Annual Results for Period Ending 28 February 2011

RNS Number : 1630G

JZ Capital Partners Ltd

09 May 2011

JZ Capital Partners Limited

FULL YEAR RESULTS FOR THE 12 MONTHS ENDING 28 FEBRUARY 2011

9 May 2011

JZ Capital Partners Limited (JZCP.L), the closed ended investment company listed on the London Stock Exchange which principally invests in US and European micro cap buyouts, today announces its audited results for the twelve months ended 28 February 2011.

Highlights

· 30% NAV Total Return included:

o Net Asset Value ("NAV") of $581 million, an increase of 27% (2010: $457m)
NAV per share $8.93 (2010: $7.04)

o Distributions of $14 million or 21.5c per share during the period

· Total shareholder return of 57%

· Total dividends for the period of 24.5c per share (2010: 15.5c), including:

o Total Special dividends of 12c per share

· Further narrowing of the NAV discount to -26% (2010: -41%)

· $116 million invested in companies in the US and Europe, including $27 million in energy distribution and telecoms businesses in Spain

· $151 million of realisations including the sale of G&H Wire with an IRR of 71% and an 8.4x return on our original investment

· At the end of the period, the portfolio consisted of 41 companies across eight industries

· Exceptionally strong balance sheet with large cash reserves for further investment

· Outlook positive with a strong pipeline of investment opportunities

Commenting on the results, David Zalaznick, Founder of JZCP said:

"I am pleased to announce an excellent set of full year results for the Company, which has underlined the triple play we offer our shareholders. There has been strong NAV appreciation, a significant narrowing of the discount to NAV and finally an increase in distribution during the period."

"The US micro cap portfolio remains the main growth driver of the portfolio and we're delighted to have made our first investments in the European market. The outlook for this niche sector continues to provide us with confidence going forward and we enter the next twelve months with a strong balance sheet and a healthy pipeline of investment opportunities."

David Macfarlane, Chairman of JZCP, said:

"I'm delighted that the portfolio has continued to perform strongly, against a steadily improving macro-economic climate. The results underline the Company's disciplined investment strategy and renewed focus in providing top quartile returns for shareholders."

There will be an investor conference call at 9am (EDT)/ 2pm (BST) today to discuss JZCP's recent financial performance and portfolio developments. It can be accessed by dialling +1 212 444 0413 (US) or +44 (0)20 7806 1955 (UK) with the access code 9140854.

A playback facility will be available two hours after the conference call concludes. This facility may be accessed until 16 May 2011 by dialling +1 347 366 9565(US) or +44 (0)20 7111 1244 (UK). The code to access the playback facility is 9140854#. A recording of the investor call will also be available on JZCP's website within a few days of the call.

For further information:

Neil Doyle/ Ed Berry

Financial Dynamics

+44 (0)20 7269 7237 /7297

David Zalaznick

Jordan/Zalaznick Advisers, Inc.

+1 212 572 0800

About JZ Capital Partners

JZ Capital Partners Limited ("JZCP") is a closed ended investment company listed on the London Stock Exchange that seeks to create a portfolio of investments in businesses in the United States and Europe, providing a superior overall return, comprised of a current yield and significant capital appreciation.

JZCP's present investment strategies include micro cap buyouts, mezzanine loans (sometimes with equity participations) and high yield securities, senior secured debt, and second lien loans and other debt and equity opportunities, including distressed debt and structured financings, derivatives and opportunistic purchase of publicly traded securities.

The Company has no direct employees. Its investment adviser, Jordan/Zalaznick Advisers, Inc ("JZAI") receives a monthly management fee and may also be entitled to a performance-related fee. JZCP has no ownership interest in JZAI and is administered by Butterfield Fulcrum Group (Guernsey).

Chairman's Statement

Performance

The year ended 28 February 2011 has seen JZCP make substantial progress. It has produced an excellent set of results and provided Shareholders with a total return (share price appreciation and reinvested dividends) of 57%.

Net Asset value ("NAV") at the year-end stood at US$581 million, or US$8.93 per share. NAV increased by 27% over the period and NAV total return, including the distributions paid during the year of US$14 million or 21.5c per share, amounted to 30%. Of the increase in NAV, US$0.50 is attributable to net realised investment gains, while US$1.30 was driven by net unrealised gains, particularly from the micro cap portfolio and the listed investments.

Reducing the discount to NAV has long been a priority for JZCP and a further narrowing of the discount to -26% (from -41%) as at 28 February 2011 is further testament to the hands-on effort that we devote to our portfolio.

This solid performance has been supported by a disciplined investment strategy, notably through the new verticals for strategic build-ups in the US and Europe and a steadily improving macro-economic climate. The Company is in good shape with a strong balance sheet and liquidity position.

We have been particularly pleased with both the level of investments and realisations across the micro cap portfolio, which continues to be the main growth driver of the Company.

Portfolio

The financial year saw the portfolio grow to 41 companies across eight industries. In May 2010 we announced that we had outlined five new vertical industries where we have appointed senior, highly experienced industry professionals to drive opportunities and provide hands on support to grow businesses.

In addition to our existing sectors, we see a number of real opportunities to make acquisitions of controlling stakes in these verticals, where we will target high margin, non-capital and non-technology intensive businesses that are scalable.

The verticals include the following highly fragmented industries; testing services, industrial services solutions, sensors solutions, specialty foods, and water treatment. We are excited about the management team we have built around these verticals and look forward to reporting our progress in each.

Acquisitions and investments in the year totalled US$116 million in 12 businesses.

European Micro cap

In 2010, our Shareholders also approved a plan to invest, over time, up to 20% of the JZCP portfolio in the European micro cap sector. This venture will apply our successful model of employing our proprietary network of intermediaries to deliver a good volume of high quality micro cap opportunities in Europe.

We aim to benefit from our European partner's expertise and network, diversify the risk of our portfolio, and benefit from the recovery of the European market.

Realisations

There have been a number of realisations during the period, in particular the sale of Apparel Ventures, one of the Company's legacy investments, and of G&H Wire. In the latter, we realised an IRR of 71% and an 8.4x return on our investment. In total, JZCP realised a total of US$151 million.

Macro-Economic Background

There was stronger growth in the US in 2010 following a weak 2009, which was particularly fragile in the first half. The improved performance was due to a combination of rising employment, low historic interest rates, QE measures, continued tax cuts, improved manufacturing performance, greater corporate earnings, and a more optimistic outlook among businesses and consumers.

The US performed positively with the S&P500 returning 15.1% and the Wilshire 5000 growing by 17.9%, reflecting the outperformance of small to mid-cap stocks. Stock indices worldwide - excluding those in the US - were up 13.2%, further underlining the relative strength of the US economy.

The portfolio has remained unaffected by the political unrest in the Middle East towards the end of the year. Europe had a difficult 2010, with the sovereign debt crisis showing few signs of abating. However, markets historically perform well in the three years following a recession, so we see opportunities for small to mid cap companies to outperform in Europe.

US M&A activity improved in the final three months of 2010, followed by a slight lull, which appears to be reversing as markets begin to pick up.

Distributions

The Directors declared and paid an Interim Dividend of 5 cents per share for the six months ended 31 August 2010, as well as paying a Special Dividend in respect of that period of 10 cents per share.

Net cash revenue for the period allows the Board to recommend a Final Dividend of 7.5 cents per share in respect of the year ended 28 February 2011. In addition, revenue that had previously been reported as non-cash which has now been converted to cash allows the Board to declare a second Special Dividend for the year of 2 cents per share.

Therefore, subject to shareholder approval of the proposed Final Dividend, the total distribution for the year will be 24.5 cents per share (15.5 cents for the year ended 28 February 2010). The rate of increase in total distributions cannot necessarily be maintained because the occurrence of circumstances that allow the declaration of Special Dividends is irregular but conditions that could allow further Special distributions are favourable.

Share Buybacks

The Directors continue to consider using the Company's share buy back facility on investment grounds but will maintain its focus on deploying capital in the micro cap sector. The Directors will not consider using the share buy back facility as a short term measure to narrow the discount to NAV.

Incentive Fee

It is the policy of the Directors to provide where appropriate for the capital and income incentive fees to which JZAI becomes entitled under the Advisory Agreement. At 28 February 2011 no provision was taken for the income incentive fee but a provision of US$2.093 million was accrued for the capital incentive fee.

Directors

At the forthcoming Annual General Meeting Tanja Tibaldi and Patrick Firth will each retire by rotation and will each offer themselves for re-election.

Outlook

We enter into the next twelve months with confidence. We are, well positioned to take advantage of further investment and realisation opportunities in the micro cap sector and have a renewed-focus on building on the last financial year's momentum and benefitting as the economy continues to emerge from a period of recession.

The Directors are encouraged by the pipeline of high quality potential investments in the US, particularly through the verticals, and also the quality of the existing and prospective investments in Europe.

David Macfarlane

Chairman

6 May 2011

Investment Adviser's Report

Dear Fellow Shareholders:

We are pleased to report that JZCP completed its fiscal year ending 28 February 2011 with strong results, posting year on year growth in Net Asset Value ("NAV") and distributions to shareholders. Our NAV was up 27%, from US$7.04 to US$8.93 per share and our dividends increased 58% from 15.5 cents to 24.5 cents. Combined with our discount narrowing by half and our stock appreciating by 51%, it was an excellent year.

Our NAV growth was driven by (i) two successful realizations, (ii) a significant increase in the value of our listed equities, and (iii) positive performance in our underlying investments. Since the fiscal year end, JZCP's NAV has continued to grow and liquidity has increased with the successful secondary public offering of our position in TAL International Group, Inc., a container leasing company. Our dividend growth was driven by realisations of the portfolio which resulted in cash payment of accrued income.

JZCP's total return to its shareholders for the 2011 fiscal year (stock appreciation plus dividends reinvested) was approximately 57%. As a result of our realisations, and even after making several of new investments, our liquidity continues to be very strong, with 47% of our assets held in either listed securities or cash, after paying record dividends.

	28/02/2011 US$'000	28/02/2010 US$'000

Investments	493,756	394,675
Cash and cash equivalents	172,267	134,867
Other net liabilities	(2,894)	(630)
Zero Dividend Preference shares	(82,341)	(71,399)

Net asset value	580,788	457,513

Number of Ordinary Shares (000's)	65,019	65,019
Net asset value per Ordinary Share	US$ 8.93	US$ 7.04
Market price per Share	US$ 6.64	US$ 4.16
NAV to market price discount	26%	41%

¹JZCP's closing share price at 28 February 2011 was GBP4.12 (28 February 2010: GBP2.73). These have been translated using the exchange rates at 28 February 2011 and 2010.

We are pleased to note that our stock performed well over the past year having appreciated 51%. In addition, the discount on our stock narrowed significantly; the discount was 66% at February '09, 41% at February '10 and 26% at February '11. Most significantly, when you net out balance sheet cash and liquid securities, our non-public portfolio of businesses trade at a 42% discount to NAV. To make the value proposition even more compelling, the Board values our private investments at under 7X EBITDA and applies a marketability discount that averages 22%.

