AFRICAN RAINBOW CAPITAL INVESTMENTS LIMITED CONDENSED UNAUDITED INTERIM RESULTS

Transcription

1 AFRICAN RAINBOW CAPITAL INVESTMENTS LIMITED CONDENSED UNAUDITED INTERIM RESULTS FOR THE PERIOD ENDED 31 DECEMBER African Rainbow Capital Investments Limit (ARC Investments) (Incorporat in the Republic of Mauritius) (Company number C148430) JSE Share Code: AIL

2 ISIN Code: MU0553S00000

3 Condens Interim Results for the period end 31 December KEY HIGHLIGHTS African Rainbow Capital Investments Limit (ARC Investments) list on the JSE on 7 September. The overriding objective of the company is to be a permanent capital vehicle for investors to invest in a broad-bas Black controll entity with an underlying high quality diversifi portfolio of investments. At listing, the Intrinsic Net Asset Value (INAV) (defin in Basis for preparation policy) of R 8,734 billion compris of Intrinsic Portfolio Value (IPV) of R 4,473 billion and cash and other net assets of R 4,261 billion. During the reporting period, the ARC Fund invest an additional R2,333 billion. Total INAV increas by 3,9 % to R9,076 billion at 31 December, comprising Intrinsic Portfolio Value of R7,086 billion, and cash and other net assets of R1,989 billion. The INAV per share as at 31 December increas from R8,46 at listing to R8,79 before dilution (R8,75 after dilution). Total number of ordinary shares issu is 1,032,470,588. Investments have generally shown good financial performance and growth. The ARC Fund continues to have a healthy deal fow pipeline. COMMENTARY 1. Listing African Rainbow Capital Investments Limit (ARC Investments) list on the JSE on 7 September and today announces its maiden interim financial results for the period end 31 December. ARC Investments is a subsidiary of African Rainbow Capital Proprietary Limit (ARC) which in turn is a wholly own subsidiary of Ubuntu-Botho Investments Proprietary Limit (UBI). ARC has made various investments since 2015 and has sold these investments to ARC Investments as part of the listing process. ARC Investments participates in the underlying investments through its limit partnership interest of 99,95% in the ARC Fund partnership (the ARC Fund), which is South African bas. Full details of the acquisitions and structure of the group were disclos in the Pre-Listing Statement issu on 28 August and publish on the company s website. This announcement provides a progress update of the business since listing in September. 2. Strategy The overriding objective in the listing of ARC Investments was to create a permanent capital vehicle that would ofer public shareholders capital appreciation as they invest in a permanent broad-bas Black controll entity with an underlying diverse portfolio of investments. The most significant benefit in this regard is access to high quality list and unlist companies which ARC facilitates. This allows ARC Investments shareholders access to a diverse portfolio of investments that would otherwise not be available to them. In addition, investments are acquir at an appropriate Black Economic Empowerment (BEE) illiquidity discount where the investment carries a BEE lock-in period. We believe these factors ofer a very attractive proposition to investors. The list platform does facilitate liquidity, which in turn allows investors to exit when they choose to do so. ARC has made more than 40 investments in portfolio companies since its formation in 2015 to the date of transfer to ARC Investments by following a deliberate building block approach. During this period, ARC acquir interests in businesses in specific financial and non-financial industries with the objective and firm belief that empowerment would enhance the competitiveness of the business. The investments made before the listing of ARC Investments were transferr to the ARC Fund at listing of ARC Investments. Acquisitions post listing have been conclud in the ARC Fund and African Rainbow Capital Financial Services Holdings Proprietary Limit (ARC Finholdco) in which the ARC Fund holds 49,9%. African Rainbow Capital Investments Limit Condens Interim Results For the period end 31 2

