Jz Capital Regulatory News (JZCP)

FULL YEAR RESULTS FOR THE 12 MONTHS ENDING 29 FEBRUARY 2012

~Strong NAV total return driven by five significant realisations and record dividend ~

18 May 2012

JZ Capital Partners Limited (LSE:JZCP.L or "JZCP"), the London listed private equity fund that invests in high quality US and European micro cap companies, today announces its audited results for the twelve months ending 29 February 2012.

Results Highlights

·; 14th consecutive quarter of Net Asset Value (NAV) growth, now exceeding $600 million

·; 7.9% NAV Total Return including:

o NAV of US$615 million, an increase of 5.85% (2010: $581m)

o A record distribution of 25.0c per share (2010: 24.5c per share)

o NAV per share increased to US$9.47 (2010: US$8.93)

·; US$226.1 million of proceeds received, including US$156 million from the sale of five businesses, generating an average multiple of equity capital invested of 5.0x and an average IRR of 27%

·; US$187.3 million invested including 9 investments in companies in the US and Europe with an average entry EBITDA multiple of 5.8x and average leverage of 1.3x

·; New investments made in the secondary mortgage loan market using the investment adviser's experience and track record of credit investing

Significant post period end investment activity

o A US$36.2 million investment in two US industrial micro cap companies and €13.5 million in a precious metals trading business in Spain

o First co-investment in Latin America - US$6.2 million investment in BSM Engenharia, a Brazil based infrastructure service business in conjunction with ACON, a private equity group with significant Latin American experience

o A US$14.25 million investment in 100,000 square feet of retail units and forty apartments in New York City

o Additional secondary of TAL stock realizing $17.0 million

Strategic Initiatives

·; Commitment to help provide a long-term solution to the discount to NAV through a new dividend policy which will provide regular and more predictable distributions at a rate of 3% of NAV per year, implying a yield at the discount (as at 16 May 2012) of 4%

·; Proposed admission to trading on the London Stock Exchange's Specialist Fund Market ("SFM") and consequent cancellation of listing on the premium segment of the Official List and trading on the London Stock Exchange's main market for listed securities

- The proposal will enable the Company to have a simplified capital structure through a single class of ordinary shares which will be more appropriate to the mix of investors who own the Company's shares

- It will also remove a structural inadequacy that has restricted the Company's ability to accommodate US investors and will better reflect the Company's reported market capitalization

·; Proposal to increase the Company's current investment limitations on investments in businesses outside the United States from 20 per cent to 30 per cent of the Company's gross assets

·; An investment of up to US$15.0 million in a new asset management business to meet the growing demand from endowments and pension funds in the US for fiduciary management service

Outlook

·; Positive - the Company has an extremely strong balance sheet and remains well positioned to take advantage of a healthy pipeline of investment and realisation opportunities within the micro cap sector

David Zalaznick, JZCP's Founder and Investment Adviser, said:

"I am pleased to announce another excellent set of full year results which includes a record distribution of 25.0c per share and another period of strong NAV appreciation.

"JZCP's micro cap portfolio continues to provide superior returns from recent realizations. Our geographical diversification includes further investments in Spain and Latin America. We have also begun to take advantage of exciting new opportunities in the credit and real estate sectors which will complement our core micro cap strategy.

"A proposed simplification of our capital structure through the transfer to the Specialist Fund Market will enable the Company to continue to grow without potential regulatory and shareholder restrictions and the change in dividend policy will benefit our shareholders with a more predictable and easy to understand dividend."

David Macfarlane, Chairman of JZCP, said:

"The results underline the Company's disciplined investment strategy and its focus on providing superior returns for shareholders. In addition, we are proposing several strategic initiatives to further enhance long-term shareholder value and pave the way for the future success of the Company. We look forward to the coming year with confidence."

There will be an analyst and investor presentation to discuss JZCP's recent financial performance and portfolio developments at 9.30am at FTI Consulting, 26 Southampton Buildings, London WC2A 1PB. It can be accessed by dialling +44(0)20 7784 1036 (UK) or +1 646 254 3364 (US) with the participant access code 7495640.

A playback facility will be available two hours after the conference call concludes. This facility may be accessed until 25 May 2012 by dialling +44 (0)20 7111 1244 or UK +1 347 366 9565 US. The code to access the playback facility is 7495640. A recording of the investor call will also be available on JZCP's website within a few days of the call.