Portfolio Summary

Below is a summary of our portfolio by asset category:

	28/02/2011 US$'000	28/02/2010 US$'000	Variance US$'000

Micro cap portfolio	263,500	171,903	91,597
Mezzanine investments	48,499	85,696	(37,197)
Legacy portfolio	42,620	31,845	10,775

Total private investments	354,619	289,444	65,175

Listed equity	105,016	69,642	35,374
Bank debt	34,121	35,589	(1,468)
Cash	172,267	134,867	37,400

Total listed investments (including cash)	311,404	240,098	71,306

Total investments (including cash)	666,023	529,542	136,481

Other current assets	464	682	(218)

Total assets	666,487	530,224	136,263

Micro cap Portfolio

We had significant activity in our US and European micro cap portfolio, investing US$146.3 million over the past year, (including the two months past the end of the fiscal year).

Significant New Investments

· We invested US$4.0 million in NAC Marketing Corp, the holding company for New Vitality, a leading direct-to-consumer vitamin and nutritional supplement business. We anticipate more opportunities to increase our investment in New Vitality as it identifies product line extensions and competitors to acquire in this high growth sector.

· Galson Labs is our first acquisition into our Specialty Testing Group (vertical); Galson is a full service provider in the fast growing industrial hygiene sector. JZCP made a US$5.2 million investment in a combination of debt and equity securities and owns 45% of the business.

· We bought two European businesses of approximately US$13.5 million each. Factor Energia is an energy distribution business in Spain, which resells electricity to smaller and medium size companies, a recently de-regulated part of the electric utility sector. The second acquisition, Xacom, is a telecom products business in Spain and Chile which will soon open in Mexico. Xacom provides large telecom companies a distribution channel by selling products to the end customer (B2B) combined with their expertise in technology and design. In addition, post period we purchased a 38% interest in Docout for US$16 million. Docout is a provider of digitalisation, document processing and storage services to financial institutions, utilities, telecoms and insurance companies in Spain.

· We invested US$22.1 million in Salter Laboratories, a co-investment with Roundtable Capital , a well known healthcare private equity group. Salter is a manufacturer and distributer of disposable products for respiratory and sleep apnea applications. JZCP invested US$6.0 million in a subordinated debt tranche, with the remaining portion representing approximately 19% of the company's stock.

· We made a US$1.9 million investment in Milestone Aviation, (a co-investment with Resolute Fund), as part of JZCP's US$10 million commitment to this helicopter leasing business. JZCP owns 2.8% of Milestone's stock.

We invested an additional US$7.8 million into Dental Holdings, as part of a refinancing to pay-off bank debt; we plan on refinancing this tranche with third party debt once the company's earnings stabilise but the company has suffered recently so there is plenty of work to do.

· Finally, our first investment in our Specialty Sensor Group (vertical) is Nielsen Kellerman. JZCP invested US$5.8 million debt and equity securities and owns 35% of the business. Nielsen makes weather related sensors and measurement instruments.

Significant Realisations

· The sale of GHW Holdings, the parent of G & H Wire, earned JZCP a 8.4x multiple of capital invested, and 71% IRR on this investment. We realised more than US$33 million from this transaction, confirming our value proposition of buying a private business in a non-auction transaction, working with management to enhance growth and, ultimately, selling to a strategic buyer.

· We realised US$12.3 million from refinancing our share of Wound Care and SEC Holdings with third party bank debt.

· We also replaced US$10.9 million of JZCP-held subordinated debt in Dantom with a like amount of third party bank debt.

Other Significant Activities

Due primarily to operating performance increases, we have written up five investments:

Woundcare US$21.7 million

Dantom US$9.5 million

Nationwide US$2.1 million

Accutest US$3.0 million

Sechrist US$ 5.0 million

We have also written down our investment in Dental Holdings by US$13.5 million, recognising reduced financial performance due to micro-economic management challenges.

The effective multiple at which we are valuing the micro-cap portfolio increased from 6.0x trailing EBITDA to 6.9x. Note the average purchase multiple for this portfolio is 6.1x. We continue to leverage prudently, with only 1.1x EBITDA represented by debt senior to JZCP. Finally, we see no issues with any existing bank debt maturities.

Other sectors

Our Mezzanine portfolio has decreased as the capital markets have allowed existing borrowers to tap into less expensive debt markets. Specifically, Roofing Supply Group and PETCO refinanced US$18.2 million and US$19.0 million of our subordinated debt, respectively. The remaining three investments of any size (and value to our balance sheet) are Continental Cement, TTS and Haas TCM. They continue to pay as agreed with no foreseeable operational or financing issues.

Our bank debt portfolio is also decreasing as the facilities we purchased have either paid off at maturity or early, all times at par. The significant reduction comes from the sale of Harrington Holdings. Our US$14.8 million debt tranches were redeemed at par plus accrued interest. The remaining bank debt investments are spread across six entities. The first lien loans are trading in the upper nineties, with one at 92% of par. The significant second lien position we hold has rebounded well; it is in Kinetek, a Resolute sponsored transaction.

Our holdings in listed equities are in three companies in which we held significant equity positions, and they subsequently went public. The two largest holdings, TAL International (an international container leasing company) and Safety Insurance (a retail and commercial insurance business), have benefited from the recovering economy; our position in TAL has risen US$23 million, or 92% over the past year, while Safety Insurance rose US$13 million, or 30% over the same time frame.

Post year end, JZCP participated in the secondary sale of shares of TAL International Group, Inc. JZCP sold a total of 314,760 shares with net proceeds of US$10.8 million (after the underwriting discount).

At this price, JZCP earned a 29.7% IRR and 4.2x multiple of capital investment in its TAL investment. After the sale, JZCP owns 1.1 million shares of TAL.

Our legacy investments have been active as well:

We realised US$23.6 million from the sale of Apparel Ventures. This investment was made 16 years ago. Despite numerous ups and downs in the company's operations, we recovered two times our investment - the benefits of not being forced to sell at any given time.

A Gear Co. realisation of US$4.8 million was the final payment on a residual stock portion we held in one of our legacy transactions.

Significant New Investments

On the investment side, JZCP made a $8.1million add-on investment in Healthcare Holdings, a power wheelchair company. This investment in new senior subordinated notes is due to a very aggressive bank group insisting on reducing their exposure. All the shareholders including JZCP purchased the entire US$15.7 million bank loan for US$13.3 million, or 85% of face value. It will pay 12.5% cash interest on the notes' face value, creating a 15% return on the discounted amount. Despite a few micro-economic hiccups driven by Medicare changes, the company continues to perform admirably with EBITDA in the US$9 million range.

Other Significant Activities

One company of note is AC Tech, an aerospace specialty chemicals company which was spun out of Permatex, one of our legacy portfolio companies, when we sold it many years ago. The Company has signed several new contracts with large commercial and military aerospace OEM's and suppliers and has good visibility on 2011/12 earnings. Consequently, our Board has increased the valuation of JZCP's 43% stake in AC Tech by US$9.2 million. We look forward to AC Tech realising its potential after some challenging years.

New opportunities and current events

We continue to work with our five investment "verticals", coordinating with our seasoned executives to find appropriate businesses to acquire for our strategic build-up program. We have closed three businesses within these verticals with two profiled earlier in this report. After the February fiscal year end we acquired Nashville Chemical, a water treatment business, the first in our water treatment vertical and have a very active pipeline of future transactions.

The Euro-micro cap business in which JZCP made a €60 commitment is very active as well. We have also made three investments in this sector, the most recent being Docout S.L., a document storage and processing company that was bought in April 2011.

Principal risks and uncertainties

As a fund, the Company's risks are those associated with its 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 some market risk associated with the publicly listed equities. The notes to the financial statements describe the Company's risk management processes.

Outlook

As we continue to realise NAV growth from well performing portfolio companies and realisations, our expectation is for a superior return for our shareholders. We hope to affect the triple play we achieved this year- i.e. growing NAV, increased dividend and narrowing of the discount.

We are very excited about the next few years as momentum on building out our verticals in the U.S. and our micro cap strategy in Europe continues to grow.

As we approach JZCP's and its predecessor JZEP's 25th anniversary (Dec 2011), we are mindful of your support over many years and do not take it for granted. We would appreciate you contacting us if you have any investment ideas for JZCP, on either side of the Atlantic.

Yours faithfully,

David W. Zalaznick John W. Jordan II May 2011

Statement of Comprehensive Income

For the year ended 28 February 2011

		Year ended 28 February 2011			Year ended 28 February 2010
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	return	return		return	return
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Income
Net gain on investments at fair value through profit or loss	5	-	119,628	119,628	-	26,726	26,726
Net (impairments)/write back of impairments on loans and receivables	6	-	(2,019)	(2,019)	-	6,113	6,113
Realised gains on investments held in escrow accounts		-	2,553	2,553	-	-	-
Net foreign currency exchange (losses)/gains	7	-	(5,008)	(5,008)	-	3,839	3,839
Investment income	8	41,228	-	41,228	37,614	-	37,614
Bank and deposit interest	9	343	-	343	450	-	450
		41,571	115,154	156,725	38,064	36,678	74,742

Expenses
Investment Adviser's base fee	11	(8,667)	-	(8,667)	(4,866)	(2,620)	(7,486)
Investment Adviser's capital incentive fee	11	-	(2,093)	(2,093)	-	-	-
Administrative expenses	11	(2,094)	-	(2,094)	(2,398)	-	(2,398)
		(10,761)	(2,093)	(12,854)	(7,264)	(2,620)	(9,884)

Operating profit		30,810	113,061	143,871	30,800	34,058	64,858

Finance costs
Finance costs in respect of Zero Dividend Preference shares	10	-	(5,938)	(5,938)	-	(7,668)	(7,668)

Profit before taxation		30,810	107,123	137,933	30,800	26,390	57,190

Withholding Taxes	12	(690)	-	(690)	(231)	-	(231)

Profit for the year		30,120	107,123	137,243	30,569	26,390	56,959

Weighted average number of Ordinary shares in issue during year*	24			65,018,610				51,460,900

Basic and diluted profit per Ordinary share using the weighted average number of Ordinary shares in issue during the year		46.33c	164.76c	211.08c	59.40c	51.28c	110.68c

*Comparative figures for weighted average number of Ordinary shares in issue during the period and basic and diluted gain/(loss) per Ordinary share have been restated to reflect the one share for five consolidation on 22 June 2009 and the bonus element of new shares issued on 22 June 2009.

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

All net income is attributable to the Ordinary shareholders of the Company.

The Company's investment activities commenced on 1 July 2008 upon transfer of investments following the liquidation of JZEP.

