control and risk management systems of the Company's service providers. In order to assist the Audit Committee in discharging these responsibilities, regular reports are received and reviewed from the Investment Manager, Administrator and external auditor. Following its review of the independence and effectiveness of the Company's external auditors, the Audit Committee has recommended to the Board that Ernst & Young LLP be reappointed as auditor, which the Board has submitted for approval to the Company's Members.

A member of the Audit Committee will continue to be available at each Annual General Meeting to respond to any shareholder questions on the activities of the Audit Committee.

Responsibilities

The terms of reference of the Audit Committee include the requirement to:

• monitor the integrity of the published Financial Statements of the Company

• review and report to the Board on the significant issues and judgements made in the preparation of the Company's published Financial Statements, (having regard to matters communicated by the external auditors) and other financial information

• monitor and review the quality and effectiveness of the external auditors and their independence

• consider and make recommendations to the Board on the appointment, reappointment, replacement and remuneration of the Company's external auditor

• review the Company's procedures for prevention, detection and reporting of fraud, bribery and corruption

• monitor and review the internal control and risk management systems of the service providers

• consider and make representations to the Board regarding Directors' remuneration.

The Audit Committee's full terms of reference can be viewed on the Company's website www.JZCP.com.

Key activities of the Audit Committee

The following sections discuss the assessments made by the Audit Committee during the period:

Financial Reporting:

The Audit Committee's review of the Annual Financial Statements focused on the following significant areas:

Valuation of investments:

The fair value of the Company's unlisted securities at 28 February 2015 was US$841,368,000 accounting for substantially all of the net assets of the Company. The Committee has concentrated on ensuring the Investment Manager has applied appropriate valuation methodologies to these investments in producing the net asset value of the Company.

Members of the Audit Committee meet the Investment Adviser at least annually to discuss the valuation process. The Committee gains comfort in the valuations produced by reviewing the methodologies used. The valuations were challenged and approved by the Audit Committee in a recent visit to the Investment Adviser. The Audit Committee has thus satisfied itself that the valuation techniques are appropriate and accurate.

Ownership of investments:

The Audit Committee considered the ownership of the investments held by the Company as at 28 February 2015 to be substantiated from confirmations provided by the Investment Manager, Custodian and Administrator. Following a review of the presentations and reports from the Administrator and consulting where necessary with the external auditor, the Audit Committee is satisfied that the Company duly owns its investments which are correctly stated in the Annual Report and Accounts.

NAV based fees

The Board has identified that there is a risk that management and incentives fees which are calculated based on the NAV of the Company could potentially be misstated if there were to be an error in the calculation of the NAV. However, as each monthly NAV calculation is approved by the Investment Adviser and the year end NAV has been audited, the Board are satisfied that the fees have been correctly calculated as stated in the Annual Report and Accounts.

The external auditor reported to the Audit Committee that no material misstatements were found in the course of their work. Furthermore, the Investment Manager and Administrator confirmed to the Audit Committee that they were not aware of any material misstatements including matters relating to financial statement presentation. The Audit Committee confirms that it is satisfied that the external auditor has fulfilled its responsibilities with diligence and professional scepticism. The Audit Committee advised the Board that this annual report and accounts, taken as a whole, is fair, balanced and understandable.

Risk Management:

The Audit Committee continued to consider the process for managing the risk of the Company and its service providers. Risk management procedures for the Company, as detailed in the Company's risk assessment matrix, were reviewed and approved by the Audit Committee. There were no issues noted during the year.

Fraud, Bribery and Corruption:

The Audit Committee continues to monitor the fraud, bribery and corruption policies of the Company. The Board receives a confirmation from all service providers that there have been no instances of fraud or bribery.

The external auditor

Independence, objectivity and fees:

The independence and objectivity of the external auditor is reviewed by the Audit Committee which also reviews the terms under which the external auditor is appointed to perform non-audit services. The Audit Committee has established pre-approval policies and procedures for the engagement of the auditor to provide non-audit and assurance services.

These are that the external auditors may not provide a service which:

• places them in a position to audit their own work

• creates a mutuality of interest

• results in the external auditor developing close relationships with service providers of the Company

• results in the external auditor functioning as a manager or employee of the Company

• puts the external auditor in the role of advocate of the Company

As a general rule, the Company does not utilise external auditors for internal audit purposes, secondments or valuation advice. Services which are in the nature of audit, such as tax compliance, tax structuring, private letter rulings, accounting advice, quarterly reviews and disclosure advice are normally permitted but will be pre-approved by the Audit Committee.

The following table summarises the remuneration paid to Ernst & Young LLP and to other Ernst & Young LLP member firms for audit services during the year ended 28 February 2015.

								01.03.14
								to 28.02.14
Ernst & Young LLP
- Annual audit								£115,000
- Auditor's interim review								£27,500
- Reporting accountant fee (included within CULS expenses)								£73,500
Other Ernst & Young LLP affiliates
- Passive Foreign Investment Company tax services								$60,000

In line with the policies and procedures above, the Audit Committee does not consider that the provision of these non-audit services, which comprised determining whether the Company is a passive foreign investment company as defined by the U.S. Internal Revenue Code, to be a threat to the objectivity and independence of the external auditor.

Performance and effectiveness:

During the period, when considering the effectiveness of the external auditor, the Audit Committee has taken into account the following factors:-

• the audit plan presented to them before each audit;

• the post audit report including variations from the original plan;

• changes in audit personnel;

• the external auditor's own internal procedures to identify threats to independence; and

• feedback received from both the Investment Adviser and Administrator.

The Audit Committee reviewed and challenged the audit plan and the post audit report of the external auditor and concluded that the audit plan sufficiently identified audit risks and that the post audit report indicated that the audit risks were sufficiently addressed and that there were no variations from the audit plan. The Audit Committee considered reports from the external auditor on their procedures to identify threats to independence and concluded that the procedures were sufficient to identify potential threats to independence.

There were no significant adverse findings from this evaluation.

The Audit Committee has examined the scope and results of the audit, its cost effectiveness and the independence and objectivity of the external auditor and considers Ernst & Young LLP, as external auditor, to be independent of the Company.

Reappointment of external auditor:

Consequent to this review process, the Audit Committee has recommended to the Board that a resolution be put to the 2015 Annual General Meeting for the reappointment of Ernst & Young LLP as external auditor. The Board has accepted this recommendation.

Internal control and risk management systems

Additional work performed by the Audit Committee in the areas of internal control and risk management are disclosed below.

The Audit Committee has also reviewed the need for an internal audit function. The Audit Committee has decided that the systems and procedures employed by the Investment Adviser and the Administrator, including the Administrator's internal audit function, provide sufficient assurance that a sound system of internal control, which safeguards the Company's assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary.

In finalising the Annual Report and Accounts for recommendation to the Board for approval, the Audit Committee has satisfied itself that the Annual Report and Accounts taken as a whole are fair, balanced and understandable.

The Audit Committee Report was approved by the Board on 11 May 2015 and signed on behalf by:

Patrick Firth

Chairman, Audit Committee

Investment Adviser's Report

Dear Fellow Shareholders,

We are pleased to report that JZCP completed its fiscal year ended 28 February 2015 having achieved NAV growth of 8.9% (pre-dividend), from US$10.25 per share at 28 February 2014 to US$11.16 per share at 28 February 2015. Unless otherwise stated, figures included in this report refer to the twelve-month period ended 28 February 2015.

Our NAV has increased in 22 out of the past 24 quarters, reflecting the positive performance of the underlying assets across the portfolio. We finished the year with strong liquidity - US$125.0 million in cash net of margin loan and marketable securities, well in excess of the US$118 million at current rates we need to redeem the Zero Dividend Preference ("ZDP") shares in June 2016. In conformance with our dividend policy of distributing three percent of NAV in semi-annual installments, we paid total dividends of US$0.31 per share during the period; at our stock price as of 28 February 2015, the implied dividend yield was 5.1%.

JZCP experienced an active investment period over the past year, deploying US$226.5 million across our US micro cap, European micro cap and real estate portfolios. We realized US$219.4 million primarily through the sale of four US micro cap businesses and our remaining Safety Insurance stock. We also raised US$65.7 million through the issuance of Convertible Unsecured Loan Stock ("CULS"), with an eye to putting more capital to work and building liquidity for the repayment of the ZDPs in June 2016.

As of 28 February 2015, our US micro cap portfolio consisted of 42 businesses across seven industries. This portfolio was valued at 7.6x EBITDA, after applying an average 25 percent marketability discount to public comparables. The average underlying leverage senior to JZCP's position in our US micro cap portfolio grew to 2.8x EBITDA, as certain of our existing and new portfolio companies demonstrated an ability to support greater leverage. Consistent with our value oriented investment strategy, we have acquired our current US micro cap portfolio at an average 6.1x EBITDA. Additionally, in contrast to a very expensive US acquisition market, we paid 6.7x EBITDA on average for US micro cap acquisitions made during the year, underlining our disciplined approach to investing.

At the end of the period, our European micro cap portfolio, consisting of eight Spanish companies, one UK-based company, one German company, and one Italian company across four industries, was valued at a combined multiple of 8.2x EBITDA, after an average 25 percent marketability discount to public comparables. The European micro cap portfolio has very low leverage senior to JZCP's position, under 2.0x EBITDA. In March 2015 (post-period), we acquired one additional business, our first portfolio company located in Denmark.

NAV Growth

JZCP's pre-dividend NAV increased 8.9% from US$10.25 per share to US$11.16. The chart below details the growth in NAV on a per share basis:

Net Asset Value per Ordinary Share as of 28 February 2014 + Change in Private Investments	US$10.25 1.75	*
+ Change in Public Investments	(0.12)
+ Income from Investments	0.46
+ Escrow s received	0.11
- Change in CULS fair value	(0.13)	*
- Finance Costs	(0.22)
- Foreign exchange effect	(0.41)
- Fees & Expenses	(0.53)
Net Asset Value per Ordinary Share (before dividends) - Dividends Paid	US$11.16 (0.31)
Net Asset Value per Ordinary Share as of 28 February 2015	US$10.85

*Foreign currency exchange movements are excluded and shown within Foreign exchange effect (0.41).

Our private investments increased US$1.75, reflecting a steady performance across the 53 micro cap businesses (US and Europe) and 27 properties in the real estate portfolio.

The US micro cap portfolio contributed US$0.47 to this increase, primarily due to a significant uplift from the sale of Milestone Aviation (US$0.27) at a higher price than its carrying value and increased earnings at our Industrial Services Solutions vertical (US$0.60) (as well as numerous accretive acquisitions). JZCP also realized an increase of US$0.22 from our Dental Services Group, following its sale at a price higher than its carrying value. Also contributing to NAV growth were increases at several co-investment portfolio companies: Vitalyst, a corporate IT support business (US$0.03), Suzo-Happ, a manufacturer of parts for the global gaming industry (US$0.10), and Justrite Manufacturing, an industrial safety company (US$0.05).

Offsetting these increases were decreases in: Amptek, our manufacturer of non-destructive testing equipment (US$0.10), following its sale below carrying value, Accutest, our full service environmental testing laboratory business (US$0.44), which experienced a significant earnings decline; New Vitality Holdings, our co-investment marketer of premium nutritional supplements (US$0.09), which has hit significant operating and financial hurdles due to advertising and product development issues; Healthcare Products Holdings, our power wheelchair company (US$0.04), which experienced an earnings decline; and both Nationwide Studios (US$0.05) and our water vertical (US$0.05), also as a result of decreased earnings.

Before foreign exchange effects, the European micro cap portfolio increased US$0.75, primarily due to write-ups reflecting increased performance at: One World Packaging (US$0.06), our niche manufacturer of biodegradable, environmentally friendly packaging; Ombuds (US$0.20), a private security company, Winns (US$0.21), a personal injury claims processing business, and Toro Finance (US$0.28), a provider of short-term working capital financing to major Spanish companies. These gains were offset by write-downs at gold reseller Oro Direct (US$0.03) and at Xacom (US$0.03), which has experienced delays in orders for its new products.

The overall decrease in the valuation of public investments was driven by the discount inherent in the block trade of Safety Insurance stock. Despite the discount, this was a highly successful investment.

Returns

The chart below summarizes the cumulative NAV total returns and total shareholder returns for the most recent three-month period, twelve-month period, three-year period, four-year period and five-year period.

	As of	Since	Since	Since	Since	Since
	28/02/2015	30/11/2014	28/02/2014	29/02/2012	28/02/2011	28/02/2010

Share Price (in GBP)	£4.09	£4.12	£4.45	£3.66	£4.15	£2.73
Dividends paid (in US Cents)	-	-	$0.31	$0.93	$1.09	$1.31
Total Shareholders' return	-	-0.8%	-3.9%	27.5%	14.9%	79.8%
NAV per share (in USD)	$10.85	$10.21	$10.25	$9.47	$8.93	$7.04
NAV total returns	-	6.3%	8.9%	24.4%	33.7%	72.7%

Portfolio Summary

Our portfolio is well diversified across 53 micro cap businesses and eight industries, and continues to become more diversified geographically as we grow our European portfolio. It's also important to note that 59.1% of our portfolio is less than three years old. Also of note is the fact that the US and European micro cap portfolios are valued at a 7.8x EBITDA multiple, after a 25% discount to the public comparables used.

Below is a year on year summary of JZCP's assets. An explanation of the changes in the portfolio follows:

	Number of
	Investments	28/02/2015	28/02/2014
	as at 28/02/2015	US$'000	US$'000
US micro cap portfolio	42	297,340	341,560
European investments	11	245,884	186,781
Real estate portfolio	15	221,151	112,792
Other portfolio	7	66,541	14,293
Total private investments	75	830,916	655,426

Listed equity		-	65,423
Listed corporate bonds		13,473	16,415
Bank debt	1	10,452	11,810
UK treasury gilts		39,480	43,292
Cash		101,323	11,372
Total Listed Investments (including cash)	1	164,728	148,312
Total investments (including cash)	76	995,644	803,738
Other current assets		33	517
Total Assets	76	995,677	804,255

We have continued our program of holding highly rated listed corporate bonds as a means of earning an enhanced return on our cash. Currently, Goldman Sachs is the sole obligor of these bonds, which mature in January 2017. We also continue to hold UK Gilts, with an eye toward the 2016 maturity date of our ZDPs.

US micro cap portfolio

It has been another good year for our US micro cap portfolio, with most assets continuing to perform well and further progress made with investments and realizations. The portfolio has been written up by US$30.5 million (US$0.47 per share), led by significant uplifts from the sales of Milestone Aviation (US$0.27) and Dental Services Group (US$0.22) at prices higher than their carrying values and increased earnings at our Industrial Services Solutions vertical (US$0.60) (as well as numerous accretive acquisitions). Offsetting these significant increases were decreased operating performances of Accutest, Nationwide Studios, our water vertical, New Vitality, and the sale of Amptek below carrying value.

New US investments - verticals

Industrial Services Solutions Vertical

We made seven acquisitions during the year: Construction & Turnaround Specialists; Parts Service International; Precision Electric; Integrated Process Technologies; Pro Inspection; M&L Valve; and National Inspection & Consultants, all add-on acquisitions to our Industrial Services Solutions vertical managed by Jim Rogers, a former GE senior manager. In total, these acquisitions were funded using approximately US$43.2 million provided by our senior lender, US$7.9 million of cash on ISS' balance sheet, and US$12.3 million in seller financing. At 28 February 2015, JZCP owned approximately 34% of the combined entity on a fully-diluted basis. In March 2015 (post period), our ISS vertical completed one additional add-on acquisition, Midwest Valve Parts Supply Company.

Water Vertical

In October 2014, JZCP invested US$9.1 million to acquire 21% of Paragon Water Systems ("Paragon"), which designs and manufactures point-of-use water filtration systems for use in homes and commercial locations. Paragon is the first acquisition in the water filtration sub-vertical of our water strategy.

Also in October 2014, JZCP invested US$1.3 million to fund the acquisitions of Action Products Marketing Corporation and ConShield Technologies Incorporated (collectively, "APMCS"). APMCS is an infrastructure rehabilitation company that formulates and sells cementitious manhole and pipe rehabilitation products and provides the associated equipment used for application. JZCP owns approximately 31% of the combined entity.

Healthcare Vertical

In October 2014, JZCP invested US$1.3 million to acquire 29% of PPM Information Solutions, Inc., a provider of billing and practice management software and services to anesthesia practices.

Testing Vertical

In March 2014, JZCP invested US$1.7 million in senior notes to help fund the acquisition of Premier Safety, a Pittsburgh based distributor of industrial safety products, specializing in a wide range of portable and fixed gas detectors, respiratory equipment, fall protection and other safety and personal protective supplies. Premier Safety offered an opportunity to acquire a strong, well respected industry participant that is both highly complementary and additive to our investment in Argus Group, which sells, rents and services industrial hygiene and safety equipment. JZCP owns approximately 36% of this testing entity.

New US investments - co-investments

In April 2014, JZCP invested US$4.2 million in iconic brand name Igloo, alongside co-investor ACON Investments. Founded in 1947, Igloo designs, manufactures and markets coolers and outdoor products online and through retailers, with a dominant market position in the US. Igloo is looking to introduce new products, add new customers and sales channels and exploit international opportunities. This investment represents 3.2% of Igloo's equity. In December 2014, JZCP invested a further US$1.8 million to fund Igloo's acquisition of Cool Gear International, a manufacturer of temperature controlled drink and storage products.

In June 2014, JZCP invested US$16.2 million for 9.0% of Cequel Data Centers, LLC, the parent company of TierPoint, LLC, alongside RedBird Capital Partners, The Stephens Group and Thompson Street Capital Partners, among others. In December 2014, JZCP invested an additional US$9.2 million, helping TierPoint fund the acquisition of a large portfolio of data centers in the Northeastern United States. Managing raised floor data center space across the US, TierPoint today offers colocation, managed services and cloud computing through 13 data centers (post- acquisition of new portfolio) in Dallas, Oklahoma City, Tulsa, Spokane, Seattle, Philadelphia, New York, Boston and Baltimore.

In August 2014, JZCP invested US$4.0 million in Southern Petroleum Laboratories ("SPL"), a global industry leader in oil & gas measurement, allocations, auditing, and laboratory services. SPL has provided hydrocarbon testing services for the oil & gas industry since the company's founding in 1944 and is one of the most recognizable names in the industry. JZCP invested in this opportunity alongside Hastings Equity Partners, a firm in Houston with significant experience and success in oilfield services related transactions. JZCP owns approximately 17.2% of the combined entity on a fully-diluted basis.

European micro cap portfolio

JZCP invests in the European micro cap sector through its 75% ownership of the EuroMicrocap Fund 2010, L.P. ("EMC"). Exposure to the European micro cap sector continues to complement and diversify JZCP's existing US micro cap portfolio. As you may recall, JZI has offices in London and Madrid and an outstanding team with over fourteen years of investment experience in European micro cap deals.

It has been an active period for investments in Europe and as of 28 February 2015, EMC consisted of eight Spanish companies, and a company each in the UK, Germany and Italy, which combined, represent 24.4% of gross assets. Post-period, in March 2015, EMC made its first investment in Denmark, acquiring S.A.C., an operational (lease and service) van leasing company based south of Copenhagen.

Before foreign exchange effects, we wrote up the European micro cap portfolio by US$49.3 million (US$0.75 per share), primarily based on increased performance at One World Packaging (US$0.06), our niche manufacturer of biodegradable, environmentally friendly packaging, Ombuds (US$0.20), a private security company, Winns (US$0.21), a personal injury claims processing business, and Toro Finance (US$0.28), a provider of short-term working capital financing to major Spanish companies. These gains were offset by write-downs at gold reseller Oro Direct (US$0.03) and at Xacom (US$0.03), which has experienced delays in orders for its new products.

New European investments

In March 2014, JZCP invested an additional €2.3 million in Fidor Bank through EMC, as part of a larger capital increase from existing and new shareholders. In October 2014, JZCP invested a further €2.6 million through EMC, structured as a shareholder loan, to acquire the economic rights to two loans from Fidor Bank. In March 2015 (post- period), JZCP invested another €1.1 million through EMC, as part of larger Tier 1 capital increase from existing Fidor Bank shareholders. Following this last capital increase, JZCP's shareholding in Fidor Bank was 20.9%. With headquarters in Munich, Germany, Fidor Bank combines a social-media banking model with traditional banking services, offering internet-based and mobile-based transactions, supplemented by full service cash management solutions to retail customers.

In May 2014, JZCP provided €4.0 million in direct debt financing to Toro Finance, a portfolio company of EMC that provides short-term working capital financing to major Spanish companies. In September 2014, JZCP provided an additional €4.0 million in direct debt financing to Toro Finance. Toro Finance is well positioned to benefit as Spanish banks in recent years tightened their risk criteria and downscaled balance sheets to meet increasing capital requirements. At 28 February 2015, JZCP has lent its full €16.0 million commitment in 8% current pay debt financing to Toro Finance.

In July 2014, JZCP invested €18.0 million in Petrocorner (through EMC), a strategic build-up to acquire 2-3% of Spain's petrol station market, targeting stations in urban areas and along highly trafficked highways and roads. JZCP is investing in this opportunity alongside Avenue Capital, backing one of the industry's "best in class" management teams that has been developing this strategy for the past two years. JZCP's total commitment (through EMC) of €23.3 million will purchase approximately 30% of Petrocorner's equity, on a fully diluted basis.

In October 2014, JZCP invested €2.1 million in Fincontinuo (through EMC), a leading independent lending platform that has been distributing and servicing Cessione del Quinto ("CdQ") loans, a low risk and niche form of consumer lending in Italy since 1997. JZCP is also investing in this opportunity alongside Avenue Capital. In December 2014, JZCP invested a further €1.1 million through EMC to capitalize an alternative lending vehicle for Fincontinuo, providing an additional €3.8 million (through EMC) to fund this lending vehicle in March 2015 (post-period). As this business ramps up, JZCP expects to invest a total of approximately €20 million (through EMC).

