Jz Capital Regulatory News (JZCP)

JZ CAPITAL PARTNERS LTD - Annual Financial Report

PR Newswire

London, May 11

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

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

ANNUAL RESULTS FOR THE TWELVE-MONTH PERIOD ENDED 29 FEBRUARY 2016

12 May 2016

JZ Capital Partners Limited (LSE:JZCP.L or “JZCP”), the London listed fund that invests in high quality US and European micro-cap companies and US real estate, announces its annual results for the twelve-month period ended 29 February 2016.

Financial Highlights

· More than $1.1 billion of gross assets

o Absolute NAV growth of 20.7% to $851.7 million (FY 28/2/15: $705.5 million)

· Pre-dividend (pre-dilution) NAV per share growth of 6.3% to $11.46 (FY 28/2/15:$10.85)

· Pre-dividend (post-dilution) NAV per share fell 3.5% to $10.49 (FY 28/2/15:$10.85)

· Distribution of 33.5 cents per share (FY 28/2/15: 31 cents per share), implying a historic dividend yield of 6.1% (as at 29/2/16).

· Dividend of 15 cents per share declared for the six-month period ended 29 February 2016

Portfolio Highlights

· $272.7 million invested across the US micro-cap ($103.1 million), European micro-cap ($59.3 million), and real estate portfolios ($104.7 million) and other investments ($5.6 million)

· $205.1 million of proceeds from realisations, primarily through the sale of three US micro-cap companies and the secondary sale of JZCP’s stake in certain European portfolio companies

· Strategic importance of US real estate portfolio growing, now accounting for over 30% of the total portfolio

· At the end of the period, the total portfolio consisted of 69 micro-cap businesses across eight industries and 51 properties located across Brooklyn and Miami.

Strategic Initiatives

· Several strategic initiatives aimed at strengthening the balance sheet and increasing liquidity have been successfully implemented during the year, including:

o $116.4 million raised via the issuance of ordinary shares, and rollover of $61.1 million of 8% ZDPs due June 2016 into 4.75% ZDPs due October 2022

o Sufficient funds to repay the remaining $45.6 million of ZDPs due June 2016 (fully covered by an issue of UK gilts), deleveraging the Company’s balance sheet for future growth

o Successful completion of fundraising for JZI Fund III, L.P. (“Fund III”), the successor to EuroMicrocap Fund 2010, L.P. (“EMC 2010”), raising €400 million in the final close

o Following shareholder approval of a more diverse investment policy last year, the Association of Investment Companies has recognised our broader investment mandate, and reclassified JZCP into the recently established Flexible Investment Sector.

Outlook

· Enhanced growth prospects driven by completed strategic initiatives, healthy pipeline of attractive investment opportunities and expected active realisation activity during the coming year

· Well-positioned to tackle the ongoing discount to NAV through positive investment performance and further realisations.

David Zalaznick, JZCP’s Founder and Investment Adviser, said: “Following several strategic initiatives undertaken throughout the year, the Company’s balance sheet is in excellent condition. We are confident the year ahead will again provide a number of realisation opportunities, leaving us well positioned to take advantage of opportunities to expand our increasingly diversified portfolio.”

David Macfarlane, Chairman of JZCP, said: “We are delighted with the Company’s robust performance throughout 2015. It has been an active and successful twelve months of investment for the Company, an excellent year for realisations and the ZDP rollover has strengthened the Company’s balance sheet further.

“We look ahead to the next twelve months with continued confidence, building upon the Company’s strong track record of delivering healthy returns for our shareholders.”

Presentation details:

There will be an analyst and investor presentation to discuss JZCP’s recent financial performance and portfolio developments at 11:30 on 12 May 2016 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD. It can be accessed by dialing +44 (0)20 3140 8286 (UK) or +1 718 354 1157 (US) with the participant access code 1744208.

A playback facility will be available two hours after the conference call concludes. This facility may be accessed by dialing +44 (0)20 3427 0598 (UK) or +1 347 366 9565 (US)  with the participant access code 1744208.

For further information:

Ed Berry / James Cheston +44 (0) 20 3727 1046FTI Consulting

David Zalaznick +1 212 485 9410Jordan/Zalaznick Advisers, Inc.

Paul Le Ray +44 (0) 1481 745815JZ Capital Partners, Ltd.

About JZCP

JZCP is a London listed fund which invests in high quality US and European microcap companies and US real estate. Its objective is to achieve a superior overall return comprised of a current yield and significant capital appreciation. JZCP receives investment advice from Jordan/Zalaznick Advisers, Inc. (“JZAI”) which is led by David Zalaznick and Jay Jordan. They have worked together for 30 years and are supported by teams of investment professionals in New York, Chicago, London and Madrid. JZAI’s experts work with the existing management of microcap companies to help build better businesses, create value and deliver strong returns for investors. JZCP also invests in mezzanine loans, first and second lien investments and other publicly traded securities. For more information please visit www.jzcp.com.

The financial information set out below does not constitute the Company's statutory accounts for the year ended 29 February 2016. All figures are based on the audited financial statements for the year ended 29 February 2016.

The announcement is prepared on the same basis as will be set out in the audited financial statements for the year ended 29 February 2016.

The annual report and audited financial statements for the year ended 29 February 2016 will shortly be posted to shareholders and will also be available on the company website: www.jzcp.com.

Who We Are

Corporate Objective

“To create a portfolio of investments providing a superior overall return comprised of a current yield and significant capital appreciation.”

About Us

JZ Capital Partners Limited (“JZCP”) invests in high-quality US and European micro-cap companies, as well as real estate properties in the US. JZCP’s investment objective is to provide an overall total return comprised of dividend yield plus stock appreciation. The current Board policy is to pay a dividend equal to 3% of net asset value, paid through semi-annual instalments.

JZCP’s Investment Adviser is Jordan/Zalaznick Advisers, Inc. (“JZAI”) which was founded by David Zalaznick and Jay Jordan in 1986. JZAI has investment professionals in New York, Chicago, London and Madrid.

JZCP offers investors unique access to the US and European micro-cap buyout markets, providing a strong history of Net Asset Value ("NAV") and dividend growth. JZCP creates value by buying high quality privately owned micro-cap companies in non-auction transactions, providing capital and actively working with the existing management to grow the businesses before selling to strategic buyers.

In the US, JZCP has an innovative buy-and-build strategy to acquire controlling stakes in high margin micro-cap companies in fragmented industries such as industrial services, water treatment services and healthcare revenue cycle management.

In addition, JZCP has teamed up with a successful real estate team to invest indirectly in commercial and residential properties that are not “fully shopped”, in up-and-coming neighbourhoods. To date we have investments in Brooklyn, New York and Miami, Florida. Our team purchases these properties prudently, and develops them via renovation and/or building construction.

In Europe, the investment adviser’s team has worked together for over ten years and has a proprietary network of intermediaries to deliver high quality micro-cap buy-and-build opportunities throughout the continent.

JZCP is a closed-ended investment company trading on the Specialist Fund Market of the London Stock Exchange.

Our Key Investment Principles

1. A disciplined value oriented and value added approach to deliver superior returns on a risk-adjusted basis

2. A focus on high quality micro-cap businesses in the US and Europe and US real estate bought at reasonable prices in partnership with management

3. A strategy of working with our management partners at each portfolio company to enhance growth through operational focus and strategic acquisitions

4. Work with a proprietary network of intermediaries to find investment opportunities rather than participating in auctions

5. Maintain a diversified portfolio in terms of industry sector, geography and asset class

Chairman's Statement

I am pleased to report the results of JZ Capital Partners (“JZCP” or the “Company”) for the twelve month period ended 29 February 2016.

Performance

The Company’s excellent performance over the last twelve months is set against a backdrop of extreme global market volatility, led by concerns over the Chinese slowdown and steep declines in oil and commodity prices.

The first half of 2015 was characterised by a number of geopolitical events, notably the uncertainty surrounding the outcome of the UK general election, and unrest in the Eurozone as Greece flirted with the notion of “Grexit” amidst the migrant crisis. In the second half of the year risk concerns shifted focus to the Emerging Markets, as Chinese markets underwent significant declines and volatility took hold of the wider financial markets.

Throughout the year, monetary policy remained stable in the major developed economies, and interest rates have remained at historically low levels. However, in December the US Federal Reserve voted to raise interest rates for the first time since 2006, as the 0.25% rate in place since the height of the 2009 recession could no longer be justified against a backdrop of continuing improvements in employment and a likely rise in inflation.

In the UK and abroad, growing concerns and uncertainty around both the EU referendum in June 2016 and the US national elections in November threaten the progression of recently steady economic growth. Overall, many of the trends from 2015 have continued to persist into 2016, suggesting volatility looks likely to remain a theme for the remainder of the year.