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

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

Statement of Financial Position

As at 28 February 2011

		28 February	28 February
		2011	2010
	Notes	US$'000	US$'000
Assets
Investments at fair value through profit or loss	13	447,804	311,436
Investments classified as loans and receivables	13	45,952	83,239
Other receivables	15	464	682
Cash and cash equivalents	14	172,267	134,867
Total assets		666,487	530,224

Liabilities
Zero Dividend Preference shares	17	82,341	71,399
Other payables	16	3,358	1,312
Total liabilities		85,699	72,711

Equity	20
Share capital account		149,269	149,269
Distributable reserve		353,528	353,517
Capital reserve		21,933	(85,190)
Revenue reserve		56,058	39,917
Total equity		580,788	457,513

Total liabilities and equity		666,487	530,224

Number of Ordinary shares in issue at year end	18	65,018,610	65,018,610

Net asset value per Ordinary share	25	US$ 8.93	US$ 7.04

These audited financial statements were approved by the Board of Directors and authorised for issue on 6 May 2011. 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 2011

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

Balance at 1 March 2010		149,269	-	353,517	(20,617)	(64,573)	39,917	457,513
Profit for the year		-	-	-	25,316	81,807	30,120	137,243
Dividends paid	31	-	-	-	-	-	(13,979)	(13,979)
Increase in receivables relating to JZ Equity Partners Plc		-	-	11	-	-	-	11
		149,269	-	353,528	4,699	17,234	56,058	580,788

Comparative for the year ended 28 February 2010

Capital

Account

US$'000

Premium

Account

US$'000

Distributable

Reserve

US$'000

Capital realised

US$'000

Revenue

Unrealised

US$'000

Revenue

Reserve

US$'000

Total

US$'000

Balance at 1 March 2009

353,365

(5,758)

(105,822)

15,199

256,984

Profit/(loss) for the year

(14,859)

41,249

30,569

56,959

Transfer of share premium to distributable reserve

(353,365)

353,365

Issue of Ordinary shares

77,008

Issue of Limited Voting Ordinary shares

72,261

Dividend paid

(5,851)

Increase in receivables relating to JZ Equity Partners Plc

152

Balance at 28 February 2010

149,269

353,517

(20,617)

(64,573)

39,917

457,513

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

Statement of cash flows

For the year ended 28 February 2011

		1 March 2010 to 28 February 2011	1 March 2009 to 28 February 2010
	Notes	US$'000	US$'000
Operating activities
Net cash inflow from operating activities	26	15,056	10,047
Cash outflow for purchase of investments		(115,814)	(13,484)
Cash outflow for purchase of US treasury notes		(99,695)	-
Cash inflow from repayment and disposal of investments		150,694	4,999
Cash inflow from sale of US treasury notes		101,133	-
Net cash inflow before financing activities		51,374	1,562

Financing activity
Proceeds from issue of Ordinary shares		-	156,365
Issue costs relating to the issue of Ordinary shares		(297)	(6,808)
Net proceeds from issue of new Zero Dividend Preference shares		-	16,241
Redemption of old Zero Dividend Preference shares		-	(104,739)
Settlement of forward currency derivative contract		-	(26,923)
Receipt of liquidation funds from JZEP		302	292
Distributions paid to shareholders		(13,979)	(5,851)

Net cash (outflow)/inflow from financing activities		(13,974)	28,577

Increase in cash and cash equivalents		37,400	30,139

Reconciliation of net cash flow to movements in cash and cash equivalents
Cash and cash equivalents at 1 March		134,867	104,728
Increase in cash and cash equivalents as above		37,400	30,139

Cash and cash equivalents at year end	14	172,267	134,867

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 subject to the Companies (Guernsey) Law, 2008. The Company's Share Capital consists of Ordinary shares and Zero Dividend Preference ("ZDP") shares. The Ordinary shares and ZDP shares were admitted to the official list of the London Stock Exchange on 1 July 2008.

The Company was granted consent on 8 May 2008 by the Guernsey Financial Services Commission under The Control of Borrowing (Bailiwick of Guernsey) Ordinance,1959 to raise up to £300,000,000 by the issue of shares.

The Company was launched in connection with a scheme of reconstruction and voluntary winding up of JZ Equity Partners Plc ("JZEP") under section 110 of the Insolvency Act 1986. JZEP's assets, after providing for its liabilities were transferred in specie to the Company on 1 July 2008 and the Company issued to JZEP Shareholders (other than those who opted against the new scheme) one Ordinary Share for each JZEP Ordinary Share and one Zero Dividend Preference ("ZDP") Share for each JZEP ZDP Share that they held.

On 22 June 2009 a Placing and open offer of Ordinary Shares resulted in 117,037,749 Ordinary and 110,527,388 Limited Voting Ordinary shares being issued at the price of 42 pence. The Ordinary shares were subsequently consolidated on the basis that all holders of Ordinary shares will hold one Ordinary share for every five Ordinary Shares held immediately prior to the share consolidation. New ZDP shares were also issued following the redemption of the old ZDP shares (note 17).

Limited Voting Ordinary Shares ("LVO") were issued so that certain of the Company's existing Shareholders and certain new investors that are Qualifying US Persons could participate in the Ordinary Share Issue without causing the Company to be treated as a US domestic company for the purposes of US securities laws and/or a CFC for US tax purposes. Limited Voting Ordinary Shares are identical to, and rank pari passu in all respects with, the New Ordinary shares except that the Limited Voting Ordinary Shares will only carry a limited entitlement to vote in respect of the appointment or removal of Directors and will not carry any entitlement to vote in respect of certain other matters. The LVO shares are not listed and are not admitted to trade on or through the facilities of the London Stock Exchange.

In 2009, the Guernsey Financial Services Commission (GFSC) amended the rules in respect of closed ended funds formerly authorised under the Control of Borrowing (Bailiwick of Guernsey) Ordinances 1959 to 1989 to bring all such funds under the Protection of Investors (Bailiwick of Guernsey) Law 1987. This amendment required the closed ended funds to elect to be either a registered or authorised fund. The Company elected to remain an authorised fund.

The Company's corporate objective is to create a portfolio of investments in businesses primarily in the United States, providing a superior overall return comprised of a current yield and significant capital appreciation. The Company's present strategies include investments in micro-cap buyouts, mezzanine loans (sometimes with equity participations) and high yield securities, senior secured debt and second lien loans and other debt and equity opportunities, including distressed debt and structured financings, derivatives and opportunistic purchase of publicly traded securities.

The Company has no direct employees. For its services the Investment Adviser receives a management fee and may also be entitled to a performance-related fee (note 11). The Company has no ownership interest in the Investment Adviser. The Company is administered by Butterfield Fulcrum Group (Guernsey) Limited (note 11).

2. Significant Accounting Policies

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

Statement of Compliance

The financial statements have been prepared in accordance with 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, together with applicable legal and regulatory requirements of Guernsey Law and the Listing Rules of the London Stock Exchange.

Basis of Preparation

The financial statements have been prepared under the historical cost or amortised cost basis, modified by the revaluation of derivative financial instruments and certain 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.

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. In accordance with this requirement, the Company's policy is to prepare the financial statements on a going concern basis unless the Directors intend to liquidate the Company.

The Directors consider the Company has adequate financial resources 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.

Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial period except as follows:

The Company has adopted the following standards and amendments as of 1 March 2010:

IFRS 2 Share-based Payments - Group cash-settled share-based payment transactions. IFRS 2 has been amended to clarify the accounting for group cash-settled share-based payment transactions, where a

subsidiary receives goods or services from employees or suppliers but the parent or another entity in the group pays for those goods or services.

IFRS 3 (Revised 2008) Business Combinations and IAS 27 (Revised 2008) Consolidated and Separate Financial Statements. A change to the scope of IFRS 3 increases the number of transactions to which it must be applied, by including combinations of mutual entities and combinations without consideration (e.g., dual listed shares).

Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items. The final amendment addresses only the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item.

IFRIC Interpretation 17 Distributions of Non-Cash Assets to Owners. This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends.

Going Concern

The following standards, amendments and interpretations are not effective and are not expected to have material impact on the financial position or performance of the Company:

IFRS 2 Share-based Payments - Group cash-settled share-based payment transactions. IFRS 2 has been amended to clarify the accounting for group cash-settled share-based payment transactions, where a

subsidiary receives goods or services from employees or suppliers but the parent or another entity in the group pays for those goods or services.

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, and all values were presented to the nearest thousand except where otherwise stated.

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/(losses)'.

Derivatives

The Company may use derivatives for the purpose of efficient portfolio management, including for hedging purposes and potentially in order to take a synthetic exposure to an investment position in circumstances where the derivative contract is more efficient than a position would be in the underlying security. Open forward currency contracts are valued at the relevant exchange rate on that day.

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 Legacy portfolios as financial assets at fair value through profit or loss. These financial assets are designated by the Board of Directors as fair value through profit or loss at inception. Financial assets or financial liabilities held for trading are those acquired or incurred principally for the purposes of sale or repurchase in the short term. All derivatives are included in this category.

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. 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 liabilities at fair value through profit or loss are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

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.

(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 balance sheet date. The quoted market price used for financial assets held by the Company is the bid price.

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.

Fair value estimation methods for the other classes of financial assets and liabilities at fair value through profit or loss are presented in the valuation policy.

(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.

The Company assesses at each reporting date whether a financial asset or group of financial assets classified as 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 indicate 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.

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.

Other receivables

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

Other payables are not interest-bearing and are stated at their nominal value

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.

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.

Income

Interest income for all interest bearing financial instruments are 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 (pre 1 March 2010 the fees were allocated 65% to revenue and 35% to realised capital reserve). This change in policy was to the prior allocation method permitting the distribution of more cash than what was generated from investment income and thus distorting reported net revenue. The incentive fee is attributed to those parts to which it relates (see note 11). The Company will also provide 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.

Formation costs

Expenses directly attributable to the set up of the Company or the issue of share capital are charged against capital.

Finance costs

Finance costs are interest expenses in respect of the ZDP shares and are recognised in the statement of comprehensive income using the effective interest 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 idemnifiable claims have been resolved and none are expected in the future.

3. Segment Information

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

· Portfolio of Bank debt.

· Portfolio of Mezzanine investments,

· Portfolio of Micro Cap investments.

· Portfolio of Legacy investments.

· Portfolio of Listed 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 diversified portfolios.

There have been no changes in reportable segments during the course of the year. The segment information provided is also presented to the board of the Company.

For the year ended 28 February 2011

	Bank Debt	Mezzanine Portfolio	Micro Cap Portfolio	Legacy Portfolio	Listed Investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Interest revenue	2,907	8,832	20,692	3,005	-	35,436
Dividend revenue	-	-	-	-	4,093	4,093
Other revenue	77	1,198	-	138	-	1,413
Net gain on investments at fair value through profit or loss	17,319	(66)	44,213	21,350	35,374	118,190
Net write back of impairments on loans and receivables	-	(2,019)	-	-	-	(2,019)
Investment Adviser's base fee	(599)	(851)	(4,625)	(748)	(1,843)	(8,667)
Investment Adviser's capital incentive fee¹	1,518	2,255	(5,578)	-	-	(1,805)
Total segmental operating profit	21,222	9,349	54,702	23,745	37,624	146,641

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

For the year ended 28 February 2010

	Bank Debt	Mezzanine Portfolio	Micro Cap Portfolio	Legacy Portfolio	Listed Investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Interest revenue	2,942	12,641	15,709	2,387	-	33,679
Dividend revenue	-	-	-	-	1908	1,908
Other revenue	1	284	31	1711	-	2,027
Net gain on investments at fair value through profit or loss	6,854	821	(2,337)	(990)	22,378	26,726
Net write back of impairments on loans and receivables	-	6,113	-	-	-	6,113
Investment Adviser's base fee	(675)	(1,625)	(3,261)	(604)	(1,321)	(7,486)
Total segmental operating profit	9,122	18,234	10,142	2,504	22,965	62,967

At 28 February 2011

	Bank Debt	Mezzanine Portfolio	Micro Cap Portfolio	Legacy Portfolio	Listed Investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Investments at fair value through profit or loss	34,121	2,547	263,500	42,620	105,016	447,804
Investments classified as loans and receivables	-	45,952	-	-	-	45,952
Total segmental assets	34,121	48,499	263,500	42,620	105,016	493,756

At 28 February 2011

	Bank Debt	Mezzanine Portfolio	Micro Cap Portfolio	Legacy Portfolio	Listed Investments	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Investments at fair value through profit or loss	35,589	2,457	171,903	31,845	69,642	311,436
Investments classified as loans and receivables	-	83,239	-	-	-	83,239
Total segmental assets	35,589	85,696	171,903	31,845	69,642	394,675

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

The following table provides a reconciliation between net reportable segment income and operating profits.