In December 2014, JZCP invested an additional €2.4 million in One World Packaging (through EMC), a manufacturer of highly advanced, biodegradable molded pulp packaging. This additional investment will help fund the acquisition of four new production machines.

In March 2015 (post-period), JZCP invested a total of €7.6 million (€2.8 million in equity through EMC and €4.8 million directly as mezzanine lender) in S.A.C, an operational (lease and service) van leasing company based south of Copenhagen, Denmark.

Real estate portfolio

Working with high quality management teams is at the core of our investment approach and, over the past three years, we have assembled a portfolio of retail, office and residential properties in Brooklyn, New York and Miami, Florida in partnership with RedSky Capital, a team with significant experience in this sector. As of 30 April 2015, JZCP had invested US$185.9 million in the real estate portfolio.

Brooklyn is in the early stages of a renaissance where areas that have been historically industrial, low-income and/or artist communities are beginning to see seismic population changes, fuelled by an influx of young and affluent ex- Manhattan residents in search of more space and a trendier community that embraces a relaxed, artistic and young lifestyle. Our properties are located in the Williamsburg, Downtown Brooklyn, Greenpoint, and Bushwick-Wyckoff Heights neighborhoods.

We are seeing similar trends and opportunities in the Wynwood and Design District neighborhoods of Miami, Florida, which each draw strong parallels to the upscale, urban ecosystem of Williamsburg, Brooklyn. We made our first investment in Miami in January 2015, quickly followed by another three acquisitions in late February and March 2015. We believe that rapidly increasing retail rents amid a thriving arts scene are providing very attractive investment opportunities right now in Miami.

During the period, JZCP, together with RedSky, acquired ten properties, reflecting RedSky Capital's ability to originate a healthy pipeline of attractive investment opportunities in both New York and Miami. Since we began investing with RedSky in April 2012, we have acquired a total of 30 properties (three post-period in March and April 2015), all currently in various stages of development and re-development. The underlying thesis of our real estate portfolio is to acquire off-market properties in neighborhoods that are beginning to see rental and valuation growth.

We have written this portfolio up by US$46.4 million (US$0.71 per share), led by significant write-ups at our Downtown Brooklyn portfolio (US$0.36), Greenpoint development site (US$0.20) Williamsburg retail portfolio (US$0.14), and Roebling portfolio (US$0.07), offset by a slight write-down at our original Bedford property (US$0.09). Increases in value at our real estate properties are due to third-party appraisals received during the period.

New real estate investments

Brooklyn acquisitions

In May 2014, JZCP invested US$3.0 million (structured as a bridge loan) for a property in the Downtown Brooklyn neighborhood of Brooklyn, New York, one of the fastest growing communities in New York City. This bridge loan was repaid, plus interest, in June 2014.

In August 2014, JZCP acquired another two properties in the Downtown Brooklyn neighborhood, further additions to our Downtown Brooklyn portfolio. These acquisitions were funded using proceeds from a refinancing of the Downtown Brooklyn portfolio, and did not require additional cash funding by JZCP. One further acquisition into our Downtown Brooklyn portfolio, made in February 2015, required an additional US$3.8 million in equity from JZCP.

In July 2014, JZCP invested US$8.0 million to acquire one of the most attractive mixed-use loft buildings in Williamsburg, Brooklyn, located within blocks of our other assets in the neighborhood. This unique property features unparalleled window design, ceiling heights and old world character, promising post renovation to become one of the premiere rental loft properties in the area.

In August 2014, JZCP invested US$6.2 million (US$3 million of which served as a bridge loan repaid shortly thereafter with interest to JZCP) to acquire a 21 unit loft-style residential building in Brooklyn's Bushwick-Wyckoff Heights neighborhood, a rapidly maturing neighborhood just east of Williamsburg. We are planning to reposition this property into a modern industrial loft-style residential building by vacating, renovating and leasing up all units at market rate.

In December 2014, JZCP invested $14.7 million to acquire two properties in the Williamsburg neighborhood of Brooklyn, featuring 50 ft. and 40 ft., respectively, of frontage on Bedford Avenue (the most highly trafficked street in Williamsburg) and a combined 20,850 sq. ft. of build-to-suit multi-level retail space.

In April 2015 (post-period), JZCP invested $7.0 million to acquire another property in the Williamsburg neighborhood of Brooklyn, featuring 20 ft. of frontage on Bedford Avenue and up to 6,000 sq. ft. of build-to-suit multi-level retail space.

Miami acquisitions

In January 2015, JZCP invested US$11.7 million to acquire its first property in Miami, Florida, located in the Wynwood neighborhood. Over the past decade, Wynwood has seen a push towards gentrification which has recently become an all-out rush, transitioning the neighborhood into a vibrant work-live-entertainment hub.

In late February and early March 2015 (post-period), JZCP invested a further US$31.2 million to acquire three properties, one located in Miami's Wynwood neighborhood and two located in the adjacent Design District neighborhood, a vibrant shopping and cultural destination home to some of the world's most prestigious brands and retailers.

Other assets

Our recently established asset management business in the US, Spruceview Capital Partners, addresses the growing demand from endowments, foundations and corporate pension funds for fiduciary management services through an Outsourced Chief Investment Officer ("OCIO") model. Spruceview launched the first product in July 2014, the Bright Spruce Fund, L.P. JZCP invested US$50 million in the Bright Spruce Fund, whose investment strategy is capital appreciation in liquid funds while mitigating risk. JZCP is not being charged any fees on this 'fund' investment.

As previously reported, Richard Sabo, former Chief Investment Officer of Global Pension and Retirement Plans at JPMorgan and a member of that firm's executive committee, is leading a team of 12 senior investment, business development, legal and operations professionals. Spruceview targeting corporate pensions, university endowments, foundations and family offices and are beginning to gain traction with several accounts. While this is a long-term building process, the business continues to progress in line with expectations and we look forward to reporting on our progress in the coming year.

Significant realizations

We had six significant realizations during the period.

US micro cap

Most of the realization activity occurred in our US micro cap portfolio, reflecting the high multiples currently achievable in the US. In July 2014, we sold Galson Laboratories, receiving proceeds of US$10.1 million. Galson is a full service provider of analytical air testing using a wide array of methods and instruments which we acquired in May 2010.

In August 2014, JZCP received proceeds of US$19.4 million from the sale of Amptek, which we had acquired in December 2011. Amptek designs and manufactures instrumentation used in numerous non-destructive testing and elemental analysis applications. Albeit a successful investment that generated both a positive MOIC and IRR, Amptek's sale price was executed below its carrying value, reducing NAV by US$6.3 million.

In October 2014, JZCP realized a portion of its investment in our water vertical, refinancing certain notes, which had been used for the previously purchased water infrastructure and water treatment businesses, with third-party debt. Net of the investment in the Paragon acquisition summarized above, JZCP received US$9.8 million of proceeds.

In February 2015, JZCP received proceeds of US$50.5 million from the sale of Dental Services Group, a network of laboratories across North America providing dentists and dental practices a wide range of laboratory services.

Co-investments

In January 2015, JZCP received proceeds of US$41.8 million from the sale of Milestone Aviation to General Electric. Headquartered in Dublin, Ireland, Milestone Aviation is currently the world's largest helicopter leasing company.

Listed equities

In May and June 2014, JZCP realized its investment in Safety Insurance, a provider of personal property and casualty insurance focused exclusively on the Massachusetts market, through two separate block trades, totaling US$57.3 million (US$33 million in May 2014 and US$24.3 million in June 2014).

Escrows received

JZCP received escrow distributions totaling approximately US$6.9 million during the year.

Significant financings

In June 2014, we closed a US$50 million one-year loan facility with Jefferies, in order to enhance our short term liquidity position. Our plan is to repay this loan with either proceeds from realizations, or with a longer term loan facility. The current facility is secured by certain US investments and carries an interest rate of 7%.

In July 2014, we issued approximately US$65.0 million of CULS, increasing the flexibility of JZCP's capital structure while providing additional capital for further investments and greater liquidity in advance of the repayment of the ZDPs in June 2016. These convertible notes carry an interest rate of 6% and a conversion price equal to a 2.5% premium to the 30 June 2014 NAV per share, which was US$10.07. If not converted, the CULS will mature in June 2021.

Outlook

As we have said in the past, our investment strategy is that of opportunistic, value oriented investors with a focus on acquiring assets that we believe have more intrinsic value than we have to pay in cash and where we can enhance the growth prospects and scale the businesses. We employ reasonable leverage to increase our equity returns and seek diversity in the portfolio in terms of industries, asset classes and geography. JZCP has experienced long term NAV growth using this model of value investing, increasing in 22 of the last 24 quarters. In addition, JZCP's strong balance sheet position allows us to take advantage of investment opportunities on an immediate basis. We remain committed to pursuing this tried and tested strategy and are confident in the future prospects of the group, particularly with the newly amended and more flexible investment policy now in place. We look forward to continuing to put your (and our) money to work in a diverse portfolio of reasonably priced assets.

As always, thank you for your confidence in our investment strategy. Please feel free to contact us with any ideas that might be beneficial to JZCP.

Yours faithfully,

Jordan/Zalaznick Advisers, Inc.

Investment Review

This investment review focuses on JZCP's investment strategy in the US Micro Cap, European Micro Cap and Real Estates portfolios and details examples of the Company's major holdings.

US MICRO CAP

The primary US micro cap investment strategy is the "vertical" strategy which sees JZCP invest in well researched industry sectors, or verticals. Similar companies are purchased in the vertical, being integrated as appropriate, and the resulting larger company sold as one entity. These industries sectors/verticals include Industrial service solutions, Water treatment services and Healthcare revenue management. The verticals are managed by a seasoned industry executive whose responsibilities include managing, integrating and growing their respective vertical.

JZCP also invests in US micro cap companies through "Co-investment". JZCP partners with experienced and trusted investors, taking a minority position in a company. The strategy benefits JZCP by diversifying the US micro cap portfolio and leveraging the expertise and resources of such investors. As at 28 February 2015 JZCP's two largest co-investments by valuation were Tierpoint, LLC, and Medplast/UPG Holdings..

US MICRO CAP (VERTICALS)

INDUSTRIAL SERVICES SOLUTIONS ("ISS")

Industrial Services Solutions ("ISS") is currently a combination of seventeen acquired businesses in the industrial maintenance, repair and service industry, with services provided both in a customers' plant, and in one of the companies numerous facilities across the United States. The company also sells parts and supplies for the products it services.

Most of these activities are nondiscretionary and typically non-cyclical. In addition, the increasing complexity of the equipment in industrial settings, along with fewer maintenance staff at these plants, should encourage growth in ISS' customers' needs. This large and very fragmented industry is well suited for a consolidator.

JZCP's US$33.2 million of investments at cost are currently valued at US$77.3 million, as the JZCP has reaped the benefits of positive organic growth, some initial cross-selling among the companies, and the effects of leverage. Sales and proforma EBITDA for the year was US$271 million and US$43 million respectively.

ISS is managed by Jim Rogers, a seasoned industry executive, having held several senior management positions at GE for 26 years. His last position at GE was CEO of GE Industrial Controls.

WATER VERTICAL

Triwater Holdings is our vertical in the $500 billion water sector. To date, we have focused on three areas in this very fragmented market: infrastructure, water treatment and filtration.

Water infrastructure businesses have been created to deal with the aging and deteriorating infrastructure in the United States. Leaking underground pipes for potable water create significant waste, while leaking underground sewer pipes create a significant health hazard. The companies we own in this area have to date addressed this issue by sealing underground sewer pipes without digging, attractive for a variety of practical and cost concerns.

The current water treatment business consists of three companies which sell and distribute chemicals for industrial plants' boilers, etc and use outside plants (e.g. "fracking").

The filtration business currently owned is Paragon Water Systems, a supplier of parts and filters for point-of-use water filtration systems.

JZCP has invested US$27.7 in this vertical; it is valued at US$33.2 million as the initial investments in sales, systems and management have yet to show benefits. Annual revenues were US$135 million while proforma EBITDA was US$21 million.

The Water vertical is managed by Mike Reardon, a long time water executive who has held senior management positions at Culligan Water, and US Filter, among others.

HEALTHCARE REVENUE MANAGEMENT

This vertical provides outsourced revenue cycle management solutions to both hospitals and physicians, a very fragmented and rapidly changing industry. Services currently offered focus on accelerating receivables collections from various payers. In addition to growing via organic growth and acquisitions, cross selling of various services across the companies will contribute to the value added proposition.

JZCP has invested US$22.8 million in this relatively new vertical, which currently carries a value of US$22.3 million. Revenues and proforma EBITDA totalled US$34.4 million and US$6.9 million, respectively.

Mike Shea, an executive with more than 25 years in healthcare revenue management, is managing these businesses.

US MICRO CAP (CO-INVESTMENTS)

TIERPOINT, LLC

Co-invest partner: RedBird Capital Partners Sector: Data Centre

Acquisition Date: June 2014 Headquarters: Missouri, USA Website: www.tierpoint.com

Tierpoint is a provider of cloud, colocation and managed services designed to help organisations improve business services and manage risks. JZCP has invested along side trusted co-invest partners, it is intended to grow the business through an organic and acquisition-based growth strategy.

	Cost	Valuation
	28/02/2015	28/02/2015
	US$'000	US$'000

Common stock	25,335	25,335
Turnover Year ended 31 December 2014		US$147.6 million
Adjusted EBITDA Year ended 31 December 2014		US$65.2 million

MEDPLAST/UPG HOLDINGS

Co-invest partner: Baird Capital [Mfg Products]

Sector: Medical/industrial plastic injection moulding

Acquisition Date: April 2012

Headquarters: Tempe, Arizona, USA

Website: www.medplastgroup.com

Medplast designs, engineers and produces precision custom moulded thermoplastic, rubber and elastomer components and moulds for the healthcare and pharmaceutical and consumer/industrial markets.

	Cost	Valuation
	28.02.2015	28.02.2015
	US$'000	US$'000

14.5% subordinated notes	9,800	10,539
8% preferred stock	7,304	9,078
Common Stock	879	3,400
	17,983	23,017

Turnover Year ended 31 December 2014		$259.4 million
Adjusted EBITDA Year ended 31 December 2014		$28.5 million

EUROPEAN MICRO CAP

JZCP's is investing in the European micro cap sector through its 75% ownership of the European Micro Cap Fund ("EMC"). The EMC's investment team has worked together for over ten years and has a proprietary network of intermediaries to deliver high quality micro cap buy-and-build opportunities throughout the continent.

Initially the team found value in investing in Spanish companies which were historically profitable and run by entrepreneurial managers. The EMC now also has investments in the UK, Germany, Italy and Denmark.

As at 28 February 2015, JZCP's three largest European Micro Cap investments by valuation were Factor Energia S.A., Toro Finance and Grupo Ombuds S.A.

FACTOR ENERGIA S.A.

Headquarters: Barcelona,

Spain Sector: Energy Supplier

Acquisition Date: July 2010

Website: www.factorenergia.com

Factor Energia is an energy distribution business in Spain, which resells electricity to smaller and medium-sized companies, a recently deregulated part of the energy sector. It purchases electricity on the spot market, and sells to its customers for a fixed or variable price, depending on the relevant contract.

	Cost	Valuation
	28.02.2015	28.02.2015
	US$'000	US$'000

Common stock	10,481	74,618


Turnover Year ended 31 December 2014		€324.7 million
Adjusted EBITDA Year ended 31 December 2014		€13.6 million

TORO FINANCE

Headquarters: Madrid, Spain Sector: Financial Services Acquisition Date: December 2013

Toro Finance ("Toro") is a provider of short term receivables financing to the suppliers of major Spanish companies, taking advantage of the continued lack of financing from banks for these highly rated credits. An opportunity was identified to provide financing to this segment and in late 2013. JZCP has approached this market via this joint venture with Avenue Capital.

	Cost	Valuation
	28.02.2015	28.02.2015
	US$'000	US$'000

8% subordinated notes	19,946	19,190
Common stock	9,817	26,920
	29,763	46,110

Turnover Year ended 31 December 2014		€312.7 million
Adjusted EBITDA Year ended 31 December 2014		€7.6 million

GRUPO OMBUDS S.A.

Headquarters: Madrid, Spain

Sector: Private Security

Acquisition Date: May 2011

Website: www.ombuds.es

Grupo Ombuds is a provider of security, surveillance and facility services to the public sector and blue chip clients in Spain. The company has successfully managed to gain market share in the private sector, achieving 80% of total sales in 2014. Management has also pursued a cost saving plan which has reduced direct costs and overheads significantly.

	Cost 28.02.2015 US$'000	Valuation 28.02.2015 US$'000
Loans	17,155	17,490
Common stock	13,526	22,040
	30,681	39,530
Turnover Year ended 31 December 2014 Adjusted EBITDA Year ended 31 December 2014		€84.1 million €6.1 million

REAL ESTATE

JZCP invest in properties through the JZ Realty Fund. The same disciplined investment strategy is applied, as with the micro cap portfolio; buying assets at reasonable prices in conjunction with excellent management teams. The real estate portfolio has been assembled in partnership with RedSky Capital, a Brooklyn based real estate and development and management company.

In 2012, JZCP started to invest in properties in Brooklyn, a borough of New York City with a population of 2.5 million, and is in the process of a renaissance where areas that have been historically industrial and low income are beginning to see population changes, fuelled by an influx of young and affluent ex-Manhattan residents. The revival of the area along with positive demographic projections is providing exciting investment opportunities for JZCP.

At 28 February 2015, JZCP has invested US$170 million in 27 properties across 15 different property portfolios. The independent year end valuation process valued the JZ Realty portfolio at US$221 million.

Three of the JZ Realty, Brooklyn portfolios; Greenpoint, Roebling and 247 Bedford Avenue are detailed below.

GREENPOINT, BROOKLYN

In November 2013, JZ Realty acquired a 49% interest in a premiere development site on the Greenpoint waterfront offering panoramic views over the Manhattan skyline. The intention is to enter into a joint-venture with a major New York City development firm and build a high end mixed-use property.

The site includes the India Street Pier which acts as the Greenpoint terminal location for the East River Ferry, making it one of the most attractive development sites on the waterfront.

ROEBLING, BROOKLYN

JZ Realty acquired the portfolio in July 2014 with the intent to redevelop and re-tenant it into a high end mixed-use portfolio. The Roebling Portfolio is comprised of three separate buildings totaling 126,500 sq. ft.; the properties are located within two blocks of 247 Bedford Avenue, our class A mixed-use asset on Williamsburg's most desirable retail block. It is intended that value will be added by renovating and reconfiguring each building to maximize rentable square footage and achieve market rents.

247 BEDFORD AVENUE, BROOKLYN

JZ Realty acquired the property in April 2012, with the intent to redevelop and re-tenant the retail and residential into a class A mixed-use property.

247 Bedford Avenue is an 115,600 sq. ft. mixed-use asset located on one of the most desirable blocks in Williamsburg. It is the largest and most visible retail site on Bedford Avenue.

JZ Realty are in the middle of the repositioning plan. An 'AAA' credit rated company has been secured as a tenant for the largest, corner retail unit. The building is being transformed into two floors of high end retail space and upgraded residential units.

Directors' Remuneration Report

The Directors' remuneration report has been prepared on behalf of the Directors in accordance with the UK Corporate Governance Code ("the Code") as issued by the UK Listing Authority.

The Company's policy in regard to Directors' remuneration is to ensure that the Company maintains a competitive fee structure in order to recruit, retain and motivate non-executive Directors of excellent quality in the overall interests of shareholders.

Remuneration policy

The Directors do not consider it necessary for the Company to establish a separate Remuneration Committee. All of the matters recommended by the Code that would be delegated to such a committee are considered by the Board as a whole.

It is the responsibility of the Board as a whole to determine and approve the Directors' fees, following a recommendation from the Chairman who will have given the matter proper consideration, having regard to the level of fees payable to non-executive Directors in the industry generally, the role that individual Directors fulfil in respect of Board and Committee responsibilities and the time committed to the Company's affairs. The Chairman's remuneration is decided separately and is approved by the Board as a whole.

The Company's Articles state that Directors' remuneration payable in any accounting year shall not exceed in the aggregate an annual sum of US$650,000. Each Director is also entitled to reimbursement of their reasonable expenses. There are no commission or profit sharing arrangements between the Company and the Directors. Similarly, none of the Directors is entitled to pension, retirement or similar benefits. No element of the Directors' remuneration is performance related.

The remuneration policy set out above is the one applied for the year ended 28 February 2015 and is not expected to change in the foreseeable future.

Directors' and Officers liability insurance cover is maintained by the Company on behalf of the Directors.

Remuneration for qualifying services

	Fees for services to the		Fees for services to the
	Company for the year to		Company for the year to
	28 February 2015		28 February 2014
	US$		US$
David Macfarlane (Chairman)	140,000		140,000
Patrick Firth	70,000		61,616	*
James Jordan	60,000		60,000
Tanja Tibaldi	60,000		60,000
David Allison	4,000	**	5,300	**
Christopher Waldron	60,000		21,371	***
	394,000		348,287

The amounts payable to Directors as shown above were for services as non-executive Directors.

No Director has a service contract with the Company, nor are any such contracts proposed.

* Patrick Firth's Directors fee was increased to $70,000 effective 1 January 2014. The above comparative has been pro-rated to reflect the increase.

** David Allison served as a Director until his death on 26 April 2013. A final payment was made during the current year for an amount outstanding to his estate for the period 1 April 2013 - 26 April 2013.

*** Christopher Waldron was appointed to the Board on 21 October 2013.

Directors' term of appointment

Each Director retires from office at the third annual general meeting after his appointment or (as the case may be) the general meeting at which he was last reappointed and is eligible for reappointment.