4 ARC Investments has a single investment in the ARC Fund in its capacity as a limit partner. The underlying investments of the ARC Fund are made in the following categories, under which the investments are manag in the ARC Fund by the fund manager, UBI General Partner Proprietary Limit (the General Partner): Diversife Investments o Telecommunications o Business Process Outsourcing o Mining, Construction and Energy o Property o Agriculture o Other Diversife Financiae Services o Insurance & Asset Management o Banking o Specialist Financial Services For investments in the Diversifi Financial Services portfolio, the ARC Fund seeks to drive synergies among portfolio companies. This allows the ARC Fund to build a holistic financial services business. For investments in non-financial services businesses within the Diversifi Investment portfolio, the approach is to invest in good stand-alone businesses and to back a strong and efective management team to deliver on the requir return on investment for the business. ARC Investments is 51,6% own by ARC. ARC is wholly-own by UBI, and UBI is majority own by various Motsepe Family Trusts. Broad-bas Black community groups are also key shareholders in UBI (as fully outlin below). UBI has been the strategic and empowerment partner to the leading financial services group, Sanlam Limit, since UBI owns a 13,5% interest in the issu shares of Sanlam Limit at 31 December. From the outset, the vision of UBI, has been to make a diference in the lives of ordinary South Africans by being a premier broad-bas Black own and Black controll financial services group in South Africa. The UBI group endorses Broad-Bas Black Economic Empowerment (B-BBEE) as a framework for the ristribution of wealth and resources to the poor and marginalis communities in the country, to address past systematic injustices previously impos on Historically Disadvantag Individuals (HDI). The intend goal of empowerment vehicles is to achieve meaningful transformation that empowers communities to positively improve the political, economic and social welfare of the lives of South Africans. Our continu support of various Women, Youth and Church groups in activities that focus on health care, youth ucation and development, sports, culture and social upliftment has benefit and empower many of the country s most vulnerable communities and groups. These groups have remain shareholders of UBI since inception in 2004, and they have benefit from the capital appreciation of the investment in Sanlam Limit. The key objectives of the UBI group include investing in financial services distribution businesses, acquiring strategic equity interests in underlying financial services product providers and acquiring majority or significant minority empowerment interests in select building blocks of a non-financial services business. The UBI group operates through the operating company, ARC, and the group s investment vehicles which comprise of ARC Investments and ARC Finholdco. The UBI group seeks to utilise its empowerment crentials, its financial strength, it s strong and well experienc leadership team and its strong brand to achieve superior capital appreciation for investors in ARC Investments. In the short space of time since listing in September, the group has continu to invest in quality investments that have achiev good growth in value and market share.

5 ARC Investments is incorporat and manag in Mauritius and holds a Category One Global Business Licence issu by the Financial Services Commission of Mauritius.

6 3. Operating Environment The sluggish economy has negatively impact some of the ARC Fund s portfolio companies as they have trad in a slow economy, low investor and business confidence, political uncertainty, increasing commodity prices and increasing fuel prices. These unfavourable economic conditions have negatively afect the performance of some of the investments. It is expect that these investments will show improv performance in the second half of the reporting period owing to the improv political landscape and revis economic outlook for the country in the mium term. The broadly diversifi portfolio of the ARC Fund has continu to demonstrate growth and perform satisfactorily against this background. 4. Leadership and Governance ARC Investments is l, manag and controll in Mauritius by an experienc, multinational and independent board of directors (the Board) that has final oversight and responsibility in respect of ARC Investments' business, strategy and key policies. This includes the investment in the ARC Fund. ARC Investments is a limit partner in the ARC Fund, an en commandite partnership establish in South Africa. It thus plays no role in the management or investment decisions of the ARC Fund. The General Partner of the ARC Fund is the UBI General Partner Proprietary Limit, a wholly own subsidiary of UBI. The Board consists of five non-executive directors, four of whom are independent. There are no executive directors on the Board of ARC Investments. As an investment holding company, ARC Investments will not appoint a Chief Executive Ofcer. Karen Bodenstein is the Chief Financial Ofcer of ARC Investments but not a director. Bridget Radebe is the Chief Financial Ofcer of UBI and a member of the investment advisory committee of the General Partner. Name (age) Nationality Function Mark Cyril Oliver (48) Deans Tommy Lo Seen Chong (58) Bridget Ntombenhle Radebe (37) Unit Kingdom Mauritian South African Independent non-executive director (Chairperson) Independent non-executive director Non-executive director Clive Msipha (37) Zimbabwean Independent non-executive director Renosi Mokate (60) South African Independent non-executive director During the period under review Sipho Nkosi resign and was replac by Renosi Mokate as an independent non-executive director onto the Board of ARC Investments efective 23 November. Karabo Nondumo also resign as a board member of UBI General Partner Proprietary Limit efective 12 December. All the investment decisions of the ARC Fund are taken by the General Partner through its investment committee or, subject to the terms of any delegations in place, its investment advisory committee. The ARC Fund's relationship with the General Partner is govern through a partnership agreement. The General Partner has, in turn, enter into the Investment Services Agreement with ARC. In terms of this agreement, ARC assists the General Partner to source investment opportunities for the ARC Fund and provides certain administrative and back ofce support to the General Partner.

7 The General Partner has a board of directors who are responsible for the general investment review of the ARC Fund as well as the management of the pipeline and liquidity of the ARC Fund. It also provides representation on the boards of directors of portfolio companies (where appropriate), is responsible for the preparation of the quarterly, half-year and year end valuation reports to ARC Investments and provides general feback to ARC Investments on relevant matters relating to the ARC Fund. The General Partner board members are: Patrice Tlhopane Motsepe BA (Legal), LLB, D.Com (Honoris Causa) Alexander Komape Maditsi BProc, LLB, LLM, Dip Company Law Johan van der Merwe MCom, MPhil (Cantab), CA(SA), AMP (Harvard), COL (Insead) Johan van Zyl Phd (Economics), D.Sc. (Agric) Non-executive director Non-executive director Executive director Non-executive director All investment decisions of the ARC Fund are made by the investment committee of UBI GP, which is a subcommittee of the Board of directors. Members of the investment committee are: Tom Boardman BCom, CA(SA) Patrice Tlhopane Motsepe BA (Legal), LLB, D.Com (Honoris Causa) Alexander Komape Maditsi BProc, LLB, LLM, Dip Company Law The General Partner s investment advisory committee supports the investment committee by sourcing and recommending investments for the ARC Fund. Members of the investment advisory committee are: Johan van der Merwe MCom, MPhil (Cantab), CA(SA), AMP (Harvard), COL (Insead) Charmaine Padayachy BCom (Accounting), Accounting (Hons), CA(SA) Bridget Ntombenhle Radebe BCom, BCom (Hons), CA(SA)