	28.02. 2011	28.02.2010
	US$ '000	US$ '000

Net reportable segment profit	146,641	62,967
Realised gains on investments held in escrow accounts	2,553	-
Realised gains on Treasury notes	1,438	-
Interest on Treasury notes	286	-
Net foreign exchange (losses)/gains	(5,008)	3,839
Interest on cash	343	450
Expenses not attributable to segments	(2,382)	(2,398)
Operating profit	143,871	64,858

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 net total segment assets and liabilities and total assets and liabilities.

	28.02. 2011	28.02.2010
	US$ '000	US$ '000

Total segmental assets	493,756	394,675
Cash and cash equivalents	172,267	134,867
Other receivables and prepayments	464	682
Total assets	666,487	530,224

Total segmental liabilities	-	-
Other payables and accrued expenses	(85,699)	(72,711)
Total liabilities	(85,699)	(72,711)

Other Information

Geographical Segment

For the current year the Directors are of the opinion that the Company is now engaged in two geographical segments, as the Company now has an investment in the European Micro-Cap sector. However due to the current level of investment in this sector no geographical segment analysis is provided. For the current year, a majority of the investments are issued by the companies operating and generating revenue in the United States.

4. 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 and the valuation policy. The key source of estimation uncertainty is on the valuation of unquoted equities and equity-related securities.

Loans and receivables

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

5. Net gain on investments at fair value through profit or loss

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Net unrealised gain in year	90,189	25,958

Proceeds from investments repaid	216,757	3,509
Cost of investments repaid	(181,360)	(2,741)
Cost of investments written off	-	(423)
Unrealised (gain)/loss in prior year now realised	(5,958)	423
Net realised gain in year	29,439	768

Net gain on investments in year	119,628	26,726

6. Net (impairments)/write back of impairments on loans and receivables

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Net write back of impairments/(impairments) on loans and receivables	(3,369)	6,113
Proceeds from investments repaid	35,052	85
Cost of investments repaid	(33,702)	(85)
Cost of investments written off	-	(14,553)
Unrealised loss in prior year now realised	-	14,553
Net realised gain	1,350	-

Net (impairments)/write back of impairments on loans and receivables	(2,019)	6,113

7. Net foreign currency exchange (losses)/gains

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Net gains on forward foreign exchange contract	-	18,443
Net losses on foreign currency translations	(5,008)	(14,604)
	(5,008)	3,839

8. Investment income

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Income from investments classified as FVTPL	32,421	24,689
Income from investments classified as loans and receivables	8,807	12,925
	41,228	37,614

Income for the year ended 28 February 2011

Preference Dividend Loan note Other Other

	Dividends US$ '000	PIK US$ '000	Cash US$ '000	PIK US$ '000	Cash US$ '000	Interest US$ '000	Income US$ '000	Total US$'000
1st and 2nd Lien bank debt		-	-	-	-	2,907	77	2,984
Mezzanine portfolio	-	25	-	433	8,374	-	1,198	10,030
Micro Cap portfolio	-	11,757	365	3,485	5,085	-	-	20,692
Legacy portfolio	-	73	-	2,798	134	-	138	3,143
Listed investments	4,093	-	-	-	-	-	-	4,093
Treasury notes	-	-	-	-	-	286	-	286
	4,093	11,855	365	6,716	13,593	3,193	1,413	41,228

Income for the year ended 28 February 2010

Preference Dividend Loan note Other Other

	Dividends US$ '000	PIK US$ '000	Cash US$ '000	PIK US$ '000	Cash US$ '000	Interest US$ '000	Income US$ '000	Total US$'000
1st and 2nd Lien bank debt	-	-	-	-	-	2,942	1	2,943
Mezzanine portfolio	-	7,425	6,194	-	6,447	-	284	12,925
Micro Cap portfolio	-	65	3,442	-	4,842	-	31	15,740
Legacy portfolio	-	-	2,220	-	102	-	1,711	4,098
Listed investments	1,908	-	-	-	-	-	-	1,908
	1,908	7,490	11,856	-	11,391	2,942	2,027	37,614

Interest on investments is shown net of a US$8,247,000 (year ended 28 February 2010: US$6,543,000) write down calculated in accordance with the Company's accounting and valuation policy.

9. Bank and deposit interest

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000
Other operating income arising on financial assets not at fair value through profit or loss:
Interest on short term fixed deposits	-	57
Bank interest	343	393
	343	450

10. Finance costs

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000
Finance costs arising on financial liabilities measured at amortised costs:
Finance costs on old Zero Dividend Preference shares redeemed on 22 June 2009	5,938	3,780
Finance costs on new Zero Dividend Preference shares issued on 22 June 2009	-	3,888
	5,938	7,668

The ZDP Shares have no right to any of the income available for distribution but have an entitlement, on a predetermined growth basis, to the available assets at any winding-up date prior to 22 June 2016. The original ZDP shares were redeemed at 215.80 pence on 22 June 2009. The new ZDP shares were issued at 215.80 pence on 22 June 2009 and will have a pre-determined final capital entitlement of 369.84 pence on 22 June 2016. The new ZDP shares, final capital entitlement is calculated using a rate equal to 8% return compounding on a monthly basis. Finance costs are allocated to the statement of comprehensive income using the effective interest rate method.

11. Investments

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Investment Adviser's base fee	8,667	7,486
Investment Adviser's capital incentive fee	2,093	-
	10,760	7,486
Administrative expenses:
Legal and professional fees	556	906
Other expenses	554	579
Directors' remuneration	380	325
Accounting, secretarial and administration fees	400	401
Auditors' remuneration	194	184
Custodian fees	10	3
Total expenses	2,094	2,398
	12,854	9,884

Directors fees

The Chairman is entitled to a fee of US$140,000 (US$85,000 pre 1 March 2010) per annum. Each of the other Directors are entitled to a fee of US$60,000 per annum. For the year ended 28 February 2011 total Directors' fees included in the statement of comprehensive income were US$380,000 (year ended 28 February 2010: US$325,000), of this amount US$63,000 was outstanding at the year end (28 February 2010:US$54,000) and included within Other Payables.

Investment Advisory and Performance fees

The Company entered into an investment advisory and management agreement with Jordan/Zalaznick Advisers, Inc (the "Investment Adviser") in May 2009.

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

The incentive fee has two parts. The first part is calculated by reference to the net investment income of the Company and is equal to up to 20 per cent. of such income, payable quarterly in arrears provided that the net investment income for the quarter exceeds 2 per cent of the average of the net asset value of the Company for that quarter and the preceding quarter (the "hurdle") (8 per cent. annualised). The fee is an amount equal to (a) 100 per cent of that proportion of the net investment income for the quarter that exceeds the hurdle, up to an amount equal to 25 per cent. of the hurdle, and (b) 20 per cent. of the net investment income of the Company above 125 per cent. of the hurdle.

The second part of the incentive fee is calculated by reference to the net realised capital gains of the Company and is equal to: (a) 20 per cent. of (x) the realised capital gains of the Company for each financial year less (y) all realised capital losses on Investments for the year less (b) the excess (for prior years since the Effective Date) (if any) of (i) the aggregate of all previous capital gains incentive fees paid by the Company to the Investment Adviser over (ii) 20 per cent. of (x) all realised capital gains of the Company less (y) all realised capital losses of the Company, payable annually in arrears. The Capital Gains Incentive is payable in arrears within 90 days of the fiscal year end.

For the year ended 28 February 2011 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$8,667,000 (28 February 2010: US$7,486,000) of this amount US$713,000 (28 February 2010: US$484,000) was outstanding at the year end and is included within Other Payables.

At 28 February 2011 a provision for a capital incentive fee of US$2,093,000 (28 February 2010:US$nil) was included, based on the net realised capital gains of the Company.

At 28 February 2011 no further provision was included for a capital incentive fee (28 February 2010:US$nil) based on net unrealised investment gains.

At 28 February 2011 and 28 February 2010 no provision was made for an income incentive fee.

Administration fees

Butterfield Fund Services (Guernsey) Limited was appointed on 12 May 2008 under an Administration, Secretarial and Registrar Agreement. Butterfield Fund Services and Fulcrum Group merged during September 2008 forming Butterfield Fulcrum Group (Guernsey) Limited (the "Administrator").

The Administrator is entitled to a quarterly fee of US$100,000 payable monthly (quarterly pre 1 October 2010) in arrears. Fees payable are subject to an annual fee review. For the year ended 28 February 2011 total expenses payable to the Administrator of US$400,000 (28 February 2010: US$401,000) were included in the statement of comprehensive income, of this amount US$33,000 (28 February 2010: US$67,000) was outstanding at the year end and is included within Other Payables.

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 2011 total expenses were included in the statement of comprehensive income of US$10,000 (28 February 2010 US$3,000) of which US$1,000 (28 February 2010:US$2,000) was outstanding at the year end and is included within Other Payables.

12. Taxation

For both 2011 and 2010 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 2011 the Company suffered withholding tax of US$690,000 (28 February 2010: US$231,000) on dividend income from listed investments,

13. Investments

Categories of financial instruments

	Listed	Unlisted	Carrying Value
	28.02.2011	28.02.2011	28.02.2011
	US$ '000	US$ '000	US$ '000

Fair value through profit or loss (FVTPL)	105,016	342,788	447,804
Loans and receivables	-	45,952	45,952
	105,016	388,740	493,756

	Listed	Unlisted	Carrying Value
	28.02.2010	28.02.2010	28.02.2010
	US$ '000	US$ '000	US$ '000

Fair value through profit or loss (FVTPL)	69,642	241,794	311,436
Loans and receivables	-	83,239	83,239
	69,642	325,033	394,675

14. Cash and cash equivalents

	28.02.2011	28.02.2010
	US$ '000	US$ '000

Cash at bank	172,267	134,867

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. The carrying value of these assets approximates to their fair value.

15. Other receivables

	28.02.2011	28.02.2010
	US$ '000	US$ '000

Accrued dividend income on listed investments	405	324
Other prepayments	31	29
Bank and deposit interest	28	38
Due from the liquidation of JZEP	-	291
	464	682

16. Other payables

	28.02.2011	28.02.2010
	US$ '000	US$ '000

Investment Adviser's fees	2,806	484
Legal fees	255	240
Other expenses	133	92
Auditors' remuneration	68	78
Directors' remuneration	63	54
Fees due to administrator	33	67
Costs relating to issue of shares	-	297
	3,358	1,312

17. Zero Dividend Preference ("ZDP") shares

Authorised Capital

Unlimited number of ZDP shares of no par value.