Given this market environment, the Board is pleased to announce that JZCP has produced an excellent set of full year results, having achieved pre-dividend, pre-dilution NAV growth of 6.3%, increasing from $10.85 to $11.46 per share at the end of the period. Pre-dividend NAV (post-dilution from new share issuance), fell 3.5%, due to the issuance of new ordinary shares. 1

Strategic Initiatives

During the period, the Board undertook several strategic initiatives, which have enabled the Investment Adviser to take advantage of a wider range of investment opportunities, providing the flexibility to adapt as market opportunities warrant. This combined with a series of financings and realisations have significantly increased the liquidity in JZCP, whilst at the same time deleveraging the Company’s balance sheet and reserving sufficient capital to repay the remaining ZDPs due in June 2016.

Furthermore, our European team raised €400 million in the final close for JZI Fund III, L.P. (“Fund III”), the successor fund to the EuroMicrocap Fund 2010, LP ("EMC 2010"), demonstrating the confidence investors have in JZAI’s ability to source accretive long-term investments in the region. JZCP has committed €75 million to Fund III, which will enable the Company to continue to expand and diversify its investment portfolio in Western Europe (JZCP is not paying management fees on its commitment to Fund III). In addition, JZCP’s co-founders and investment advisers, David Zalaznick and Jay Jordan, along with the European management team have committed €25 million.

Following shareholder approval of a more diverse investment policy last year, the Board is delighted that the Association of Investment Companies has recognised our broader investment mandate and reclassified JZCP into the recently established Flexible Investment Sector.

Portfolio Update

Overview

It has been an active investment period for the company, putting $272.7 million to work across our core portfolios – US and European micro-cap and US real estate – whilst realisations generated $205.1 million. At the end of the period, the Company’s portfolio consisted of 69 micro-cap businesses across eight industries and 51 properties located in Brooklyn, New York and Miami, Florida. We continue to become more diversified geographically as we invest in more Western European countries.

Whilst the US and European micro-cap portfolios underpin the Company’s overall investment strategy, the shape of the portfolio is now more balanced by investment type, with US real estate becoming more strategically important, now accounting for over 30% of the total portfolio.

US and European Micro-cap

The Board is pleased with the positive performance of the US micro-cap portfolio, which has seen a valuation increase of 46 cents per share during the period, primarily due to increased earnings and numerous accretive acquisitions at our ISS vertical (6 cents), Healthcare Revenue Cycle Management vertical (7 cents) and Water vertical (5 cents).

JZCP continues to adopt its value-oriented investment approach targeting high quality micro-cap companies in Western Europe. As of 29 February 2016, Fund III held five investments and EMC 2010 held four investments across the UK, Italy, Germany, Spain and Scandinavia.

1 Calculated on a dividends re-invested basis

During the period, the Company invested in two new European platforms: Collingwood (through Fund III), a niche auto insurer in the UK; and MyLender (through Fund III), a small consumer lending platform in Finland.

Real Estate

JZCP has made significant progress in building a diversified portfolio of retail, office and residential properties in Brooklyn and Miami in partnership with an experienced team at RedSky Capital. As of 29 February 2016, JZCP had invested more than $250 million in 51 properties, all currently in various stages of development and redevelopment.

The real estate portfolio had a net increase of 62 cents, led by significant write-ups at our Bedford Avenue property (31 cents), Greenpoint development site (9 cents), new Bedford Avenue portfolio (8 cents), Fulton assemblage (5 cents), and greater Miami portfolio (7 cents). Increases in value at our real estate properties are based upon third-party appraisals.

Realisations

The Company generated realisations totalling $205.1 million primarily through the sale of three US micro-cap companies and the secondary sale of six of its European investments (held through EMC 2010) at NAV to a major financial institution for €96.3 million.

The Company realised its investment in Justrite Manufacturing, a manufacturer of industrial safety products, for $21.4 million. JZCP first invested in Justrite in June 2011, realising a gross multiple of capital invested of 3.5x and a gross IRR of 38.8%.

Distributions

In accordance with our policy of distributing 3.0% of NAV per annum in two instalments, the Directors declared a second dividend of 15 cents per share for the six-month period ended 29 February 2016, on the new enlarged share capital, compared to 17.5 cents for the six-month period ended 28 February 2015. Having already paid a first interim dividend of 16 cents, this implies an annualised yield as at 29 February 2016 of 5.6%.

Outlook

We are pleased with the strong performance of the underlying portfolio and it has been a busy year with the capital raise and ZDP rollover in addition to a series of major realisations in Europe and the final close of a new European fund. These events have further strengthened the Company’s balance sheet, leaving the Company well positioned to take advantage of opportunities to acquire high-quality companies and properties at attractive prices in the US and Europe.

We enter 2016 with continued optimism and the Board is confident that the Company is well-positioned to tackle the ongoing discount to NAV through positive investment performance and further successful realisations.

David MacfarlaneChairman11 May 2016

Investment Adviser’s Report

Dear Fellow Shareholders,

We are pleased to report that JZCP’s balance sheet is in excellent condition following a series of financings and realisations as well as new investments during the period. The absolute NAV has risen more than 20% from $705.5 million to $851.7 million during the period, after paying $21.8 million in dividends. Our absolute NAV (pre-dividend) has increased in 25 out the past 28 quarters. Most significantly, JZCP successfully raised and realized $479.0 million in the past year through the events detailed below, more than the market capitalization of the Company of $461.9 million as of 29 February 2016.

We have significantly increased the liquidity in JZCP in order to: (i) raise capital for new investments ahead of realisations, (ii) deleverage the Company’s balance sheet (reduce gearing) and (iii) have sufficient funds to repay the remaining Zero Dividend Preference Shares (“ZDPs”) due June 2016 (final liability of £32.9 million (approximately $45.6 million)). Our strong balance sheet will provide the foundations we need to grow JZCP’s NAV and dividend payment.

Towards that end, we raised approximately $116.4 million (net) via the issuance of 18,888,909 new ordinary shares and $61.1 million (net) from the rollover of a portion of our current 8% ZDPs into longer-dated ZDPs with a 4.75% yield due October 2022. Furthermore, we completed a secondary sale of JZCP’s stake in six EuroMicrocap Fund 2010, L.P. (“EMC 2010”) assets to a major financial institution for its stated NAV of €96.3 million, which provides strong validation of our net asset value. JZCP also closed a $100 million (gross) six-year term loan from Guggenheim Partners, which was partially used to pay down the entire Jefferies $50 million one-year loan facility.

(1)Net of issue costs

Additionally, our European team raised €400 million (final close) for JZI Fund III, L.P. (“Fund III”), the successor fund to EMC 2010, further demonstrating the continued investor appetite to access assets across the region. JZCP committed €75 million to Fund III, which will enable JZCP to continue to expand and diversify its investment portfolio in Western Europe. In addition, we (David Zalaznick, Jay Jordan and the European management team) committed €25 million to the new fund.

Pre-dividend NAV per share (pre-dilution from new share issuance) was up 6.3% for the year, from $10.85 to $11.46. Pre-dividend NAV per share (post-dilution from new share issuance), fell 3.5%, due to the aforementioned issuance of new ordinary shares. In conformance with our dividend policy of distributing 3% of NAV in semi-annual installments, we paid total dividends of 33.5 cents per share during the year versus 31 cents during the prior year. At our stock price as of 29 February 2016, the implied dividend yield was 6.1%.

JZCP experienced an active investment period over the past year, deploying $272.7 million in our US micro-cap, European micro-cap, real estate and other investments portfolios. We realised $205.1 million primarily through the sale of three US micro-cap companies and the secondary sale of JZCP’s position in certain EMC 2010 portfolio companies described above.

As of 29 February 2016, our US micro-cap portfolio consisted of 55 businesses across seven industries. This portfolio was valued at 8.1x EBITDA, after applying an average 24% marketability discount to public comparables. The average underlying leverage senior to JZCP’s position in our US micro-cap portfolio is 3.4x EBITDA. Consistent with our value-oriented investment strategy, we have acquired our current US micro-cap portfolio at an average 6.5x EBITDA. Additionally, in contrast to a very expensive US acquisition market, we paid 7.4x EBITDA on average for US micro-cap acquisitions made during the year, underlining our approach to investing.

At the end of the period, our European micro-cap portfolio consisted of 13 companies across four industries and six countries. The European micro-cap portfolio has very low leverage senior to JZCP’s position, of under 2.0x EBITDA.

As of the same date, our real estate portfolio consisted of 51 properties, 24 of which were acquired during the period. An additional three properties were purchased post-period in March 2016.