For further information:

Neil Doyle/ Ed Berry +44 (0)20 7269 7237 / 7297

FTI Consulting

David Zalaznick +1 212 572 0800

Jordan/Zalaznick Advisers, Inc.

About JZCP

JZCP is a London listed private equity fund which invests in high quality US and European micro cap companies. Our 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"), founded by David Zalaznick and Jay Jordan, which has advised JZCP for twenty five years and has investment professionals and offices in New York, Chicago, London and Madrid. JZAI's experts work with the existing management of micro cap companies to help build better businesses, create value and deliver strong returns to our 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

Chairman's Statement

I am pleased to report the results of JZ Capital Partners Limited ("JZCP" or the "Company") for the twelve-month period ended 29 February 2012 and a number of strategic initiatives which are aimed at ensuring the future success of the Company and generating more stable, superior long-term returns for our shareholders.

PerformanceThe Company's disciplined, value-orientated investment approach has once again provided a solid platform for another strong set of full year results and has provided the 14th consecutive quarter of Net Asset Value ("NAV") growth; including dividends paid, we have shown a total NAV return for the last three years of 18%. This is an excellent achievement considering the sustained challenging trading environment, which remained unpredictable throughout the period, despite glimpses of an equity market rally towards the end of 2011.

The positive performance of the underlying assets led to a 6% increase in NAV to US$615 million (2010: US$581 million) giving rise to a NAV per share of US$9.47 per share (2010: US$8.93). The Board is pleased to announce a record full year distribution of US$16.3 million (2010: US$15.9 million) or 25.0 cents per share (2010: 24.5 cents per share), providing shareholders with a total NAV return (NAV appreciation and reinvested dividends) of 8%.

The Company has built on the heightened levels of investment activity during 2010 with further investments and realisations across the core portfolio during the period. Investing in good quality companies with strong growth prospects remains a continued focus for JZCP and the Company continues to exploit a broad range of industry verticals and geographies to originate suitable assets. At the end of the period the portfolio consisted of 44 companies across 10 industry sectors and within the US, Europe and now Latin America.

Valuations in the micro cap space, the main growth driver for JZCP, held up well relative to the rest of the private equity sector and the Company was able to make five significant realisations generating US$156 million. The US micro cap portfolio continues to form the mainstay of the Company's investment and realisation activity and 2011 was no exception, with US$53.3 million of investments made during the period, with an average entry multiple of 5.8x.

Our exposure to the European micro cap sector continues to compliment and diversify the US micro cap portfolio and is becoming a strategically important segment of the business. The challenging economic environment in Spain has provided five investment opportunities for the Company to date and we continue to explore other opportunities at distressed prices in the region and across Europe. Our European portfolio represents 12% of NAV as at 29 February 2012 (now 14% of NAV since period end).

Since the period end, we have started to exploit our value-orientated approach in Latin America, a market with a positive demographic trend that has huge growth potential and importantly it will provide our portfolio with further geographic diversification. Due to the strong performance of our European portfolio and the considerable scope for further activity in the region and further co-investment opportunities in Latin America, the Board feels that it is in the interest of all shareholders to have the option to increase the percentage of the portfolio which can be invested outside the US from 20% to 30% of the portfolio.

I'm also pleased to report some other exciting opportunities that will complement our core micro cap strategy. Our track record of investing in credit and the current dislocation in the real estate market has led us to some quality investment opportunities in the secondary mortgage loan market. These assets have the potential to provide a high yield and capital appreciation, so fit nicely within the Company's risk reward profile.

JZCP is also taking advantage of opportunities within the New York retail and commercial real estate market through a new partnership with a real estate developer.

Separately the Company is establishing a new asset management business in the US that will address the growing demand from endowments and pension funds for fiduciary management services. We look forward to updating the market on the progress of these early stage investments later in the year.

Strategic Initiatives

The Company continues to experience interest from a number of investors from the US, which are attracted by the shareholder returns generated by JZCP. With that in mind, shareholders will be receiving a communication about a proposed restructuring of the Company's Ordinary share capital, the rationale for which I would like to address briefly below.

The Company has had an equity capital structure to date which has included listed Ordinary shares and unlisted Limited Voting Ordinary shares (LVOs). This structure restricts the Company's ability to accommodate the growing number of US investors looking to invest in JZCP, as outlined above

In light of this trend and given the potentially onerous and costly US regulatory consequences caused if voting control of JZCP is owned by US shareholders, the Board feels that it is in the interest of all shareholders to devise a capital structure that resolves this issue on a permanent basis. The Board has explored a wide range of options and has concluded that this shareholder restriction be removed by a restructuring of JZCP's capital that includes a change to a single class of Ordinary shares.