8 5. Investment strategy The initial underlying investment portfolio in ARC Investments through its investment in the ARC Fund compris of: 100% of ARC s interests in its non-financial services portfolio companies (within the Diversifi Investments portfolio). 49.9% of ARC's interests in its financial services portfolio companies (within the Diversifi Financial Services portfolio). By investing in a broad range of sectors and through a variety of types of list and unlist equity, the ARC Fund generally seeks to gain exposure to growth and early-maturity stage businesses in which management teams are appropriately incentivis. The ARC Fund generally seeks to acquire significant minority equity interests in establish and start-up businesses that meet one or more of the following attributes: experienc, qualifi and capable management; a demonstrable track record; strong cash fow generation; solid growth prospects; establish market position; the opportunity to consolidate their respective markets and/or existing businesses within the ARC Fund portfolio; and/or commercial prospects which can be enhanc by having strong B-BBEE crentials. Where the ARC Fund holds majority or significant minority interests in portfolio companies, the ARC Fund, where appropriate, seeks to provide broad strategic guidance to such companies. This is generally provid through participation on their Board of directors. The ARC Fund has the fexibility to participate in opportunistic investments as and when they arise and seeks to focus on transactions in South Africa and other select countries in Africa but may also invest in portfolio companies with interests and/or operations elsewhere in the world. The ARC Fund does not have a target size and may be gear, as appropriate, to meet its investment strategy. ARC Investments mium to long-term objective is to grow its INAV by at least 16% per annum. Each investment opportunity is expect to exce this minimum risk-adjust return hurdle on a stand-alone basis (i.e., without considering potential synergistical benefits that can be deriv from being part of a diversifi portfolio). The return threshold applicable to start-ups may be significantly higher than the 16% per annum hurdle, refecting the higher risks attaching to such ventures relative to establish businesses.

9 6. INTERIM FINANCIAL RESULTS Statement of Financial Position At 31 December (R mieeion) ASSETS Non-current assets Investment in the ARC Fund at FVTPL* Current assets Trade and other receivables Cash and cash equivalents Notes as at 31-Dec- at Listing 7-Sep- Audit at incorporati on 30 Jun 9 240, ,9-1,5 43,0 1,3 45,1 TOTAL ASSETS 9 284, , EQUITY Stat capital 8 775, , Retain income/ Accumulat loss 15,0 (12,1) (11,2) Share-bas payment reserve , Fair value reserve 435,1 - - LIABILITIES Current eiabieities Trade and other payables 15,6 14,0 11,2 TOTAL EQUITY AND LIABILITIES 9 284, ,3 - Number of orinary shares in issue (mieeion) Net asset vaeue per share (cents) ( ) 1 *FVTPL: Fair value through profit or loss 1 The net asset value per shares was deriv from the (R11 million) net asset value divid by 100 shares at incorporation.

10 Statement of Comprehensive Income from for the Total for the six 7 Sep- period to month period Audit For the six month perio ene 31 December to listing end at incorporation R mieeion Notes 31 Dec- 7-Sept- 31-Dec- 30-Jun- Fair value movements on the Investment in the ARC Fund at FVTPL* ,6-509,6 - Other income 0,9-0,9 Other expenses (4,5) - (4,5) Share-bas payment expense (43,8) - (43,8) 4 Profit/(loss) before taxation 462,2-462,2 Taxation Profit/(loss) for the period Other comprehensive income/(loss) TOTAL COMPREHENSIVE INCOME/(LOSS) 462,2-462, ,2-462,2 - (11, 2) - (11,2) - (11,2) - (11, 2) Earnings per share: Basic earnings per share (cents) ( ) 96 Dilut earnings per share (cents) ( ) 95 African Rainbow Capital Investments Limit Condens Interim Results For the period end 31 8 ( )

11 ( ) *FVTPL: Fair value through profit or loss African Rainbow Capital Investments Limit Condens Interim Results For the period end 31 9