The Directors were appointed as Non-executive Directors by letters issued in April 2008 and October 2013 which state that their appointment and any subsequent termination or retirement shall be subject to three-month' notice from either party in accordance with the Articles. Each Director's appointment letter provides that, upon the termination of his/her appointment, that he/she must resign in writing and all records remain the property of the Company. The Directors' appointments can be terminated in accordance with the Articles and without compensation. There is no notice period specified in the Articles for the removal of Directors. The Articles provide that the office of director shall be terminated by, among other things: (a) written resignation; (b) unauthorised absences from board meetings for six months or more; (c) unanimous written request of the other directors; and (d) an ordinary resolution of the Company.

Signed on behalf of the Board of Directors on 11 May 2015 by:

David Macfarlane Patrick Firth

Director Director

Corporate Governance

Introduction

The Board of JZ Capital Partners Limited has considered the principles and recommendations of the AIC Code of Corporate Governance published in October 2010 (the "AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to JZ Capital Partners Limited.

The Company is a member of the Association of Investment Companies (the "AIC") and by complying with the AIC Code of Corporate Governance ("AIC Code") is deemed to comply with both the UK and Guernsey Codes of Corporate Governance. The Financial Reporting Council issued a revised UK Corporate Governance Code in September 2014 for accounting periods beginning on or after 1 October 2014. The AIC updated the AIC Code (including the Guernsey edition) and its Guide to Corporate Governance to reflect the relevant changes to the FRC document in February 2015. The Board has not early adopted this revised code.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will provide better information to shareholders. To ensure ongoing compliance with these principles the Board receives and reviews a report from the Corporate Secretary, at each quarterly meeting, identifying how the Company is in compliance and identifying any changes that might be necessary.

Throughout the accounting period the Company has complied with the recommendations of the AIC Code and thus the relevant provisions of the UK Corporate Governance Code, except as set out below.

The UK Corporate Governance code includes provisions relating to:

- the role of the chief executive

- executive directors remuneration

- the need for an internal audit function

- whistle blowing policy

For the reasons set out in the AIC guide, and as explained in the UK Corporate Governance Code, the Board considers these provisions are not relevant to the position of JZ Capital Partners Limited, being an externally managed investment company. The Company has therefore not reported further in respect of these provisions. The Directors are non-executive and the Company does not have employees, hence no whistle blowing policy is required. However the Directors have satisfied themselves that the Company's service providers have appropriate whistle blowing policies and procedures and have received confirmation from the service providers that nothing has arisen under those policies and procedures which should be brought to the attention of the Board.

Guernsey Code of Corporate Governance

The Guernsey Financial Services Commission's (GFSC) "Finance Sector Code of Corporate Governance" (Guernsey Code) came into effect on 1 January 2012. The introduction to the Guernsey Code states that companies which report against the UK Corporate Governance Code or the AIC's Code of Corporate Governance are deemed to meet the Guernsey Code.

The Board

Corporate Governance of JZCP is monitored by the Board which at the end of the year comprised five Directors, all of whom are non-executive. Biographical details of the Board members at the date of signing these Financial Statements are shown below and their interests in the shares of JZCP are shown in the Report of the Directors. The Directors' biographies highlight their wide range of business experience.

The Board considers that all of the Directors are independent of the Investment Adviser. The Board considers the Directors are free from any business or other relationship that could materially interfere with the exercise of their independent judgment. The Board reviews the independence of the Directors at least annually.

Proceedings of the Board

The Directors have overall responsibility for the Company's activities and the determination of its investment policy and strategy. The Company has entered into an investment advisory and management agreement with its Investment Adviser, JZAI, pursuant to which, subject to the overall supervision of the Directors, the Investment Adviser acts as the investment manager to the Company and manages the investment and reinvestment of the assets of the Company in pursuit of the investment objective of the Company and in accordance with the investment policies and investment guidelines from time to time of the Company and any investment limits and restrictions notified by the Directors (following consultation with the Investment Adviser). Within its strategic responsibilities the Board regularly considers corporate strategy as well as dividend policy, the policy on share buy backs and corporate governance issues.

The Directors meet at least quarterly to direct and supervise the Company's affairs. This includes reviewing the investment strategy, risk profile and performance of the Company and the performance of the Company's functionaries, and monitoring compliance with the Company's objectives. The Directors hold regular meetings to review the Investment Adviser's investment decisions and valuations and to decide if the levels of gearing within the investment portfolio are appropriate. The Directors deem it appropriate to review the valuations on a quarterly basis.

Continuing terms of Investment Adviser agreement

In the opinion of the Directors, the continuing appointment of the Investment Adviser on the terms agreed continues to be in the interests of Shareholders. In reaching its conclusion the Board considers the Investment Adviser's investment strategy and performance.

Supply of information

The Chairman ensures that all Directors are properly briefed on issues arising at Board meetings. The Company's advisers provide the Board with appropriate and timely information in order that the Board may reach proper decisions. Directors can, if necessary, obtain independent professional advice at the Company's expense.

Directors' training

The Board is provided with information concerning changes to the regulatory or statutory regimes as they may affect the Company, and are offered the opportunity to attend courses or seminars on such changes, or other relevant matters. An induction programme is available for any future Director appointments.

Chairman and senior independent Director

The Chairman is a non-executive Director, together with the rest of the Board. There is no executive Director position within the Company. Day-to-day management of the Company's affairs has been delegated to the Administrator. The Board has considered whether a senior independent Director should be appointed. However, as the Board comprises entirely non- executive Directors, the appointment of a senior independent Director for the time being, is not considered necessary. Any of the non-executive Directors are available to shareholders if they have concerns which cannot be resolved through discussion with the Chairman.

Board diversity

The Board has also given careful consideration to the recommendations of the Davies Report on women on boards and as recommended in that report has reviewed its composition and believes that it has available an appropriate range of skills and experience. In order to extend its diversity, the Board is committed to implementing the recommendations of the Davies Report, if possible within the timescales proposed in the Davies Report, and to that end will ensure that women candidates are considered when appointments to the Board are under consideration - as indeed has always been its practice.

Re-election of Directors

The principle set out in the UK Corporate Governance Code is that Directors should submit themselves for re- election at regular intervals and at least every three years, and in any event as soon as it is practical after their initial appointment to the Board. It is a further requirement that non-executive Directors are appointed for a specific period.

The Letters of Appointment of the non-executive Directors suggest that it is appropriate for Directors to retire and be nominated for re-election after three years of service, subject to the recommendation of the General Meeting. Patrick Firth and Tanja Tibaldi were re-elected to the Board at the 2014 Annual General Meeting. David Macfarlane and James Jordan were re-elected to the Board at the 2013 Annual General Meeting. The appointment of Christopher Waldron to the Board during 2013 was ratified at the 2014 Annual General Meeting.

The Board's evaluation

The Board, Audit Committee, and Nomination Committee undertake an evaluation of their own performance and that of individual Directors on an annual basis. In order to review their effectiveness, the Board and its Committees carry out a process of formal self-appraisal. The Board and Committees consider how they function as a whole and also review the individual performance of its members. This process is conducted by the respective Chairman reviewing each member's performance, contribution and their commitment to the Company. The Board as a whole reviews the performance of the Chairman. Each Board member is also required to submit details of training they have undertaken on an annual basis.

The results of the evaluation process concluded the Board was functioning effectively and the Board and its committees provided a suitable mix of skills and experience.

Board Committees

In accordance with the AIC Code, the Board has established an Audit Committee and a Nomination Committee, in each case with formally delegated duties and responsibilities within written terms of reference. The identity of each of the chairmen of the committees referred to below are reviewed on an annual basis. The Board has decided that the entire Board should fulfil the role of the Audit and Nomination committees. The terms of reference of the committees are kept under review and can be viewed on the Company's website www.jzcp.com.

Nomination Committee

In accordance with the Code, the Company has established a Nomination Committee. The main role of the committee is to propose candidates for election to the Board of Directors, including the Chairman. The Nomination Committee takes into consideration the Code's rules on independence of the Board in relation to the Company, its senior management and major shareholders. The nomination committee is chaired by David Macfarlane, and each of the other Directors is also a member. The members of the committee are independent of the Investment Adviser. The Nomination Committee has responsibility for considering the size, structure and composition of the Board, retirements and appointments of additional and replacement Directors and making appropriate recommendations to the Board.

Due to the nature of the Company being a listed investment company investing in private equity with an international shareholder base, the Company needs Directors with a broad range of financial experience. For this reason, Directors believe that it is more appropriate to use their own contacts as a source of suitable candidates as no one external consultancy or advertising source is likely to be in a position to identify suitable candidates.

The final decision with regard to appointments always rests with the Board and all such appointments are subject to confirmation by shareholders.

Audit Committee

The Audit Committee is chaired by Patrick Firth. All the other Directors are members. Members of the Committee are independent of the Company's external auditors and the Investment Adviser. The Audit Committee meets at least twice a year and meets the external auditors at least twice a year. The Audit Committee is responsible for overseeing the Company's relationship with the external auditors, including making recommendations to the Board on the appointment of the external auditors and their remuneration. The Committee also considers the nature, scope and results of the auditors' work and reviews, and develops and implements policies on the supply of any non-audit services that are to be provided by the external auditors.

Management Engagement Committee

The Company currently does not have a separate Management Engagement committee. The recommended functions and responsibilities of such a committee are exercised by the full board each member of which is unassociated with the Investment Adviser.

Remuneration Committee

In view of its non-executive and independent nature, the Board considers that it is not appropriate for there to be a separate Remuneration Committee as prescribed by the AIC Code. The process for agreeing the non-executive Directors' fees is set out in the Directors' Remuneration Report.

Board and Committee meeting attendance

The number of formal meetings of the Board and its committees held during the year and the attendance of individual Directors at these meetings was as follows:

	Number of meetings
	Board			Ad Hoc	Other	Audit
	Main	AGM	EGM	Meetings	Committee	Committee
Total number of meetings	5	1	1	6	2	2
David Macfarlane	5	1	-	4	2	2
Patrick Firth	4	1	-	5	2	2
James Jordan	5	1	-	3	1	-
Tanja Tibaldi	4	1	1	3	2	2
Christopher Waldron	5	1	1	6	2	2

The main Board meetings are held to agree the Company's valuation of its investments, agree the Company's financial statements and discuss and agree other strategic issues. Other meetings are held when required to agree board decisions on ad- hoc issues.

Internal Controls

Responsibility for the establishment and maintenance of an appropriate system of internal controls rests with the Board and to achieve this, a process has been established which seeks to:

- review the risks faced by the Company and the controls in place to address those risks

- identify and report changes in the risk environment

- identify and report changes in the operational controls

- identify and report on the effectiveness of controls and errors arising

- ensure no override of controls by its service providers, the Manager and Administrator.

A report is tabled and discussed at each Board meeting setting out the risks identified, their potential impact, the controls in place to mitigate them, the residual risk assessment and any exceptions identified during the period under review. The Board considers the current activities of the company and external factors and amends the risk reporting accordingly.

The Board also receives confirmation from the Administrator of its accreditation under the SOC1 report.

Further reports are received and reviewed from the Administrator in respect of compliance, London Stock Exchange continuing obligations and other matters.

Going Concern

The Directors consider the Company has adequate financial resources, in view of its holding in cash and cash equivalents and liquid investments and the income streams deriving from its investments and believe that the Company is well placed to manage its business risks successfully to continue in operational existence for the foreseeable future and that it is appropriate to prepare the Financial Statements on the going concern basis.

Foreign Account Tax Compliance Act

The Company is registered (with a Global Intermediary Identification Number CAVBUD.999999.SL.831) under The Foreign Account Tax Compliance Act ("FATCA") which became effective on 1 January 2013. The legislation is aimed at determining the ownership of US assets in foreign accounts and improving US tax compliance with respect to those assets. The States of Guernsey has entered into an intergovernmental agreement ("IGA") with US Treasury in order to facilitate the requirements under FATCA. In May 2014, the US announced a six month delay to the new entity account on-boarding rules, from 1 July 2014 to 1 January 2015, for the operation of the US FATCA regulations, which has been extended to the IGA. Guernsey Financial Institutions are required to have had new individual account on-boarding procedures in place with effect from 1 July 2014 and new entity account on-boarding procedures with effect from 1 January 2015. The Board has taken steps to implement on- boarding procedures, with the assistance of its professional advisers.

Inter-Governmental Agreements

The States of Guernsey have signed an intergovernmental agreement with the UK ("UK-Guernsey IGA") under which potentially mandatory disclosure requirements may be required in respect of Shareholders who have a UK connection. The Board is monitoring implementation of the UK-Guernsey IGA with the assistance of its professional advisers.

Alternative Investment Fund Managers Directive

The Company does not expect to be required to comply with the AIFM Directive except to the extent that it may be required to satisfy certain provisions of the AIFM Directive in order to permit the marketing of the Company's shares in EEA Member States. In this circumstance the relevant regime remains the national private placement arrangements in the relevant EEA Member State into which the fund is marketed. Compliance with the Directive may result in increased reporting requirements, possible changes to the governance structure of the Company and additional disclosure in the financial statements. The Company will consult with its professional advisors to minimise this impact where possible.

Relations with shareholders

The Directors believe that the maintenance of good relations with both institutional and retail shareholders is important for the long term prospects of the Company. It therefore seeks active engagement with investors, bearing in mind the duties regarding equal treatment of shareholders and the dissemination of inside information. The Board receives feedback on shareholder views from its Corporate Broker and Investment Adviser, and is circulated with Broker reports on the Company.

The Directors believe that the Annual General Meeting, a meeting for all shareholders, is the key point in the year when the Board of Directors accounts to all shareholders for the performance of the Company. It therefore encourages all shareholders to attend, and all Directors are present unless unusual circumstances prevail.

The Directors believe that the Company policy of reporting to shareholders as soon as possible after the Company's year end and the holding of the Annual General Meeting at the earliest opportunity is valuable.

The Company also provides an Interim Report and Accounts in accordance with IAS 34 and Interim Management statements for the quarterly periods in line with the requirements of the EU Transparency Directive.

Independent Auditors' Report

Independent auditors' report to the members of JZ Capital Partners Limited

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the Company's affairs as at 28 February 2015 and of its profit for the year then ended;

• have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and

• have been prepared in accordance with the requirements of the Companies (Guernsey) Law 2008.

What we have audited

We have audited the financial statements of the Company for the year ended 28 February 2015 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and related notes 1 to 34. The financial reporting framework that has been applied in their preparation is applicable law and IFRS.

This report is made solely to the Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Our assessment of risks of material misstatement

We identified the following risks of material misstatement that we believed would have the greatest impact on our overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team:

• valuation of the Company's unquoted investments whose valuations are subjective and require the use of estimation and judgement;

• calculation of management and incentive fees, including the risk of management override of controls; and; and

• existence and ownership of investments because failure to obtain good title exposes the Company to significant risk of loss

Our application of materiality

We determined planning materiality for the Company to be US$14.1 million (2014: US$13.3 million), which is 2% of Net Asset Value. This provided a basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures. We used equity as a basis for determining planning materiality because the Company's primary performance measures for internal and external reporting are based on net asset value.

On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Company should be 50% (2014: 75%) of materiality, namely US$7.0 million (2014: US$9.9 million). Our objective in adopting this approach was to ensure that total uncorrected and undetected audit differences in the financial statements did not exceed our materiality level.

We agreed with the Audit Committee that we would report to them all audit differences in excess of US$0.71 million (2013: US$0.67 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluated any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations.

An overview of the scope of our audit

We adopted a risk-based approach in determining our audit strategy. This approach focuses audit effort towards higher risk areas, such as management judgments and estimates.

Our response to the risks identified above was as follows;

• we confirmed our understanding of the Company's methodology, processes and policies for valuing its unquoted investments;

• we determined and challenged the appropriateness of the valuation techniques applied to unquoted investments, and obtained evidence to corroborate the inputs into the valuation model;

• we agreed valuation inputs that did not require specialist knowledge to supporting documentation and we tested the arithmetical accuracy of the Company's calculations;

• we engaged our own real estate valuation experts, in relation to the valuation of the real estate portfolio, to:

a) assist us to determine whether the methodology used to value the investment was appropriate; and

b) corroborate and challenge management's judgements and valuation inputs utilised in the valuation calculation.

Our response to the risk of incorrect calculation of management and incentive fees was as follows:

• we reperformed the management and incentive fee calculations for accuracy and consistency with agreements; and

• we reviewed the reasonableness of the inputs used in the incentive fee calculation and also considered the risk of management overriding internal controls;

Our response to the risk of existence and ownership of investments was as follows:

• we obtained independent confirmations for a sample of unquoted investments directly from the underlying investee companies and agreed them to the books and records of the Company; and

• we obtained independent confirmation from the custodian of the Company's publicly traded investments and agreed this to the records of the Company.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

• materially inconsistent with the information in the audited financial statements; or

• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Company acquired in the course of performing our audit; or

• is otherwise misleading.

In particular we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed.

Under the Companies (Guernsey) Law 2008 we are required to report to you if, in our opinion:

• proper accounting records have not been kept; or

• the financial statements are not in agreement with the accounting records; or

• we have not received all the information and explanations we require for our audit.

Christopher James Matthews, FCA

for and on behalf of Ernst & Young LLP

Guernsey, Channel Islands

11 May 2015

Notes:

1. The maintenance and integrity of the JZ Capital Partners Limited web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

2. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Investment Portfolio

	Historical	Carrying Value	Percentage of portfolio
	Book	28 February
	cost*	2015
Company	US$'000	US$'000		%

US Micro Cap Portfolio

US Micro Cap Verticals

Industrial Service Solutions
INDUSTRIAL SERVICES SOLUTIONS ("ISS") A combination of acquired businesses in the industrial maintenance, repair and service industry.	33,175	77,293		8.8

Healthcare Revenue Cycle Management

MONTI ELIGIBILITY & DENIAL SOLUTIONS An outsourced provider of patient benefit eligibility, enrolment and recovery services to hospitals and health systems. A subsidary of Bolder Healthcare Solutions, LLC.	14,244	11,822		1.3
BODHI TREE GROUP An outsourced provider specialising in billing, practice management and outsourcing services for anaesthesiology physician, nurse groups and ambulatory surgery centres. A subsidary of Bolder Healthcare Solutions, LLC.	7,232	9,179		1.0
PPM INFORMATION SOLUTIONS, INC. Provider of billing and practice management software and services to anesthesia practices. A subsidary of Bolder Healthcare Solutions, LLC.	1,296	1,340		0.1

Sensors Solutions
NIELSEN-KELLERMAN Designer and manufacturer of weather, wind and timing measurement instruments and devices. Nielsen-Kellerman is a subsidiary of Sensors Solutions Holdings	3,454	6,730		0.8

Testing Services

ACCUTEST HOLDINGS, INC. Provider of environmental testing laboratories to the US market	33,516	4,800		0.5
ARGUS GROUP HOLDINGS Sells, rents and services safety and testing equipment to a variety of industries. Argus Group Holdings is a subsidiary of Testing Services Holdings	10,079	11,406		1.3

Logistics Solutions
PRIORITY EXPRESS, LLC Provider of same day express courier services to various companies located in northeastern USA. Priority Express is a subsidary of US Logistics, LLC	13,200	12,020		1.3

Water Services

TWH INFRASTRUCTURE INDUSTRIES, INC. Environmental infrastructure company that provides technology to facilitate repair of underground pipes and other infrastructure. TWH Infrastructure Industries, Inc., which owns LMK Enterprises, Perma-Liner Industries and APMCS, is a subsidiary of Triwater Holdings.	9,865	10,153		1.1
TWH WATER TREATMENT INDUSTRIES, INC. Provider of water treatment supplies and services. TWH Water Treatment Industries, Inc., which owns Nashville Chemical & Equipment and Klenzoid Canada Company / Eldon Water, Inc., is a subsidiary of Triwater Holdings.	8,543	13,297		1.5
TWH FILTRATION INDUSTRIES, INC. Supplier of parts and filters for point-of-use filtration systems, which owns Paragon Water Systems.	9,322	9,707		1.1

Total US Micro Cap Verticals	143,926	167,747		18.8

US Micro Cap Co-investments
JUSTRITE MANUFACTURING COMPANY Manufacturer of industrial safety products	6,068	13,832		1.5
MEDPLAST/UPG HOLDINGS Manufacturer of plastic medical components.	17,983	23,017		2.6
NEW VITALITY HOLDINGS, INC. Direct-to-consumer provider of nutritional supplements and personal care products.	3,280	164		0.0
VITALYST Provider of outsourced IT support and training services.	9,020	9,300		1.0
SALTER LABS, INC. Developer and manufacturer of respiratory medical products and equipment for the homecare, hospital, and sleep disorder markets.	19,163	15,551		1.7
SOUTHERN PETROLEUM LABORATORIES, INC. Provider of petroleum and environmental testing services.	3,957	4,121		0.5
TIERPOINT, LLC Provider of cloud computing and colocation data center services.	25,335	25,335		2.9
SUZO HAPP GROUP Designer, manufacturer and distributor of components for the global gaming, amusement and industrial markets	3,915	12,500		1.4
IGLOO PRODUCTS CORP Designer, manufacturer and marketer of coolers and outdoor products	6,038	6,038		0.7


Total US Micro Cap Co-investments	94,759	109,858		12.3

US Micro Cap Other
BOLDER INDUSTRIAL PERFORMANCE SOLUTIONS Acquiror of companies providing mission critical inspection services for a variety of industries	331	355		0.0
HEALTHCARE PRODUCTS HOLDINGS, INC.*** Designer and manufacturer of motorised vehicles	17,636	12,400		1.4
MODC, LLC Acquiror of speciality retail companies located in the centre of shopping malls	208	231		0.0
NATIONWIDE STUDIOS, INC. Processer of digital photos for preschoolers	16,132	6,200		0.7
US SANITATION, LLC Acquirer of janitorial and sanitorial product distributors and related chemical manufacturers and blenders	424	549		0.1



Total US Micro Cap Other	34,731	19,735		2.2



Total US Micro Cap Portfolio	273,416	297,340		33.3

European Micro Cap Portfolio
EUROMICROCAP FUND 2010, LP At 28 February 2015, had invested in eleven companies in the European micro cap sector: Factor Energia, Xacom Comunicaciones, Docout, Grupo Ombuds, Oro Direct, One World Packaging, Toro Finance, Winn Group, Fidor Bank, Petrocorner and Fincontinuo	131,683	204,019		22.8
DOCOUT, S.L. Provider of digitalisation, document processing and storage services.	2,777	2,786		0.3
GRUPO OMBUDS Provider of personal security and asset protection.	17,155	17,490		2.0
TORO FINANCE Provides short term receivables finance to the suppliers of major Spanish companies.	21,619	19,190		2.1
XACOM COMUNICACIONES SL Supplier of telecom products and technologies.	2,055	2,399		0.3


Total European Micro Cap Portfolio	175,289	245,884		27.5


Real Estate
JZCP REALTY** Facilitates JZCP's investment in US real estate.	169,512	221,151		24.7


Total Real Estate Investments	169,512	221,151		24.7

Mezzanine Portfolio
GED HOLDINGS, INC. Manufacturer of windows.	6,100	305		0.0
METPAR INDUSTRIES, INC. Manufacturer of restroom partitions.	7,754	750		0.1
PETCO ANIMAL SUPPLIES, INC. Retailer of pet food, supplies and services.	1,237	1,900		0.2


Total Mezzanine Porfolio	15,091	2,955		0.3

Bank Debt: Second Lien Portfolio
DEKKO TECHNOLOGIES, LLC Distributor of electrical sub-components	9,975	10,452		1.2


Total Bank Debt	9,975	10,452		1.2

Other
BSM ENGENHARIA S.A. Brazilian-based provider of supply chain logistics, infrastructure services and equipment rental.	6,115	1,895		0.2
SPRUCEVIEW CAPITAL, LLC Asset management company that primarily manages smaller endowments and pension funds.	10,917	10,917		1.2
BRIGHT SPRUCE FUND, LP Fund investing in marketable equity, fixed income and alternative asset classes.	50,000	50,113		5.6
JZ INTERNATIONAL, LLC*** Fund of European LBO investments.	661	661		0.1


Total Other	67,693	63,586		7.1

Listed Investments
UK Gilts
UK treasury 2% - maturity 22.01.2016	40,732	39,480		4.4


Total UK Gilts	40,732	39,480		4.4

Corporate Bonds
Goldman Sachs, 22.03.2016	16,590	13,473		1.5


Total Corporate Bonds	16,590	13,473		1.5



Total Listed Investments	57,322	52,953		5.9



Total - Portfolio	768,298	894,321		100.0

* Book cost to JZCP equating to transfer value as at 1 July 2008 upon the liquidation of JZEP and adjusted for subsequent transactions. The book cost excludes the transfer value and subsequent Payment In Kind ("PIK") investments.