Part of the proposed structure is that there are restrictions on the voting rights of shareholders who cannot or do not confirm that they are not US persons. This would mean JZCP's Ordinary shares would not be eligible for listing on the premium segment of the Official list and would be transferred, together with the ZDP shares, for admission to trading on the London Stock Exchange's Specialist Fund Market (SFM).

The new capital structure will provide the following benefits to shareholders:

- Better reflect the Company's market capitalization

- Promote a free flow of Ordinary shares giving improved access for US investors

- Provide a resolution of existing US securities laws regulatory risk

- All ordinary shareholders will hold a single class of listed Ordinary shares

- No forced conversion or sell downs as required under the current situation when the percentage of US shareholders exceeds 50%

These proposals are subject to shareholder approval and further information can be found in the Circular distributed to shareholders and in today's separate regulatory announcement.

DistributionsThe Directors declared and paid an Interim Dividend of 3.5 cents per share for the six months ended 31 August 2011 and paid a Special Dividend in respect of that period of 3 cents per share. The Board recommends a final dividend for the year of 18.5 cents per share. Therefore, subject to shareholder approval of the proposed Final Dividend, the total distribution for the year will be 25.0 cents per share, compared to 24.5 cents for the year ended 28 February 2011. Much of this additional 18.5 cents is due to significant cash income generated from Paid in Kind ("PIK") interest and preferred dividends paid in cash from the realizations mentioned above.

The Board continues to be mindful of the significant discount to NAV at which the Company, and the majority of the wider listed private equity sector market is trading and continually explores options that are aimed at providing a long-term solution to narrow the discount.

Accordingly the Board is proposing to make dividend distributions that are regular and predictable, through a change in dividend policy.

Historically it has been the policy to distribute, as regular interim and final dividends, the majority of JZCP's net cash income and as special dividends non-cash income, largely PIK interest, when it is converted into cash. Whilst recently the Board has been able to say that conditions are tending to be such as to allow the payment of special dividends, their payment has been irregular in terms of amount and timing and at the same time as a result of low interest rates, net cash income is tending to reduce. Accordingly shareholders have had no certainty of yield or progression.

The distribution for the year ended 29 February 2012 has been determined on the historic basis. But for the current financial year and thereafter it will be the Directors' policy that the dividend will be calculated as 3 per cent of NAV per year (1.5 per cent at each of the interim and final stages) implying a yield at the discount (as at 16 May 2012) of approximately 4 per cent.

OutlookThe outlook for the Company continues to be positive: we are well positioned to take advantage of a healthy pipeline of investment and realisation opportunities in the micro cap sector in US and Europe whilst pursuing some exciting investments diversified by industry and geography.

As outlined above, our shareholders will have the opportunity shortly to vote on a number of strategic initiatives that have been proposed to further enhance long-term shareholder value and that the Board believes will pave the way for the future success of the Company. We look forward to the year ahead with confidence.

David Macfarlane

Chairman

17 May 2012

Report of the Directors

The Directors present their annual report together with the audited financial statements of JZ Capital Partners Limited (the "Company") for the year ended 29 February 2012.

Principal Activities

JZ Capital Partners 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 Share Capital consists of Ordinary shares and Zero Dividend Preference ("ZDP") shares. The Ordinary and ZDP shares were admitted to the official list of the London Stock Exchange on 27 June 2008.

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

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

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

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

Business Review

The total profit attributable to Ordinary shareholders for the year was US$45,044,000 (year ended 28 February 2011: profit of US$137,243,000). The revenue return for the year was US$25,202,000 (year ended 28 February 2011: US$30,120,000), after charging administrative expenses of US$2,786,000 (year ended 28 February 2011: US$2,094,000) and Investment Adviser's base fee US$10,247,000 (year ended 28 February 2011: US$8,667,000) and an income incentive fee payable to the investment adviser of US$4,410,000 (28 February 2011: US$nil). The net asset value (NAV) of the Company at the year end was US$615,462,000 (28 February 2011: US$580,788,000) equal to US$9.47 (28 February 2011:US$8.93) per Ordinary.