12 Statement of Changes in Equity For the six month perio ene 31 December (R mieeion) Not es Share capital Retain incom Sharebas Payme nt reserv Fair value reserve Total Equity e e Balance at the beginning of the period Issue of shares Total comprehensive income/(loss) for the period - (11,2) - - (11,2) Balance at 30 June - (11,2) - - (11,2) Issue of shares: - Acquisition of portfolio assets settl with equity 4 506, ,9 - Issue of shares 4 300, ,0 - Share issue costs (31,5) (31,5) Total comprehensive income/(loss) for the period - (0,9) - - (0,9) Balance at listing 7 September 8 775,4 (12,1) ,3 Total comprehensive income/(loss) for the period - 462, ,2 Transfer to fair value reserve - (435,1) - 435, 1 - Equity settl share-bas payment ,8-43, 8 Balance at 31 December 8 775,4 15,0 43,8 435, ,3

13 Statement of Cash Flows For the six month perio ene 31 December (R mieeion) for the 6 month Audit Notes at period end incorporation 31-Dec- 30 Jun CASH FLOWS FROM OPERATING ACTIVITIES Cash utilis in operations before investment activities Cash invest in ARC Fund Partnership Net cash outflows from operating activities CASH FLOWS FROM FINANCING ACTIVITIES Issue of shares Share issue costs Net cash inflows from fnancing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period TOTAL CASH AND CASH EQUIVALENTS (1,5) (4 224,0) (4 225,5) ,0 (31,5) 4 268,5 43, ,0 - African Rainbow Capital Investments Limit Condens Interim Results For the period end

14 7. Accounting policies The Company was incorporat in the Republic of Mauritius on 30 June as a private company limit by shares. The Company holds a Category one Global Business Licence under the Financial Services Act 2007 and is regulat by the Financial Services Commission. The register ofce and principal place of business of the Company is locat at Level 3, Alexander House, 35 Cybercity, Ebène 72201, Mauritius. The principal activities of the Company are that of an investment holding company whereby it ofers shareholders long-term capital appreciation by indirectly investing in a diversifi portfolio of list and unlist private equity type investments. IFRS Portfolio Value Investments in the ARC Fund report in compliance with International Financial Reporting Standards (IFRS). Intrinsic Portfolio Value The Intrinsic Portfolio Value is determin by the directors every reporting period. The Intrinsic Portfolio Value is the IFRS Portfolio adjust for non-ifrs measures as set out in note The significant non-ifrs measure diferences comprise inter alia: Valuing underlying list investments on a 30 day VWAP basis (compar to closing spot price), net after tax Valuing underlying list investments after recognising BBBEE discounts (compar to closing spot price), net after tax. INAV Intrinsic Portfolio Value plus the cash and net assets in the ARC Fund. NAV The net asset value of ARC Investments determin in accordance with IFRS principles of recognition and measurement. Basis of preparation The condens interim financial statements are prepar in accordance with the recognition and measurement principles of IFRS, including IAS 34: Interim Financial Reporting, and the SAICA Financial Reporting Guides as issu by the Accounting Practices Committee and Financial Pronouncements as issu by the Financial Reporting Standards Council, and in accordance with the requirements of the Mauritian Companies Act 2001 in so far as applicable to a Category one Global Business Licens company under the Financial Services Act 2007 which is regulat by the Financial Services Commission, and the Listings Requirements of the JSE Limit. The accounting policies appli in the preparation of these condens interim financial statements are, where applicable to the prior financial period, consistent in all material respects with those us in the prior financial period, except for changes requir by the mandatory adoption of new and revis IFRS. None of the new accounting standards which became efective in the current financial period had a significant impact on the Company s results. All other accounting policies are consistent with IFRS, inter alia, financial instruments and cash and cash equivalents where IFRS ofers no accounting policy choice. The condens interim financial statements have been prepar under the historical cost basis except for investments which are measur at fair value. These condens interim financial statements were compil under the supervision of the Chief Financial Ofcer, Ms Karen Bodenstein, and were not review or audit by the Company s external auditor. The condens interim financial statements were approv by the Board on 12 March Key areas of judgement Fair vaeue measurement of the investment in ARC Fun The basis of valuation of the Investment in the ARC Fund is dependent on the basis of valuation of all investments in the ARC Fund Portfolio. The basis of valuation of all investments in the ARC Fund Portfolio and consequently the Investment at fair value through profit or loss (FVTPL), is fair value.

15 Fair value is determin as of the end of each quarter. All investments are valu in accordance with the valuation policy outlin below.