*Original book cost incurred by JZEP/JZCP adjusted for subsequent transactions. The book cost represents cash outflows and excludes PIK investments.

** JZCP owns 100% of the shares and voting rights of JZCP Realty Fund, Ltd.

*** Legacy Investments. Legacy investments are excluded from the calculation of capital and income incentive fees.

Mezzanine Portfolio includes common stock with a carrying value of US$1,955,000. These investments are classified as Investments at fair value through profit or loss.

Statement of Comprehensive Income

For the year ended 28 February 2015

		Year ended 28 February 2015			Year ended 28 February 2014
		Revenue	Capital	Total	Revenue	Capital	Total
		return	return		return	return
	Notes	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Income

Net gain on investments at fair value through profit or loss	6	-	60,665	60,665	-	55,408	55,408

Net loss on financial liabilities at fair value through profit or loss	17	-	(1,867)	(1,867)	-	-	-


Net impairment on loans and receivables	7	-	(121)	(121)	-	(77)	(77)

Realisations from investments held in escrow accounts	30	-	6,924	6,924	-	2,233	2,233

Net foreign currency exchange gains/(losses)		-	5,899	5,899	-	(9,980)	(9,980)

Investment income	8	36,196	-	36,196	39,184	-	39,184

Bank and deposit interest		53	-	53	130	-	130



		36,249	71,500	107,749	39,314	47,584	86,898

Expenses
Investment Adviser's base fee	10	(12,976)	-	(12,976)	(11,220)	-	(11,220)
Investment Adviser's incentive fee	10	-	(19,102)	(19,102)	4,411	(13,819)	(9,408)
Directors' remuneration	10	(394)	-	(394)	(348)	-	(348)
Administrative expenses	10	(1,984)	-	(1,984)	(2,138)	-	(2,138)

		(15,354)	(19,102)	(34,456)	(9,295)	(13,819)	(23,114)

Operating profit		20,895	52,398	73,293	30,019	33,765	63,784

Finance costs
Finance costs	9	-	(13,990)	(13,990)	-	(7,489)	(7,489)

Profit before taxation		20,895	38,408	59,303	30,019	26,276	56,295

Withholding taxes	11	(93)	-	(93)	(841)	-	(841)


Profit for the year		20,802	38,408	59,210	29,178	26,276	55,454


Weighted average number of Ordinary shares in issue during year	19			65,018,607			65,018,607
Basic earnings per Ordinary share	24	31.99c	59.07c	91.07c	44.88c	40.41c	85.29c

All items in the above statement are derived from continuing operations.

The profit for the year is attributable to the Ordinary shareholders of the Company.

The format of the Income Statement follows the recommendations of the AIC Statement of Recommended Practice.

The "Total" column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS There was no comprehensive income other than the profit for the year.

The accompanying notes form an integral part of the financial statements.

Statement of Financial Position As at 28 February 2015
	Notes	28 February 2015 US$'000	28 February 2014 US$'000
Assets Investments at fair value through profit or loss	12	893,321	791,366
Investments classified as loans and receivables	12	1,000	1,000
Cash and cash equivalents	13	101,323	11,372
Other receivables	14	33	517 517
Total assets		995,677	804,255
Liabilities
Convertible Unsecured Loan Stock	17	67,563	-
Zero Dividend Preference shares	18	106,813	107,201
Loans payable	16	90,114	17,839
Investment Adviser's incentive fee		22,595	9,408
Investment Adviser's base fee		1,451	848
Directors' remuneration		63	63
Other payables	15	1,568	2,440
Total liabilities		290,167	137,799
Equity Share capital account	21	149,269	149,269
Distributable reserve	21	353,528	353,528
Capital reserve	21	115,196	76,788
Revenue reserve	21	87,517	86,871
Total equity		705,510	666,456
Total liabilities and equity		995,677	804,255
Number of Ordinary shares in issue at year end	19	65,018,607	65,018,607
Net asset value per Ordinary share	25	US$ 10.85	US$ 10.25

These audited financial statements were approved by the Board of Directors and authorised for issue on 11 May 2015. They were signed on its behalf by:

David Macfarlane Patrick Firth

Chairman Director

The accompanying notes form an integral part of the financial statements.

Statement of Changes in Equity

For the year ended 28 February 2015

		Share
		Capital	Distributable	Capital Reserve		Revenue
		Account	Reserve	Realised	Unrealised	Reserve	Total
	Notes	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Balance as at 1 March 2014		149,269	353,528	85,910	(9,122)	86,871	666,456


Profit for the year		-	-	18,747	19,661	20,802	59,210

Dividends paid	31	-	-	-	-	(20,156)	(20,156)



Balance at 28 February 2015		149,269	353,528	104,657	10,539	87,517	705,510

Comparative for the year ended 28 February 2014

		Share
		Capital	Distributable	Capital Reserve		Revenue
		Account	Reserve	Realised	Unrealised	Reserve	Total
	Notes	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Balance as at 1 March 2013		149,269	353,528	92,834	(42,322)	76,873	630,182


(Loss)/profit for the year		-	-	(6,924)	33,200	29,178	55,454

Dividends paid	31	-	-	-	-	(19,180)	(19,180)



Balance at 28 February 2015		149,269	353,528	85,910	(9,122)	86,871	666,456

The accompanying notes form an integral part of the financial statements.

Statement of Cash Flows

For the year ended 28 February 2015

		1 March 2014 to		1 March 2013 to
		28 February		28 February
		2015		2014
	Notes	US$'000		US$'000

Operating activities

Net cash outflow from operating activities	26	(9,473)		(7,296)

Cash outflow for purchase of investments		(188,291)	*	(195,526)

Cash outflow for capital calls by the EuroMicrocap Fund 2010, LP		(38,220)	*	(31,035)

Cash inflow from repayment and disposal of investments		211,853	**	143,830



Net cash outflow before financing activities		(24,131)		(90,027)

Financing activity

Dividends paid to shareholders	31	(20,156)		(19,180)


Proceeds from issue of Convertible Unsecured Loan Stock	17	65,696		-

Net proceeds from loan facilities		72,275		17,839

Finance costs		(3,733)		-



Net cash inflow/(outflow) from financing activities		114,082		(1,341)



Increase/(decrease) in cash and cash equivalents		89,951		(91,368)




Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March		11,372		102,740
Increase/(decrease) in cash and cash equivalents as above		89,951		(91,368)
Cash and cash equivalents at year end		101,323		11,372

* Total investments for the year ended 28 February 2015 total US$226.5 million.

** Total proceeds from realisations for the year US$219.4 million include escrow receipts US$6.9 million and current period debt interest realised US$0.6 million (included within operating activities above).

The accompanying notes form an integral part of the financial statements.

Notes to the Financial Statements

1. General Information

JZ Capital Partners Limited (the "Company") is a Guernsey domiciled closed-ended investment company which was incorporated in Guernsey on 14 April 2008 under The Companies (Guernsey) Law, 1994. The Company is now subject to The Companies (Guernsey) Law, 2008. The Company is classed as an authorised fund under The Protection of Investors (Bailiwick of Guernsey) Law 1987. The Company's Capital consists of Ordinary shares, Zero Dividend Preference ("ZDP") shares and Convertible Unsecured Loan Stock ("CULS"). In July 2014, the Company issued approximately US$65 million of CULS.

The Company's objective is to create a portfolio of investments providing a superior overall return comprised of a current yield and significant capital appreciation.

The Company is focused on investing in the following areas:

(a) small or micro-cap buyouts in the form of debt and equity and preferred stock;

(b) real estate or real estate linked investments and natural resources investments;

(c) debt opportunities, including mezzanine investments, comprising loans and high-yield securities, and listed bank debt, including both senior secured debt and second lien loans; and

(d) other debt and equity opportunities, including distressed debt and structured and off-balance sheet financings, derivatives and publicly traded securities.

The Company has no direct employees. For its services the Investment Adviser receives a management fee and is also entitled to performance related fees (note 10). The Company has no ownership interest in the Investment Adviser. During the year under review the Company was administered by Northern Trust International Fund Administration Services (Guernsey) Limited.

The financial statements are presented in US$'000 except where otherwise indicated.

2. Significant Accounting Policies

The accounting policies adopted in the preparation of the audited annual financial statements have been consistently applied during the year, unless otherwise stated.

Statement of Compliance

The financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS"), which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and International Accounting Standards ("IAS") and Standing Interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, and have been adopted by the European Union, together with applicable legal and regulatory requirements of Guernsey Law, and the SFM.

Basis of Preparation

The financial statements have been prepared under the historical cost or amortised cost basis, modified by the revaluation of financial instruments designated at fair value through profit or loss upon initial recognition. The principal accounting policies adopted are set out below. The preparation of financial statements in conformity with IFRS requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statements follow the Association of Investment Companies ("AIC") Statement of Recommended Practice ("SORP") issued on 21 January 2009.

Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year.

(i) Standards, amendments and interpretations that are not effective and are expected to have a material impact on the financial position or performance of the Company

IFRS 9 Financial Instruments: Classification and Measurement. The adoption of the first phase of IFRS 9 (tentatively effective for periods beginning on after 1 January 2018, awaiting EU endorsement) may have an effect on the classification and measurement of the Company's financial assets, but will potentially have no impact on classification and measurements of financial liabilities.

There are certain other current standards, amendments and interpretations that are not relevant to the Company's operations.

Assessment as investment entity

Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them. The criteria which define an investment entity are as follows:

• An entity that obtains funds from one or more investors for the purpose of providing those investors with investment services

• An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both

• An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis

The Company has a wide range of investors; through its Investment Adviser management services it enables investors to access private equity, real estate and similar investments.

The Company's objective to provide a "superior overall return comprised of a current yield and significant capital appreciation" is consistent with that of an investment entity. The Company has clearly defined exit strategies for each of its investment classes, these strategies are again consistent with an investment entity.

In determining the fair value of unlisted investments JZCP follows the principles of The International Private Equity and Venture Capital Association ("IPEVCA") Valuation Guidelines. The Valuation Guidelines have been prepared with the goal that Fair Value measurements derived when using these Valuation Guidelines are compliant with IFRS.

The Board of JZCP evaluates the performance of unlisted investments quarterly on a fair value basis. Listed investments are recorded at Fair Value in accordance with IFRS being the last traded market price where this price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Board determines the point within the bid-ask spread that is most representative of fair value in accordance with IFRS 13.

The Board has also concluded that the Company meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of equities and similar securities; it has more than one investor and its investors are not related parties.

Going concern

A fundamental principle of the preparation of financial statements in accordance with IFRS is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realisation of assets and settlement of liabilities occurring in the ordinary course of business.

Functional and presentational currency

Items included in the financial statements of the Company are measured in the currency of the primary economic environment in which the Company operates (the "functional currency"). The functional currency of the Company as determined in accordance with IFRS is the US Dollar because this is the currency that best reflects the economic substance of the underlying events and circumstances of the Company. The financial statements are presented in US Dollars, as the Company has chosen the US Dollar as its presentation currency.

Foreign exchange

Monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the rate of exchange ruling at the end of the reporting period date. Transactions in foreign currencies during the course of the period are translated at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at reporting period end exchange rates of monetary assets and liabilities and non-monetary assets and liabilities that are denominated in foreign currencies are recognised in the Statement of Comprehensive Income. Foreign exchange gains and losses on financial assets and financial liabilities at fair value through profit or loss are recognised together with other changes in the fair value. Net foreign exchange gains or losses on monetary financial assets and liabilities other than those classified as at fair value through profit or loss are included in the line item 'Net foreign currency exchange gains'.

Financial assets and financial liabilities

(a) Financial assets and liabilities at fair value through profit or loss

(i) Classification

The Company classifies its investments in listed investments, investments in first and second lien debt securities, other equity opportunities and other investments within its Micro Cap and Real Estate portfolios as financial assets at fair value through profit or loss. These financial assets are designated by the Board of Directors as at fair value through profit or loss at inception.

Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Company's investment strategy as documented in its prospectus and includes those investments over which the Company has significant influence except for the investment in the Associate (see (c) below). Information about these financial assets and financial liabilities are evaluated by the management of the Company on a fair value basis together with other relevant financial information.

(ii) Recognition / derecognition

Purchases and sales of investments are recognised on the trade date - the date on which the Company commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

Financial assets and liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the Statement of Comprehensive Income. Subsequent to initial recognition, all financial assets and liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the 'financial assets or financial liabilities at fair value through profit or loss' category are presented in the Statement of Comprehensive Income in the period in which they arise.

Dividend income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income within investment income when the Company's right to receive payment is established.

Realised surpluses and deficits on the partial sale of investments are arrived at by deducting the average cost of such investments from the sales proceeds.

(iii) Fair value estimation

The fair value of financial instruments traded in active markets (such as publicly traded securities) is based on quoted market prices at the Statement of Financial Position date. The quoted market price used for financial assets held by the Company is the bid price.

Unquoted preferred shares, micro cap loans, unquoted equities and equity related securities investments are typically valued by reference to their enterprise value, which is generally calculated by applying an appropriate multiple to the last twelve months' earnings before interest, tax, depreciation and amortisation ("EBITDA"). In determining the multiple, the Directors consider inter alia, where practical, the multiples used in recent transactions in comparable unquoted companies, previous valuation multiples used and where appropriate, multiples of comparable publicly traded companies. In accordance with IPEVCA guidelines, a marketability discount is applied which reflects the discount that in the opinion of the Directors, market participants would apply in a transaction in the investment in question.

Traded loans including first and second lien term securities are valued by reference to the last indicative bid price from recognised market makers. These investments are classified in the Statement of Financial Position as Investments at fair value through profit or loss.

(b) Loans and receivables

(i) Classification

The Company classifies unquoted senior subordinated debt within Mezzanine investments as loans and receivables. Investments are generally accounted for at amortised cost using the effective interest method except where there is deemed to be impairment in value which indicates that a provision should be made.

(ii) Recognition / derecognition

(iii) Measurement

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

(iv) Impairment

The Company assesses at each reporting date whether the loans and receivables are impaired. Evidence of impairment may include indications that the counterparty is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. If there is objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the asset's carrying amount and the net present value of expected cash flows discounted at the original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Statement of Comprehensive Income as net impairments on loans and receivables.

Impaired debts together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a previous write-off is later recovered, the recovery is credited to net impairments/write back of impairments on loans and receivables.

An associate is an entity over which the Company has significant influence. An entity is regarded as a subsidiary only if the Company has control over its strategic, operating and financial policies and intends to hold the investment on a long-term basis for the purpose of securing a contribution to the Company's activities.

In accordance with the exemption within IAS 28 Investments in Associates and Joint Ventures, the Company does not account for its investment in EuroMicrocap Fund 2010, LP (the "Partnership") using the equity method. Instead, the Company has elected to measure its investment in its associate at fair value through profit or loss.

The Directors have determined that although the Company has over 50% economic partnership interest in the Partnership, it does not have the power to govern the financial and operating policies of the partnership. Such powers are vested with the General Partner. However the Company does have significant influence over the Partnership.

(d) Investment in a subsidiaries

JZCP owns 100% of the shares and voting rights of JZCP Realty Fund, Ltd through which JZCP holds its interests in real estate. As the Board has concluded that it meets the criteria of an investment entity, its investment in JZCP Realty Fund, Ltd is carried at fair value through profit or loss.

(e) Cash on deposit

Cash on deposit comprises bank deposits with an original maturity of three months or more.

(f) Cash and cash equivalents

Cash and cash equivalents comprise bank balances and cash held by the Company including short-term bank deposits with an original maturity of three months or less. Cash also includes amounts held in interest-bearing overnight accounts.

(g) Other receivables and payables

Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Other payables are not interest- bearing and are stated at their nominal value.

(h) Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities and equity are recorded at the amount of proceeds received, net of issue costs. Ordinary shares are regarded as equity.

(i) Zero dividend preference ("ZDP") shares

In accordance with International Accounting Standard 32 - 'Financial Instruments: Presentation', ZDP shares have been disclosed as a financial liability as the shares are redeemable at a fixed date and holders are entitled to a fixed return. ZDP shares are recorded at amortised cost using the effective interest rate method.

(j) 6% Convertible Unsecured Loan Stock 2021

The Convertible Unsecured Loan Stock ("CULS") issued by the Company is denominated in a currency (GBP) other than the Company's functional currency and hence fails the 'fixed-for-fixed' criteria for equity classification. Rather than account for the host debt and embedded conversion element separately, the Company elects to account for the CULS in its entirety in accordance with the IAS 39 'Fair Value Option'. The CULS' fair value is deemed to be the listed offer price at the period end. CULS is translated at the exchange rate at the reporting date and both differences in fair value due to the listed offer price and exchange rates are recognised in the Statement of Comprehensive Income.

Income

Interest income for all interest bearing financial instruments is included on an accruals basis using the effective interest method. Dividend income is recognised when the Company's right to receive payment is established. When there is reasonable doubt that income due to be received will actually be received, such income is not accrued until it is clear that its receipt is probable. Where following an accrual of income, receipt becomes doubtful, the accrual is either fully or partly written off until the reasonable doubt is removed.

Expenses

Investment Adviser's basic fees are allocated to revenue. The Company also provides for a Capital Gains Incentive fee based on net unrealised investments gains.

Expenses which are deemed to be incurred wholly in connection with the maintenance or enhancement of the value of the investments are charged to realised capital reserve. All other expenses are accounted for on an accruals basis and are presented as revenue items.

Finance costs

Finance costs are interest expenses in respect of the ZDP shares, loans payable, and CULS and are recognised in the Statement of Comprehensive Income using the effective interest rate method.

Escrow accounts

Where investments are disposed of, the consideration given may include contractual terms requiring that a percentage of the consideration is held in an escrow account pending resolution of any indemnifiable claims that may arise and as such the value of these escrow amounts is not immediately known. The Company records gains realised on investments held in escrow in the Statement of Comprehensive Income following confirmation that any such indemnifiable claims have been resolved and none is expected in the future.

3. Segment information

The Investment Manager, who is the chief investment officer, is responsible for allocating resources available to the Company in accordance with the overall business strategies as set out in the Investment Guidelines of the Company. The Company has been organised into the following segments:

• Portfolio of US micro cap investments

• Portfolio of European micro cap investments

• Portfolio of Real Estate investments

• Portfolio of Mezzanine investments

• Portfolio of Bank debt

• Portfolio of Listed investments

• Portfolio of Other investments

The investment objective of each segment is to achieve consistent medium-term returns from the investments in each segment while safeguarding capital by investing in a diversified portfolio.

Investment in corporate bonds, money market funds and treasury gilts are not considered part of any individual segment and have therefore been excluded from this segmental analysis.