Net Asset Value ("NAV")

Pre-dividend NAV per share (pre-dilution from new share issuance) was up 6.3% for the year, from $10.85 to $11.46. Pre-dividend NAV per share (post-dilution from new share issuance), fell 3.5%, due to the aforementioned issuance of new ordinary shares. In addition, we paid total dividends of 33.5 cents per share during the year. At our stock price as of 29 February 2016, the implied dividend yield was 6.1%.

NAV bridge

(1) Includes fx gains of 9 cents

(2) Includes fx losses on investments of 13 cents, these losses are deducted from Net gains on investments at fair value through profit or loss when presented within the Statement of Comprehensive Income

The US micro-cap portfolio had a net increase of 46 cents, primarily due to: increased earnings at Justrite, our co-investment industrial safety business (10 cents), and its subsequent sale above carrying value, and increased earnings and numerous accretive acquisitions at our Industrial Services Solutions (“ISS”) vertical (6 cents), Healthcare Revenue Cycle Management vertical (7 cents) and water vertical (5 cents). Several co-investment portfolio companies showed increases as well: Salter (4 cents) and Medplast (3 cents), both healthcare products manufacturers; Suzo-Happ, a manufacturer of parts for the global gaming industry (4 cents); Southern Petroleum Labs, an oil and gas lab services business (5 cents); and New Vitality Holdings, our co-investment marketer of premium nutritional supplements (5 cents).

Offsetting these increases was a decrease at Accutest, our full service environmental testing laboratory business (7 cents), which experienced an earnings decline and was subsequently realised in January 2016. Other assets to experience earnings declines included: Vitalyst, our co-investment IT support business (5 cents); Sloan LED, our co-investment LED lighting business (2 cents); Healthcare Products Holdings, our power wheelchair company (3 cents); and both our testing vertical (4 cents) and logistics vertical (6 cents).

The European micro-cap portfolio had a net increase of 15 cents, primarily due to write-ups reflecting increased earnings at: One World Packaging (1 cent), a niche manufacturer of biodegradable, environmentally friendly packaging; Fidor Bank (4 cents), our German online bank; Winn (1 cent), our UK-based legal claims processing business; and Petrocorner (2 cents), our petrol station build-up in Spain. These gains were offset by write-downs at Ombuds (2 cents), a private security business and Docout (1 cent), a business process outsourcing company.

The real estate portfolio had a net increase of 62 cents, led by significant write-ups at our original Bedford Avenue property (31 cents), Greenpoint development site (9 cents), new Bedford Avenue portfolio (8 cents), Fulton assemblage (5 cents), and greater Miami portfolio (7 cents). Increases in value of our real estate properties are based upon third-party appraisals.

Returns

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

* Returns calculated on a dividend re-invested basis

Portfolio Summary

Our portfolio is well diversified by asset type and geography, with 69 micro-cap investments across eight industries and 51 properties. It continues to become more diversified geographically across Western Europe. It’s also important to note that 52% of our portfolio is less than three years old.

Below is a year on year summary of JZCP’s assets and liabilities at 29 February 2016 as compared to 28 February 2015. An explanation of the changes in the portfolio follows:

We continue to hold UK Gilts, which will be used to redeem our remaining ZDPs due 2016.

US Micro-Cap Portfolio

The US micro-cap portfolio has performed very well this year. As described earlier in the NAV section, the US micro-cap portfolio had a net increase of 46 cents, due to a combination of increased earnings, accretive acquisitions and sales above carrying value. We’ve made a number of acquisitions in our various verticals. As you know from previous reports, our US portfolio is grouped into industry verticals where we are continuing our strategy of consolidating businesses under industry executives who can add value via organic growth and cross company synergies. In addition, we made several new co-investments, two of which we will highlight below in the case studies section.

New US investments – Verticals

New US investments – Co-investments

Case Studies: Recent US Strategic Build-ups

We’re highlighting two of our US strategic build-ups in high growth sectors; in both cases we have partnered with excellent management teams with whom we have long-term relationships.

TierPoint provides mission-critical IT infrastructure solutions via a network of 39 data centres in 20 markets across the United States. According to 451 Research, this market is forecasted to grow at a CAGR of 20.9% from $49.5 billion in 2013 to $87.5 billion in 2016, whilst Altman Vilandrie & Co. expects the percent of IT spend outsourced to grow to 58% from 35% in the next 3-5 years. There are several strong underlying demand characteristics that support continued growth in the colocation and hosting sector: growth in data demand, customer use of third-party infrastructure to minimise capital investment, continued trend of IT outsourcing, rapid adoption of cloud solutions, increased focus on compliance requirements and necessity of secure computing environments.

The company is focused predominantly on Tier II markets that have strong growth prospects and a robust small-to-medium sized business customer population. TierPoint offers multi-tenant, private and hybrid cloud solutions; disaster recovery, business continuity and other managed services; and colocation.

Deal summary and update

In June 2014, JZCP participated in the recapitalisation of TierPoint alongside trusted co-investment partners with whom we have a long-term relationship. The transaction was led by RedBird Capital Partners and TierPoint management. Co-investors include Ontario Teachers’ Pension Plan, The Stephens Group, Thompson Street Capital Partners, TA Associates and management.

At the time of the initial investment, TierPoint generated $27 million of EBITDA and has since grown organically and via acquisitions to over $146 million of EBITDA. The Company acquired Xand in December 2014 ($43 million EBITDA), Windstream Hosted Solutions in December 2015 ($49 million EBTIDA), and Cosentry in March 2016 ($23 million EBITDA). Now, our management team has to integrate these businesses to maximize their effectiveness in the market, not to mention their enterprise value.

Management team

TierPoint is led by one of the most capable and successful management teams with whom we have done business. Jerry Kent, CEO, has an established track record of great returns for his investors, most recently as CEO of Suddenlink Communications. As major shareholders of TierPoint, management’s interest and focus is fully aligned with investors.

High quality business

The data centre business is attractive due to a highly visible recurring revenue model, sticky customer relationships, high free cash flow generation, attractive internal reinvestment opportunities and a significant runway for growth. Furthermore, TierPoint is focused on small-to-medium sized businesses in Tier II US markets, which we believe to be an attractive niche. As the company transitions toward higher-value managed and cloud services via a series of acquisitions and strategic initiatives, we believe the result will be greater customer captivity, greater profitability and a structurally higher quality business.

K2 Towers

K2 Towers (“K2”) is one of the largest privately owned cell tower companies in North America. The key driver of the cell tower industry is data demand, which is projected to increase 700% in the United States over the next five years (LA Business Journal, “Wireless Networks Could Connect L.A. with Jobs,” Nov. 2015), continuing to overwhelm the capacity of wireless networks. While demand has been and is expected to continue to grow significantly, supply of cell towers is generally constrained due to issues such as zoning and other regulatory restrictions. Furthermore, the cell tower industry offers stable, long-term profitability due to contractually recurring revenues from high quality customers and significant operating leverage due to the fact that its costs are generally fixed.

Deal summary and update

In May 2015, JZCP participated in the acquisition of K2 alongside Orangewood Partners (“Orangewood”), a private investment firm, which led the transaction. In less than one year since the original investment, K2’s tower cash flow has grown almost 20% through both organic growth and acquisitions.

Management team

K2 is led by a management team with a long and successful history in the industry. Alan Goldfarb, Chairman of the Board of Directors and Founder of Orangewood, was previously Chairman of K2 under its previous ownership. Howard Mandel and Ryan Lepene, K2’s CEO and President, respectively, have run K2 since its inception. Importantly, management is fully aligned with investors given its significant ownership stake.

High quality business

Ownership of cell towers has been extremely lucrative over the past twenty years. Given the contractual and long term nature of both revenues and expenses, there is a high degree of visibility into the cash flows. Additionally, since costs are generally fixed, there is substantial operating leverage from organic revenue growth including contractual escalators, existing tenants upgrading equipment and the addition of new tenants. K2’s portfolio contains towers with substantial revenue and tower cash flow growth potential. Our management team is consistently sourcing new towers to buy with similar characteristics given its proprietary acquisition model.

European Micro-Cap Portfolio

Recent events in Europe

JZI Fund III, L.P. (“Fund III”) – Final close at €400 million of commitments

In December 2015, JZAI closed the final round of fundraising for Fund III, the successor fund to EMC 2010, with €400 million of commitments. The fundraising surpassed its €350 million target, receiving strong backing from institutional investors and family offices from across Europe and North America. As previously mentioned, JZCP committed €75 million to Fund III.

EMC 2010 had warehoused three portfolio companies, Petrocorner, Fincontinuo and S.A.C, (at an 8% cost to carry) for Fund III (the “Warehoused Transactions”). Fund III also purchased (from JZCP) the direct stake that JZCP held as mezzanine lender in S.A.C as part of the Warehoused Transactions. JZCP has an 18.8% stake in Fund III and has invested a total of €12.7 million in the Warehoused Transactions (through Fund III).