	28.02.2011	28.02.2010
ZDP shares redeemed 22 June 2009
Amortised cost at 1 March	-	137,858
Finance costs allocated to statement of comprehensive income	-	3,780
Redemption of ZDP shares - cash	-	(104,739)
Redemption of ZDP shares - rollover to new ZDP shares	-	(56,516)
Currency loss on redemption of ZDP shares	-	19,617
Attributable net assets at 28 February	-	-

ZDP shares redeemed 22 June 2009
Amortised cost at 1 March	71,399	-
Issued during year - cash received	-	16,590
Issued during year - rollover from old ZDP shares	-	56,516
Issue costs	-	(348)
Finance costs allocated to statement of comprehensive income	5,938	3,888
Unrealised currency gain on translation during the year	5,003	(5,247)
Attributable net assets at 28 February	82,340	71,399

Total number of ZDP shares in issue	20,707,141	20,707,141
Price per ZDP share US$	US$ 3.9892	US$ 3.4633
Price per ZDP share GBP	GBP 2.4549	GBP 2.2731

On 1 July 2008, a total of 45,662,313 ZDP shares were issued on a one-to-one basis to holders of old JZ Equity Partners Plc ZDP shares under the terms of the reconstruction scheme. Of these shares 29,654,417 were redeemed on 22 June 2009 at a price of 215.80 pence and 16,007,896 were rolled over in to new ZDP shares.

Further 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 new ZDP shares issued comprised 16,007,896 shares from the rollover of old ZDP shares and 4,699,245 which were issued for cash. They 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 will carry the right to vote at general meetings of the Company as detailed in the Company's Memorandum of Articles and Association. 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.

18. Share Capital

Authorised Capital

Unlimited number of ordinary shares of no par value.

Ordinary shares - Issued Capital

	28.02.2011	28.02.2011	28.02.2010	28.02.2010
	Number of shares	US$ '000	Number of shares	US$ '000

Balance at 1 March	42,913,132	-	97,527,916	-
Issued during period	-	-	117,037,749	-
Share consolidation 1 for 5	-	-	(171,652,533)	-
Total ordinary shares in issue	42,913,132	-	42,913,132	-

Limited Voting Ordinary shares - Issued Capital

	28.02.2011	28.02.2011	28/02/2010	28/02/2010
	Number of shares	US$ '000	Number of shares	US$ '000

Balance at 1 March	22,105,478	-	-	-
Issued during period	-	-	110,527,388	-
Share consolidation 1 for 5	-	-	(88,421,910)	-
Total limited voting ordinary shares in issue	22,105,478	-	22,105,478	-
Total shares in issue	65,018,610	-	65,018,610	-

The Company's Ordinary shares were listed on the London Stock Exchange on 1 July 2008 in connection with a scheme of reconstruction and voluntary winding up of JZ Equity Partners Plc ("JZEP") under section 110 of the Insolvency Act 1986 (UK law). JZEP's assets, after providing for its liabilities were transferred in specie to the Company and the Company issued to JZEP shareholders (other than those who opted against the new scheme) one Ordinary share for each JZEP Ordinary share that they held.

18. Share Capital

On 22 June 2009 a Placing and open offer of Ordinary Shares resulted in 117,037,749 Ordinary and 110,527,388 Limited Voting Ordinary shares being issued at the price of 42 pence. Both Ordinary and Limited Voting Ordinary shares were subsequently consolidated on the basis all holders of shares will hold one share for every five shares held immediately prior to the share consolidation.

Limited Voting Ordinary Shares ("LVO") were issued so that certain of the Company's existing Shareholders and certain US new investors could participate in the Ordinary Share Issue without causing the Company to be treated as a US domestic company for the purposes of US securities laws and/or a CFC for US tax purposes.

Limited Voting Ordinary Shares are identical to, and rank pari passu in all respects with, the New Ordinary shares except that the Limited Voting Ordinary Shares will only carry a limited entitlement to vote in respect of the appointment or removal of Directors and will not carry any entitlement to vote in respect of certain other matters. The LVO shares are not listed and are not admitted to trade on or through the facilities of the London Stock Exchange.

The Ordinary shares and LVO 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 and LVO 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 have been met. In addition, holders of Ordinary shares and LVO 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 shall have the rights to receive notice of, to attend and to vote at all general meeting of the Company.

Further issue of shares

Under the Articles, the Directors have the power to issue new shares on a non pre-emptive basis. The Directors have resolved, however, that new shares will not be issued at a discount to the prevailing Net Asset Value per Ordinary share other than where shareholders are permitted to participate in the issue pro rata to their existing holding in the Company and, therefore, will not be disadvantageous to existing shareholders. Future issues of shares will be carried out in accordance with the Listing Rules.

The Directors will consider issuing new shares at not less than the prevailing Net Asset Value per Ordinary share where there is a significant demand for further shares.

Purchase of own shares by the Company

It is the intention of the Directors to seek authority from shareholders on a regular basis to allow the Company to repurchase shares in the market to prevent the emergence of a significant discount on the Company's market price to the Company's Net Asset Value.

19. Capital management

The Company's capital is represented by the Ordinary shares and Zero Dividend Preference ("ZDP") shares.

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 Ordinary and Zero Dividend Preference 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, and to meet redemption requests as they arise.

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.

20. 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 a 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

	28.02.2011	28.02.2010
	US$ '000	US$ '000

Distributable reserve	353,528	353,517
Share capital account	149,269	149,269
Capital reserve	21,933	(85,190)
Revenue reserve	56,058	39,917
	580,788	457,513

Distributable reserve

	28.02.2011	28.02.2010
	US$ '000	US$ '000

At 1 March	353,517	-
Transfer from Share Premium	-	353,365
Increase in provisions/receivables relating to JZ Equity Partners Plc	11	152
At 28 February	353,528	353,517

Share capital account	28.02.2011	28.02.2010
	US$ '000	US$ '000

At 1 March	149,269	-
New Ordinary shares issued in year	-	80,419
Limited Voting Shares issued in year	-	75,946
Issue costs	-	(7,096)
At 28 February	149,269	149,269

Share premium account	28.02.2011	28.02.2010
	US$ '000	US$ '000

At 1 March	-	353,365
Transfer to distributable reserve	-	(353,365)
At 28 February	-	-

Capital reserve

All surpluses arising from the realisation or revaluation of investments and all other capital profits and accretions of capital shall be 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
	28/02/2011	28/02/2011	28/02/2011
	US$ '000	US$ '000	US$ '000

At 1 March 2010	(20,617)	(64,573)	(85,190)
Net gains on investments	30,789	86,820	117,609
Unrealised net foreign currency exchange losses	-	(5,013)	(5,013)
Realised gains on investments held in escrow accounts	2,553	-	2,553
Realised net foreign currency exchange losses	5	-	5
Expenses charged to capital	(2,093)	-	(2,093)
Finance costs in respect of Zero Dividend Preference shares	(5,938)	-	(5,938)
At 28 February 2011	4,699	17,234	21,933

	Capital reserve
	Realised	Unrealised	Total
	28/02/2010	28/02/2010	28/02/2010
	US$ '000	US$ '000	US$ '000

At 1 March 2009	(5,758)	(105,822)	(111,580)
Net gains on investments	768	32,071	32,839
Unrealised net foreign exchange losses	-	9,178	9,178
Realised net foreign currency exchange losses	(5,339)	-	(5,339)
Expenses charged to capital	(2,620)	-	(2,620)
Finance costs in respect of Zero Dividend Preference shares	(7,668)	-	(7,668)
At 28 February 2010	(20,617)	(64,573)	(85,190)

Revenue reserve	28.02.2011	28/02/2010
	US$ '000	US$ '000

At 1 March	39,917	15,199
Profit for the year attributable to revenue	30,120	30,569
Dividend paid	(13,979)	(5,851)
At 28 February	56,058	39,917

Categories of financial instruments

	Carrying Value	Carrying Value
	28.02.2011	28.02.2010
	US$ '000	US$ '000
Financial assets
Fair value through profit or loss (FVTPL)	447,804	311,436
Loans and receivables	45,952	83,239
Trade receivables	464	682
Cash and cash equivalents	172,267	134,867
	666,487	530,224
Financial liabilities
Valued at amortised cost
- Zero Dividend Preference ("ZDP") shares issued 22 June 2009	(82,341)	(71,399)
Trade payables	(3,358)	(1,312)
Total liabilities	(85,699)	(72,711)

Loans and receivables presented above represent mezzanine loans.

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

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the Financial Statements.

22. Financial risk and 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 (listed investments)

Equity price risk is the risk of unfavourable changes in the fair values of equity investments as the result of changes in the value of individual shares. The equity price risk exposure arises from the Company's investments in equity securities. The company has three equity investments valued at US$105,016,000 (28 February 2010: US$69,642,000) which are listed on the NASDAQ, and NYSE.

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

Management's best estimate of the effect on the net assets attributable to shareholders and on the profit for the year/period due to a reasonably possible change in equity indices, with all other variables held constant is indicated in the table below. In practice, the actual trading results may differ from the sensitivity analysis below and the difference could be material. An equivalent decrease in each of the indices shown below would have resulted in an equivalent, but opposite, impact.

Sensitivity analysis for change in value of listed equity resulting from increase/decrease in relevant indicies:

Markets	Change in Indices	Carrying Value of Listed Equities	Effect on the net assets attributable to shareholders
		28.02.2011	28.02.2011
		US$ '000	US$ '000

NYSE	10%	49,335	4,933
NASDAQ	10%	55,681	5,568
		105,016	10,501

Markets	Change in Indices	Carrying Value of Listed Equities	Effect on the net assets attributable to shareholders
		28.02.2010	28.02.2010
		US$ '000	US$ '000

NYSE	10%	26,782	2,678
NASDAQ	10%	42,860	4,286
		69,642	6,965

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

Industry	Percentage of Equity Securities
	28.02.2011	28.02.2010

Property and Casualty Insurance	53.0%	61.5%
Education and Training Services	1.2%	2.4%
Rental and Leasing Services	45.8%	36.1%
	100.0%	100.0%

The Company has certain financial instruments (common stock private investments) that are recorded at fair value using valuation techniques such as an EBITDA 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$20,876,000 (28 February 2010: US$1,082,000).

The table below analyses the Company's concentration of common stock private investments by industrial distribution and the effect on the net assets attributable to shareholders and on the increase/(decrease) in profit for the year due to a reasonably possible change in the value of EBITDA. In practice, the actual trading results may differ from the sensitivity analysis below and the difference could be material.

Industry	Carrying Value	Percentage of total common stock of private investments	Change in EBITDA	Effect on the net assets attributable to shareholders
	28.02.2011	28.02.2011		28.02.2011
		US$ '000		US$ '000

Business Services	9,500	29%	10% /-10%	3,300 / (3,300)
Specialized Equipment Manufacturers	9,400	29%	10% /-10%	1,500 / (1,500)
Chemical	9,400	29%	10% /-10%	1,000 / (1,000)
Pet Supplies	1,636	5%	10% /-10%	N/A
Roofing Supplies	700	2%	10% /-10%	460 / (460)
Industrial Investment Firms	1,101	3%	10% /-10%	N/A
Personal Care Products	400	1%	10% /-10%	N/A
Strategic Workforce Solutions	300	1%	10% /-10%	N/A
Other	359	1%	10% /-10%	N/A
	32,796	100%		6,260 / (6,260)

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.