For the year ended 28 February 2015

		Micro Cap	Micro Cap	Real	Mezzanine	Bank	Listed	Other
		US	European	Estate	Portfolio	Debt	Investments	Investments	Total
		US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

	Interest revenue	29,666	3,554	321	174	1,262	-	-	34,977
	Dividend revenue	-	-	-	-	-	311	-	311
	Net gain/(loss) on investments at fair value through profit or loss	23,669	7,815	46,441	(629)	-	(7,377)	(2,504)	67,415
	Impairments on loans and receivables	-	-	-	(121)	-	-	-	(121)
	Investment Adviser's base fee	(3,875)	(3,205)	(2,882)	(39)	(136)	-	(829)	(10,966)
	Investment Adviser's capital incentive fee¹	(13,457)	1,538	(9,289)	151	-	-	608	(20,449)

Total segmental operating profit		36,003	9,702	34,591	(464)	1,126	(7,066)	(2,725)	71,167

Year ended 28 February 2014

		Micro Cap	Micro Cap	Real	Mezzanine	Bank	Listed	Other	Total
		US	European	Estate	Portfolio	Debt	Investments	Investments
		US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

	Interest revenue	31,210	2,124	495	215	1,307	-	-	35,351
	Dividend revenue	-	-	-	-	-	2,804	-	2,804
	Other revenue	-	-	-	-	-	-	-	-
	Net gain/(loss) on investments at fair value through profit or loss	3,659	32,744	4,701	176	-	10,354	(675)	50,959
	Impairments on loans and receivables	-	-	-	(77)	-	-	-	(77)
	Investment Adviser's base fee	(4,765)	(2,605)	(1,573)	(52)	(165)	(1,753)	(149)	(11,062)
	Investment Adviser's capital incentive fee¹	(10,411)	-	-	2,284	-	-	-	(8,127)

Total segmental operating profit		19,693	32,263	3,623	2,546	1,142	11,405	(824)	69,848

1The capital incentive fee is allocated across segments where a realised or unrealised gain or loss has occurred. Segments with realised or unrealised losses are allocated a credit pro rata to the size of the loss and segments with realised or unrealised gains are allocated a charge pro rata to the size of the gain.

At 28 February 2015

		Micro Cap	Micro Cap	Real	Mezzanine	Bank	Listed	Other	Total
		US	European	Estate	Portfolio	Debt	Investments	Investments
		US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
	Investments at fair value through profit or loss	297,340	245,884	221,151	1,955	10,452	-	63,586	840,368
	Investments classified as loans and receivables	-	-	-	1,000	-	-	-	1,000
	Other payables and accrued expenses	(18,508)	1,180	(10,551)	2,431	(15)	(1,080)	728	(25,815)


Total segmental net assets		278,832	247,064	210,600	5,386	10,437	(1,080)	64,314	815,553


At 28 February 2014

		Micro Cap	Micro Cap	Real	Mezzanine	Bank	Listed	Other	Total
		US	European	Estate	Portfolio	Debt	Investments	Investments
		US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
	Investments at fair value through profit or loss	341,560	186,781	112,792	2,706	11,810	65,423	10,587	731,659
	Investments classified as loans and receivables	-	-	-	1,000	-	-	-	1,000
	Other receivables	-	-	-	-	-	486	-	486
	Other payables and accrued expenses	(10,771)	(197)	(119)	2,280	(12)	(1,136)	(11)	(9,966)


Total segmental net assets		330,789	186,584	112,673	5,986	11,798	64,773	10,576	723,179

Certain income and expenditure is not considered part of the performance of an individual segment. This includes net foreign exchange gains, interest on cash, finance costs, custodian and administration fees, directors' fees and other general expenses.

	Year ended 28/02/2015 US$ '000	Year ended 28/02/2014 US$ '000
Net reportable segment profit	71,167	69,848
Net (losses)/ gains on treasury gilts and corporate bonds	(6,750)	4,449
Realised gains on investments held in escrow accounts	6,924	2,233
Net foreign exchange	5,899	(9,980)
Interest on treasury gilts and corporate bonds	908	1,029
Interest on cash	53	130
Fees payable to investment adviser based on non segmental assets	(663)	(1,439)
Net loss on financial liabilities	(1,867)	-
Expenses not attributable to segments	(2,378)	(2,486)
Operating profit	73,293	63,784

Other receivables and prepayments are not considered to be part of individual segment assets. Certain liabilities are not considered to be part of the net assets of an individual segment. These include custodian and administration fees payable, Directors' fees payable and other payables and accrued expenses.

The following table provides a reconciliation between total net segment assets and total net assets.

	28/02/2015	28/02/2014
	US$ '000	US$ '000

Total net segmental assets	815,553	723,179

Non segmental assets and liabilities:
Treasury gilts	39,480	43,292
Floating rate notes	13,473	16,415
Cash and cash equivalents	101,323	11,372
Other receivables and prepayments	33	31
Zero Dividend Preference Shares	(106,813)	(107,201)
Convertible Unsecured Loan Stock	(67,563)	-
Loans payable	(90,114)	(17,839)
Other payables and accrued expenses	138	(2,793)

Total non segmental net assets	(110,043)	(56,723)
Total net assets	705,510	666,456

4. Fair value of financial instruments

The Company classifies fair value measurements of its financial instruments at fair value through profit or loss using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The financial assets valued at fair value through profit or loss are analysed in a fair value hierarchy based on the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Those involving inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Those involving inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on:

Financial assets at 28 February 2015

	Level 1 US$ '000	Level 2 US$ '000	Level 3 US$ '000	Total US$ '000
Financial assets designated at fair value through profit or loss at inception:
Listed Securities	52,953	-	-	52,953
Bank debt	-	-	10,452	10,452
Mezzanine portfolio	-	-	1,955	1,955
US Micro Cap portfolio	-	-	297,340	297,340
European Micro Cap portfolio	-	-	245,884	245,884
Real Estate portfolio	-	-	221,151	221,151
Other	-	-	63,586	63,586
	52,953	-	840,368	893,321
Financial assets at 28 February 2014
	Level 1 US$ '000	Level 2 US$ '000	Level 3 US$ '000	Total US$ '000
Financial assets designated at fair value through profit or loss at inception:
Listed Securities	125,130	-	-	125,130
Bank debt	-	-	11,810	11,810
Mezzanine portfolio	-	-	2,706	2,706
US Micro Cap portfolio	-	-	341,560	341,560
European Micro Cap portfolio	-	-	186,781	186,781
Real Estate portfolio	-	-	112,792	112,792
Other	-	-	10,587	10,587
	125,130	-	666,236	791,366

Transfers between levels

There were no transfers between the levels of hierarchy of financial assets recognised at fair value within the year ended 28 February 2015 and 28 February 2014.

Financial liabilities at 28 February 2015	Level 1	Level 2-	Level 3	Total
	US$ '000	US$ '000	US$ '000	US$ '000
Financial liabilities designated at fair value through profit or loss at inception:
Convertible Subordinated Unsecured Loan Stock	67,563	-	-	67,563
	67,563	-	-	67,563

Transfers between levels

There were no transfers between the levels of hierarchy of financial liabilities recognised at fair value within the year ended 28 February 2015.

Valuation techniques

In valuing investments in accordance with International Financial Reporting Standards, the Directors follow a number of general principles as detailed in the International Private Equity and Venture Capital Association ("IPEVCA") guidelines.

When fair values of listed equity and debt securities at the reporting date are based on quoted market prices or binding dealer price quotations (bid prices for long positions), without any deduction for transaction costs, the instruments are included within Level 1 of the hierarchy.

The fair value of bank debt which is derived from unobservable data is classified as Level 3. Investments for which there are no active markets are valued according to one of the following methods:

Real Estate

JZCP makes its Real Estate investments through a wholly-owned subsidiary, which in turn owns interests in various residential, commercial, and development real estate properties. The net asset value of the subsidiary is used for the measurement of fair value. The underlying fair value of JZCP's Real Estate holdings, however, is represented by the properties themselves.

The Company's Investment Adviser and Board review the fair value methods and measurement of the underlying properties on a quarterly basis. The fair value techniques used in the underlying valuations are:

- Use of third party appraisals on the subject property, where available.

- Use of comparable market values per square foot of properties in recent transactions in the vicinity in which the property is located, and in similar condition, of the relevant property, multiplied by the property's square footage.

- Discounted Cash Flow ("DCF") analysis, using the relevant rental stream, less expenses, for future periods, discounted at a Market Capitalization ("MC") rate, or interest rate.

- Relevant rental stream less expenses divided by the market capitalization rate; this method approximates the enterprise value construct used for non-real estate assets.

For each of the above techniques third party debt is deducted to arrive at fair value.

Due to the inherent uncertainties of real estate valuation, the values reflected in the financial statements may differ significantly from the values that would be determined by negotiation between parties in a sales transaction and those differences could be material.

Mezzanine loans

Investments are generally valued at amortised cost except where there is deemed to be impairment in value which indicates that a provision should be made. Mezzanine loans are classified in the Statement of Financial Position as loans and receivables and are accounted for at amortised cost using the effective interest method less accumulated impairment allowances in accordance with IFRS.

The Company assesses at each reporting date whether a financial asset or group of financial assets classified as loans and receivables is impaired. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the net present value of expected cash flows discounted at the original effective interest rate.

Unquoted preferred shares, micro cap loans, unquoted equities and equity related securities

Unquoted preferred shares, micro cap loans, unquoted equities and equity related securities investments are classified in the Statement of Financial Position as Investments at fair value through profit or loss. These investments are typically valued by reference to their enterprise value, which is generally calculated by applying an appropriate multiple to the last twelve months' earnings before interest, tax, depreciation and amortisation ("EBITDA"). In determining the multiple, the Directors consider inter alia, where practical, the multiples used in recent transactions in comparable unquoted companies, previous valuation multiples used and where appropriate, multiples of comparable publicly traded companies. In accordance with IPEVCA guidelines, a marketability discount is applied which reflects the discount that in the opinion of the Directors, market participants would apply in a transaction in the investment in question.

In respect of unquoted preferred shares and micro cap loans the Company values these investments by reference to the attributable enterprise value as the exit strategy in respect to these investments would be a one tranche disposal together with the equity component. The fair value of the investment is determined by reference to the attributable enterprise value (this is calculated by a multiple of EBITDA reduced by senior debt and marketability discount) covering the aggregate of the unquoted equity, unquoted preferred shares and debt instruments invested in the underlying company. The increase of the fair value of the aggregate investment is reflected through the unquoted equity component of the investment and a decrease in the fair value is reflected across all financial instruments invested in an underlying company.

Quantitative information of significant unobservable inputs and sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy

The significant unobservable inputs used in fair value measurement catergorised within Level 3 of the fair value hirearchy together with a quantitative sensitivity as at 28 February 2015 are shown below:

	Value	Valuation	Unobservable	Range	Sensitivity	Effect on Fair Value
	28.2.2015	Technique	input	(weighted average)	used*	US$'000
	US$'000
US Micro cap investments	297,340	EBITDA Multiple	Average EBITDA Multiple of Peers	5.0x - 11.5x (7.6x)	0.5x / -0.5x	(24,240)	24,384
US Micro cap investments			Discount to Average Multiple	15% - 40% (25%)	5.0% / -5.0%	(28,355)	28,414

European Micro cap investments	245,884	EBITDA Multiple	Average EBITDA Multiple of Peers	5.4x - 12.5x (8.2x)	0.5x / -0.5x	(9,577)	10,095
European Micro cap investments			Discount to Average Multiple	0% - 44% (25%)	5.0% / -5.0%	(13,265)	13,783

Mezzanine investments	1,955	EBITDA Multiple	Average EBITDA Multiple of Peers	5.0x - 8.0x (7.0x)	0.5x / -0.5x	(334)	334
Mezzanine investments			Discount to Average Multiple	10%	5.0% / -5.0%	(294)	294

Bank debt	10,452	EBITDA Multiple	Average EBITDA Multiple of Peers	6.0x	0.5x / -0.5x	-	-

Real estate (1)	221,151	Comparable Sales	Market Value Per Square Foot	$314 - $575 per sq ft	-5% /+5%	(2,964)	2,895
		DCF Model / Income Approach	Discount Rate	7%	+25bps /-25bps	(781)	827
		Cap Rate/Income Approach	Capitalisation Rate	4.5% - 5%	+25bps /-25bps	(8,227)	8,954

Other investments	63,586	EBITDA Multiple	Average EBITDA Multiple of Peers	7.5x	0.5x / -0.5x	(301)	301
			Discount to Average Multiple	25%	5.0% / -5.0%	(222)	222
		Adjusted NAV	Discount for Lack of Liquidity	5%	5% /5%	(2,638)	2,931

(1) The Fair Value of JZCP's investment in financial interests in Real Estate, is measured as JZCP's percentage interest in the value of the underlying properties. The Directors consider the discount rate used, applied to the DCF, when valuing the properties as the most significant unobservable input affecting the measurement of fair value.

* The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.

	Value
	28.2.2014	Valuation	Unobservable	Range	Sensitivity	Effect on Fair Value
	US$'000	Technique	input	(weighted average)	used*	US$'000

US Micro cap investments	287,792	EBITDA Multiple	Average EBITDA Multiple of Peers	5.0x - 9.0x (7.2x)	0.5x / -0.5x	(21,426)	19,256
US Micro cap investments			Discount to Average Multiple	0% - 40% (25%)	5.0% / -5.0%	(28,087)	23,893

US Micro cap investments (1)	23,563	Multiple of Book Value	Multiple of Book Value	1.5x	0.25x / -0.25x	(3,293)	3,293

US Micro cap investments (2)	30,205	Revenue Multiple	Revenue Multiple	0.4x	0.1x / -0.1x	(6,169)	5,103

European Micro cap investments	186,781	EBITDA Multiple	Average EBITDA Multiple of Peers	5.4x - 9.0x (7.3x)	0.5x / -0.5x	(11,010)	11,010
European Micro cap investments		EBITDA Multiple	Discount to Average Multiple	25% - 48% (33%)	5.0% / -5.0%	(9,730)	9,825

Mezzanine investments	2,706	EBITDA Multiple	Average EBITDA Multiple of Peers	5.0x - 8.0x (7.0x)	0.5x / -0.5x	(342)	342
Mezzanine investments		EBITDA Multiple	Discount to Average Multiple	10%	5.0% / -5.0%	(256)	256

Bank debt	11,810	EBITDA Multiple	Average EBITDA Multiple of Peers	6.0x	0.5x / -0.5x	-	-

Real estate (3)	112,792	DCF Model / Income Approach	Discount Rate	10%	+ 1% / - 1%	(3,745)	3,922

Other investments	10,587	EBITDA Multiple	Average EBITDA Multiple of Peers	7.5x	0.5x / -0.5x	(447)	447
			Discount to Average Multiple	25%	5.0% / -5.0%	(379)	379

(1) Milestone Aviation valued using a different valuation method

(2) Dental Holdings valued using a different valuation method

(3) The Fair Value of JZCP's investment in financial interests in Real Estate, is measured as JZCP's percentage interest in the value of the underlying properties. The Directors consider the discount rate used, applied to the DCF, when valuing the properties as the most significant unobservable input affecting the measurement of fair value.

* The sensitivity analysis refers to a percentage amount added or deducted from the input and the effect this has on the fair value.

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the reporting period.

At 28 February 2015
		Bank		Mezzanine		US Micro	Euro Micro	Real
		Debt		Portfolio		Cap Portfolio	Cap Portfolio	Estate	Other		Total
		US$ '000		US$ '000		US$ '000	US$ '000	US$ '000	US$ '000		US$ '000

At 1 March 2014		11,810		2,706		341,560	186,781	112,792	10,587		666,236
Purchases		-		-		52,574	48,843	68,094	57,000		226,511
PIK adjusted for fair value		111		(1)		25,724	-	(51)	-		25,783
Proceeds from investments repaid or sold		(1,461)		-		(144,723)	-	(6,125)	(1,497)		(153,806)
Net gains and losses recognised in statement of comprehensive income		-		(750)		23,669	7,815	46,441	(2,504)		74,671
Movement in accrued interest recognised in statement of comprehensive income		(8)		-		(1,464)	2,445	-	-		973

At 28 February 2015		10,452		1,955		297,340	245,884	221,151	63,586		840,368

		Bank		Mezzanine		US Micro	Euro Micro	Real
		Debt		Portfolio		Cap Portfolio	Cap Portfolio	Estate	Other		Total
		US$ '000		US$ '000		US$ '000	US$ '000	US$ '000	US$ '000		US$ '000

At 1 March 2013		11,690		2,529		342,566	107,463	30,861	11,080		506,189
Purchases		-		-		63,370	45,172	76,933	1,750		187,225
PIK adjusted for fair value		130		50		25,386	-	-	-		25,566
Proceeds from investments repaid or sold		-		-		(92,142)	-	(198)	(1,568)		(93,908)
Net gains and losses recognised in statement of comprehensive income		-		99		3,659	32,774	4,701	(675)		40,558
Movement in accrued interest recognised in statement of comprehensive income		(10)		28		(1,279)	1,372	495	-		606


At 28 February 2014		11,810		2,706		341,560	186,781	112,792	10,587		666,236

The following table details the revenues and net gains included within the statement of comprehensive income for investments classified at Level 3 which were held during the year.

At 28 February 2015	Bank		Mezzanine		US Micro		Euro Micro	Real
	Debt		Portfolio		Cap Portfolio		Cap Portfolio	Estate	Other	Total
	US$ '000		US$ '000		US$ '000		US$ '000	US$ '000	US$ '000	US$ '000

Interest and other revenue	1,262		174		29,666		3,554	321	-	34,977
Net (loss)/gain on investments at fair value through profit or loss	-		(750)		23,669		7,815	46,441	(2,504)	74,671


	1,262		(576)		53,335		11,369	46,762	(2,504)	109,648


At 28 February 2014	Bank		Mezzanine		US Micro		Euro Micro	Real
	Debt		Portfolio		Cap Portfolio		Cap Portfolio	Estate	Other	Total
	US$ '000		US$ '000		US$ '000			US$ '000	US$ '000	US$ '000

Interest and other revenue	1,307		215		31,210		2,124	495	-	35,351
Net gain/(loss) on investments at fair value through profit or loss	-		99		3,659		32,774	4,701	(675)	40,558


	1,307		314		34,869		34,898	5,196	(675)	75,909

For the investments measured at Level 3 at the reporting date, the Company adjusted the default rate, and discount rate assumptions within a range of reasonably possible alternatives. The extent of the adjustment varied according to the characteristics of each security.

The potential effect of using reasonably possible alternative assumptions for valuing financial instruments classified as Level 3 at the reporting date would reduce the fair value by up to US$91,199,000 (28 February 2014: US$84,884,000) or increase the fair value by US$93,435,000 (28 February 2014: US$77,726,000).

The fair value of financial assets and financial liabilities measured at amortised cost are determined as follows:

The fair value of the Zero Dividend Preference shares is deemed to be their quoted market price. As at 28 February 2015 the ask price was £3.58 (28 February 2014: £3.36 per share) the total fair value of the ZDP shares was US$114,563,000 (28 February 2014: US$116,599,000) which is US$7,750,000 higher (28 February 2014: US$9,398,000 higher) than the liability recorded in the Statement of Financial Position.

The carrying amounts of loans and receivables are recorded at amortised cost using the effective interest method in the financial statements. The fair value of loans and receivables at 28 February 2015 was US$1,000,000 (28 February 2014: US$1,000,000).

The carrying amounts of trade receivables and trade payables are deemed to be their fair value due to their short term nature.

5. Critical accounting judgements and key sources of estimation uncertainty

The following are the key assumptions and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Fair value of investments at fair value through profit or loss ("FVTPL")

Certain investments are classified as FVTPL, and valued accordingly, as disclosed in note 2. The key source of estimation uncertainty is on the valuation of unquoted equities and equity-related securities.

In reaching its valuation of the unquoted equities and equity-related securities the key judgements the Board has to make relate to the selection of the multiples and the discount factors used in the valuation models.

Loans and receivables

Certain investments are classified as Loans and Receivables, and valued accordingly, as disclosed in note 2. The key estimation is the impairment review and the key assumptions are as disclosed in note 2.

Investment in associate

The policies applied in accounting for the Company's associate require significant judgement. Full details are disclosed in Note 2 (c).

Assessment as an investment entity

The Board has concluded that the Company meets the definition of an investment entity and as such, does not consolidate its subsidiary but rather values it at fair value through profit or loss as described in note 2 (d).

6. Net gains on investments at fair value through profit or loss

	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Net movement in unrealised gains in the year	36,516	55,009
Proceeds from investments realised	211,853	136,247
Cost of investments realised	(172,692)	(131,978)
Realised gains (proceeds less cost to JZCP)	39,161	4,269
Total gains in prior periods now realised	(15,012)	(3,870)
Total net realised gains in the year	24,149	399
Net gain on investments in the year	60,665	55,408

7. Net impairments on loans and receivables

	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Net impairments on impairments on loans and receivables	(121)	(77)

Proceeds from investments previously written off
Proceeds from investments repaid	-	7,584
Cost of investments repaid	-	(7,584)

	-	-
Net realised gain	(121)	(77)



Net impairments on loans and receivables	(121)	(77)

8. Investment income

	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Income from investments classified as FVTPL	36,022	38,969
Income from investments classified as loans and receivables	174	215
	36,196	39,184

Income for the year ended 28 February 2015

		Preferred	Loan note		Other
	Dividends	Dividends	PIK	Cash	Interest	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

US micro cap portfolio	-	15,036	9,350	5,280	-	29,666
European micro cap portfolio	-	-	2,490	1,064	-	3,554
Real estate	-	-	-	321	-	321
Mezzanine portfolio	-	-	174	-	-	174
Bank debt	-	-	-	-	1,262	1,262
Listed investments	311	-	-	-	-	311
Treasury gilts and corporate bonds	-	-	-	-	908	908
						-
						-
	311	15,036	12,014	6,665	2,170	36,196


Income for the year ended 28 February 2014

		Preferred	Loan note		Other
	Dividends	Dividends	PIK	Cash	Interest	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
US micro cap portfolio	-	15,213	9,272	6,725	-	31,210
European micro cap portfolio	-	-	1,569	555	-	2,124
Mezzanine portfolio	-	-	77	138	-	215
Bank debt	-	-	-	-	1,307	1,307
Listed investments	2,804	-	-	-	-	2,804
Treasury gilts and corporate bonds	-	-	-	-	1,029	1,029
Real estate	-	-	495	-	-	495
	2,804	15,213	11,413	7,418	2,336	39,184

Interest on unlisted investments totaling US$15,640,000 (year ended 28 February 2014: US$12,035,000) has not been recognised in accordance with the Company's accounting and valuation policy.