Secondary sale to major financial institution

In February 2016, JZCP completed the sale of six of its European investments (held through EMC 2010) to a major financial institution for €96.3 million.

This transaction will be completed in two phases. First, on February 1, 2016, JZCP sold its stake in the first five assets (Docout, Ombuds, One World Packaging, Toro Finance, and Xacom) for €75.2 million. Second, JZCP will sell its stake in Winn (the sixth asset) for €21.1 million when regulatory approval is received (estimated 4-6 months). Once both phases are complete, JZCP expects to have realised an aggregate gross multiple of invested capital (“MOIC”) of 1.6x in constant euros (1.3x after accounting for FX losses).

The sale was undertaken as a secondary transaction and priced at NAV. In addition to validating the Company’s NAV, this transaction provides JZCP with significant liquidity to pursue further investment opportunities across its three main portfolios (US micro-cap, European micro-cap and real estate).

(1) From February 1, 2016 until the close of the second portion of the transaction, the institutional buyer will pay JZCP 8% interest on the €21.1 million purchase price for Winn.

(2) Gross MOIC (constant euro) figures are for illustrative purposes only, assuming that EMC 2010 was a euro-denominated fund (EMC 2010 is a US dollar-denominated fund).

Current European Portfolio

JZCP invests in the European micro-cap sector through its 75% ownership of EMC 2010 and its 18.8% ownership of Fund III. As you may recall, JZAI has offices in London and Madrid and an outstanding team with over fifteen years of investment experience in European micro-cap deals.

As of 29 February 2016, Fund III held five investments: one in Spain, one each in the UK and Italy, and two in Scandinavia.

EMC 2010 held four investments: two in Spain (Factor Energia3 and Oro) and one each in the UK (Winn) and Germany (Fidor Bank), with JZCP’s position in Winn slated for sale to a major financial institution as soon as regulatory approval is received (see above section).

(3)EMC 2010 transferred its interest in Factor Energia to EuroMicrocap Fund-C, L.P. (“EMC Fund-C”) as of February 1, 2016. EMC Fund-C is held by the same LPs and in the exact same ownership percentages as EMC 2010.

New European investments – EMC 2010

In March 2015, JZCP invested a further €1.1 million in Fidor Bank, as part of larger Tier 1 capital increase from existing Fidor Bank shareholders. In February 2016, JZCP invested a further €1.7 million in Fidor Bank, as part of another capital increase from existing shareholders.

Fund III – New European investments

In October 2015, JZCP invested €6.8 million in Collingwood, a niche auto insurer in the UK.

In November 2015, JZCP invested €3.2 million in MyLender, a small consumer lending platform in Finland. The strategy is to develop MyLender into a substantial alternative lending vehicle in Finland and Sweden, in conjunction with an experienced executive management team.

In December 2015, JZCP invested a further €3.2 million in S.A.C, an operational van leasing company in Denmark.

A portion of these three investments was returned to JZCP following the final close of Fund III in late December 2015 and subsequent reallocation of capital amongst the limited partners.

Real Estate Portfolio

As of 29 February 2016, JZCP had invested more than $250 million in a portfolio of retail, office and residential properties in Brooklyn, New York and Miami, Florida that is valued at $366.2 million as of the same date. We have made these investments in partnership with RedSky Capital, a team with significant experience in the sector.

Real Estate Approach

Our approach to real estate is very similar to our approach to private equity. It is a value-added strategy that is actually more intensive than when we integrate companies; it is a redevelopment strategy. We are looking for undervalued, underutilised, off-market properties in communities that are undergoing significant growth and gentrification. These properties are on the major retail shopping streets and are ripe for being rebuilt and repositioned. We also look to assemble contiguous properties and development sites in these same areas to achieve the equivalent of a multiple expansion.

We often target mixed-use opportunities that offer the potential for retail space on the ground and second floors, with flexible residential / boutique office space above. Most often, we purchase existing properties that require extensive renovation and repositioning in the market as prime retail sites. This is an intensive, value-add strategy that takes time to execute but enables us to achieve superior risk-adjusted returns.

Case study - Redbridge Bedford

In April 2012, JZCP made its first real estate acquisition, a $64 million mixed-use property in Williamsburg, Brooklyn. Prior to the latest refinancing (see below), JZCP had invested a total of $18.1 million in equity in Redbridge Bedford, owning approximately 63% of this property. As part of our value-add process, we have completed the following:

· Negotiated buyouts with more than 15 ‘loft law’ residential tenants and major commercial tenants

· Signed an agreement with a well-known brand and triple A rated credit anchor tenant to occupy the prime corner retail unit. The tenant has taken possession and plans to open during Summer 2016

· Signed leases with three nationally known restaurant tenants

· Terminated lease of major commercial tenant due to lease term defaults and in process of evicting tenant

· In April 2016, we refinanced the property based on an appraisal value of $153.2 million and returned $3.9 million to JZCP

Our Target Markets

Brooklyn’s demographics are exceeding the national average, in some cases by a wide margin. For instance, since 2000, Brooklyn’s population between the ages of 25 and 34 has increased by more than 19.5% while the same age group has increased by only 8.4% across the United States[1]. Neighbourhoods that have been historically industrial, low-income and/or artist communities are witnessing these seismic population changes firsthand, fuelled by an influx of young and affluent residents that embrace Brooklyn’s relaxed, artistic and young lifestyle. We have focused our portfolio on several of the fastest growing neighbourhoods, including Williamsburg, Downtown Brooklyn, Greenpoint, and Bushwick-Wyckoff Heights.

We are seeing similar trends and opportunities in the Wynwood and Design District neighbourhoods of Miami, Florida, which each draw strong parallels to the upscale, urban atmosphere of Williamsburg, Brooklyn. We made our first investment in Miami in January 2015, quickly followed by another three acquisitions in late February and March 2015. Since then, we have rapidly completed the assemblage of a full square block in Miami’s Design District and have amassed a portfolio of cash generating retail properties, retail re-position opportunities and prime development sites in Miami’s Wynwood neighbourhood. We believe that rapidly increasing retail rents amid a thriving arts scene are providing very attractive investment opportunities in Miami.

1Cushman & Wakefield Report. Brooklyn: The Epicenter of Hip. January 2016.

Fiscal Year Overview

During the period, JZCP, together with RedSky, acquired 24 properties, reflecting RedSky Capital’s ability to originate a healthy pipeline of attractive investment opportunities in both New York and Miami. Since we began investing with RedSky in April 2012, we have acquired a total of 54 properties (three post-period in March 2016), all currently in various stages of development and re-development.

The real estate portfolio had a net increase of 62 cents, led by significant write-ups at our original Bedford Avenue property (31 cents), Greenpoint development site (9 cents), new Bedford Avenue portfolio (8 cents), Fulton assemblage (5 cents), and greater Miami portfolio (7 cents). Increases in value at our real estate properties are based upon third-party appraisals.

New Real Estate Investments

Other Investments

Our recently established asset management business in the US, Spruceview Capital Partners, addresses the growing demand from corporate pensions, endowments, family offices and foundations for fiduciary management services through an Outsourced Chief Investment Officer (“OCIO”) model. Spruceview has a robust pipeline of opportunities and has won three major accounts during the past year: investment oversight of the pension of the Canadian subsidiary of an international confectionary company; a European private credit fund-of-funds tailored to the clients of an international multi-family office; and a healthcare private equity vehicle designed for the clients of a large US registered investment adviser.

As previously reported, Richard Sabo, former Chief Investment Officer of Global Pension and Retirement Plans at JPMorgan and a member of that firm’s executive committee, is leading a team of 12 senior investment, business development, legal and operations professionals. Following shareholder approval in September 2015, JZCP increased its commitment to Spruceview by $15 million.

Listed Investments

We have continued our program of holding highly rated listed corporate bonds as a means of earning an enhanced return on our cash. Currently, Goldman Sachs is the sole obligor of these bonds, which mature in January 2017. We also continue to hold UK Gilts, which will be used to redeem our remaining ZDPs due June 2016.

Significant Realisations

Outlook

We are very confident that our value-added investment strategy across several asset classes will produce superior risk adjusted returns. As always, our objective is to put your (and our) money to work in a diverse portfolio of reasonably priced assets. Then we work with our management partners to grow these assets, both organically and by acquisition. This has been our strategy since our inception in December 1986 – although what we do today has a larger value-added component and the portfolio is much more diverse than in the past.