The table below summarises the Company's exposure to interest rate risks:

	Fixed rate	Floating rate	Non interest bearing	Total
	28.02.2011	28.02.2011	28.02.2011	28.02.2011
	US$ '000	US$ '000	US$ '000	US$ '000

Investments at fair value through profit or loss	275,871	34,121	137,812	447,804
Loans and receivables	45,952	-	-	45,952
Other receivables and prepayments	-	-	464	464
Cash and cash equivalents	-	172,267	-	172,267
Zero Dividend Preference shares	(82,341)	-	-	(82,341)
Other payables	-	-	(3,358)	(3,358)
Total net assets	239,482	206,388	134,918	580,788

	Fixed rate	Floating rate	Non interest bearing	Total
	28.02.2010	28.02.2010	28.02.2010	28.02.2010
	US$ '000	US$ '000	US$ '000	US$ '000

Investments at fair value through profit or loss	173,463	35,589	102,384	311,436
Loans and receivables	83,239	-	-	83,239
Other receivables and prepayments	-	-	682	682
Cash and cash equivalents	-	134,867	-	134,867
Zero Dividend Preference shares	(71,399)	-	-	(71,399)
Other payables	-	-	(1,312)	(1,312)
Total net assets	185,303	170,456	101,754	457,513

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 rates 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$172,267,000 (28 February 2010: US$134,687,000) 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 2011 and year ended 28 February 2010, 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



		28.02.11 US$'000			28.02.10 US$'000		28.02.11 US$'000		28.02.10 US$'000
+25/-25	286 / (286)			312 / (265)		150 / (150)		153 / (153)
+100/-100	1,143 / (343)			1,005 / (461)		599 / (599)		614 / (614)

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

0-3 months

4-12 months

1-2 years

2-5 years

More than 5 years

No maturity date

Non- interest bearing

Total

28.02.11

US$ '000

Cash and cash equivalents

172,267

Financial asset at fair value through profit or loss

29,995

1,477

20,430

79,069

33,393

145,718

137,812

447,804

Loans and receivables

9,653

36,299

45,952

Zero Dividend Preference Shares

(82,341)

Other receivables / payables

(2,894)

202,262

1,477

29,993

115,368

(48,948)

145,718

134,918

580,788

28.02.10

US$ '000

Cash and cash equivalents

134,867

Financial asset at fair value through profit or loss

13,743

16,464

76,473

102,539

102,217

311,436

Loans and receivables

3,989

79,156

83,239

Zero Dividend Preference Shares

(71,399)

Other receivables / payables

(630)

134,867

17,732

16,464

155,629

(71,399)

102,633

101,587

457,513

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 exposure 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 AFVPL, debt investments, loans and receivables, cash & cash equivalents and derivatives.

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	Total
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Bank Debt	34,121	35,589
Legacy Portfolio Debt	42,620	17,660
Mezzanine Debt	48,499	83,239
Micro Cap Debt	263,500	155,803
Cash and cash equivalents	172,267	134,867
Accrued dividend income	405	324
	561,412	427,482

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.

Of the US$8,807,000 (28 February 2010:US$12,640,000) interest receivable on investments classified as loans and receivables US$432,000 (28 February 2010:US$6,193,000) 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.

The movement in the allowance for impairment in respect of loans and receivables during the year was as follows:

	28.02.2011	28.02.2010
	US$ '000	US$ '000

Balance at beginning of year	(27,241)	(29,035)
Impairment on PIK valued at nil	(81)	(4,319)
(Impairment)/Impairment write back recognised	(3,288)	6,113
Balance at year end	(30,610)	(27,241)

A provision of US$880,000 (28 February 2010:US$4,394,000) was offset against total interest of US$9,687,000 (28 February 2010:$US$17,034,000) for the year on investments classified as loans and receivables.

The table below analyses the Company's investments that are either past due or impaired.

	Directors' valuation			Directors' valuation
	Impaired	Past due	Total	Impaired	Past due	Total
	28.02.2011	28.02.2011	28.02.2011	28.02.2010	28.02.2010	28.02.2010
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000
Mezzanine portfolio	1,868	-	1,868	4,250	-	4,250
Total	1,868	-	1,868	4,250	-	4,250

Mezzanine investments typically have no or a limited trading market and therefore such investments will be illiquid, therefore 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. The Company has also diversified its portfolio across different industry sectors.

Bank debt designated at fair value through profit or loss.

The Company has also invested in bank debt with investment grade credit ratings as rated by Standard and Poors and Moody's detailed below:

Credit rating - Bank debt First and Second Lien		Percentage of debt instruments
	28.02.2011	28.02.2010
BB	8%	-
B+	-	5%
B	3%	10%
B-	12%	-
BB-	-	20%
CCC+	-	35%
CCC	40%	-
No rating	37%	27%
	100%	100%

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

	28.02.2011	28.02.2010
	US$ '000	US$ '000
Healthcare Services & Equipment	25%	27%
Support Services	24%	25%
Financial General	16%	-
Construction & Materials	14%	26%
Industrial Engineering	12%	8%
House, Leisure & Personal Goods	4%	12%
Electronic & Electrical Equipment	4%	2%
Sensors & Instrumentation	1%	-
	100%	100%

The table below analyses the Company's cash and cash equivalents by rating agency category.

	Credit ratings
	Moody's Outlook	Fitch LT Issuer Default Rating	28.02.2011 US$ '000	28.02.2010 US$ '000
HSBC Bank USA NA	Negative	AA	120,330	134,588
Deutsche Bank	Stable	AA-	51,240	-
Jefferies & Company, Inc	Stable	BBB	405	-
Butterfield Bank (Guernsey) Limited	Negative	A-	292	279
			172,267	134,867

Bankruptcy or insolvency of the Banks may cause the Company's rights with respect to these assets to be delayed or limited. The Directors monitor 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.

There are partial restrictions on the saleability of the listed investments amounting to US$20,206,000 (28 February 2010: US$10,541,000) (being 42% of TAL International Group, Inc,).

The table below and overleaf 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 2011	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	3,358	-	-	-	-
Zero Dividend Preference shares	-	-	-	124,449	--
	3,358	-	-	124,449	-

At 28 February 2010	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	1,312.00	-	-	-	-
Zero Dividend Preference shares	-	-	-	116,683	--
	1,312.00	-	-	116,683	-

The Company has a capital requirement to pay ZDP shareholders a pre determined final capital entitlement of 365.28 pence on 22 June 2016. As at 28 February 2011 the liability to the ZDP shareholders amounted to US$82,341,000 (28 February 2010 US$71,399,000).

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. The Company currently has no hedge to manage this risk to Sterling.

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

At 28 February 2011	US dollar	Euro	GB sterling	Total
	28.02.2011	28.02.2011	28.02.2011	28.02.2011
	US$ '000	US$ '000	US$ '000	US$ '000
Assets
Financial asset at fair value through profit or loss	414,905	32,899	-	447,804
Loans and receivables	45,952	-	-	45,952
Other receivables	434	-	30	464
Cash and cash equivalents	-	-	103	172,267
Total assets	633,455	32,899	133	666,487

Liabilities
Zero Dividend Preference shares	-	-	82,341	82,341
Other payables	3,274	-	84	3,358
Total liabilities	3,274	-	82,425	85,699

Net currency exposure	630,181	32,899	(82,292)	580,788

At 28 February 2010	US dollar	GB sterling	Total
	28.02.2010	28.02.2010	28.02.2010
	US$ '000	US$ '000	US$ '000
Assets
Financial asset at fair value through profit or loss	311,436	-	311,436
Loans and receivables	83,239	-	83, 239
Other receivables	368	314	682
Cash and cash equivalents	134,867	-	134,867
Total assets	529,910	314	530,224

Liabilities
Zero Dividend Preference shares	-	71,399	71,399
Other payables	974	338	1,312
Total liabilities	974	71,737	72,711

Net currency exposure	528,936	(71,423)	457,513

23. Fair value of financial instruments

The Company adopted the amendment to IFRS 7, effective 1 January 2009. This requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The financial assets valued at fair value 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 2011	Level 1	Level 2	Level 3	Total
	US$ '000	US$ '000	US$ '000	US$ '000
Financial assets designated at fair value through profit or loss at inception:
Listed Securities	105,016	-	-	105, 016
Legacy portfolio	-	-	42,620	42,620
Bank debt	-	25,039	9,082	34,121
Mezzanine portfolio	-	-	2,547	2,547
Micro Cap portfolio	-	-	263,500	263,500
	105,016	25,039	317,749	447,804

Financial assets at 28 February 2010	Level 1	Level 2	Level 3	Total
	US$ '000	US$ '000	US$ '000	US$ '000
Financial assets designated at fair value through profit or loss at inception:
Listed Securities	69,642	-	-	69,642
Legacy portfolio	-	-	31,845	31,845
Bank debt	-	23,919	11,670	35,589
Mezzanine portfolio	-	-	2,547	2,547
Micro Cap portfolio	-	-	171,903	171,903
	69,642	23,919	217,875	311,436

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 values of Bank debt which is provided by a broker is classified as level 2. The fair value of bank debt which is derived from unobservable data is classified as level 3. JJKenny) or a vendor (e.g., Reuters/Bloomberg), or broker or custodian

The fair values of investments in the Micro Cap, Legacy and Mezzanine portfolios for which there are no active market, are calculated using a valuation model which is accepted in the industry. The model calculates the fair value by applying an appropriate multiple (based on comparable quoted companies, recent acquisition prices and quotes) to the Company's last twelve months EBITDA and deducting a market liquidity discount. The multiples used and marketability discount are classified as unobservable inputs therefore investments are classified as level 3.

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 2011 and 28 February 2010.

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 2011	Bank	Mezzanine	Micro Cap	Legacy
	Debt	Portfolio	Portfolio	Portfolio	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

At 1 March 2010	11,670	2,457	171,903	31,845	217,875
Purchases	-	131	102,349	13,334	115,814
PIK adjusted for fair value	92	20	13,514	2,557	16,183
Disposals at cost	(10,000)	-	(70,054)	(26,705)	(106,759)
Net gains and losses recognised in statement of comprehensive income	7,300	(66)	44,213	21,350	72,797
Movement in accrued interest recognised in statement of comprehensive income	20	5	1,575	239	1,839
At 28 February 2011	9,082	2,547	263,500	42,620	317,749

At 28 February 2010	Bank	Mezzanine	Micro Cap	Legacy
	Debt	Portfolio	Portfolio	Portfolio	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

At 1 March 2009	11,900	1,636	158,263	29,180	200,979
Purchases	1,393	-	7,104	2,157	10,654
PIK adjusted for fair value	-	-	10,674	1,498	12,172
Disposals -	-	-	(1,801)	-	(1,801)
Net gains and losses recognised in statement of comprehensive income	(1,623)	821	(2,337)	(990)	(4,129)
At 28 February 2010	11,670	2,457	171,903	31,845	217,875

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

At 28 February 2011	Bank	Mezzanine	Micro Cap	Legacy
	Debt	Portfolio	Portfolio	Portfolio	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

Interest and other revenue	1,283	25	20,692	3,143	25,143
Net gain on investments at fair value through profit or loss	7,300	-	44,213	21,350	72,863
	8,583	25	64,905	24,493	98,006

At 28 February 2010	Bank	Mezzanine	Micro Cap	Legacy
	Debt	Portfolio	Portfolio	Portfolio	Total
	US$ '000	US$ '000	US$ '000	US$ '000	US$ '000

Interest and other revenue	2,942	-	15,709	2,387	21,038
Net gain/(loss) on investments at fair value through profit or loss	(1,623)	821	(2,337)	(1,756)	(4,895)
	1,319	821	13,372	631	16,143

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$6,260,000 (28 February 2010: US$6,510,000) or increase the fair value by US$6,260,000 (28 February 2010:US$6,510,000).