9. Finance costs

Finance costs arising are allocated to the Statement of Comprehensive Income using the effective interest rate method. The rights and entitlements of the ZDP shares, which are accounted for at amortised cost are described in note 18. The rights and entitlements of the CULS, are described in note 17. The interest expense on the CULS is calculated according to the effective interest rate method.

	Year ended	Year ended
	28/02/2015	2/28/2014
	US$ '000	US$ '000
ZDP shares (note 18)	8,390	7,489
CULS Interest and transaction costs (note 17)	2,042	-
Loan - Jefferies Finance, LLC (note 16)	3,374	-
Loan - Deutsche Bank (note 16)	184	-
	13,990	7,489

10. Expenses

	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Investment Adviser's base fee	12,976	11,220
Investment Adviser's incentive fee	19,102	9,408
Directors' remuneration	394	348
	32,472	20,976
Administrative expenses:
Legal and professional fees	957	870
Other expenses	369	557
Accounting, secretarial and administration fees	350	324
Auditors' remuneration	151	216
Auditors' remuneration - non-audit fees	103	108
Custodian fees	54	63
	1,984	2,138
Total expenses	34,456	23,114

Directors fees

The Chairman is entitled to a fee of US$140,000 per annum. As from 1 January 2014, the Chairman of the Audit
Committee is entitled to a fee of US$70,000 per annum, all other directors are entitled to a fee of US$60,000. For the year ended 28 February 2015 total Directors' fees included in the Statement of Comprehensive Income were US$394,000 (year ended 28 February 2014: US$348,000), of this amount US$63,000 was outstanding at the year end (28 February 2014: US$63,000).

Investment Advisory and Performance fees

The Company entered into the amended and restated investment advisory and management agreement with Jordan/Zalaznick Advisers, Inc. (the "Investment Adviser") on 23 December 2010 (the "Advisory Agreement").

Pursuant to the Advisory Agreement, the Investment Adviser is entitled to a base management fee and to an incentive fee. The base management fee is an amount equal to 1.5% per annum of the average total assets under management of the Company less those assets identified by the Company as being excluded from the base management fee, under the terms of the agreement. The base management fee is payable quarterly in arrears; the agreement provides that payments in advance on account of the base management fee will be made.

For the year ended 28 February 2015, total investment advisory and management expenses, based on the average total assets of the Company, were included in the Statement of Comprehensive Income of US$13,976,000 (year ended 28 February 2014: US$11,220,000). Of this amount US$1,451,000 (28 February 2014: US$848,000) was outstanding at the year end.

The incentive fee has two parts. The first part is calculated by reference to the net investment income of the Company ("Income Incentive fee") and is payable quarterly in arrears provided that the net investment income for the quarter exceeds 2% of the average of the net asset value of the Company for that quarter (the "hurdle") (8% annualised). The fee is an amount equal to (a) 100% of that proportion of the net investment income for the quarter as exceeds the hurdle, up to an amount equal to a hurdle of 2.5%, and (b) 20% of the net investment income of the Company above a hurdle of 2.5% in any quarter. Investments categorised as legacy investments and other assets identified by the Company as being excluded are excluded from the calculation of the fee. A true-up calculation is also prepared at the end of each financial year to determine if further fees are payable to the Investment Adviser or if any amounts are recoverable from future income incentive fees.

For the years ended 28 February 2015 and 2014 there was no income incentive fee.

The second part of the incentive fee is calculated by reference to the net realised capital gains ("Capital Gains Incentive fee") of the Company and is equal to: 20% of the realised capital gains of the Company for each financial year less all realised capital losses of the Company for the year less (b) the aggregate of all previous capital gains incentive fees paid by the Company to the Investment Adviser. The capital gains incentive is payable in arrears within 90 days of the fiscal year end. Investments categorised as legacy investments and assets of the Euro Microcap Fund 2010, LP are excluded from the calculation of the fee.

For the purpose of calculating incentive fees cumulative preferred dividends received on the disposal of an investment are treated as a capital return rather than a receipt of income.

A capital gains incentive fee based on realised gains during the year ended 28 February 2015 of US$13,156,000 (28 February 2014: US$5,907,000) was incurred and US$13,156,000 (28 February 2014: US$3,115,000) was payable to the Investment Adviser at year end. The Company also provides for a capital gains incentive fee based on unrealised gains. For the year ended 28 February 2015 there has been an increase in this provision of US$5,936,000 (28 February 2014: US$3,503,000) resulting in a closing provision of US$9,439,000 (28 February 2014: US$3,503,000).

Total incentive fees payable to the Investment Adviser within 90 days of the year ended total US$13,156,000 (2014: US$5,907,000).

The Advisory agreement may be terminated by the Company or the Investment Advisor upon not less than two and one- half years' (i.e. 913 days') prior notice (or such lesser period as may be agreed by the Company and Investment Adviser).

Administration fees

Northern Trust International Fund Administration Services (Guernsey) Limited was appointed as Administrator to the Company on 1 September 2012. The Administrator is entitled to a fee payable quarterly in arrears. Fees payable to the Administrator are fixed for the three years from the date of appointment and are then subsequently subject to an annual fee review.

Custodian fees

HSBC Bank (USA) N.A, (the "Custodian") was appointed on 12 May 2008 under a custodian agreement. The Custodian is entitled to receive an annual fee of US$2,000 and a transaction fee of US$50 per transaction. For the year ended 28 February 2015 total Custodian expenses of US$54,000 (28 February 2014: US$63,000) were included in the Statement of Comprehensive Income of which US$26,000 (28 February 2014: US$16,000) was outstanding at the year end and is included within Other Payables.

Auditors remuneration

During the year ended 28 February 2015, the Company incurred fees for audit services of $151,000, and fees for non-audit services (reporting accountant services, interim review and taxation services) of $210,000, of which $43,000 were charged to auditor's remuneration within administrative expenses in the Statement of Comprehensive Income, and $110,000 were included within finance costs in the Statement of Comprehensive Income and related to services provided in connection with the issue of the CULS.

11. Taxation

For both 2015 and 2014 the Company applied for and was granted exempt status for Guernsey tax purposes under the terms of The Income Tax (Zero 10) (Guernsey) Law, 2007.

For the year ended 28 February 2015 the Company incurred withholding tax of US$93,000 (28 February 2014: US$841,000) on dividend income from listed investments.

12. Investments

Categories of financial instruments
	Listed 28/02/2015 US$ '000	Unlisted 28/02/2015 US$ '000	Carrying Value 28/02/2015 US$ '000
Fair value through profit or loss (FVTPL)	52,953	840,368	893,321
Loans and receivables	-	1,000	1,000
	52,953	841,368	894,321
Book cost at 1 March 2014	Listed 28/02/2015 US$ '000 100,380	Unlisted 28/02/2015 US$ '000 656,439	Total 28/02/2015 US$ '000 756,819
Purchases in year	-	188,291	188,291
Capital calls during year	-	38,220	38,220
Payment in kind ("PIK")	-	25,783	25,783
Proceeds from investments disposed/realised	(58,047)	(153,806)	(211,853)
Realised gains on disposal	14,988	24,173	39,161
Book cost at 28 February 2015	57,321	779,100	836,421
Unrealised (losses)/gains at 28 February 2015	(4,451)	51,769	47,318
Accrued interest at 28 February 2015	83	10,499	10,582
Carrying value at 28 February 2015	52,953	841,368	894,321
	Listed 28/02/2014	Unlisted 28/02/2014	Carrying Value 28/02/2014
	US$ '000	US$ '000	US$ '000
Fair value through profit or loss (FVTPL)	125,130	666,236	791,366
Loans and receivables	-	1,000	1,000
	125,130	667,236	792,366
Book cost at 1 March 2013	Listed 28/02/2014 US$ '000 102,384	Unlisted 28/02/2014 US$ '000 541,869	Total 28/02/2014 US$ '000 644,253
Purchases in year	39,336	156,190	195,526
Capital calls during year	-	31,035	31,035
Payment in kind ("PIK")	-	25,566	25,566
Proceeds from investments disposed/realised	(42,366)	(101,464)	(143,830)
Realised gains on disposal	1,026	3,243	4,269
Book cost at 28 February 2014	100,380	656,439	756,819
Unrealised gains at 28 February 2014	24,655	1,271	25,926
Accrued interest at 28 February 2014	95	9,526	9,621
Carrying value at 28 February 2014	125,130	667,236	792,366

The above book cost is the cost to JZCP equating to the transfer value as at 1 July 2008 upon the liquidation of JZEP and adjusted for subsequent transactions.

The cost of PIK investments is deemed to be interest not received in cash but settled by the issue of further securities when that interest has been recognised in the Statement of Comprehensive Income.

As at 28 February 2015, the Company had a direct investment in the following associate:


Entity	Place of incorporation	Principal activity	% Interest


EuroMicrocap Fund 2010, LP	Cayman	Acquiror of Europe-based microcap companies	75%

The Company has elected for an exemption from the IAS 28 equity method. Therefore the Company values its associate at fair value through profit or loss. An associate investment is defined as an entity over which the Company has the power to participate in the financial and operating policy decisions of the investee but does not have control or joint control of these policies.

28/02/2015

28/02/2014

EuroMicrocap Fund 2010, LP

US$ '000

204,019

US$ '000

150,115

Investment in associate at fair value

204,019

150,115

Restrictions

There are no significant restrictions on the ability of the associate to transfer funds to the Company in the form of cash dividends, or repayment of loans or advances. However, the company has not received any funds from the associate.

Investment in subsidiary

As at 28 February 2015, the Company had a direct investment in the following subsidiary:

	28/02/2015	28/02/2014
	US$ '000	US$ '000

JZCP Bright Spruce, Ltd	50,113	-
JZCP Realty Fund, Ltd	221,151	112,792
Investment in subsidiaries at fair value	271,264	112,792

The principal place of business for both subsidiaries is USA. The Company meets the definition of an Investment Entity in accordance with IFRS 10. Therefore, it does not consolidate its subsidiaries but rather recognises them as investments at fair value through profit or loss.

Unconsolidated subsidiaries	Place of incorporation	% Interest
JZCP Realty Fund, Ltd	Cayman	100%
JZCP Bright Spruce, Ltd	Cayman	100%

The above subsidiary controls the following subsidiaries:

Entity	Place of incorporation	% Interest
JZ REIT Fund Metropolitan, LLC	Delaware, USA	99%
JZCP Loan Metropolitan Corp	Delaware, USA	100%
JZ REIT Fund 1, LLC	Delaware, USA	99%
JZCP Loan 1 Corp	Delaware, USA	100%
JZ REIT Fund Flatbush Portfolio, LLC	Delaware, USA	99%
JZCP Loan Flatbush Portfolio Corp	Delaware, USA	100%
JZ REIT Fund Flatbush, LLC	Delaware, USA	99%
JZCP Loan Flatbush Corp	Delaware, USA	100%
JZ REIT Fund Fulton, LLC	Delaware, USA	99%
JZCP Loan Fulton Corp	Delaware, USA	100%
JZCP Loan Greenpoint Corp	Delaware, USA	99%
JZ REIT Fund Greenpoint, LLC	Delaware, USA	100%
JZ REIT Fund Florida, LLC	Delaware, USA	100%
JZCP Loan Florida Corp	Delaware, USA	100%

Restrictions

The Company receives income in the form of interest from its investments in unconsolidated subsidiaries, and there are no significant restrictions on the transfer of funds from these entities to the Company.

Support

The Company has no contractual commitments to provide any financial or other support to its unconsolidated subsidiaries.

13. Cash and cash equivalents

	28/02/2015	28/02/2014
	US$ '000	US$ '000

Cash at bank	101,323	11,372

Cash and cash equivalents comprise bank balances and cash held by the Company including short-term bank deposits and investments in money market funds with an original maturity of three months or less

14. Other receivables

	28/02/2015	28/02/2014
	US$ '000	US$ '000

Accrued dividend income on listed investments	-	486
Other receivables and prepayments	33	31
	33	517

15. Other payables

	28/02/2015	28/02/2014
	US$ '000	US$ '000

Provision for tax on dividends received not withheld at source	1,004	1,004
Legal fees	250	250
Other expenses	143	187
Auditors' remuneration	89	147
Fees due to administrator	57	115
Custody fees	26	16
Structured forward currency contract	-	721
	1,568	2,440

16. Loans payable

	28/02/2015	28/02/2014
	US$ '000	US$ '000
Jefferies Finance, LLC	50,154	-
Deutsche Bank	39,960	17,839
	90,114	17,839

At 28 February 2015, JZCP had a loan facility with Deutsche Bank allowing the Company to draw down a total of US$52.0 million. At the year end the loan outstanding was US$40.0 million and a further US$12.0 million was available to draw down. The loan is secured by the Company's investment in corporate bonds and UK gilts, the total value of assets held as collateral at 28 February 2015 was US$53.0 million. The interest rate is charged at 30 day Libor + 75 basis points.

On 16 June 2014, JZCP entered in to a US$50.0 million loan agreement with Jefferies Finance, LLC. Proceeds of US$49.0 million were received after deduction of a 2% original issue discount. Loan interest is payable at 7%, after allowing for transaction costs and the initial discount the effective interest rate applied is 9.6%. The loan is due for repayment on 16 June 2015.

	28/02/2015
	US$ '000
Proceeds - 16 June 2014	49,000
Issue costs	(295)
Finance costs charged to Statement of Comprehensive Income	3,374
Interest paid	(1,925)
	50,154

The carrying value of the loans approximates to fair value and would be designated as level 3 in the fair value hierarchy.

17. Convertible Subordinated Unsecured Loan Stock ("CULS")

On 30 July 2014, JZCP issued £38,861,140 6% CULS. Within 12 months of the date of the CULS prospectus (21 July 2014) the Company at its discretion can issue a further tranche of up to £38,861,140 6% CULS subject to shareholder approval.

Holders of CULS may convert the whole or part (being an integral multiple of £10 in nominal amount) of their CULS into Ordinary Shares. Conversion Rights may be exercised at any time during the period from 30 September 2014 to 10 business days prior to the Maturity date being the 30 July 2021. The initial conversion price is £6.0373 per Ordinary Share, which shall be subject to adjustment to deal with certain events which would otherwise dilute the conversion of the CULS. These events include consolidation of Ordinary Shares, dividend payments made by the Company, issues of shares, rights, share-related securities and other securities by the Company and other events as detailed in the Prospectus.

CULS bear interest on their nominal amount at the rate of 6.00% per annum, payable semi-annually in arrears. During the year ending 28 February 2015 US$1,491,000 of interest payable to holders of CULS is shown as a finance cost in the Statement of Comprehensive Income.

During the year the Company incurred costs of US$1,367,000 in relation to the issue of the CULS.

	28/02/2015
	US$ '000
Issue of 3,886,114 CULS of £10 nominal value on 30 July 2014	65,687
Unrealised movement in fair value of CULS	1,876
Fair Value of CULS based on offer price at 28 February 2015	67,563

18. Zero Dividend Preference ("ZDP") shares

	28/02/2015	28/02/2014
	US$ '000	US$ '000

ZDP shares issued 22 June 2009
Amortised cost at 1 March	107,201	89,839
Finance costs allocated to statement of comprehensive income	8,390	7,489
Unrealised currency loss/(gain) to the Company on translation during the year	(8,778)	9,873
Amortised cost at year end	106,813	107,201

Total number of ZDP shares in issue	20,707,141	20,707,141

ZDP shares were issued on 22 June 2009 at a price of 215.80 pence and are designed to provide a pre-determined final capital entitlement of 369.84 pence on 22 June 2016 which ranks behind the Company's creditors but in priority to the capital entitlements of the Ordinary shares. The ZDP shares carry no entitlement to income and the whole of their return will therefore take the form of capital. The capital appreciation of approximately 8% per annum is calculated monthly. In certain circumstances, ZDP shares carry the right to vote at general meetings of the Company as detailed in the Company's Memorandum of Articles and Incorporation. Issue costs are deducted from the cost of the liability and allocated to the statement of comprehensive income over the life of the ZDP shares.

19. Share Capital Authorised Capital

Authorised Capital

Unlimited number of ordinary shares of no par value.

Ordinary shares - Issued Capital	28/02/2015	28/02/2014
	Number of shares	Number of shares
Total ordinary shares in issue	65,018,607	65,018,607

The Company's shares trade on the London Stock Exchange's Specialist Fund Market. The Company's shares were also quoted on the Channel Islands Securities Exchange (listing was cancelled from 22 December 2014).

The Ordinary shares carry a right to receive the profits of the Company available for distribution by dividend and resolved to be distributed by way of dividend to be made at such time as determined by the Directors.

In addition to receiving the income distributed, the Ordinary shares are entitled to the net assets of the Company on a winding up, after all liabilities have been settled and the entitlement of the ZDP shares has been met. In addition, holders of Ordinary shares will be entitled on a winding up to receive any accumulated but unpaid revenue reserves of the Company, subject to all creditors having been paid out in full but in priority to the entitlements of the ZDP shares. Any distribution of revenue reserves on a winding up is currently expected to be made by way of a final special dividend prior to the Company's eventual liquidation.

Holders of Ordinary shares have the rights to receive notice of, to attend and to vote at all general meetings of the Company.

20. Capital management

The Company's capital is represented by the Ordinary shares, ZDP shares and CULS.

As a result of the ability to issue, repurchase and resell shares, the capital of the Company can vary. The Company is not subject to externally imposed capital requirements and has no restrictions on the issue, repurchase or resale of its shares.

The Company's objectives for managing capital are:

• To invest the capital in investments meeting the description, risk exposure and expected return indicated in its prospectus.

• To achieve consistent returns while safeguarding capital by investing in a diversified portfolio.

• To maintain sufficient liquidity to meet the expenses of the Company.

• To maintain sufficient size to make the operation of the Company cost-efficient.

The Company continues to keep under review opportunities to buy back Ordinary or ZDP shares.

The Company monitors capital by analysing the NAV per share over time and tracking the discount to the Company's share price. It also monitors the performance of the existing investments to identify opportunities for exiting at a reasonable return to the shareholders.

21. Reserves

Capital raised on formation of Company

The Royal Court of Guernsey granted that on the admission of the Company's shares to the official list and to trading on the London Stock Exchange's market, the amount credited to the share premium account of the Company immediately following the admission of such shares be cancelled and any surplus thereby created accrue to the Company's distributable reserves to be used for all purposes permitted by the Companies Law, including the purchase of shares and the payment of dividends.

Capital raised on issue of new shares

Subsequent amounts raised by the issue of new shares, net of issue costs, are credited to the share capital account.

Distributable reserves

Subject to satisfaction of the solvency test, all of the Company's capital and reserves are distributable in accordance with The Companies (Guernsey) Law, 2008.

Summary of reserves attributable to Ordinary shareholders

	28/02/2015 US$ '000	28/02/2014 US$ '000
Distributable reserve	353,528	353,528
Share capital account	149,269	149,269
Capital reserve	115,196	76,788
Revenue reserve	87,517	86,871
	705,510	666,456

There was no movement in the Company's share capital account and distributable reserve for the years ended 28 February 2015 and 2014.

Capital reserve

All surpluses arising from the realisation or revaluation of investments and all other capital profits and accretions of capital are credited to the Capital reserve. Any loss arising from the realisation or revaluation of investments or any expense, loss or liability classified as capital in nature may be debited to the Capital reserve.

	Capital reserve

		Realised	Unrealised	Total
		28/02/2015	28/02/2015	28/02/2015
		US$ '000	US$ '000	US$ '000

At 1 March 2014		85,910	(9,122)	76,788
Net gains on investments		39,161	21,504	60,665
Net (losses)/gains on foreign currency exchange		(2,290)	8,068	5,778
Realised gains on investments held in escrow accounts		6,924	-	6,924
Expenses charged to capital		(25,048)	5,946	(19,102)
Net loss on CULS		-	(1,867)	(1,867)
Finance costs in respect of Zero Dividend Preference Shares		-	(13,990)	(13,990)
At 28 February 2015		104,657	10,539	(115,196)

	Capital reserve

		Realised	Unrealised	Total
		28/02/2014	28/02/2014	28/02/2014
		US$ '000	US$ '000	US$ '000

At 1 March 2013		92,834	(42,322)	50,512
Net gains on investments		4,291	51,117	55,408
Net gains/(losses) on foreign currency exchange		371	(10,428)	(10,057)
Realised gains on investments held in escrow accounts		2,233	-	2,233
Expenses charged to capital		(13,819)	-	(13,819)
Finance costs in respect of Zero Dividend Preference Shares		-	(7,489)	(7,489)
At 28 February 2015		85,910	(9,122)	76,788

Revenue reserve	28/02/2015	28/02/2014
	US$ '000	US$ '000

At 1 March	86,871	76,873
Profit for the year attributable to revenue	20,802	29,178
Dividend paid	(20,156)	(19,180)
At 28 February	87,517	86,871

22. Financial Instruments

Strategy in using financial instruments

The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

Categories of financial instruments

	Carrying Value 28/02/2015 US$ '000	Carrying Value 28/02/2014 US$ '000
Financial assets Fair value through profit or loss (FVTPL)	893,321	791,366
Loans and receivables	1,000	1,000
Other receivables	33	517
Cash and cash equivalents	101,323	11,372
Total assets	995,677	804,255
Financial liabilities Fair value through profit or loss (FVTPL) Convertible Unsecured Loan Stock ("CULS")	(67,563)	-
Valued at amortised cost
Loan payable	(90,114)	(17,839)
Zero Dividend Preference ("ZDP") shares	(106,813)	(107,201)
Trade payables	(25,677)	(12,759)
Total liabilities	(290,167)	(137,799)

Loans and receivables presented above represent mezzanine loans.