Having financed and realised almost half a billion dollars ($479.0 million) during the past fiscal year, JZCP has achieved a stronger, less leveraged balance sheet with fresh capital available to pursue multiple opportunities. We also closed a €400 million fund with several prestigious institutional investors to continue to build our European portfolio; JZCP’s €75 million commitment to Fund III will be invested pro rata with the other limited partners, providing greater diversity in larger companies than we can do just on behalf of JZCP but still “micro-cap” size businesses.

Looking ahead, we are pursuing several more realisations in the coming year which will provide more liquidity for us to invest in our growing pipeline of attractive opportunities. The pace of investment will be a function of prices, which seem high to us in several sectors, all the more reason to be a seller!

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

Yours faithfully,

Jordan/Zalaznick Advisers, Inc.

11 May 2016

Investment Review

This investment review focuses on JZCP's investment strategy in the US micro-cap, European micro-cap and real estate portfolios and details examples of the Company's major holdings.

US MICRO-CAP

The primary US micro-cap investment strategy is the "vertical" strategy which sees JZCP invest in well researched industry sectors, or verticals. Similar companies are purchased in the vertical, being integrated as appropriate, and the resulting larger company sold as one entity. These industries sectors/verticals include Industrial Service Solutions, Water and Healthcare Revenue Cycle Management. The verticals are managed by seasoned industry executives whose responsibilities include managing, integrating and growing their respective vertical.

JZCP also invests in US micro-cap companies through "Co-investments". JZCP partners with experienced and trusted investors, taking a minority position in a company. The strategy benefits JZCP by diversifying the US micro-cap portfolio and leveraging the expertise and resources of such investors.

US MICRO-CAP (VERTICALS)

Industrial Services Solutions ("ISS")

ISS is currently a combination of twenty-three acquired businesses in the industrial maintenance, repair and service industry, with services provided both in a customer's plant, and in one of the company's numerous facilities across the United States. The company also sells parts and supplies for the products it services.

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

JZCP’s $33.2 million of investments at cost are currently valued at $84.4 million, as JZCP has reaped the benefits of positive organic growth, making accretive acquisitions and the effects of leverage. Sales and proforma EBITDA for the year were $326 million and $52 million respectively.

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

Futher information on ISS is available at www.iss-na.com.

Water Vertical

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

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

The current water treatment business consists of four companies which sell and distribute chemicals for industrial plants’ boilers, etc and for use outside of plants (e.g. “fracking”).

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

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

Further information on the Water vertical is available at www.triwaterholdings.com

Healthcare Revenue Cycle Management

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

There are currently five companies under this vertical, with several more under letters of intent.

JZCP has invested $28.9 million in this relatively new vertical, which currently carries a value of $35.4 million. Revenues and proforma EBITDA totalled $104 million and $17 million respectively.

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

US MICRO-CAP CO-INVESTMENTS

Two examples of JZCP's co-invest strategy being K2 Towers and TierPoint are detailed below.

K2 TOWERS

Co-invest Partner: Orangewood Partners

Sector: Wireless Towers

Acquisition Date: April 2015

Headquarters: Ohio, USA

Website: http://www.k2towers.com/

K2 Towers is one of the largest privately owned cell tower companies in North America. JZCP has partnered with a trusted management team who intends to grow the business both organically and via acquisitions.

Further insight to this investment is given within the Investment Adviser’s Report.

TIERPOINT

Co-invest Partner: Redbird Capital Partners

Sector: Data CentreWireless Towers

Acquisition Date: June 2014

Headquarters: Missouri, USA

Website: www.tierpoint.com

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

Further insight to this investment is given within the Investment Adviser's report.

EUROPEAN MICRO-CAP

JZCP invests in the European micro-cap sector through its 18.75% stake in JZI Fund III, which completed its final fund raising in December 2015. Previously investments were made through the EuroMicrocap Fund 2010 ("EMC 2010"). The European investment team has worked together for over ten years and has a proprietary network of intermediaries to deliver high quality micro-cap buy-and-build opportunities throughout the continent.

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

An example of two of JZCP's European investments, Winn Solicitors and Petrocorner, are detailed below.

WINN SOLICITORSSector: Legal ServicesAcquisition Date: September 2013Headquarters: Newcastle, UKWebsite: http://www.winnsolicitors.com/

Winn is a leading regional player in the legal claim processing market in the UK. Winn provides full accident management services to customers involved in non-fault road traffic accidents, where the party does not wish to claim on its own insurance for a variety of reasons, including losing a no-claim bonus or increasing insurance premiums.

Winn's growth strategy is based on strong organic growth from a rapidly consolidating market in the UK driven by regulatory change and operating efficiencies.

PETROCORNER

Sector: Petrol Stations

Acquisition Date: July 2014

Headquarters: Madrid, Spain

Website: http://www.petrocorner.com/

Petrocorner is a strategic build-up in the Spanish retail petrol station market. The strategic plan is to acquire 2-3% of all petrol stations in Spain to become the fourth largest retailer of petrol after Repsol, Cepsa and British Petroleum. Petrocorner’s management team is highly experienced in the retail petrol station market in Spain.

REAL ESTATE

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

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

2015 saw JZCP begin to invest in the Wynwood and Design District neighbourhoods of Miami, Florida, two locations where rapidly increasing retail rents amid a thriving arts scene are again providing very attractive opportunities.

At 29 February 2016, JZCP has invested over $250 million across 51 properties. The independent year end valuation process valued the JZ Realty portfolio at $366.2 million.

Examples of the Real Estate portfolio are detailed below;

247 Bedford Avenue, Brooklyn

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

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

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

Further insight to this investment is given within the Investment Adviser's Report.

Design District, Miami Assemblage

Over the course of 2015 and early 2016, JZ Realty acquired a portfolio of adjacent properties in Miami’s Design District, one of the premier luxury retail destinations in the U.S. The completed Design District assemblage has more than 600,000 square feet of as-of-right buildable commercial space.

Greenpoint, Brooklyn

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

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

Investment Portfolio

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

(2) JZCP owns 100% of the shares and voting rights of JZCP Realty Fund, Ltd.

(3)  Legacy Investments. Legacy investments are excluded from the calculation of capital and income incentive fees.

(4) Co-investment with Fund A, a Related Party (note 24).

(5) Investment in mezzanine debt is classified as a Loan and Receivable in the financial statements.

Board of Directors

David Macfarlane (Chairman)1

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

Patrick Firth2

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

James Jordan

Mr Jordan is a private investor who was appointed to the Board of JZCP in 2008. He is a director of the First Eagle family of mutual funds, and of Alpha Andromeda Investment Trust Company, S.A.. Until 30 June 2005, he was the managing director of Arnhold and S. Bleichroeder Advisers, LLC, a privately owned investment bank and asset management firm; and until 25 July 2013, he was a non-executive director of Leucadia National Corporation. He is a Trustee and Vice Chairman of the World Monuments Fund, and serves as an Overseer of the Gennadius Library of the American School of Classical Studies in Athens, and as a Director of Pro Natura de Yucatan.

Tanja Tibaldi

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

Christopher Waldron

Mr. Waldron was appointed to the Board of JZCP in 2013. He is the Chairman of Ranger Direct Lending Fund Plc and UK Mortgages Limited, and a director of DW Catalyst Fund Limited and Crystal Amber Fund Limited as well as a number of unlisted entities. He has almost 30 years’ experience as an investment manager and until 2013 was Chief Executive of the Edmond de Rothschild Group in the Channel Islands. He remains a consultant to the Edmond de Rothschild Group and is also a member of the States of Guernsey’s Treasury and Resources Investment Sub-Committee and its Bond Management Sub-Committee. He is a Fellow of the Chartered Institute of Securities and Investment and is a Guernsey resident.

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

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

Report of the Directors

The Directors present their annual report together with the audited financial statements of JZ Capital Partners ("JZCP" or the "Company") for the year ended 29 February 2016.

Principal activities

JZ Capital Partners Limited is a closed-ended investment company with limited liability which was incorporated in Guernsey on 14 April 2008 under The Companies (Guernsey) Law, 1994. The Company is subject to The Companies (Guernsey) Law, 2008. The Company's Capital consists of Ordinary shares, Zero Dividend Preference ("ZDP") shares and Convertible Unsecured Loan Stock ("CULS"). The Company's Ordinary shares, ZDP Shares and CULS are traded on the London Stock Exchange's Specialist Fund Market.

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

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

The Company is focused on investing in the following areas:

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

(b) real estate interests

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

The Investment Adviser is able to invest globally but with a particular focus on opportunities in the United States and Europe. The above Investment Policy received shareholder approval at the EGM held on 26 February 2015. Shareholders also agreed to remove the limit of 40% of gross assets that applied to investing in businesses outside the United States.