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 2011 the ask price was £2.725 (28 February 2010: £2.515 per share the total fair value of the ZDP shares was US$91,693,809 (28 February 2010:US$79,346.741) which is US$9,087,250 higher (28 February 2010:US$7,632,010 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 2011 was US$45,952,000 (28 February 2010: US$83,239,000).

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

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 year ended 28 February 2011 the weighted average number of Ordinary shares (including Limited voting ordinary shares) outstanding during the period was 65,018,610.

The weighted average number for the comparative period ending 28 February 2010 was calculated as follows:

	28.02.2010
Qualifying shares at beginning of the period before the 1 for 5 share consolidation	325,093,053
Qualifying shares at beginning of the period after the 1 for 5 share consolidation and after time apportionment	50,928,276
Effect of the bonus element of the new shares issued	532,624
Weighted average number of Ordinary shares	51,460,900

The weighted average number of Ordinary shares is based on the average number of Ordinary shares in issue during that period. On 22 June 2009 a Placing and Open Offer of Ordinary Shares resulted in 117,037,749 Ordinary and 110,527,388 Limited Voting Ordinary shares being issued at the price of 42 pence. The Ordinary shares were subsequently consolidated on the basis all holders of Ordinary shares will hold one Ordinary share for every five Ordinary Shares held immediately prior to the share consolidation.

The weighted average number of shares for the period ended 28 February 2010 has been computed assuming the shares in issue for the period 1 March 2009 to 22 June 2009 had also been subject to the 1 for 5 share consolidation and adjusted by a 1.09 adjustment factor in respect of the bonus element of new shares issued*.

*Adjustment factor is calculated using the fair value (47.5 pence) per share at issue date as the numerator and the theoretical ex-right price (43.7 pence) per share as a denominator.

25. Net Asset Value Per Share

The net asset value per Ordinary share of US$8.93 (28 February 2010: US$7.04) is based on the net assets at the year end of US$580,788,000 (28 February 2010: US$457,513,000) and on 65,018,610 (28 February 2010: 65,018,610) Ordinary shares, being the number of Ordinary shares in issue at the year end.

26. Notes to the cash flow statement

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

	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Profit for the year	137,243	56,959
Increase in other payables	2,286	578
Decrease in receivables relating to operating activities	189	1,195
Net unrealised gains on investments	(86,820)	(32,071)
Net unrealised foreign currency exchange losses/(gains)	4,999	(3,839)
Realised gain on investments - financing activity	(30,789)	(768)
Realised loss/(gain) on foreign exchange translation	3	(317)
Interest on investments received as PIK adjusted for increase in accrued interest	(17,993)	(19,358)
Finance costs in respect of Zero Dividend Preference shares	5,938	7,668
Net cash from operating activities	15,056	10,047

Investment income received during the year	Year ended	Year ended
	28.02.2011	28.02.2010
	US$ '000	US$ '000

Interest on investments	17,648	15,633
Dividends from listed investments	3,322	2,705
Interest on short term fixed deposits	1,413	70
Bank interest	352	355
Interest on treasury notes	286	-
Other income	3	2,027
	23,024	20,790

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 and Contingent Liabilities

The Company has no financial commitments or contingent liabilities as at 28 February 2011.

28. Related Party Transactions

The remuneration of the Directors is disclosed in Note 10.

In 2007, JZEP invested US$ 250,000 in ETX Holdings, Inc. which was a spin off of Jordan Auto Aftermarket Holdings, Inc., a former co-investment with The Jordan Company. The investment was subsequently transferred to JZCP as part of the in specie transfer dated 1 July 2008. A further US$66,667 has subsequently been invested in ETX Holdings, Inc. During the year ended 28 February 2011 the Company did not receive any income from this investment. At 28 February 2011 the investment was valued at US$534,000 (28 February 2010: US$463,000)

Jay Jordan and David Zalaznick each purchased a further 9,020,099 Ordinary shares and 10,304,708 Limited Voting Ordinary shares on 22 June 2009. These shares were subsequently consolidated at 1 share for every 5. The share acquisition by David Zalaznick and Jay Jordan was approved by the Ordinary Shareholders at the EGM held on 18 June 2009.

In July 2010, JZCP made an initial investment of €11,100,000 in the EuroMicrocap Fund 2010 LP ("The Europe Fund"). At 28 February 2011 a total of €23,114,902 had been invested in the Europe Fund by JZCP. The Europe Fund will be 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. JZCP has an investment in JZI detailed below.

The Company has invested with The Resolute Fund, which is managed by the Jordan Company, a company in which David Zalaznick and Jay Jordan are Managing Principals. These investments include: Kinetek, Inc.; TAL International Group, Inc.; TTS, Llc and Woundcare Services, Inc. and represent an aggregate value of US$111,216,000 at 28 February 2011 (28 February 2010: US$76,688,000).

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 2011, the Company retained Ashurst LLP, a UK based law firm. David Macfarlane was a former Senior Corporate Partner at Ashurst until 2002.

Patrick Firth is a Director of the Company and was formerly (until 30 June 2009) Managing Director of Butterfield Fulcrum Group (Guernsey) Limited. Fees paid by the Company to the Administrator are detailed 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

Investments have been disposed of by JZEP and JZCP, 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 2011 the Company has assessed that the fair value of these investments is nil as it is not reasonably probable that these investments will be realised by the Company.

As at 28 February 2011, 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
	28.02.2011	28.02.2010
	US$ '000	US$ '000

GHW (G&H Wire)	3,031	-
Recycled Holdings Corporation	1,300	1,300
Apparel Ventures, Inc.	1,039	-
N&B Industries, Inc.	776	776
Gear for Sports	248	-
Lincoln Holdings, Inc.	-	995
	6,394	2,076

During the year US$2,553,000 (28 February 2010: nil) was realised relating to the Escrow account of Lincoln Holdings, Inc. (US$801,000) and Apparel Ventures, Inc. (US$1,752,000).

31. Dividends paid and proposed

In accordance with the Prospectus, it is the Directors' intention to distribute substantially all of the Company's net cash income (after expenses) in the form of dividends paid in US dollars (Shareholders can elect to receive dividends in Sterling).

A second interim dividend, relating to the year ended 28 February 2010, of 6.5c per Ordinary share (total US$4,226,210) was declared by the Board on 4 March 2010 and paid on 1 April 2010.

An interim dividend of 5.0c per Ordinary share (total US$3,250,930) and a special dividend of 10.0c per share (total US$6,501,861) was declared by the Board on 27 October 2010 and paid on 3 December 2010.

A final dividend of 7.5 cents per Ordinary share (total US$4,876,396) was proposed and a special dividend of 2.0 cents (total US$1,300,372) was declared by the Board on 6 May 2011.

32. Subsequent events

JZCP participated in the secondary sale of shares of TAL International Group, Inc. During April 2011, JZCP sold a total of 314,760 shares with net proceeds of US$10.8 million (after the underwriting discount). At this price, JZCP earned a 29.7% IRR and 4.2x multiple of capital investment in its TAL investment. After the sale, JZCP owns 1.1 million shares of TAL.

A final dividend of 7.5 cents per Ordinary share (total US$4,876,396) was proposed and a special dividend of 2.0 cents (total US$1,300,372) was declared by the Board on 6 May 2011.

Investment Review

Company	JZCP Book cost* US$'000		Historical Book cost** US$'000	Directors Valuation at 28 February 2011 US$'000	Carrying Value Including Accrued Interest 28 February 2011 US$'000	Percentage of portfolio %

Bank Debt
First Lien Portfolio
EMDEON BUSINESS SERVICES, LLC Healthcare service provider	2,533		2,697	2,677	2,677	0.6
INFONXX INC. Worldwide provider of directory assistance	2,747		2,880	2,747	2,747	0.6
KINETEK, INC.*** Manufacturer of electric motors and gearboxes	4,325		4,719	4,153	4,184	0.8
TOTES ISOTONER CORPORATION Leading designer and retailer of cold weather and rain products	492		689	685	693	0.1
WP EVENFLO HOLDINGS, INC. Manufacturer of children's products	804		938	877	881	0.2

Second Lien Portfolio
DEKKO TECHNOLOGIES, LLC Distributor of electrical sub-components	11,418		12,228	8,985	9,082	1.8
EMDEON BUSINESS SERVICES, LLC Healthcare service provider	465		500	496	496	-
KINETEK, INC.*** Manufacturer of electric motors and gearboxes	13,425		15,000	13,200	13,361	2.7
Total bank debt	36,209		39,651	33,820	34,121	6.8

Mezzanine Portfolio
BRAXTON-BRAGG CORPORATION Distributor of equipment to stone fabricators		1,324	1,324	-	-	-
CONTINENTAL CEMENT COMPANY, LLC Mines and processes limestone		28,082	28,082	28,082	28,541	5.8
GED HOLDINGS, INC. Manufacturer of windows		4,917	11,017	305	327	0.1
HAAS TCM GROUP, INC. Speciality chemical distribution		7,584	7,584	7,584	7,758	1.6
M/C COMMUNICATIONS, LLC Provision of marketing services to the medical profession		800	800	-	-	-
METPAR INDUSTRIES, INC. Manufacturer of restroom partitions		8,491	9,796	712	750	0.1
PETCO ANIMAL SUPPLIES, INC.**** Retailer of pet food, supplies and services		1,636	1,636	1,636	1,636	0.3
ROOFING SUPPLY GROUP, INC. Distributor of roofing products		1,426	1,426	851	856	0.2
TTS, LLC Provider of technical facilities for mechanical services		8,646	8,486	8,486	8,631	1.8