Financial liabilities measured at amortised cost presented above represent ZDP shares, loans payable and trade payables as detailed in the statement of financial position.

23. Financial risk management objectives and policies

Introduction

The Company's objective in managing risk is the creation and protection of shareholder value. Risk is inherent in the

Company's activities, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of risk management is critical to the Company's continuing profitability. The Company is exposed to market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk arising from the financial instruments it holds.

Risk management structure

The Company's Investment Adviser is responsible for identifying and controlling risks. The Directors supervise the Investment Adviser and are ultimately responsible for the overall risk management approach within the Company.

Risk mitigation

The Company's prospectus sets out its overall business strategies, its tolerance for risk and its general risk management philosophy. The Company may use derivatives and other instruments for trading purposes and in connection with its risk management activities.

Market risk

Market risk is defined as "the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in variables such as equity price, interest rate and foreign currency rate".

Market price risk

The Company's investments are subject to normal market fluctuations and there can be no assurance that no depreciation in the value of those investments will occur. There can be no guarantee that any realisation of an investment will be on a basis which necessarily reflects the Company's valuation of that investment for the purposes of calculating the Net Asset Value of the Shares.

Changes in industry conditions, competition, political and diplomatic events, tax, environmental and other laws and other factors, whether affecting the United States alone or other countries and regions more widely, can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.

The Company's market price risk is managed through diversification of the investment portfolio across various sectors. The Investment Adviser considers each investment purchase to ensure that an acquisition will enable the Company to continue to have an appropriate spread of market risk and that an appropriate risk/reward profile is maintained.

Equity price risk is the risk of unfavourable changes in the fair values of equity investments as a result of changes in the value of individual shares. The equity price risk exposure arose from the Company's investments in equity securities. The company had two listed equity investments valued which were disposed of during the year (valued at US$65,423,000 at 28 February 2014), which were listed on the NASDAQ, and NYSE. Disposal proceeds were US$58,047,000.

The Company does not generally invest in liquid equity investments and the previous portfolio of the listed equity investments resulted from the successful flotation of unlisted investments.

The table below analyses the Company's concentration of equity price risk by industrial distribution:

	Percentage of Equity Securities
Industry	Percentage of Equity Securities
	28/02/2015	28/02/2014
Property and Casualty Insurance	-	98.6%
Education and Training Services	-	1.4%
	-	-
	-	100.0%

The Company has certain financial instruments (common stock private investments) that are recorded at fair value using valuation techniques such as earnings multiple model derived either from acquisition/purchase information or observable market data from comparable companies. In some cases an adjustment is made to the acquisition/purchase multiple to reflect the underlying growth of the investment. These are adjusted to reflect counter party credit risk and limitations in the model.

Equity price risk (unlisted investments)

For the financial instruments whose fair value is estimated using valuation techniques with no market observable inputs, the net unrealised amount recorded in the Statement of Comprehensive Income in the year due to changes in the inputs amounts to gains of US$47,114,000 (28 February 2014: gains of US$47,604,000).

Sensitivity analysis relating to changes in unobservable inputs and the effect on the fair value of Equity and other unlisted investments is found in note 4.

Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. It has not been the Company's policy to use derivative instruments to mitigate interest rate risk, as the Investment Adviser believes that the effectiveness of such instruments does not justify the costs involved.


			Non interest
	Fixed rate	Floating rate	bearing	Total
	28/02/2015	28/02/2015	28/02/2015	28/02/2015
	US$ '000	US$ '000	US$ '000	US$ '000

Investments at fair value through profit or loss	129,028	176,117	588,176	893,321
Loans and receivables	1,000	-	-	1,000
Other receivables and prepayments	-	-	33	33
Cash and cash equivalents	-	101,323	-	101,323
Loan payable	(50,154)	(39,960)	-	(90,114)
Zero Dividend Preference shares	(106,813)	-	-	(106,813)
Convertible Unsecured Loan Stock	(67,563)	-	-	(67,563)
Other payables	-	-	(25,677)	(25,677)
Total net assets	(94,502)	237,480	562,532	705,510

			Non interest
	Fixed rate	Floating rate	bearing	Total
	28/02/2014	28/02/2014	28/02/2014	28/02/2014
	US$ '000	US$ '000	US$ '000	US$ '000

Investments at fair value through profit or loss	601,341	11,810	178,215	791,366
Loans and receivables	1,000	-	-	1,000
Other receivables and prepayments	-	-	517	517
Cash and cash equivalents	-	11,372	-	11,372
Loan payable	-	(17,839)	-	(17,839)
Zero Dividend Preference shares	(107,201)	-	-	(107,201)
Other payables	-	-	(12,759)	(12,759)

Total net assets	495,140	5,343	165,973	666,456

The income receivable by the Company is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates. However, whilst the income received from fixed rate securities is unaffected by changes in interest rates, the investments are subject to risk in the movement of fair value. The Investment Adviser considers the risk in the movement of fair value as a result of changes in the market interest rate for fixed rate securities to be insignificant, hence no sensitivity analysis is provided.

Of the money held on deposit, US$101,320,000 (28 February 2014: US$11,372,000) earns interest at variable rates and the income may rise and fall depending on changes to interest rates.

The sensitivity of the bank debt's market value is not influenced by a change in prevailing interest rates, because they are floating rate instruments. The market value of bank debt is influenced by factors such as the performance of the issuer and bank liquidity.

The data below demonstrates the sensitivity of the Company's profit/(loss) for the year to a reasonably possible change in interest rates, with all other variables held constant.

The sensitivity of the profit on interest received on cash and cash equivalents is the effect of the assumed changes in the daily interest rates throughout the year to 28 February 2015 and year ended 28 February 2014, on accounts where cash is held:

The sensitivity of the profit for the year on investment income received on bank debt is the effect of the assumed changes in the 3 month Libor on which the interest paid was derived.

Change in basis points Increase/(decrease)

Sensitivity of interest income Increase/(decrease) receivable on cash and cash equivalents

Sensitivity of investment income Increase/(decrease) receivable on bank debt

28/02/2015

28/02/2014

28/02/2015

28/02/2014

US$ '000

+25 / -25

45/(45)

106/(106)

29/(29)

30/(30)

+100 / -100

179/(179)

424/(130)

115/(115)

119/(119)

The following table analyses the Company's interest rate exposure in terms of the assets and liabilities maturity dates.

28/02/2015	0-3 months	4-12 months	1-2 years	2-5 years	More than 5 years	No maturity date	Non- interest bearing	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

Cash and cash equivalents	101,323	-	-	-	-	-	-	101,323
Financial asset at fair value through profit or loss	-	54,115	48,617	66,534	6,851	129,028	588,176	893,321
Loans and receivables	-	1,000	-	-	-	-	-	1,000
Loans payable	-	(39,960)	(50,154)		-	-	-	(90,114)
Zero Dividend Preference Shares	-	-	(106,813)	-	-	-	-	(106,813)
Convertible Unsecured Loan Stock	-	-	-	-	(67,563)	-	-	(67,563)
Other receivables / payables	-	-	-	-	-	-	(25,644)	(25,644)

	101,323	15,155	(108,350)	66,534	(60,712)	129,028	562,532	705,510

28/02/2014
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

Cash and cash equivalents	11,372	-	-	-	-	-	-	11,372
Financial asset at fair value through profit or loss	11,810	38,328	58,560	108,015	11,855	179,517	383,281	791,366
Loans and receivables	-	-	-	-	-	1,000	-	1,000
Loan payable	-	-	-	(17,839)	-	-		(17,839)
Zero Dividend Preference Shares	-	-	-	(107,201)	-	-	-	(107,201)
Other receivables / payables	-	-	-	-	-	-	(12,242)	(12,242)
	23,182	38,328	58,560	(17,025)	11,855	180,517	371,039	666,456

The Investment Adviser monitors the Company's overall interest sensitivity on a regular basis by reference to prevailing interest rates and the level of the Company's cash balances. The Company has not used derivatives to mitigate the impact of changes in interest rates.

Credit risk

The Company takes on exposures to credit risk, which is the risk that a counterparty to a financial instrument will cause a financial loss to the Company by failing to discharge an obligation. These credit exposures exist within investment classified as FVTPL, debt investments, loans and receivables and cash & cash equivalents.

They may arise, for example, from a decline in the financial condition of a counterparty, from entering into derivative contracts under which counterparties have obligations to make payments to the Company. As the Company's credit exposure increases, it could have an adverse effect on the Company's business and profitability if material unexpected credit losses were to occur.

In the event of any default on the Company's loan investments by a counterparty, the Company will bear a risk of loss of principal and accrued interest of the investment, which could have a material adverse effect on the Company's income and potential to pay dividends to Shareholders and to redeem the ZDP Shares.

In accordance with the Company's policy, the Investment Adviser monitors the Company's exposure to credit risk on a regular basis, by reviewing the financial statements, budgets and forecasts of underlying investee companies.

The table below analyses the Company's maximum exposure to credit risk. The maximum exposure is shown gross at the reporting date.

	Total 28/02/2015 US$ '000	Total 28/02/2014 US$ '000
Bank Debt	10,452	11,810
Mezzanine Debt	2,955	3,706
US Micro Cap Debt	297,340	341,560
European Micro Cap Debt	245,884	186,781
Cash and cash equivalents	101,323	11,372
Accrued dividend income	-	486
	657,954	555,715

A proportion of Micro Cap and Mezzanine debt held does not entitle the Company to interest payment in cash. This interest is capitalised (PIK) and as a result has substantial credit risk as there is no return to the Company until the loan plus all the interest, is repaid in full. All of the US$174,000 (28 February 2014: US$215,000) interest that was recognised in the Statement of Comprehensive Income on investments classified as loans and receivables during the year (28 February 2014: US$77,000) was receivable in the form of PIK Investments. There is no collateral held in respect of Mezzanine debt forming the loans and receivables.

An impairment review is performed by the Investment Adviser on an investment by investment basis every quarter.

During the year ended 28 February 2015 there was an increase in the allowance for impairment in respect of loans and receivables of US$121,000 (28 February 2014: increase in allowance of US$77,000). Total impairment of loans and receivables at 28 February 2015 was US$7,297,000 (28 February 2014: US$7,176,000)

Mezzanine investments typically have no or a limited trading market and therefore such investments will be illiquid, and as such the Company's ability to sell them in the short term may be limited.

The Investment Adviser closely monitors the creditworthiness of mezzanine debt counterparties and other loans and receivables and upon unfavourable change, may seek to terminate the agreement or to obtain collateral. The creditworthiness is monitored by the reviewing of quarterly covenant agreements and by the Investment Adviser having board representation on a significant number of these investees.

Bank debt designated at fair value through profit or loss

As at 28 February 2015 and 28 February 2014, the Company's only investment in Bank Debt was Dekko Technologies LLC, a private company whose debt was neither listed or credit rated.

The following table analyses the concentration of credit risk in the Company's debt portfolio by industrial distribution.

	28/02/2015	28/02/2014
	US$ '000	US$ '000
Healthcare Services & Equipment	25%	31%
Financial General	24%	14%
Private Security	13%	10%
Support Services	8%	9%
Electronic & Electrical Equipment	8%	6%
Industrial Engineering	8%	5%
Logistics	6%	4%
House, Leisure & Personal Goods	4%	4%
Document Processing	2%	2%
Telecom	2%	2%
Water Treatment / Infrastructure	0%	11%
Real Estate	0%	2%
	100%	100%
The table below analyses the Company's cash and cash equivalents by rating agency category.

	Credit ratings
	Standard &
	Poor's	Fitch LT Issuer
	Outlook	Default Rating	28/02/2015	28/02/2014
			US$ '000	US$ '000
Cash and cash equivalents
HSBC Bank USA NA	Negative (2014: Negative)	AA- (2014: AA-)	101,093	10,832
Deutsche Bank	Negative (2014: Negative)	A+ (2014: A+)	114	498
Northern Trust (Guernsey) Limited	Stable (2014: Stable)	AA- (2014: AA-)	116	42
			101,323	11,372

Bankruptcy or insolvency of the Banks may cause the Company's rights with respect to these assets to be delayed or limited. The Investment Adviser monitors risk by reviewing the credit rating of the Bank. If credit quality deteriorates, the Investment Adviser may move the holdings to another bank.

Liquidity risk

Liquidity risk is defined as the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected.

Many of the Company's investments are private equity, mezzanine loans and other unlisted investments. By their nature, these investments will generally be of a long term and illiquid nature and there may be no readily available market for sale of these investments.

The closed-ended nature of the Company enables the Investment Advisor to manage the risk of illiquid investments. The Directors review liquidity reports and consider how best to utilise the funds generated to maximise income.

The Company has outstanding investment commitments at the year end of US$18,499,000 (2014: US$73,995,000) see note 27.

The Company manages liquidity levels to ensure these obligations can be met.

The table below analyses the Company's financial liabilities into relevant maturity groups based on the remaining period at the reporting date to the contractual maturity date. The amounts in the table are not discounted to the net present value of the future cash outflows as it is not considered significant.

At 28 February 2015	Less than 1 month	2-12 months	1-5 years	>5 years	No stated maturity
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
Loans payable	-	90,114	-	-	-
Other payables	25,677	-	-	-	-
Zero Dividend Preference shares	-	-	118,352	-	-
Convertible Unsecured Loan Stock	-	-	-	60,056	-
	25,677	90,114	118,352	60,056	-

At 28 February 2014	Less than 1 month	2-12 months	1-5 years	>5 years	No stated maturity
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
Other payables	12,759	-	17,839	-	-
Zero Dividend Preference shares	-	-	128,342	-	-
	12,759	-	146,181	-	-

The Company has a capital requirement to pay ZDP shareholders a pre determined final capital entitlement of 369.84 pence on 22 June 2016. As at 28 February 2015 the liability to the ZDP shareholders amounted to US$106,813,000 (28 February 2014: US$107,201,000), as disclosed in note 16. Further, the Company has a capital requirement to redeemed CULS at their full nominal value, as described in note 17. As at 28 February 2015 the liability to the CULS holders amounted to US$67,563,000.

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Zero dividend preference shares are denominated in Sterling. The Company has an obligation to redeem the ZDP shareholders on 22 June 2016. The total liability on the redemption date, 22 June 2016, will be GBP76,583,969. CULS are denominated in Sterling. The Company has an obligation to redeem CULS holders on 30 July 2021. The total liability on the Maturity date being the 30 July 2021, will be GBP38,861,140. The Company currently has no hedge to manage this risk to Sterling.

The following table sets out the Company's exposure by currency to foreign currency risk.

At 28 February 2015	US dollar	Euro	Sterling	Total
	28/02/2015	28/02/2015	28/02/2015	28/02/2015
	US$ '000	US$ '000	US$ '000	US$ '000
Assets
Financial assets at fair value through profit or loss	811,976	41,865	39,480	893,321
Loans and receivables	1,000	-	-	1,000
Other receivables	-	-	33	33
Cash and cash equivalents	98,724	15	2,584	101,323
Total assets	911,700	41,880	42,097	995,677

Liabilities
Loans payable	90,114	-	-	90,114
Zero Dividend Preference shares	-	-	106,813	106,813
Convertible Unsecured Loan Stock	-	-	67,563	67,563
Other payables	25,677	-	-	25,677
Total liabilities	115,791	-	174,376	290,167

Net currency exposure	795,909	41,880	(132,279)	705,510



At 28 February 2014	US dollar	Euro	Sterling	Total
	28/02/2014	28/02/2014	28/02/2014	28/02/2014
	US$ '000	US$ '000	US$ '000	US$ '000
Assets
Financial assets at fair value through profit or loss	561,293	186,781	43,292	791,366
Loans and receivables	1,000	-	-	1,000
Other receivables	486	-	31	517
Cash and cash equivalents	9,584	923	865	11,372

	572,363	187,704	44,188	804,255
Liabilities
Loan payable	17,839	-	-	17,839
Zero Dividend Preference shares	-	-	107,201	107,201
Other payables	12,759	-	-	12,759
Bank overdraft

	30,598	-	107,201	137,799

Net currency exposure	541,765	187,704	(63,013)	666,456

24. Basic and diluted earnings per share

Basic and diluted earnings per share are calculated by dividing the earnings for the period by the weighted average number of Ordinary shares outstanding during the period.

For the years ended 28 February 2015 and 28 February 2014 the weighted average number of Ordinary shares (including Limited voting ordinary shares) outstanding during the year was 65,018,607.

The effect of the issue of the CULS was anti-dilutive to the earnings per share, therefore a diluted earnings per share is not presented for the period.

Potentially the earnings per share will be diluted by the weighted average number of Ordinary shares including an additional 6,346,841 of Ordinary shares that could be converted and earnings being increased/reduced by gains/losses on financial liabilities at fair value through profit or loss and finance costs relating to the CULS.

25. Net Asset Value Per Share

The net asset value per Ordinary share of US$10.85 (28 February 2014: US$10.25) is based on the net assets at the year end of US$705,510,000 (28 February 2014: US$666,454,000) and on 65,018,607 (28 February 2014: 65,018,607) Ordinary shares, being the number of Ordinary shares in issue at the year end.

26. Notes to the Statement of Cash Flows

Reconciliation of the profit for the year to net cash from operating activities

	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Profit for the year	59,210	55,454
Decrease in other receivables	484	35
Increase in other payables	12,918	1,206
Net movement in unrealised gains on investments	(36,404)	(54,935)
Net impairments on loans and receivables	121	77
Adjustment for foreign currency exchange (losses)/gains on ZDP Shares	(8,778)	9,873
Realised gain on investments	(24,270)	(476)
Increase in accrued interest on investments and adjustment for PIK interest	(26,744)	(26,019)
Finance costs	13,990	7,489
Net cash outflow from operating activities	(9,473)	(7,296)


Investment income received during the year	Year ended	Year ended
	28/02/2015	28/02/2014
	US$ '000	US$ '000

Interest on investments	8,302	10,215
Dividends from listed investments	311	2,804
Bank interest	53	130
	8,666	13,149

Purchases and sales of investments are considered to be operating activities of the Company, given its purpose, rather than investing activities. The cash flows arising from these activities are shown in the Cash Flow Statement.

27. Commitments

At 28 February 2015 JZCP had the following financial commitments outstanding in relation to fund investments:

	Year ended 28/02/2015 US$ '000	Year ended 28/02/2014 US$ '000
EuroMicrocap Fund 2010, LP (related party)	7,067	45,287
Acon AEP Co-Invest (Suzo), LP	4,491	4,491
Spruceview Capital Partners LLP	4,083	11,083
Grua, LP	2,085	2,085
Toro Finance (€8,000,000)	773	-
Igloo Products Corp	-	11,049
	18,499	73,995

In October 2013, the capital commitment of the EuroMicrocap Fund 2010, L.P was increased by US$75,000,000 to US$185,000,000. JZCP's 75% share of the total capital commitment as at 28 February 2015 was US$138,750,000 (28 February 2014: US$138,750,000) of which US$7,067,000 (28 February 2014: US$45,287,000) remained available for call at the year end.

28. Related Party Transactions

At 28 February 2015, JZCP has invested US$131,683,000 (28 February 2014: US$93,463,000) in the EuroMicrocap Fund 2010 LP ("EMC"). At 28 February 2015 the investment was valued at US$201,664,000 (28 February 2014: US$148,230,000). EMC is managed by JZ International LLC ("JZI"), an affiliate of JZAI, JZCP's investment manager. JZAI and JZI were each founded by David Zalaznick and Jay Jordan.

The Company has co-invested with Fund A, a Limited Partnership in a number of US micro cap buyouts. Fund A is managed by JZAI. At 28 February 2015, the total amount of these co-investments was US$94,216,000 (28 February 2014: US$161,675,296) of the total amount of the co-investment US$77,257,000 (28 February 2014: US$132,004,623) was invested by the Company and US$16,942,281 (28 February 2014: US$29,670,673) was invested by Fund A.

Jordan/Zalaznick Advisers, Inc. ("JZAI"), a US based company, provides advisory services to the board of Directors of the Company in exchange for management fees, paid quarterly. Fees paid by the Company to the Investment Adviser are detailed in note 10.

During the year ended 28 February 2015, the Company retained Ashurst LLP, a UK based law firm. David Macfarlane was a former Senior Corporate Partner at Ashurst until 2002.

The Directors' remuneration is disclosed in note 10.

29. Controlling Party

The issued shares of the Company are owned by a number of parties, and therefore, in the opinion of the Directors, there is no ultimate controlling party of the Company, as defined by IAS 24 - Related Party Disclosures.

30. Contingent assets

Amounts held in escrow accounts

Investments have been disposed by the Company, of which the consideration given included contractual terms requiring that a percentage was held in an escrow account pending resolution of any indemnifiable claims that may arise. At 28 February 2015 the Company has assessed that the fair value of these escrow accounts are nil (28 February 2014: nil) as it is not reasonably probable that they will be realised by the Company.

As at 28 February 2015, the Company had the following contingent assets held in escrow accounts which had not been recognised as assets of the Company:

Company	Amount in Escrow
	28/02/2015	28/02/2014
	US$'000	US$'000

Dental Services	2,809	-
Galson Laboratories	1,213	-
Amptek, Inc	1,386	-
ETX Holdings, Inc	157	185
H&S (BG Holdings, Inc)	10	-
Advanced Chemistry & Technology, Inc.	-	1,613
Wound Care Solutions, Llc	-	1,421
GHW (G&H Wire)	-	883
N&B Industries, Inc.	-	776
Dantom Systems, Inc.	-	15
	5,575	4,893

During the year ended 28 February 2015 the Company has identified a further US$3,041,000 of contingent assets held in escrow accounts and have written off US$843,000 previously recorded at 28 February 2014. Total net proceeds of US$6,952,000 (28 February 2014: US$2,233,000) were realised during the year and are recorded in the Statement of Comprehensive Income.