Business review

The total profit attributable to Ordinary shareholders for the year ended 29 February 2016 was $51,594,000 (year ended 28 February 2015: profit of $59,210,000). The revenue return for the year was $10,004,000 (year ended 28 February 2015:$20,802,000), after charging directors fees and administrative expenses of $2,713,000 (year ended 28 February 2015:$2,378,000) and Investment Adviser's base fee of $15,510,000 (year ended 28 February 2015:$12,976,000). The net asset value ("NAV") of the Company at the year end was $851,739,000 (28 February 2015: $705,510,000) equal to $10.15 (28 February 2015: $10.85) per Ordinary share.

On 30 September 2015 the Company completed a Placing and Open Offer, resulting in a further 18,888,909 Ordinary shares being admitted to trade on the Specialist Fund Market of the London Stock Exchange. The issue price of the new shares was £4.1919. At the year end the Company had 83,907,516 Ordinary shares in issue (28 February 2015: 65,018,607).

For the year ended 29 February 2016, the Company had $24,195,000 of cash outflows resulting from operating activities (year ended 28 February 2015: outflows of US$10,894,000).

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

Dividends

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

For the year ended 29 February 2016 an interim dividend of 16 cents per Ordinary share (total US$10,403,000) was declared by the Board on 28 October 2015 and paid on 27 November 2015. The 18,888,909 New Ordinary shares, issued on 30 September 2015, were not entitled to receive this dividend but will be entitled to receive future dividends.

A second interim dividend of 15 cents per Ordinary share (total $12,586,000) was declared by the Board on 11 May 2016.

Directors

The Directors listed below are all non-executive, have served on the Board throughout the year and were in office at the end of the year and subsequent to the date of this report. The biographical details of the Directors are shown in the Board of Directors section.David Macfarlane (Chairman)Patrick FirthJames JordanTanja TibaldiChristopher Waldron

All Directors are independent.

Annual General Meeting

The Company's Annual General Meeting is due to be held on 17 June 2016.

Stated capital, purchase of own shares and CULS

Details of the ZDP shares and the Ordinary shares can be found in Notes 15 and 18. During the year the Company did not buy back any of its own shares. Details of the CULS can be found in Note 14.

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

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

None of the Directors held any interest in the Zero Dividend Preference shares during the year. There have been no changes in the Directors' interests between 29 February 2016 and the date of this report.

Substantial shareholders

As at 30 April 2016 and at the date of this report the Company has been notified in accordance with applicable listing rules of the following interests of 5% or more of the total Ordinary share capital of the Company:

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

It is the responsibility of the shareholders to notify the Company of any change to their shareholdings when it reaches 5% of shares in issue and any subsequent change when the shareholding increases or decreases by a further 5%.

Ongoing charges

Ongoing charges for the years ended 29 February 2016 and 28 February 2015 have been prepared in accordance with the Association of Investment Companies ("AIC") recommended methodology. The Ongoing charges for the year ended 29 February 2016 were 2.4% (28 February 2015: 2.3%) excluding incentive fees of 2.1% (28 February 2015: 2.9%).

Principal risks and uncertainties

The Company's board believes the principal risks and uncertainties that relate to an investment in JZCP are as follows:

NAV Factors

(i) Macroeconomic Risks

The Company's performance, and underlying NAV, is influenced by economic factors that affect the demand for products or services supplied by investee companies and the valuation of Real Estate interests held. Economic factors will also influence the Company's ability to invest and realise investments and the level of realised returns. Approximately 22% of the Company's investments are denominated in non-US dollar currencies, primarily the euro. Also the Company has issued debt denominated in non-US dollar currencies, primarily sterling. Fluctuations to these exchange rates will affect the NAV of the Company.

(ii) Underlying Investment Performance

The Company is reliant on the Investment Adviser to source and execute suitable investment opportunities. The Investment Adviser provides to the board an explanation of all investment decisions and also quarterly investment reports and valuation proposals of investee companies. The Board reviews investment performance quarterly and investment decisions are checked to ensure they are consistent with the agreed long term investment strategy.

Portfolio Liquidity

The Company invests predominantly in unquoted companies. Therefore this potential illiquidity means there can be no assurance investments will be realised at their latest valuation. The board considers this illiquidity when planning to meet its future obligations, whether committed investments or the repayment of debt facilities or the future repayment of CULS and ZDP shares. On a quarterly basis, the Board receives from the Investment Adviser and reviews a working capital model produced by the Investment Adviser which highlights the Company's projected liquidity and financial commitments.

Share Price Trading at Discount to NAV

JZCP's share price is subject to market sentiment and will also reflect any periods of illiquidity when it may be difficult for shareholders to realise shares without having a negative impact on share price. The Directors review the share price in relation to Net Asset Value on a regular basis and determine whether to take any action to manage the discount. The Directors with the support of the Investment Adviser work with brokers to maintain interest in the Company’s shares through market contact and research reports.

Operational and Personnel

Although the Company has no direct employees, the Company considers what dependence there is on key individuals within the Investment Adviser and service providers that are key to the Company meeting its operational and control requirements.

The board considers the principal risks and uncertainties above are consistent with the prior year and the Company's exposure to these risks is neither greater nor any less than in May 2015.

Viability Statement

In accordance with provision c2.2 of the UK Corporate Governance Code 2014 (the "UK Code") the Board has assessed the expectations that the Company will be able to continue in operation and meet its ongoing debt obligations. In order to make the assessment the Board has carried out a robust review of the Company's principal risks and uncertainties, as noted above, to which the Company is exposed and that potentially threaten future performance and liquidity and has assessed the Company's current position and prospects as detailed in the Chairman's statement and Investment Adviser's report. The period covered by the viability statement is the next three financial years to 28 February 2019.

The Board believes that a viability assessment of three years aligns with the Company's review of working capital models provided by the Investment Adviser which detail expected investment activity and estimated liquidity over a three year period. The Board also considers the underlying investment portfolio, which consists primarily of unlisted micro-cap businesses and real estate investments which are not publicly traded. Micro-cap investments are held for the medium term, typically a period of 3 to 5 years and it is anticipated real estate developments will take a similar time-frame to realise returns.

The Board will continue to review the period of assessment on an annual basis and may in future years extend the period if it is considered appropriate.

Factors considered whilst reviewing the Company's future prospects and viability, include:

Financing obligations

The Company has obligations to redeem ZDP shares, CULS and repay loan debt. JZCP is due to redeem £32.9 million of ZDP shares on 22 June 2016. The Company holds treasury gilts with a redemption date of May 2016, the proceeds of £32.9 million will be used to fund the redemption of the ZDP shares. At 29 February 2016 the Company had outstanding investment commitments of $115.1 million (28 February 2015: $18.5 million). The Board will continue to consider the Company's position in meeting debt obligations falling outside the three year review being approximately $180 million in 2021 and $85 million in 2022.

Investment performance and liquidity

The Board reviews, on a quarterly basis, the valuation and prospects of all underlying investee companies. The Board is confident that the diversity of the portfolio and ability of the Investment Adviser to select suitable investment opportunities will negate the risk of a significant fall in NAV, similar to the one the Company suffered during the financial crisis of 2008 which saw a reduction in NAV for the 7 month period ended 28 February 2009 of approximately 30%. Whilst a similar fall in NAV would not directly threaten the Company's viability the Board is mindful that in a similar financial environment, the Company will be exposed to a possible lack of liquidity due to the difficulty in realising investments and the possibility of investments defaulting on interest obligations to the Company. JZCP has had realisations over the last 3 financial years that have averaged cash inflows of $198 million per annum and has invested an average of $254 million per annum over the same period. The Board's current view is that whilst a reduction in realisations may curtail scope of future investment opportunities, cash inflows will be sufficient to enable the Company to meets its investment and operational obligations.

Mitigation of risk as outlined in the Principal Risks and Uncertainties (detailed above).

The Board is confident the performance of the Company over the period of review will be robust and the investment strategy will deliver returns and liquidity. Therefore the Board has been able to form a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the next three financial years.

Going Concern

The Board considers the Company has adequate financial resources, in view of its cash balances and cash equivalents and liquid investments and the income streams deriving from its investments and believe that the Company is well placed to manage its business risks successfully to continue in operational existence for a period of 12 months from signing of the financial statements and that it is appropriate to prepare the financial statements on the going concern basis.

Statement of Directors' responsibilities

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

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to ensure that the financial statements have been prepared in accordance with the Companies (Guernsey) Law, 2008 and IFRS. They are also responsible for safeguarding the assets of the Company and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

In preparing Financial Statements the Directors are required to:

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

· select suitable accounting policies and apply them consistently;

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

· make judgements and estimates that are reasonable and prudent;

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

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

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

Responsibility statement of the Directors in respect of the Financial Statements

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

(a) The Annual Report and Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and give a true and fair view of the financial position and profit of the Company as at and for the year ended 29 February 2016.