16 The General Partner values the investment portfolio in accordance with its valuation policy. Such valuation policy shall consider the International Private Equity and Venture Capital Valuation Guidelines (IPEV Guidelines) and shall be consistent with the below detail valuation approach, which will be consistent year on year except where there have been changes in circumstances in relation to an investment, and therefore the impact of such change would be disclos. Basis of vaeuation an approach The fair value approach of the investments in the ARC Fund will be determin as of the measurement date in accordance with the principles of IFRS 13. Fair value is defin as the price that would be receiv for an asset in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that a hypothetical transaction to sell an asset takes place in the principal market or in its absence, the most advantageous market for the asset. For eiste investments which are suitably liquid investments, the available market prices (calculat at spot on reporting date) will be the basis for the measurement of IFRS portfolio value for identical instruments. For uneiste investments, the primary valuation methodology appli will be the income approach (IA), discount cash fow (DCF) and compar against a market approach (MA), where appropriate. The General Partner will use its judgement to select the valuation technique most appropriate for an investment. The use of multiple valuation approaches on an investment is encourag. On a specific investment, a single valuation technique or approach may be appropriate (e.g., when valuing an asset using quot prices in an active market for identical assets). If multiple valuation techniques or approaches are us to measure fair value, the results of the various valuation methods are evaluat considering the reasonableness of the range of values indicat by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances. In determining the fair value of an investment, the General Partner should use judgement. This includes consideration of those specific terms of the investment which may impact its Fair Value. In this regard, the General Partner should consider the economic substance of the investment, which may take precence over the strict legal form. The General Partner should take the results of each of the valuation methods appli into account in concluding the final value of an investment. Foreign investments are those consider to be in jurisdictions outside of South Africa. These will be valu in the local currency of the country of investment and translat to Rand at the spot rate as at the valuation date. Lack of controe/minority interest: To the extent that an investment is a minority interest and is not easily able to be realis, an appropriate discount would be consider. However, to the extent that the ARC Fund has certain rights in respect of an investment (such as minority protections or board representations) these rights would be consider in the IFRS Portfolio value of the investment. Restriction on traing: To the extent that the ARC Fund is restrict from disposing the investment for a period, this restriction would be consider in the IFRS Portfolio value of the investment. Income Approach methooeogy When applying the income approach, the General Partner will consider the appropriateness of any sensitivity and/or scenario analysis. Discounte Cash Feow methooeogy Deriving the enterprise valuation of the investment using reasonable assumptions on the estimations of expect future post-tax cash fows and the terminal value (free cash fows to the firm), and discounting to the present value by applying the appropriate risk adjust rate that captures the risk inherent to the projections (weight average cost of capital). To arrive at an appropriate equity value, an adjustment for net indebtness will be made. Where appropriate, an adjustment to the valuation would be made for surplus non-operating assets and liabilities in the investment.

17 In some valuations (for example, insurance and banking valuations), the use of free cash fow to equity might be preferr. The length of period for which it would remain appropriate to use this valuation technique will depend on the specific circumstances of the investment and is subject to the judgement of the General Partner.

18 Market Approach methooeogy If a multiple approach is us, where appropriate, apply an Enterprise Value (EV)/ Earnings before interest, tax, depreciation and amortisation (EBITDA) or price/earnings (P/E) multiple that is appropriate and reasonable, bas on comparable companies and taking account of the size, risk profile and earnings prospects of the underlying company. In other cases, where appropriate, EV/EBITDA and price/book value may also be consider. The General Partner as Fund Manager of the portfolio assets is contractually bound to perform fair valuation of the portfolio assets on a quarterly basis and provide quarterly accounts and valuation reports with respect thereto to the partners of the ARC Fund partnership after approval by the Board of Directors of the ARC Fund Partnership on recommendation for such approval by the Audit Committee of the ARC Fund with the support, guidance and direction of the Investment Committee. Whilst the best judgement is us in determining the fair value of these investments, there are inherent limitations in any valuation technique involving securities of the type in which the ARC Fund invests. Therefore, the fair values present herein may not be indicative of the amount which the ARC Fund could realise in a current transaction. Controe over the ARC Fun The General Partner directs all the relevant activities of the ARC Fund. The Company does not have a currently exercisable right to remove the General Partner. Therefore, the Company does not control the ARC Fund nor does it have significant infuence over the ARC Fund.