For the year ended 29 February 2012, the Company had US$1,633,000 (year ended 28 February 2011: US$15,056,000) of cash inflows resulting from operating activities.

A review of the Company's activities and performance is detailed in the Chairman's Statement and the Investment Adviser's Report.

The Directors' valuation of the listed and unlisted investments is detailed in the Investment Review.

Dividends

An interim dividend of 3.5 cents per Ordinary share (total US$2,275,651) and a special dividend of 3.0 cents (total US$1,501,558) was declared by the Board on 17 October 2011 and paid on 25 November 2011.

A final dividend of 18.5 cents per Ordinary share (total US$12,028,443) was proposed by the Board on 17 May 2012.

For the year ending 28 February 2013, it will be the Board's intention to distribute substantially 3% of the Company's net assets in the form of dividends.

Directors

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

David Macfarlane (Chairman)

David Allison

Patrick Firth

James Jordan

Tanja Tibaldi

All Directors are independent at the year end and throughout the year and to the date of this report.

*A foreign corporation shall satisfy the "qualified US person ownership test" if, for more than half the days of the corporation's taxable year:

(i) it is a CFC, and (ii) more than 50% of the total value of all the outstanding stock of the CFC is owned by one or more "qualified US persons".

Annual General Meeting

The Company's Annual General Meeting is due to be held on 3 July 2012.

Share Capital and Purchase of Own Shares

Details of the Zero Dividend Preference shares and the Ordinary shares can be found in Notes 17 and 18] respectively. During the year the Company did not buy back any of its own shares.

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

David Allison and Patrick Firth did not hold an interest in Ordinary shares during the year. 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 2012 and the date of this report.

Directors' Statement as to the Disclosure of Information to the Auditors

All the present Directors were members of the Board at the time of approving this report, and each of the Directors confirms that:

• To the best of his/her knowledge and belief, there is no information relevant to the preparation of this report of which the Company's auditors are unaware; and

• He/she has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company's auditors are aware of that information.

Independent Auditor

A resolution to re-appoint Ernst & Young LLP as auditor to the Company will be proposed at the next annual general meeting.

Substantial Shareholders

As at 29 February 2012 the Company has been notified in accordance with applicable legislation of the following interests in the Ordinary share capital and Limited Voting Ordinary ("LVO") share capital of the Company:

*At the date of this report (17 May 2012) Rothschild Private Management Limited held 3,921,118 Ordinary shares and no Limited Voting Ordinary shares in the Company.

**At the date of this report (17 May 2012) M&G Investment Management Ltd held 1,912,449 Ordinary shares and no Limited Voting Ordinary shares in the Company.

***At the date of this report (17 May 2012) Baillie Gifford held 1,820,523 Ordinary shares and no Limited Voting Ordinary shares in the Company.

****At the date of this report (17 May 2012) Legal & General held 1,361,458 Ordinary shares and no Limited Voting Ordinary shares in the Company.

All other holdings were the same as at the year end and 17 May 2012.

The percentage of Ordinary shares shown above represents the ownership of voting rights at the year end (LVO shares are not classed as having voting rights).

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

Statement of Directors' Responsibilities

The Directors are responsible for preparing the 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 requires that financial statements present fairly for each financial period the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the preparation and presentation of financial statements". In virtually all circumstances a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards.

In preparing Financial Statements the Directors are required to:

• Ensure that the Financial Statements comply with the Memorandum & Articles of Incorporation and IFRS, as published by the International Accounting Standards Board;

• 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 in 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:

• The Financial Statements, prepared in accordance with IFRS and in accordance with the requirements of the London Stock Exchange ("LSE"), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

• The Investment Advisers' Report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties faced by the Company.

The Directors are also responsible for the keeping of proper accounting records which disclose with reasonable accuracy at any time, the financial position of the Company and to enable them to ensure that the Financial Statements comply with the Companies (Guernsey) Law, 2008 and the Listing Rules of the London Stock Exchange. They are also responsible for the system of internal controls, safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom and Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Approved by the Board of Directors and agreed on behalf of the Board on 17 May 2012.

David Macfarlane Patrick Firth

Chairman Director

Investment Adviser's Report

We are pleased to report JZCP completed its fiscal year ending 29 February 2012 with strong investment returns, year on year growth in Net Asset Value ("NAV") and a substantial dividend distribution to shareholders. Our NAV (including dividends paid) was up 7.9%; on a per share basis the NAV went up to US$9.47 per share from US$8.93. JZCP's dividend will be 25.0 cents versus 24.5 cents last year. Our Company's balance sheet is exceptionally strong with enhanced liquidity from multiple realizations and repayment of debt investments. We received US$247.8 million in proceeds from realizations and deployed US$291.3 million in new investments over the past fourteen months.