(b) The Annual Report includes information detailed in the Chairman’s Report, Investment Adviser’s, Investment Manager’s and Directors’ Reports, Audit Committee Report and Notes to the Annual Financial Statements required by: DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency Rules, being a fair review of the development and performance of the Company business and the position of the Company together with a description of the principal risks and uncertainties facing the Company.

Directors’ statement

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

Approved by the Board of Directors and agreed on behalf of the Board on 11 May 2016.

David Macfarlane Patrick Firth

Chairman Director

Corporate Governance

Introduction

The Board of JZ Capital Partners Limited has considered the principles and recommendations of the AIC Code of Corporate Governance published in February 2015 (the "AIC Code"). The AIC Code, as explained by the AIC Code, addresses all the principles set out in the UK Corporate Governance Code (the "UK Code"), as well as setting out additional principles and recommendations on issues that are of specific relevance to JZ Capital Partners Limited. The AIC Code can be found at www.theaic.co.uk and the UK Corporate Governance Code can be found at. http://www.frc.org.uk/.

The Company is a member of the Association of Investment Companies (the "AIC") and by complying with the AIC Code of Corporate Governance ("AIC Code") is deemed to comply with both the UK and Guernsey Codes of Corporate Governance. The Financial Reporting Council issued a revised UK Corporate Governance Code in September 2014 for accounting periods beginning on or after 1 October 2014. The AIC updated the AIC Code (including the Guernsey edition) and its Guide to Corporate Governance to reflect the relevant changes to the FRC document in February 2015.

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

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

The UK Corporate Governance code includes provisions relating to:

- the role of the chief executive- executive directors remuneration- the need for an internal audit function- appointment of a senior independent director- whistle blowing policy

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

Guernsey Code of Corporate Governance

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

The Board

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

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

Proceedings of the Board

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

The Directors meet at least quarterly to direct and supervise the Company’s affairs. This includes reviewing the investment strategy, risk profile, gearing strategy and performance of the Company and the performance of the Company’s functionaries, and monitoring compliance with the Company's objectives.

The Directors visit the Investment Adviser at least annually for a comprehensive review of the portfolio, its valuations methodology and general strategy. The Directors deem it appropriate to review the valuations of the investment portfolio on a quarterly basis. The schedule of Directors and Committee meetings is shown below.

Continuing terms of Investment Adviser agreement

In the opinion of the Directors, the continuing appointment of the Investment Adviser on the terms agreed continues to be in the interests of Shareholders. In reaching its conclusion the Board considers the Investment Adviser's performance and expertise and is confident in the Investment Adviser's ability to of source excellent future investment opportunities.

Supply of information

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

Directors' training

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

Chairman and senior independent Director

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

Board diversity

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

Re-election of Directors

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

The Letters of Appointment of the non-executive Directors suggest that it is appropriate for Directors to retire and be nominated for re-election after three years of service, subject to the recommendation of the General Meeting. David Macfarlane and James Jordan are seeking re-election to the Board at the 2016 Annual General Meeting. Patrick Firth and Tanja Tibaldi were re-elected to the Board at the 2014 Annual General Meeting. The appointment of Christopher Waldron to the Board during 2013 was ratified at the 2014 Annual General Meeting.

The UK Code requires that non-executive directors who have served longer than nine years should be subject to annual re-election.

The Board's evaluation

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

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

Board Committees

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

Nomination Committee

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

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

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

Audit Committee

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

A report of the Audit Committee detailing responsibilities and activities is presented in the Audit Committee Report section.

Management Engagement Committee

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

Remuneration Committee

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

Board and Committee meeting attendance

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

Number of meetings

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

Internal Controls

The Board is ultimately responsible for establishing and maintaining the Company’s system of internal financial and operating control and for maintaining and reviewing its effectiveness. The Company's risk matrix continues to be the core element of the Company's risk management process in establishing the Company's system of internal financial and reporting control. The risk matrix is prepared and maintained by the Board which initially identifies the risks facing the Company and then collectively assesses the likelihood of each risk, the impact of those risks and the strength of the controls operating over each risk. The system of internal financial and operating control is designed to manage rather than to eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute assurance against misstatement and loss.

These controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained and the financial information for publication is reliable. The Board confirms that there is an ongoing process for identifying, evaluating and managing the principal risks faced by the Company.

This process has been in place for the year under review and up to the date of approval of this Annual Report and Financial Statements and is reviewed by the Board and is in accordance with the Internal controls: Revised Guidance for Directors on the Combined Code.

The Board has evaluated the systems of internal controls of the Company. In particular, it has prepared a process for identifying and evaluating the principal risks affecting the Company and the policies by which these risks are managed.

The Board has delegated the day to day responsibilities for the management of the Group’s investment portfolio, the provision of depositary services and administration, registrar and corporate secretarial functions including the independent calculation of the Company's NAV and the production of the Annual Report and Consolidated Financial Statements which are independently audited.

Formal contractual agreements have been put in place between the Company and providers of these services.

Even though the Board has delegated responsibility for these functions, it retains accountability for these functions and is responsible for the systems of internal control. At each quarterly board meeting, compliance reports are provided by the Administrator, Company Secretary and Portfolio Manager. The Board also receives confirmation from the Administrator of its accreditation under its Service Organisation Controls 1 report.

The Company’s risk exposure and the effectiveness of its risk management and internal control systems are reviewed by the Audit Committee at its quarterly meetings and annually by the Board.

The Board believes that the Company has adequate and effective systems in place to identify, mitigate and manage the risks to which it is exposed.

Prospectus for Capital Fund Raising

On 4 September 2015, the Company issued a prospectus for the issue of new Ordinary shares and the rollover of existing ZDP shares. The prospectus did not contain profit forecasts or pro forma financial statements but did provide unaudited details of the Company's net asset position at 31 July 2015. The Board confirm the unaudited position at 31 July 2015 presented within the prospectus was based on the valuation policy and principles consistent with that used within the Company's audited financial statements.

Foreign Account Tax Compliance Act

The Company is registered with IRS (with a Global Intermediary Identification Number CAVBUD.999999.SL.831) under The Foreign Account Tax Compliance Act ("FATCA") which became effective on 1 January 2013. The legislation is aimed at reducing tax evasion by US citizens. In broad terms, FATCA requires financial institutions outside the US to pass certain information about their US customers and investors to the US tax authorities. Guernsey and the United States have entered into an inter-governmental agreement ("US-Guernsey IGA") on 13 December 2013 to facilitate compliance by Guernsey resident financial institutions with the reporting requirements imposed by FATCA. The Board has taken steps to implement FACTA requirements, with the assistance of its professional advisers.

Common Reporting Standard (“CRS”)

The CRS is a standard developed by the Organisation for Economic Co-operation and Development (OECD) and is a global approach to the automatic exchange of tax information. Guernsey has now adopted the CRS which came into effect on 1 January 2016. The CRS has replaced the UK Inter-Governmental Agreement (IGA) from 1 January 2016. However, it will still be necessary to submit the reportable information, being the disclosure requirements of shareholders who have a UK connection, relating to 2014 and 2015 periods under the UK IGA by 30 June 2016. The first report for CRS will be made to the Director of Income Tax by 30 June 2017. The Company is subject to Guernsey regulations and guidance on the automatic exchange of tax information and the Board will therefore take the necessary actions to ensure that the Company is compliant in this regard.

Relations with shareholders

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

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

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

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

Directors' Remuneration Report

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

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

Remuneration policy

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

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

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

The remuneration policy set out above is the one applied for the year ended 29 February 2016 and is not expected to change in the foreseeable future.

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

Remuneration for services

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

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

(1) David Macfarlane's Directors fee was increased to $160,000 effective 1 March 2015.

(2) Chris Waldron's Directors fee was increased to $65,000 effective 1 March 2015.

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

Directors' term of appointment

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

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

Signed on behalf of the Board of Directors on 11 May 2016 by:

David Macfarlane Patrick Firth

Chairman Director

Audit Committee Report

Dear Shareholder,

Below, we present the Audit Committee's Report for 2016, setting out the responsibilities of the Audit Committee and its key activities in 2015/2016. The Audit Committee has reviewed the Company's financial reporting, the independence and effectiveness of the external auditor and the internal control and risk management systems of the Company's service providers. In order to assist the Audit Committee in discharging these responsibilities, regular reports are received and reviewed from the Investment Manager, Administrator and external auditor.

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

Responsibilities

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

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

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

· monitor and review the quality and effectiveness of the external Auditors and their independence

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

· advise the Board that the annual report and accounts, taken as a whole, is fair, balanced and understandable.