19 8. Segmental information for the period end 31 December (R million) The Company's operations consist of the investment in the ARC Fund. The Company has only one operating segment in terms of IFRS 8, operating Segments. The chief operating decision makers (CODM's), being the board of directors, evaluate the investment in the ARC Fund bas on Intrinsic Portfolio Value and fair value movement in this Intrinsic Portfolio Value. This is disclos in note 9. Information of the ARC Fund is also report to the CODM's for the purpose of assessing segment performance. This is specifically focus on the reporting to the board of the Company by the General Partner in the ARC Fund through its Investment Committee under the adopt AIL Investment Guidelines policy. The construct thereof is on the basis of the Diversifi Investments and Diversifi Financial Services strategies and this is present below: [1] - Income from investments includes dividend income, interest on loans and directors fees pertaining to portfolio entities in the ARC Fund and ARC Finholdco; and the interest income and cash and cash equivalents in the ARC Fund and ARC Finholdco. [2] - The values are stat net of relat deferr taxation adjustments for the Portfolio assets held in ARC Finholdco. Diferences in the IFRS Portfolio Value and the Intrinsic Portfolio Value are explain below Return on investment portfolio Diversife Investments Telecommunications Business Process Outsourcing Mining construction and energy Agriculture Proper ty Other Diversife Financiae Services Insurance & Asset Management Specialist financial services Income from investment s [1] for the period end 31-Dec- IFRS Portfolio Value fair value adjustment s [2] for the period end 31-Dec- IFRS Portfolio Value fair value adjustments plus Income from Investments [2] for the period end 31-Dec ,9 191,9 20,9 (93,5) (72,6) 5,4 48,7 54,1 7,2 176,1 183,3 16,4 51,6 68, ,9 374,8 424,7 Intrinsic Portfolio Value fair value adjustment s [2] for the period end 31-Dec- Intrinsic Portfolio Value fair value adjustments plus Income from Investments [2] for the period end 31-Dec- 193,9 193,9 (188,8) (167,9) (25,5) (20,1) 177,0 184,2 53,2 69, ,8 259,7 11,2 55,1 66,3 59,5 70,7 African Rainbow Capital Investments Limit Condens Interim Results For the period end

20 Interest income: Cash an cash equivaeents Expenses irectey attributabee to the Fun TOTAL 69,4 440,2 509,6 279,9 349,3 African Rainbow Capital Investments Limit Condens Interim Results For the period end

21 Valuation of investment portfolio Diversife Investments Telecommunications Business Process Outsourcing Mining construction and energy Agriculture Property Other Diversife Financiae Services Insurance & Asset Management Specialist financial services Banking at Listing 7-Sep- IFRS Portfolio Value Net additio ns (includi ng capitali s interes t) IFRS Portfolio Value fair value adjustment s [2] as at 31- Dec- at Listing 7-Sep- Intrinsic Portfolio Value Net additio ns (includi ng capitali s intere st) Intrinsic Portfolio Value fair value adjustment s [2] as at 31- Dec- 774, ,5 191, ,9 772, ,5 193, ,0 783,9 555,7 (93,5) 1 246,1 866,6 555,4 (188,8) 1 233, ,9 105,1 48, , ,4 105,2 (25,5) 1 201,1 432,9 118,0 176,1 727,0 431,8 118,2 177,0 727,0 314,4 22,9 51,6 388,9 313,8 23,0 53,2 390,0-199,9-199,9-199,9-199, , ,1 374, , , ,2 209, ,2 - TOTAL 4 502, ,4 440, , , ,3 279, ,5

22 Other return on portfolio segment information Intrinsic Portfolio Value fair value adjustment s [2] for the period end 31-Dec- Intrinsic Portfolio Value fair value adjustments plus Income from Investments [2] for the period end 31-Dec- Profee List (196,7) (184,9) -Diversifi Investments (212,0) (200,2) -Diversifi Financial Services 15,3 15,3 Unlist 476,6 526,4 -Diversifi Investments 421,8 459,9 -Diversifi Financial Services 54,8 66,5 Interest income: Cash an cash equivaeents Expenses irectey attributabee to the Fun TOTAL 69,4 440,2 509,6-47,0 - (39,2) 279,9 349,3

23 Geographic South Africa 57,2 421,8 IFRS Portfolio 479,0 261,3 318,5 International 4,4 IFRS 18,4 Value 22,8 fair Income Portfolio value 18,6 23,0 Interest income: Cash an cash from 47,0 Value -fair adjustments 47,0-47,0 equivaeents investment value plus Income Expenses irectey attributabee to s [1] (39,2) adjustment - (39,2) from - (39,2) the Fun s [2] Investments [2] TOTAL 69,4 440,2 509,5 279,9 349,3 for the period end 31-Dec- for the period end 31-Dec- for the period end 31-Dec- 11,8 (27,9) (16,1) 11,8 (41,6) (29,8) 0,0 13,7 13,7 49,8 468,1 517,9

24 IFRS Portfolio Value Intrinsic Portfolio Value Other valuation of portfolio segment information Profee List -Diversifi Investments -Diversifi Financial Services Unlist -Diversifi Investments -Diversifi Financial Services TOTAL at Listing 7-Sep- Net additio ns (includi ng capitali s interest ) IFRS Portfolio Value fair value adjustment s [2] as at 31- Dec- at Listing 7-Sep- Net additio ns (includi ng capitali s interest ) Intrinsic Portfolio Value fair value adjustment s [2] as at 31- Dec ,2 266,1 (27,9) 1 595, ,8 266,0 (196,7) 1 403, ,9 0,3 (41,6) 1 035, ,4 0,3 (212,0) 866,7 280,3 265,8 13,7 559,8 255,4 265,7 15,3 536, , ,3 468, , , ,3 476, , , ,5 416, , , ,0 421, ,6 712,6 17,8 51,7 782,0 711,7 13,3 54,8 779,8 Geographic South Africa Internation al TOTAL 4 502, ,4 440, , , ,3 279, ,5