Total Mezzanine Portfolio		62,906	70,151	47,656	48,499	9.9


Micro Cap Portfolio
ACCUTEST HOLDINGS, INC. Provision of environmental testing laboratories to the US market	48,219	44,956	42,465	43,268	8.8
BG HOLDINGS, INC. Manufacturer of industrial gears	27,729	27,729	25,253	25,802	5.2
CHINA DENTAL HOLDINGS, INC. Potential acquiror of China-based laboratories	758	758	758	770	0.2
DANTOM SYSTEMS, INC. Outsourcing of debt collection	22,152	24,201	33,652	34,229	6.9
DENTAL SERVICES, INC. Manufacturer of dental services	38,872	34,549	22,942	23,629	4.8
IND SERVICES SOLUTIONS, INC. Potential acquiror of industrial equipment service businesses	1,054	1,054	1,054	1,070	0.2
EUROMICROCAP Fund 2010, LP Acquiror of Europe-based microcap companies	30,488	30,488	32,517	32,899	6.7
MILESTONE AVIATION GROUP, INC. Finance provider for helicopter and private jet owners	2,879	2,879	2,879	2,921	0.6
NATIONWIDE STUDIOS, INC. Processer of digital photos for preschoolers	17,919	18,904	7,057	7,231	1.5
NEW VITALITY HOLDINGS, INC. Direct-to-consumer provider of nutritional supplements and personal care products	4,243	4,243	4,243	4,299	0.9
SALTER LABS, INC. Developer and manufacturer of respiratory medical products and equipment for the homecare, hospital, and sleep disorder markets	22,437	22,437	21,183	21,580	4.4
SECHRIST INDUSTRIES, INC.*** Manufacturer of oxygen chambers and other respiratory products	13,181	3,704	13,081	13,129	2.7
SENSORS SOLUTIONS, INC. Potential acquiror of businesses affiliated with sensor devices or systems	6,166	6,166	6,166	6,276	1.3
TAP HOLDINGS, INC. Potential acquiror of food product manufacturers or distributors	654	654	654	664	0.1
TESTING SERVICES HOLDINGS Acquiror of laboratory testing businesses. Its first acquisition was Galson Holdings, Inc. a provider of industrial hygiene testing services	4,197	4,197	4,179	4,249	0.8
TRIWATER HOLDINGS CORPORATION Potential acquiror of water treatment businesses	365	365	365	370	0.1
WOUND CARE SOLUTIONS, LLC*** Chronic wound care treatment	37,870	55,697	41,114	41,114	8.3

Total Micro Cap Portfolio	279,183	282,981	259,562	263,500	53.5


Legacy Portfolio:
ADVANCED CHEMISTRY & TECHNOLOGY, INC. Manufacturer of aircraft sealants	4,331	4,331	12,624	12,676	2.6
ETX HOLDINGS, INC. Provider of services to the auto after sales market	534	534	534	543	0.1
HEALTHCARE PRODUCTS HOLDINGS, INC. Designer and manufacturer of motorised vehicles	38,144	49,845	26,323	27,323	5.5
JORDAN INDUSTRIES, INC. Conglomerate	-	21	-	-	-
JZ INTERNATIONAL LLC Fund of European LBO investments	1,719	759	1,720	1,726	0.3
NTT ACQUISITION CORP. Technical education and training	52	946	52	52	-
TIGER INFORMATION SYSTEMS, INC. Provider of temporary staff and computer training	300	400	300	300	0.1

Total Legacy Portfolio	45,080	56,836	41,553	42,620	8.6

Listed Investments
Equities
SAFETY INSURANCE GROUP, INC. Provider of automobile insurance	42,223	6,816	55,681	55,681	11.3
TAL INTERNATIONAL GROUP, INC.*** Lessor of intermodal shipping containers	31,959	13,798	48,110	48,110	9.7
UNIVERSAL TECHNICAL INSTITUTE, INC. Vocational training in the automotive and marine fields	835	15	1,225	1,225	0.2

Total Listed Investments	75,017	20,629	105,016	105,016	21.2

Total - Portfolio	498,395	470,248	487,111	493,756	100.0

Zero Dividend Preference shares				(82,341)

Cash and other net assets				169,373

Net assets attributable to Ordinary shares				580,788

* Book cost to JZCP equating to transfer value as at 1 July 2008 upon the liquidation of JZEP and adjusted for subsequent transactions.

**Original book cost incurred by JZEP/JZCP adjusted for subsequent transactions.

*** Invested in deals with the Resolute Fund - see note 28.

Mezzanine Portfolio includes common stock with a carrying value of US$2,391,000 and preferred shares with a carrying value of US$156,000 these investments are classified as Investments at fair value through profit or loss.

Legacy Portfolio - Investments not subject to capital incentive fee

Investment Review - Major Holdings

The investments listed represent the top ten investments in terms of valuation:

SAFETY INSURANCE GROUP, INC.

Headquarters: Boston, Massachusetts, USA

Sector: Property and Casualty Insurance

Safety Insurance Group, Inc., which is listed on NASDAQ, provides personal property and casualty insurance focused exclusively on the Massachusetts market. The Company's principal product line is private passenger automobile insurance. In addition, Safety Insurance offers commercial automobile, homeowners, dwelling fire, umbrella and business owning policies.

Valuation	JZCP Book cost* US$'000	Historical Book cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

Common stock with an effective equity interest of 7.3%	42,223	6,816	55,681

Year ended 31 December 2010 Sales			US$612.7m

Year ended 31 December 2010 Adjusted EBITDA			US$79.0m

TAL INTERNATIONAL GROUP, INC

Headquarters: Purchase, New York , USA

Sector: Industrial Transportation

TAL International Group, Inc., which is listed on the New York Stock Exchange (NYSE: TAL), is one of the world's largest lessors of intermodal shipping containers with a fleet of over 810,000 standard dry freight, refrigerated and special containers which are serviced out of 216 container depots in 39 countries. The company's customers include shipping companies, distribution companies, manufacturers and transport companies.

			Directors'
Valuation			Valuation at
	JZCP	Historical	28 February
	Book cost*	Book cost**	2011
	US$'000	US$'000	US$'000

Common stock	31,959	13,798	48,110


Year ended 31 December 2010 Sales			US$366.8m
Year ended 31 December 2010 Adjusted EBITDA			US$298.4m

ACCUTEST HOLDINGS, INC.

Headquarters: Datton, New Jersey, USA

Sector: Research Laboratories

Accutest Laboratories is a full service, independent testing laboratory successfully delivering legally defensive data for more than 50 years. Founded in 1956, they provide a full range of water, soil and air testing services to industrial, engineering/consulting and government clients throughout the United States.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

12.5% Senior Subordinated Notes	11,123	11,123	11,123
10% Preferred Stock	33,596	33,596	31,342
Common stock	3,500	39	-
	48,219	44,956	42,465

Year ended 31 December 2010 Sales			US$83.6m
Year ended 31 December 2010 Adjusted EBITDA			US$17.3m

WOUND CARE SOLUTIONS, LLC

Headquarters: Nashua, New Hampshire, USA

Sector: Healthcare Equipment and Services

WCS Clinics provides management services for the development, implementation and operation of Comprehensive Wound Healing Centres. These centres are designed as outpatient departments in hospitals and are committed to the successful treatment and prevention of chronic, non healing wounds.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

13% Preferred Stock	27,243	27,243	24,925
15% Preferred Stock	10,627	28,362	16,189
Common stock	-	92	-
	37,870	55,697	41,114

Year ended 31 December 2010 Sales			US$98.6m
Year ended 31 December 2010 Adjusted EBITDA			US$26.0m

DANTOM SYSTEMS, INC.

Headquarters: , Novi, MI,USA

Sector: Business Services

Dantom Systems, Inc. provides value-added business process outsourcing solutions to the accounts receivables management and revenue cycle management sectors with a focus on healthcare, financial services, and cable and utilities. Dantom Systems, Inc. provides customized data and transaction document processing solutions to over 900 customers, including collection agencies, hospitals, medical practices, cable companies and utilities.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

12.5% Senior Subordinated Notes	16,875	16,875	16,875
8% Preferred Stock	5,277	7,277	7,277
Common stock	-	49	9,500
	22,152	24,201	33,652

Year ended 31 December 2010 Sales			US$39.6m
Year ended 31 December 2010 Adjusted EBITDA			US$12.1m

Euro MicroCap Fund 2010, LP

Headquarters: London, UK

Sector: Acquiror of Europe-based microcap companies

Euro MicroCap Fund 2010, LP is a private equity fund built around the investment team at JZ International, the European private equity platform founded in 1999 with Jock Green-Armytage, the former chairman of JZEP. The fund's aim is to make investments in Europe-based micro-cap companies.

Valuation	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

8% notes	30,488	32,517
	30,488	32,517

CONTINENTAL CEMENT COMPANY, LLC

Headquarters: , Hannibal, Missouri, USA

Sector: Cement Manufacturer

Continental Cement Company mines, manufactures and processes limestone, clay and other materials into what is commonly known as Portland Cement. The Company operates from one production facility in Hannibal, Missouri, two distribution facilities, a clay mining operation and one sales office. It operates a newly completed state of the art plant in Hannibal, Missouri with 3,500 acres adjacent to the Mississippi River.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

10% Senior Subordinated Notes	28,082	28,082	28,082

Year ended 31 December 2010 Sales			US$80.1m
Year ended 31 December 2010 Adjusted EBITDA			US$24.2m

HEALTHCARE PRODUCTS HOLDINGS, INC.

Headquarters: Sarasota, Florida, USA

Sector: Healthcare Services & Equipment

Healthcare Products Holdings, Inc. operating subsidiary is Hoveround Corporation, a designer, manufacturer and distributor of motorised wheelchairs and other patented mobility vehicles. Hoveround Corporation utilizes a direct-to-the-customer marketing concept to sell and deliver its products.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

12.5% Second Lien Notes	13,317	13,317	13,317
12% Subordinated Notes	21,412	25,819	9,591
14% Subordinated Notes	3,415	3,415	3,415
6% Preferred Stock	-	7,056	-
Common stock with an equity interest of 2%	-	238	-
	38,144	49,845	26,323

Year ended 31 December 2010 Sales			US$91.1m
Year ended 31 December 2010 Adjusted EBITDA			US$9.0m

BG HOLDINGS INC.

Headquarters: Cleveland, Ohio, USA

Sector: Industrial Gears

BG Holdings Inc owns The Horsburgh & Scott Co ("H&S"). H&S is a privately held manufacturer of highly engineered industrial gears and mechanical gear drives, with a market leading position in the large-diameter gear market. Founded in 1886, the Company offers a wide array of large gear types and engineering services for new or replacement installations, as well as custom industrial gears, repair, spare parts, heat treatment and other technical solutions. The Company also provides field service for its customers. H&S' products are used in a variety of applications in steel, mining, sugar, aluminium, and power generation among other industries.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

12.5% Senior Subordinated Notes	5,153	5,153	5,153
Preferred Stock	22,535	22,535	20,100
Common stock with an equity interest of 38.0%	41	41	-
	27,729	27,729	25,253

Year ended 31 December 2010 Sales			US$52.6m
Year ended 31 December 2010 Adjusted EBITDA			US$8.2m

DENTAL HOLDINGS CORPORATION

Headquarters: Minneapolis, Minnesota, USA

Sector: Healthcare Equipment and Services

Dental Holdings Corporation is the parent of Dental Services Group ("DSG"). DSG is an operator of laboratories which manufacture oral appliances for dentists and dental centres. It runs both full service labs and "sale and delivery" sites in the United States, Canada and Mexico, making it one of the largest companies of its kind.

Valuation	JZCP Book cost* US$'000	Historical cost** US$'000	Directors' Valuation at 28 February 2011 US$'000

15% Senior Notes	8,573	8,573	8,573
15% Subordinated Notes	264	264	264
12.5% Senior Notes	8,154	8,154	8,154
8% Preferred Stock	9,230	9,979	5,951
10% Preferred Stock	6,851	7,541	-
Common stock with an equity interest of 37.9%	5,800	38	-
	38,872	34,549	22,942

Year ended 31 December 2010 Sales			US$91.1m
Year ended 31 December 2010 Adjusted EBITDA			US$9.0m