Our NAV growth for the year was driven by (i) five successful realizations (ii) and positive performance in our underlying investments. Our robust dividend was provided in part, by realizations of the portfolio which resulted in cash payment of accrued income. Starting with this financial year ending 28 February 2013, it is the Board's intent to prescribe an annual dividend equal to 3% of JZCP's NAV; assuming this occurs, dividends, comprised of capital and income returns, will be paid to shareholders at a predictable rate that will not be subject to the dependence on realizing accrued income for a portion of the dividend.

Our investment style is relatively simple: we are value oriented investors that primarily buy already successful businesses in partnership with management at reasonable prices. We have worked with the respective management teams on strategic acquisitions, and over the years we have added operational improvements to help grow the value of our portfolio companies. We believe this is the way to achieve superior returns with less risk.

We have diversified JZCP's portfolio into many different industry sectors as well as geographically across the United States, and more recently, into Europe. As you will see in this report, we have started to add asset classes, such as real estate and distressed debt, applying the same disciplined investment approach we have always used.

Currently (May 2012), we have businesses in 10 different sectors. In addition, we have invested US$0.8 million in distressed debt, US$16.8 million in real estate and US$61.4 million in listed corporate bonds.

NAV Growth

For the twelve months ending 29 February 2012, JZCP's net assets increased from US$8.93 per share to US$9.47, a 6% increase (after the 16 cents of dividends paid in the same period), posting 14 consecutive quarters of growth. The chart below shows the source of JZCP's annual growth for this fiscal year:

Regarding the Increase in Underlying Investments above, over the course of the year, we have increased the valuation of four US micro cap businesses through both realized (20 cents) and unrealized (12 cents) means. We reduced the valuations of four US micro cap investments due to soft earnings performance (28 cents). In addition, we booked an increase in the valuation of the EuroMicrocap Fund investments, through the over-performance of Factor Energia, a Spanish power reseller (31 cents per share). Finally, the sale of Advanced Chemistry & Technology, Inc., a legacy investment contributed 8 cents to the NAV growth.

Portfolio Summary

Below is a comparison of our portfolio, comparing the year ended 29 February 2012 to previous year end. As you will note, our US micro cap portfolio decreased by US$50 million because we had two outstanding realizations (discussed below). Since 29 February 2012, we have completed three US micro cap investments (US$38.1 million), and two businesses outside the US (US$19.4 million).

Note that we have begun a program to purchase highly rated listed corporate bonds, as a means of earning an enhanced return on our cash. The obligors of these bonds are three highly rated banks: HSBC, JP Morgan Chase and Wells Fargo and mature from 2014 to 2016.

Micro Cap Portfolio

We had significant activity in our US and European micro cap portfolio, investing US$180.4 million over the past year (including the two months past the end of the fiscal year). The average entry multiple was 5.6x and the average leverage was 1.2x.

US investments

• As part of our strategic build up in sensors, in December 2011 we invested US$22.5 million to acquire a 33% stake in Amptek, Inc., a designer and manufacturer of x-ray detectors. The investment consists of 7% preferred and common stock. We are very pleased to partner with Amptek's very accomplished and motivated management team. This is our second investment in our Sensors vertical, managed by Gerry Posner.

• In August 2011, we made our third Industrial Services vertical acquisition - Southern Parts and Engineering Company ("SPECO"), an independent supplier of aftermarket products and services for industrial air compressors. The company provides internal parts, filters, and lubricants for most reciprocating and rotary OEM brands of compressors. Our US$6.6 million investment in SPECO consists of US$4.5 million of 10% notes and US$2.1 million of preferred and common stock, representing 34% of the equity in this business.

• We acquired Nashville Chemical, in March 2011 which was the first investment into our water vertical. Nashville Chemical is a speciality water treatment, chemical and services company; which treats boilers, cooling water, and process water systems for industrial and commercial customers. Nashville Chemical's water treatment solutions remove harmful contaminants from water, which ultimately improve the efficiency and extend the life of its customer's assets.

• Our US$7.0 million investment in this entity consists of US$3.8 million in notes, and US$3.2 million of preferred and common stock representing a 33% ownership in this company.