25 9. Detail Intrinsic Portfolio Value by reporting segment (R million) Diversifi Investments at listing 7-Sept ,2 Telecommunications 772,6 Rain 655,7 Additions / (Disposals) Fair Value Adjustment s at 31-Dec- Percent age of the ARC Fund 2 054,2 209, ,2 81.4% 1 052,5 193, ,0 28,5% 1 052,5 183,9 Efective Sharehol ding 1 892,1 26,7% 20,0% Metrofibre 116,9-10,0 126,9 1,8% 15,0% Business Process Outsourcing 866,6 555,4-188, ,2 17,4% Bluespec - 509,0-509,0 7,2% 25,0% Afrigem 323,8 37,3 (2,3) 358,8 5,1% 100,0% EOH 313,9 - (158,9) 155,0 2,2% 1,7% Humanstate 138, ,9 2,0% 10,0% Other Business Process Outsourcing 90,0 9,1 (27,6) 71,5 1,0% Various Mining, Construction and Energy 1 121,4 105,2-25, ,1 16,9% Afrimat 655,6 - (25,5) 630,1 8,9% 19,3% Elandsfontein 421, ,8 6,0% 25,0% Last Mile Fund - 92,5-92,5 1,3% 15,0% Other Mining, Construction and Energy 44,0 12,7-56,7 0,8% Various Agriculture 431,8 118,2 177,0 727,0 10,3% BKB 219,9-164,8 384,7 5,4% 20,0% Acorn Agri 211,9-12,2 224,1 3,2% 15,0% Other Agriculture - 118,2-118,2 1,7% Various Property 313,8 23,0 53,2 390,0 5,5% Majik Property Holdings 171,9 0,7 18,6 191,2 2,7% 18,5% Val de Vie 141,9-4,3 146,2 2,1% 20,0% Other Property - 22,3 30,3 52,6 0,7% Various Other - 199,9-199,9 2,8% Flge Capital - 199,9-199,9 2,8% 0,0% Diversifi Financial Services 967,1 279,1 70, ,3 18,6% Insurance and Asset Management 755,1 270,9 59, ,5 18,8% Alexander Forbes 415,0 265,8 20,0 700,8 9,9% 8,4% Afrocentric - 1,4% 3,6% African Rainbow Capital Investments Limit Condens Interim Results For the period end

26 83,3 18,6 101,9 ARC Health 89, ,8 1,3% 41,0% Colourfield 65,8 4,4 10,0 80,2 1,1% 14,1% Other Insurance and Asset Management 101,2 0,7 10,9 112,8 1,6% Various Specialist Financial Services 212,0 8,2 10,6 230,8 3,3% Ooba 97,3-9,2 106,5 1,5% 15,0% Other Specialist Financial Services 114,7 8,2 1,4 124,3 1,8% Various Total 4 473, ,3 279, ,5 100% African Rainbow Capital Investments Limit Condens Interim Results For the period end

27 Portfolio analysis 9.1. List companies List companies report as per the regulat reporting cycles and information on these companies is readily available. As such no additional information other than the information contain in the table above is disclos Diversifi Investments Telecommunications Rain Rain is aiming to become a full-service Mobile Network Operator, focusing on data as a primary ofering. The major assets constitute spectrum licences, including an allocation in the 1800 MHz band, along with the other major operators, as well as an allocation in the sought after 2600 MHz band, where Rain holds the only licence. Rain intends to build a dicat national LTE Advanc network and infrastructure that will eventually facilitate an environment where open access to the internet becomes a reality in South Africa, with the best possible quality and internet spe, at afordable rates. The Rain group consists of three main operating business units, namely Networks, Business to Business and Direct business. The Network business unit builds and manages the RAIN LTE Advanc network. The business unit is responsible for the capital expenditure to build a network of LTE sites and expand the network to enable nationwide connectivity for the Business to Business and Direct business units. In addition to the infrastructure, the network business unit is responsible for roaming agreements with other major telecommunication companies. The Business to Business unit provides of fix wireless connectivity to end users. Rain however currently does not directly sell to users, and the business relationship is with intermiary Internet Service Providers (ISP s). The Direct business represents Rain s mobile strategy which will be ofer directly to the public. The direct mobile technology is currently in beta testing phase and is expect to be releas to the public during At the stage when ARC engag to acquire the interest in Rain the company deriv very little income from its activities. It has since made significant progress. A network of over 2,000 sites has been establish and has interconnect all the major metros around South Africa. This already provides a sufcient platform and the Business to Business unit has successfully procur business which generates significant revenue and cash fow Metrofibre MetroFibre is an internet infrastructure company that provides manag fibre optic broadband connectivity in South Africa. MetroFibre customers consist of service providers, resellers, residential and business properties. Consumers can take advantage of an array of services that are tailor to meet their business nes Business Process Outsourcing Bluespec BlueSpec is a holding company compris of a number of specialist businesses which collectively aim to transform the repair and recovery industry to enable its customers to deliver more efective and efcient propositions to their clients in the most cost-efective manner. Business units include Incident Logistics ( FirstGroup ), Autobody Repair ( Renew-it Group ), Salvage ( Auction Nation ), Motor Retail ( Daytona Group ), Technology ( DreamTec ) and StraightThrough. BlueSpec is 51% black-own with WIPHOLD Investment Trust and The ARC Fund as the B-BBEE partners.