· review and consider the Company’s Principal risks and uncertainties

· consider the long term viability of the Company

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

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

· consider and make representations to the Board regarding Directors' remuneration

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

Key Activities of the Audit Committee

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

Financial Reporting:

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

· Valuation of Investments:

The fair value of the Company’s unlisted securities at 29 February 2016 was $985,448,000 accounting for 86% of the Company's assets. The Committee has concentrated on ensuring the Investment Manager has applied appropriate valuation methodologies to these investments in producing the net asset value of the Company.

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

· Ownership of Investments

The Audit Committee considered the ownership of the investments held by the Company as at 28 February 2016 to be substantiated by the periodic reconciliation of records held by the Custodian to the Company’s portfolio and from confirmations provided by Lawyers, Custodian and Administrator. Following a review of the presentations and reports from the Administrator and consulting where necessary with the external auditor, the Audit Committee is satisfied that the Company duly owns its investments which are correctly stated in the Annual Report and Financial Statements.

· NAV-Based Fees

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

Risk Management:

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

Fraud, Bribery and Corruption:

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

The External Auditor

Ernst & Young LLP have acted as external auditor since the Company's inception in April 2008.

Independence, objectivity and fees:

The independence and objectivity of the external auditor is reviewed by the Audit Committee which also reviews the terms under which the external auditor is appointed to perform non-audit services. The Audit Committee has established pre-approval policies and procedures for the engagement of the auditor to provide non-audit and assurance services. The audit committee ensure the appointment does not create a scenario which:

· places the external auditor in a position to audit their own work

· creates a mutuality of interest

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

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

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

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

The following table summarises the remuneration paid by JZCP to Ernst & Young LLP and to other Ernst & Young LLP member firms for audit and other services during the years ended 29 February 2016 and 28 February 2015.

 (1) During the year ended 28 February 2015 audit fees of £42,000 in relation to Real Estate interests were paid at Subsidiary level and are not included in above numbers. For the year ended 29 February 2016 fees for audit work on Real Estate interests payable by JZCP are included within the £163,000.

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

Performance and effectiveness:

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

· the audit plan presented to them before each audit;

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

· changes in audit personnel;

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

· feedback received from both the Investment Adviser and Administrator.

The Audit Committee reviewed and challenged the audit plan and the post audit report of the external auditor and concluded that audit risks had been sufficiently identified and were sufficiently addressed. The Audit Committee considered reports from the external auditor on their procedures to identify threats to independence and concluded that the procedures were sufficient to identify potential threats to independence.

There were no significant adverse findings from this evaluation.

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

Reappointment of External Auditor

Consequent to this review process, the Audit Committee has recommended to the Board that a resolution be put to the 2016 Annual General Meeting for the reappointment of Ernst & Young LLP as external auditor. The Board has accepted this recommendation.

Internal control and risk management systems

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

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

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

The Audit Committee Report was approved by the Board on 11 May 2016 and signed on behalf by:

Patrick Firth

Chairman, Audit Committee

Statement of Comprehensive Income

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

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

The format of the Income Statement follows the recommendations of the 2014 AIC Statement of Recommended Practice.

The "Total" column of this statement represents the Company's statement of comprehensive income, prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

There was no comprehensive income other than the profit for the period.

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

Statement of Financial Position

As at 29 February 2016

These audited financial statements were approved by the Board of Directors and authorised for issue on 11 May 2016. They were signed on its behalf by:

David Macfarlane Patrick Firth

Chairman Director

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

Statement of Changes in Equity

For the Year Ended 29 February 2016

Comparative for the Year ended 28 February 2015

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

(1) Net of share issue costs of $3.523 million.

Statement of Cash Flows

For the Year Ended 29 February 2016

Reconciliation of Cash Outflows/Inflows from Investments and Realisations, for the year ended 29 February 2016, to numbers presented in Note 12 of the financial statements and the Chairman's Statement and Investment Adviser's Report.

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

Notes to the Financial Statements

1. General Information

JZ Capital Partners Limited (the "Company") is a Guernsey domiciled closed-ended investment company which was incorporated in Guernsey on 14 April 2008 under the Companies (Guernsey) Law, 1994. The Company is now subject to the Companies (Guernsey) Law, 2008. The Company is classed as an authorised fund under the Protection of Investors (Bailiwick of Guernsey) Law 1987. The Company's Capital consists of Ordinary shares, Zero Dividend Preference ("ZDP") shares and Convertible Unsecured Loan Stock ("CULS"). The Company's shares trade on the London Stock Exchange's Specialist Fund Market ("SFM").

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

The Company’s Investment Policy is to target predominantly private investments, seeking to back exceptional management teams to deliver on attractive investment propositions. In executing strategy, the Company takes a long term view. The Company seeks to invest directly in its target investments, although it may also invest through other collective investment vehicles. The Company may also invest in listed investments, whether arising on the listing of its private investments or directly. The Investment Adviser is able to invest globally but with a particular focus on opportunities in the United States and Europe.

The Company is currently mainly focused on investing in the following areas:

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

(b) US real estate interests.

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

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

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

2. Significant Accounting Policies

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

Statement of Compliance

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

Basis of Preparation

The financial statements have been prepared under the historical cost basis, modified by the revaluation of financial instruments designated at fair value through profit or loss upon initial recognition. The principal accounting policies adopted are set out below. The preparation of financial statements in conformity with IFRS requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The presentation of the financial statements and certain disclosures follows the guidance as outlined in the Association of Investment Companies ("AIC") Statement of Recommended Practice ("SORP") issued in November 2014.

Changes in accounting policy and disclosures

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

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

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

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

Functional and presentational currency

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

Foreign exchange

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

Financial assets and liabilities at Fair Value Through Profit or Loss ("FVTPL")

(i) Classification

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

Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Company's investment strategy as documented in its prospectus.

(ii) Recognition/derecognition

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

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

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

(iii) Fair value estimation

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

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

The valuation techniques to derive the fair value of real estate interests are detailed in note 5.

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

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

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.

(iii) Measurement

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

(iv) Impairment

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

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

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

Cash on deposit and cash and cash equivalents

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

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

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, other than CULS (see below) and equity are recorded at the amount of proceeds received, net of issue costs. Ordinary shares are regarded as equity.

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.

6% Convertible Unsecured Loan Stock 2021

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

Income

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

Expenses

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

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

Finance costs

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

Escrow accounts

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

Taxation

The company has been granted Guernsey tax exempt status in accordance with The Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 (as amended). However, in some jurisdictions, investment income and capital gains are subject to withholding tax deducted at the source of the income. The Company presents the withholding tax separately from the gross investment income in the statement of comprehensive income.

3. Estimates and Judgements

The following are the key judgements 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:

Estimates

(i) Fair Value of Investments at Fair Value Through Profit or Loss ("FVTPL")

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

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

(ii) Loans and Receivables

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

Judgements

Assessment as an Investment Entity

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

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

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

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

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

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

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

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

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

Investment in Associates

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

In accordance with the exemption within IAS 28 Investments in Associates and Joint Ventures, the Company does not account for its investment in EuroMicrocap Fund 2010, L.P., EuroMicrocap Fund-C ,L.P., JZI Fund III GP, L.P., Spruceview Capital, LLC and Orangewood Partners Platform LLC using the equity method. Instead, the Company has elected to measure its investment in its associates at fair value through profit or loss.

The Directors have determined that although the Company has over 50% economic interest in EuroMicrocap Fund 2010, L.P., EuroMicrocap Fund-C,L.P., JZI Fund III GP, L.P. and Orangewood Partners Platform LLC, it does not have the power to govern the financial and operating policies of the entities, but does have significant influence over the strategic, operating and financial policies.

Going Concern

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

The Directors consider the Company has adequate financial resources, in view of its holding in cash and cash equivalents and liquid investments and the income streams deriving from its investments and believe that the Company is well placed to manage its business risks successfully to continue in operational existence for a period of 12 months from signing of the financial statements and that it is appropriate to prepare the financial statements on the going concern basis.

Segment Information

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

• Portfolio of US micro-Cap investments.

• Portfolio of European micro-cap investments.

• Portfolio of Real estate investments

• Portfolio of Other investments

• Portfolio of Listed equities.

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

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

During the year the Company disposed of the portfolio of bank debt and has also disposed of the maturity of the carrying value of the Mezzanine portfolio. The investment in the Mezzanine portfolio and bank debt portfolio are now classified as an 'other' investments in line with management reporting. The Company disposed of the Listed Equity portfolio during the year ended 28 February 2015.

Segmental Profit/Loss

For the year ended 29 February 2016

For the year ended 28 February 2015