• In June 2011, we co-invested with Baird Capital Partners in Justrite, a leading designer and manufacturer of safety products for the handling and storage of flammable and hazardous liquids. Manufacturers, laboratories, commercial buildings and other users of flammable and hazardous liquids rely on Justrite products to comply with regulatory requirements, meet safety codes and prevent catastrophic events caused by fires or spillage. We invested US$4.4 million in preferred and common stock, representing a 11% ownership in this company.

• Throughout the year we invested an additional US$10.0 million in Milestone Aviation, a helicopter leasing business, bringing our investment stake in this business' preferred and common stock to US$12.9 million. This investment represents 8% of Milestone equity.

• In April 2012, we purchased Bay Valve Service and Engineering, a Seattle Washington based refurbisher of larger valves for a variety of end users, from oil refineries to power generation plants. Bay Valve is part of our Industrial Service solutions vertical overseen by Jim Rogers. We invested US$18.7 million in debt and equity securities, including 31% of the business's equity. We are excited to add Bay Valve to the ISS family of businesses, including Horsburgh and Scott gears, MidAmerican rubber plant services, and SPECO compressors.

• In April 2012, we made an investment in Medplast/UPG, a plastic molding company specializing in high margin healthcare molded products. This business has 10 plants around the world, using a variety of proprietary techniques. Baird Capital Partners, is the lead investor in this transaction; we purchased US$17.5 million of securities, including US$10.0 of 14.5% subordinated notes and US$7.5 million of preferred and common equity. The equity represents a fully diluted 11% of the business.

• We also made a commitment of up to US$15.0 million into a new asset management portfolio company, run by David Russ. David brings with him an impressive track record as Chief Investment Officer of Dartmouth College's endowment, as well as having senior investment roles at Stanford University and the Regents of the University of California. His plan is to approach smaller endowments and pension funds who have limited resources and offer them an institutional grade investment management program; this type of asset management business is known as an "outsourced CIO/Endowment model." We are excited to be working with David and will report more on this business as developed.

European investments

JZCP is investing in the European micro cap sector through its 75% ownership of the EuroMicrocap Fund ("EMF"). Exposure to the European micro cap sector continues to compliment and diversify JZCP's existing micro cap portfolio and 2011 saw significant activity in this strategically important sector. As at 29 February 2012, the European micro cap portfolio represented 11% of total NAV, and now 14% of NAV after our investment in Oro Direct (described below) this past March.

As you may recall, we have an office in London and Madrid and an outstanding team with over ten years of investment experience in European micro cap deals. During the fiscal year ended 29 February 2012 (plus the two months following) EMF has made the following investments.

• In April 2011, EMF acquired Docout, a provider of digitalization, document processing and storage services to Spanish financial institutions, utilities and insurance companies. EMF invested €11 million in equity and JZCP directly loaned Docout €2.0 million for working capital. Docout was awarded the largest document outsourcing contract from Bank Santander just prior to its acquisition. Docout has already begun to expand its business to Latin America and the UK in conjunction with its large customers.

• In May 2011, EMF made a €12.7 million investment in Grupo Ombuds, a leading provider of security, surveillance and facility services to public sector and blue-chip clients in Spain. JZCP also loaned the company €5.0 million in a 8.0% senior debt and €3.5 million in 15% junior debt (5% cash and 8% PIK).Ombuds' service offering includes personal security protection to government officials and corporate executives, asset protection, security services to public and corporate buildings and the provision of ancillary facility services. The company is a niche player with strong growth potential and has a leading market share in Spain.

• In March 2012, EMF acquired 29.7% of Oro Direct, a leading precious metals trading business in Spain. EMF invested €13.5 million along side a co-investor, LFPI, which invested €11.5 million for 25.3% interest. Based in Valencia, Spain, Oro produces scrap gold and silver from 1,500 pawn shops and jewelers for the spot price less a commission per kilo transacted. The precious metals are then sold on to a refiner in Switzerland. This business is very scalable and opened an office in Vienna immediately after our transaction.

The EMF made two additional investments during fiscal 2011, JZCP's share through EMF of all five of its investments represented 14% of JZCP's total assets as at 29 February 2012.

Significant realisations

In July 2011, we sold one of our oldest investments, Advanced Chemistry & Technology, Inc. for a significant gain. JZCP received US$18.2 million for its US$3.4 million investment, representing a 5.6x multiple of capital invested. This sale represented a US$5.5 million increase in NAV, from the 28 February 2011 valuation.