									US$'000
Escrows at 1 March 2014									4,893
Escows added on realisation of investments									5,408
Additional escrows recognised in year not reflected in opening position									3,041
Escrows recognised in opening position and written off in year									(843)
Escrow receipts during the year									(6,924)
Escrows at 28 February 2015									5,575

31. Dividends paid and proposed

In accordance with the Company's dividend policy, it is the Directors' intention for the year ending 28 February 2014 and thereafter to distribute approximately 3% of the Company's net assets in the form of dividends paid in US dollars (Shareholders can elect to receive dividends in Sterling). Prior to the new policy, the Directors have distributed substantially all of the Company's net cash income (after expenses) in the form of dividends.

A second interim dividend for the year ended 28 February 2014 of 16.0 cents per Ordinary share (total US$10,402,978) was paid on 6 June 2014.

For the year ended 28 February 2015 an interim dividend of 15.0 cents per Ordinary share (total US$9,752,791) was paid on 28 November 2014.

A second interim dividend for the year ended 28 February 2015 of 17.5 cents per Ordinary share (total US$11,378,256) will be paid on 12 June 2015.

32. Financial highlights

										28/02/2015
										US$

Net asset value per share at the beginning of the year										10.25

Performance during the year (per share):
Net investment income										0.41
Incentive fee										(0.29)
Net realised and unrealised gains										1.01
Finance costs										(0.22)
Dividends paid										(0.31)

Total return										0.60


Net asset value per share at the end of the year										10.85

Total Return										5.85%

Net investment income to average net assets excluding incentive fee										6.39%
Operating expenses to average net assets										(2.34%)
Incentive fees to average net assets										(2.89%)
Operating expenses to average net assets including incentive fee										(5.23%)

Finance costs										(2.12%)

33. US GAAP reconciliation

The Company's financial statements are prepared in accordance with IFRS, which in certain respects differ from the accounting principles generally accepted in the United States ("US GAAP"). It is the opinion of the Directors that these differences are not material and therefore no reconciliation between IFRS and US GAAP has been presented.

34. Subsequent events

These financial statements were approved for issuance by the Board on 11 May 2015. Subsequent events have been evaluated until this date.

A second interim dividend for the year ended 28 February 2015 of 17.5 cents per Ordinary share (total US$11,378,256) will be paid on 12 June 2015.

Company Advisers

Investment Adviser		US Bankers
The Investment Adviser to JZ Capital Partners Limited ("JZCP") is Jordan/Zalaznick Advisers, Inc., ("JZAI") a company beneficially owned by John (Jay) W Jordan II and David W Zalaznick. The company was formed for the purpose of advising the Board of JZCP on investments in leveraged securities, primarily related to private equity transactions. JZAI has offices in New York and Chicago.		HSBC Bank USA NA
		452 Fifth Avenue
		New York NY 10018

		(Also provides custodian services to JZ Capital Partners
		Limited under the terms of a Custody Agreement).



		Guernsey Bankers
		Northern Trust (Guernsey) Limited
Jordan/Zalaznick Advisers, Inc.		PO Box 71
9 West, 57th Street		Trafalgar Court
New York NY 10019		Les Banques
		St Peter Port
Registered Office		Guernsey GY1 3DA
PO Box 255
Trafalgar Court		Independent Auditor
Les Banques		Ernst & Young LLP
St Peter Port		PO Box 9
Guernsey GY1 3QL		Royal Chambers
		St Julian's Avenue
JZ Capital Partners Limited is registered in Guernsey		St Peter Port
Number 48761		Guernsey GY1 4AF

Administrator, Registrar and Secretary		UK Solicitors
Northern Trust International Fund Administration Services		Ashurst LLP
(Guernsey) Limited		Broadwalk House
PO Box 255		5 Appold Street
Trafalgar Court		London EC2A 2HA
Les Banques
St Peter Port		US Lawyers
Guernsey GY1 3QL		Monge Law Firm, PLLC
		333 West Trade Street
		Charlotte, NC 28202
UK Transfer and Paying Agent
Equiniti Limited		Mayer Brown LLP
Aspect House		214 North Tryon Street
Spencer Road		Suite 3800
Lancing		Charlotte NC 28202
West Sussex BN99 62X
		Winston & Strawn LLP
		35 West Wacker Drive
		Chicago IL 60601-9703

		Guernsey Lawyers
		Mourant Ozannes
		P.O Box 186
		1 Le Marchant Street
		St Peter Port
		Guernsey GY1 4HP

		Financial Adviser and Broker
		JP Morgan Cazenove Limited
		20 Moorgate
		London EC2R 6DA

Board of Directors

David Macfarlane (Chairman)1

Mr Macfarlane was appointed to the Board of JZCP in April 2008 as Chairman and a non-executive Director. Until 2002 he was a Senior Corporate Partner at Ashurst. He was a non-executive director of the Platinum Investment Trust Plc from 2002 until January 2007. He is also chairman of Rex Bionics plc.

Patrick Firth2

Mr Firth was appointed to the Board of JZCP in April 2008. He is also a director of a number of offshore funds and management companies, including DW Catalyst Fund (formerly "BH Credit Catalysts Limited"), ICG-Longbow Senior Secured UK Property Debt Investments Limited, Riverstone Energy Limited and Next Energy Solar Fund Limited. He is Chairman of GLI Finance Limited. He is a member of the Institute of Chartered Accountants in England and Wales and The Chartered Institute for Securities and Investment. He is a resident of Guernsey.

James Jordan

Mr. Jordan is a private investor who was appointed to the Board of JZCP in 2008. He is a director of the First Eagle family of mutual funds, and of Alpha Andromeda Investment Trust Company, S.A.. Until 30 June 2005, he was the managing director of Arnhold and S. Bleichroeder Advisers, LLC, a privately owned investment bank and asset management firm; and until 25 July 2013, he was a non-executive director of Leucadia National Corporation. He is a Trustee and Vice Chairman of the World Monuments Fund, and serves on the Chairman's Council of Conservation International.

Tanja Tibaldi

Ms Tibaldi was appointed to the Board of JZCP in April 2008. She was on the board of JZ Equity Partners Plc from January 2005 until the company's liquidation on 1 July 2008. She was managing director at Fairway Investment Partners, a Swiss asset management company where she was responsible for the Group's marketing and co-managed two fund of funds. Previously she was an executive at the Swiss Stock Exchange and currently serves on the board of several private companies.

Christopher Waldron

Mr Waldron was appointed to the Board of JZCP in October 2013. He is a director of a number of Guernsey funds and investment companies including GBD Limited, Crystal Amber Fund Limited, DW Catalyst Fund (formerly "BH Credit Catalysts Limited") and Ranger Direct Lending Fund plc. An experienced investment manager, he was Chief Executive Officer of the Edmond de Rothschild companies in Guernsey until January 2013 and he remains a consultant to the Edmond de Rothschild Group. He is a Fellow of the Chartered Institute for Securities and Investment and a Guernsey resident.

1Chairman of the nominations committee of which all Directors are members.

2Chairman of the audit committee of which all Directors are members.

Listing

JZCP Ordinary, Zero Dividend Preference shares and Convertible Loan Stock are listed on the Official List of the Financial Services Authority of the UK, and are admitted to trading on the London Stock Exchange Specialist fund market for listed securities. The ticker symbols are "JZCP", "JZCN" and "JZCC" respectively.

The prices of the Ordinary and Zero Dividend Preference shares are shown in the Financial Times under "Investment Companies - Ordinary Income Shares" and "Investment Companies - Zero Dividend Preference Shares" as "JZ Capital" respectively.

Securities and Exchange Commission ("SEC") Custody Rules

The Company has complied with the requirements of the SEC Custody Rules within these Financial Statements. These requirements include the Investment Portfolio falling within the remit of the annual audit, disclosure of the Company's Financial Highlights, as disclosed in note 32, and a reconciliation of the accounts prepared under IFRS to US GAAP, as discussed in note 33.

Financial diary

Annual General Meeting 19 June 2015

Interim report for the six months to 31 August 2015 27 October 2015

JZCP will be issuing an Interim Management Statement for the quarters ending 31 May 2015 and 30 November 2015. These Statements will be sent to the market via RNS within six weeks from the end of the appropriate quarter, and will be posted on JZCP's website at the same time, or soon thereafter.

Payment of dividends

Cash dividends will be sent by cheque to the first-named shareholder on the register of members at their registered address, together with a tax voucher. At shareholders' request, where they have elected to receive dividend proceeds in GBP Sterling, the dividend may instead be paid direct into the shareholder's bank account through the Bankers' Automated Clearing System. Payments will be paid in US dollars unless the shareholder elects to receive the dividend in Sterling. Existing elections can be changed by contacting the Company's Transfer and Paying Agent, Equiniti Limited on +44 (0) 121 415 7047.

Share dealing

Investors wishing to buy or sell shares in the Company may do so through a stockbroker. Most banks also offer this service.

Internet address

The Company: www.jzcp.com

Foreign Account Tax Compliance Act

The Company is registered (with a Global Intermediary Identification Number CAVBUD.999999.SL.831) under The Foreign Account Tax Compliance Act ("FATCA").

ISIN/SEDOL numbers

The ISIN code/SEDOL (Stock Exchange Daily Official List) numbers of the Company's Ordinary shares are GG00B403HK58/B403HK5, the numbers of the Zero Dividend Preference shares are GG00B40B7X85/B40D7X8 and the numbers or the Convertible Unsecured Loan Stock are GG00BP46PR08/BP46PR0.

Share register enquiries

The Company's UK Transfer and Paying Agent, Equiniti Limited, maintains the share registers. In event of queries regarding your holding, please contact the Registrar on 0871 384 2265, calls to this number cost 8p per minute from a BT landline, other providers' costs may vary. Lines are open 8.30 a.m. to 5.30 p.m., Monday to Friday, If calling from overseas +44 (0) 121 415 7047 or access their website at www.equiniti.com. Changes of name or address must be notified in writing to the Transfer and Paying Agent.

Nominee share code

Where notification has been provided in advance, the Company will arrange for copies of shareholder communications to be provided to the operators of nominee accounts. Nominee investors may attend general meetings and speak at meetings when invited to do so by the Chairman.

Documents available for inspection

The following documents will be available at the registered office of the Company during usual business hours on any weekday until the date of the Annual General Meeting and at the place of the meeting for a period of fifteen minutes prior to and during the meeting:

(a) the Register of Directors' Interests in the share capital of the Company;

(b) the Articles of Incorporation of the Company; and

Warning to shareholders - Boiler Room Scams

In recent years, many companies have become aware that their shareholders have been targeted by unauthorised overseas-based brokers selling what turn out to be non-existent or high risk shares, or expressing a wish to buy their shares. If you are offered, for example, unsolicited investment advice, discounted JZCP shares or a premium price for the JZCP shares you own, you should take these steps before handing over any money:

• Make sure you get the correct name of the person or organisation

• Check that they are properly authorised by the FCA before getting involved by visiting http://www.fca.org.uk/firms/systems-reporting/register

• Report the matter to the FCA by calling 0800 111 6768

• If the calls persist, hang up

• More detailed information on this can be found on the Money Advice Service website www.moneyadviceservice.org.uk

US Investors

General

The Company's Articles contain provisions allowing the Directors to decline to register a person as a holder of any class of ordinary shares or other securities of the Company or to require the transfer of those securities (including by way of a disposal effected by the Company itself) if they believe that the person:

(A) is a "US person" (as defined in Regulation S under the US Securities Act of 1933, as amended) and not a "qualified purchaser" (as defined in the US Investment Company Act of 1940, as amended);

(B) is a "Benefit Plan Investor" (as described under "Prohibition on Benefit Plan Investors and Restrictions on Non-ERISA Plan" below); or

(C) is, or is related to, a citizen or resident of the United States, a US partnership, a US corporation or a certain type of estate or trust and that ownership of any class of ordinary shares or any other equity securities of the Company by the person would materially increase the risk that the Company could be or become a "controlled foreign corporation" (as described under "US Tax Matters" below").

In addition, the Directors may require any holder of any class of ordinary shares or other securities of the Company to show to their satisfaction whether or not the holder is a person described in paragraphs (A), (B) or (C) above.

US Securities Laws

The Company (a) is not subject to the reporting requirements of the US Securities Exchange Act of 1934, as amended (the "Exchange Act") and does not intend to become subject to such reporting requirements and (b) is not registered as an investment company under the US Investment Company Act of 1940, as amended (the "1940 Act"), and investors in the Company are not subject to the protections provided by the 1940 Act.

Prohibition on Benefit Plan Investors and Restrictions on Non-ERISA Plans

Investment in the Company by "Benefit Plan Investors" is prohibited so that the assets of the Company will not be deemed to constitute "plan assets" of a "Benefit Plan Investor". The term "Benefit Plan Investor" shall have the meaning contained in Section 3(42) of the US Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and includes (a) an "employee benefit plan" as defined in Section 3(3) of ERISA that is subject to Part 4 of Title I of ERISA; (b) a "plan" described in Section 4975(e)(1) of the US Internal Revenue Code of 1986, as amended (the "Code"), that is subject to Section 4975 of the Code; and (c) an entity whose underlying assets include "plan assets" by reason of an employee benefit plan's or a plan's investment in such entity. For purposes of the foregoing, a "Benefit Plan Investor" does not include a governmental plan (as defined in Section 3(32) of ERISA), a non-US plan (as defined in Section 4(b)(4) of ERISA) or a church plan (as defined in Section 3(33) of ERISA) that has not elected to be subject to ERISA.

Each purchaser and subsequent transferee of any class of ordinary shares (or any other class of equity interest in the Company) will be required to represent, warrant and covenant, or will be deemed to have represented, warranted and covenanted that it is not, and is not acting on behalf of or with the assets of a, Benefit Plan Investor to acquire such ordinary shares (or any other class of equity interest in the Company).

Under the Articles, the directors have the power to require the sale or transfer of the Company's securities in order to avoid the assets of the Company being treated as "plan assets" for the purposes of ERISA.

The fiduciary provisions of pension codes applicable to governmental plans, non-US plans or other employee benefit plans or retirement arrangements that are not subject to ERISA (collectively, "Non-ERISA Plans") may impose limitations on investment in the Company. Fiduciaries of Non-ERISA Plans, in consultation with their advisors, should consider, to the extent applicable, the impact of such fiduciary rules and regulations on an investment in the Company. Among other considerations, the fiduciary of a Non-ERISA Plan should take into account the composition of the Non-ERISA Plan's portfolio with respect to diversification; the cash flow needs of the Non-ERISA Plan and the effects thereon of the illiquidity of the investment; the economic terms of the Non- ERISA Plan's investment in the Company; the Non-ERISA Plan's funding objectives; the tax effects of the investment and the tax and other risks associated with the investment; the fact that the investors in the Company are expected to consist of a diverse group of investors (including taxable, tax-exempt, domestic and foreign entities) and the fact that the management of the Company will not take the particular objectives of any investors or class of investors into account.

Non-ERISA Plan fiduciaries should also take into account the fact that, while the Company's board of directors and its investment advisor will have certain general fiduciary duties to the Company, the board and the investment advisor will not have any direct fiduciary relationship with or duty to any investor, either with respect to its investment in Shares or with respect to the management and investment of the assets of the Company. Similarly, it is intended that the assets of the Company will not be considered plan assets of any Non-ERISA Plan or be subject to any fiduciary or investment restrictions that may exist under pension codes specifically applicable to such Non-ERISA Plans. Each Non-ERISA Plan will be required to acknowledge and agree in connection with its investment in any securities to the foregoing status of the Company, the board and the investment advisor that there is no rule, regulation or requirement applicable to such investor that is inconsistent with the foregoing description of the Company, the board and the investment advisor.

Each purchaser or transferee that is a Non-ERISA Plan will be deemed to have represented, warranted and covenanted as follows:

(a) The Non-ERISA Plan is not a Benefit Plan Investor;

(b) The decision to commit assets of the Non-ERISA Plan for investment in the Company was made by fiduciaries independent of the Company, the Board, the Investment Advisor and any of their respective agents, representatives or affiliates, which fiduciaries (i) are duly authorized to make such investment decision and have not relied on any advice or recommendations of the Company, the Board, the Investment Advisor or any of their respective agents, representatives or affiliates and (ii) in consultation with their advisers, have carefully considered the impact of any applicable federal, state or local law on an investment in the Company;

(c) None of the Company, the Board, the Investment Advisor or any of their respective agents, representatives or affiliates has exercised any discretionary authority or control with respect to the Non-ERISA Plan's investment in the Company, nor has the Company, the Board, the Investment Advisor or any of their respective agents, representatives or affiliates rendered individualized investment advice to the Non-ERISA Plan based upon the Non-ERISA Plan's investment policies or strategies, overall portfolio composition or diversification with respect to its commitment to invest in the Company and the investment program thereunder; and

(d) It acknowledges and agrees that it is intended that the Company will not hold plan assets of the Non-ERISA Plan and that none of the Company, the Board, the Investment Advisor or any of their respective agents, representatives or affiliates will be acting as a fiduciary to the Non-ERISA Plan under any applicable federal, state or local law governing the Non-ERISA Plan, with respect to either (i) the Non-ERISA Plan's purchase or retention of its investment in the Company or (ii) the management or operation of the business or assets of the Company. It also confirms that there is no rule, regulation, or requirement applicable to such purchaser or transferee that is inconsistent with the foregoing description of the Company, the Board and the Investment Advisor.

US Tax Matters

This discussion does not constitute tax advice and is not intended to be a substitute for tax advice and planning. Prospective holders of the Company's securities must consult their own tax advisers concerning the US federal, state and local income tax and estate tax consequences in their particular situations of the acquisition, ownership and disposition of any of the Company's securities, as well as any consequences under the laws of any other taxing jurisdiction.

The Company's directors are entitled to decline to register a person as, or to require such person to cease to be, a holder of any class of ordinary shares or other equity securities of the Company if they believe that: such person is, or is related to, a citizen or resident of the United States, a US partnership, a US corporation or a certain type of estate or trust and that ownership of any class of ordinary shares or any other equity securities of the Company by such person would materially increase the risk that the Company could be or become a "controlled foreign corporation" (a "CFC").

In general, a foreign corporation is treated as a "CFC" only if its "US shareholders" collectively own more than 50% of the total combined voting power or total value of the corporation's stock. A "US shareholder" means any US person who owns, directly or indirectly through foreign entities, or is considered to own (by application of certain constructive ownership rules), 10% or more of the total combined voting power of all classes of stock of a foreign corporation, such as the Company.

There is a risk that the Company will decline to register a person as, or to require such person to cease to be, a holder of the Company's the Company if the Company could be or become a CFC. The Company's treatment as a CFC could have adverse tax consequences for US taxpayers.

The Company is expected to be treated as a "passive foreign investment company" ("PFIC"). The Company's treatment as a PFIC is likely to have adverse tax consequences for US taxpayers.

The taxation of a US taxpayer's investment in the Company's securities is highly complex. Prospective holders of the Company's securities must consult their own tax advisers concerning the US federal, state and local income tax and estate tax consequences in their particular situations of the acquisition, ownership and disposition of any of the Company's securities, as well as any consequences under the laws of any other taxing jurisdiction.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SFUFWFFISEII

Companies

JZ Capital Partners Ltd (JZCP)

Friday, 15th November 2024

COMPANIES COVERED:

TTG LAND SOLI

M&A activity sees TT Electronics share price jump after Volex goes public with unsolicited approach, Solid State slips off news of order delay and Land Securities tops FTSE-100 in wake of earnings update.

Full Archive

UK 100

Latest directors dealings

5 hours ago Urban Logistics Reit
6 hours ago Ocado Group
6 hours ago AJ Bell
6 hours ago Foresight Enterprise VCT
6 hours ago Mitie Group

All directors dealings today

Annual Financial Report

Company Advisers

Investment Adviser

US Bankers

HSBC Bank USA NA

452 Fifth Avenue

New York NY 10018

(Also provides custodian services to JZ Capital Partners

Limited under the terms of a Custody Agreement).

Guernsey Bankers

Northern Trust (Guernsey) Limited

Jordan/Zalaznick Advisers, Inc.

PO Box 71

9 West, 57th Street

Trafalgar Court

New York NY 10019

Les Banques

St Peter Port

Registered Office

Guernsey GY1 3DA

PO Box 255

Trafalgar Court

Independent Auditor

Les Banques

Ernst & Young LLP

St Peter Port

PO Box 9

Guernsey GY1 3QL

Royal Chambers

St Julian's Avenue

JZ Capital Partners Limited is registered in Guernsey

St Peter Port

Number 48761

Guernsey GY1 4AF

Administrator, Registrar and Secretary

UK Solicitors

Northern Trust International Fund Administration Services

Ashurst LLP

(Guernsey) Limited

Broadwalk House

PO Box 255

5 Appold Street

Trafalgar Court

London EC2A 2HA

Les Banques

St Peter Port

US Lawyers

Guernsey GY1 3QL

Monge Law Firm, PLLC

333 West Trade Street

Charlotte, NC 28202

UK Transfer and Paying Agent

Equiniti Limited

Mayer Brown LLP

Aspect House

214 North Tryon Street

Spencer Road

Suite 3800

Lancing

Charlotte NC 28202

West Sussex BN99 62X

Winston & Strawn LLP

35 West Wacker Drive

Chicago IL 60601-9703

Guernsey Lawyers

Mourant Ozannes

P.O Box 186

1 Le Marchant Street

St Peter Port