In October 2011, JZCP realized the sale of Document Holdings Corporation, the parent of Dantom Systems, Inc. Dantom was purchased in April 2005 as a platform to acquire and manage businesses that provide integrated services to third party debt collection agencies and to other consumer billing companies. The US$40.5 million JZCP received created a 4.8x multiple of equity invested, and a 27% IRR. We realized a US$5.4 million NAV increase from this sale, versus the 28 February 2011 valuation.

In November 2011, JZCP also realized US$83.0 million from the sale of its wound care businesses, Wound Care Holdings and Sechrist. The transaction represented a multiple of equity invested of 1.9x, and an IRR of 14%. Although JZCP had been writing up these investments over time, the sale still represented a US$7.3 million NAV increase.

In January 2012, we were repaid our US$29 million debt position in Continental Cement, a cement factory in central Missouri. We were paid in full with accrued interest.

During the year ended 29 February 2012 and post year end, JZCP sold 1,023,080 shares of TAL International Group, Inc ("TAL") in three secondary offerings realizing US$37.6 million. TAL has been a very successful investment, we plan to continue realizing our remaining share stake (357,418 of shares) in the next year.

Other Sectors

Over the past year, the bulk of our Mezzanine Portfolio has been re-paid due to the strength of the high yield debt market. We currently have two mezzanine investment of size, HAAS TCM, Inc., an automobile paint system supplier company. HAAS has been performing well, and paying cash interest per its terms.

Our largest mezzanine investment is TTS LLC ("TTS") (technical facilities for mechanical services), which is a US$15.2 million note. TTS is current on all interest and principal owed to us.

The only significant Legacy Portfolio investment left is Healthcare Products, our power wheelchair company. Despite the vicissitudes of dealing with Medicare, its primary customer, this company continues to perform to plan and we're hopeful of a successful exit above its valuation of US$22.7 million in our NAV.

Our Listed Equities declined with the market: TAL (the international container leasing company) and Safety Insurance (a Massachusetts based insurance company) together accounted for a reduction of per share NAV of 26 cents or US$17 million. During the year ended 29 February 2012 and post year end (as previously mentioned), we were able to sell 51% of our position in TAL in three successful secondary share offerings, for a US$27.3 million gain.

Our approach to credit opportunities (such as mezzanine loans) has always been based on our valuation of underlying business assets. Given the current dislocation in real estate related assets, we focused on funding interest bearing opportunities that meet our risk reward criteria i.e. the credit worthiness is supported by a conservative loan to value ratio.

We have begun to invest in secondary mortgage loans at a significant discount from par. These loans are being purchased with the help of experienced managers, directly from banks and government agencies such as the Federal Reserve.

Although we are just starting, we expect to be able to deploy US$50-100 million in high yielding paper with low loan to value ratios. These will produce a high current yield (above Treasuries and bank paper) and, depending on the discount, capital appreciation. We look forward to reporting more about this in the future.

In April 2012, we completed the purchase of almost an entire square block in Williamsburg, Brooklyn one of the fastest growing neighborhoods in New York City. We purchased over 100,000 square feet of retail units and forty apartments for approximately US$64 million. JZCP invested US$14.25 million in equity for a 75% ownership position.

Finally, in April 2012 we invested US$6.2 million in BSM Engenharia, a Brazil based infrastructure service business. BSM manages ports and other transportation focused infrastructure projects for businesses such as PertroBras, the nationally-owned oil company. Our 3.7% of BSM was purchased in conjunction with ACON, a very successful private equity group with significant Latin American experience. Given the exceptionally positive demographics in Brazil and certain other Latin American countries, we plan to look at other co-investment opportunities there in conjunction with other established private equity firms in the region.

Principal Risks and Uncertainties

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

Outlook

We believe the best way to achieve superior returns is by maintaining investment discipline and investing your (and our) money in a diversified portfolio of good quality niche businesses at reasonable prices. Our value oriented investment strategy has remained consistent through the years although the value-added/ operations management component has increased significantly. We are pleased to have excellent managers as partners and together we develop growth strategies and work on operational efficiencies for the respective portfolio companies. This approach to investing offers superior risk adjusted returns for our shareholders over the long-term.

We are making good progress in building out several of our investment verticals. The verticals will continue to be the growth engines for our NAV. We also think our co-investments with other private equity firms will provide great investment returns. Most importantly, our Company has never been more diversified and we will endeavor to continue to diversify by industry sector, asset class and to a lesser degree, geography, through our increasing exposure in Europe.

Furthermore, we expect our shareholders to benefit from the new dividend policy which will provide a more predictable level of distribution based on the Company's NAV. Most importantly, we will try not to lose any money along the way.

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

Yours faithfully,

Jordan/Zalaznick Advisers, Inc.

17 May 2012

Investment Review

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

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

*** Invested in deals with the Resolute Fund - see note 29.

Mezzanine Portfolio includes common stock with a carrying value of US$5,471,000 and preferred shares with a carrying value of US$187,000 these investments are classified as Investments at fair value through profit or loss.

Legacy Portfolio - Investments not subject to capital incentive fee. The listed equities Safety Insurance Group, Inc and Universal Technical Institute, Inc. are also classified as legacy investments for the purpose of calculating the incentive fees payable to the Investment Adviser.

Investment Review - Major Holdings

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

EuroMicrocap Fund 2010, LP

Headquarters: London, UK

Sector: Acquiror of Europe-based microcap companies

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

SAFETY INSURANCE GROUP, INC.

Headquarters: Boston, Massachusetts, USA

Sector: Property and Casualty Insurance

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

ACCUTEST HOLDINGS, INC.

Headquarters: Dalton, New Jersey, USA

Sector: Environmental Testing Laboratories

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

TAL INTERNATIONAL GROUP, INC

Headquarters: Purchase, New York , USA

Sector: Industrial Transportation

TAL International Group, Inc., which is listed on the New York Stock Exchange (NYSE: TAL), is one of the world's largest lessors of intermodal shipping containers with a fleet of over 945,000 standard dry freight, refrigerated and special containers which are serviced out of 225 container depots in 39 countries. The company's customers include shipping companies, distribution companies, manufacturers and transport companies.

BG HOLDINGS INC.

Headquarters: Cleveland, Ohio, USA

Sector: Industrial Gears

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

DENTAL HOLDINGS CORPORATION

Headquarters: Minneapolis, Minnesota, USA

Sector: Healthcare Equipment and Services

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

HEALTHCARE PRODUCTS HOLDINGS, INC.

Headquarters: Sarasota, Florida, USA

Sector: Healthcare Services & Equipment

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

SENSORS SOLUTIONS, INC.

Headquarters: Bedford, Massachusetts, USA and Boothwyn, PA

Sector: Sensors & Instrumentation

Sensors Solutions is the parent company of Nieilsen-Kellerman and Amptek, Inc. Nieilsen-Kellerman, located in Boothwyn, PA, is a producer of weather measurement devices. Amptek, Inc., located in Bedford, MA, designs and manufacturers instrumentation used in numerous non-destructive testing and elemental analysis applications.

TTS, LLC

Headquarters: Denver, Colorado, USA

Sector: Commercial services

TTS, LLC is the parent company of MSCH, Inc. MSCH, Inc. provides integrated energy efficiency services and contractural maintenance programs for heating, ventilation and air conditioning ("HVAC") systems, chilled water systems and building automation and controls.

KINETEK, INC.

Headquarters: Deerfield, Illinois, USA

Sector: Industrial Manufacturing

Kinetek, Inc. Is a provider of custom engineered control, monitor and drive system solutions for customers in the elevator/escalator, commercial floor care, material handling/aerial lift, commercial food equipment, renewable energy and medical markets.

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

Independent Auditors' Report

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

We have audited the financial statements of JZ Capital Partners Limited for the year ended 29 February 2012 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related Notes 1 to 32. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union.

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

Respective Responsibilities of Directors and Auditors

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

Scope of the Audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report for the year ended 29 February 2012 to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report

Opinion

In our opinion the financial statements:

• give a true and fair view of the state of the Company's affairs as at 29 February 2012 and of its profit for the year then ended;

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

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

Matters on Which We Are Required to Report by Exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 require us to report to you if, in our opinion:

• proper accounting records have not been kept; or

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

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

Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

Michael Bane

for and on behalf of Ernst & Young LLP

Guernsey, Channel Islands

17 May 2012

Notes:

1. The maintenance and integrity of the JZ Capital Partners Limited website is the responsibility of the Directors; the work carried out by the auditor does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

Statement of Comprehensive Income

For the year ended 29 February 2012