28 Afrigem Afrigem consists of Payprop SA, CSG, Consumer Friend and Infoslips. Payprop SA (Payprop) is a well-establish, market leading residential letting outsourcing business that ofers a unique end-to-end rental property management and compliance software platform. Payprop is an automat payment platform system that ofers settlement functionality within the real-time banking environment, enabling automation of the entire letting transaction life cycle according to property-specific payment rules set up by clients. Payprop s customers range from small independent letting agencies to large rental agencies. CSG Group is a list company and is a leading strategic outsource partner of choice for stafng solutions, facility management, security and relat services in Southern Africa. Consumer Friend is a debt review outsourcing service. Infoslips is a document outsourcing service Humanstate Humanstate is a private technology services group bas in the Unit Kingdom. It provides businesses and non- profit organisations with state-of-the-art web-bas software applications, integrat with on-demand payment processing bas on their global transactional platform. Humanstate is invest in PayProp SA (the business describ above), Payprop UK and in PayProp Canada. The South African business is mature whilst Paypop UK is in early development stage. The Canadian initiative is still in a start - up phase Other The other portfolio investments include: Autoboys Autoboys was establish in 2011 as part of the Retail Division of Grandmark International. In, the Parts and Glass Divisions were transferr into Autoboys Holdings, and The ARC Fund subscrib for a 51% interest. The company is a provider of aftermarket automotive parts and has a large market share of glass replacements for the insurance industry. Capitae Appreciation - list Mining, Construction and Energy Elandsfontein Elandsfontein Exploration and Mining is in the process of establishing a phosphate mine locat on the West Coast of South Africa. The deposit is the second largest known phosphate deposit in South Africa. The ARC Fund s investment in Elandsfontein Exploration and Mining is premis on securing an investment with Rand hge qualities and investing in an underlying commodity (phosphate, a key ingrient in fertiliser manufacturing) whose demand is correlat to global population growth and not strongly correlat to other commodity prices. There has been an appeal against the Integrat Water Use Licence which was grant to Elandsfontein in April. The court has referr the matter to the Water Tribunal. Elandsfontein is awaiting information on when the appeal will be consider by the Water Tribunal. We remain confident that the appeal will not be successful. Commissioning of the processing plant was postpon in July, following test results during the pre- commissioning phase. Extensive research has since been done to ensure consistency of the final product and the final decision in terms of reconfiguring certain sections of the plant to ensure optimal consistency and yield will be made shortly. It will require additional capital and commissioning is plann for early We remain very close to developments and are of the view that the issues will be resolv.

29 Last Mile Fund The Last Mile Fund is a black-own fund incorporat to take advantage of the opportunities that exist in the broader resource space due to the combination of volatile commodity cycles and policy uncertainty. The first transaction involv an investment in a coal asset Other The other portfolio investments include: a) Global Asset Management is a JSE AltX list holding company focus on asset-bas financing and development of alternative energy businesses. An investment of R13 million was made in Plastics Green Energy, a subsidiary of GAM, during the review period Agriculture BKB BKB is a leading agri-business in South Africa and is a mature, sound and diversifi business with sound management. An agreement was sign that enables ARC to efectively sell its investment in BKB to Acorn Agri upon the expiry of the BEE lock-in period in June 2018 by means of a put option. The put option price is R22.00 per share. ARC determin the present value of the put option price for purposes of the valuation Acorn Agri Acorn Agri is a long-term investor focusing on food and food processing, agricultural processing and the agricultural value chain. Acorn Agri currently has investments in Overberg Agri, Lesotho Milling, Montagu Dri Fruits and Nuts, BKB, Grassroots and ACG Fruit. Acorn Agri has enter into an Amalgamation Agreement with Overberg Agri whereby the two entities will amalgamate their respective businesses into one combin entity and thereby create a leading national agriculture and food investment company, with a shar culture and values, a focus and complementary investment portfolio, proven management and track record Other The other portfolio investments include: The RSA Group RSA is a horizontally integrat sales organisation which ofers a unique value proposition to the suppliers of fresh produce in the agricultural space across all channels. Subtropico Subtropico operates in the food and agricultural sector, focusing mainly on the services sector in these industries. The Group consists of a fresh produce market agent, livestock agents, a packing facility, an equity interest in Farmwise, shareholding in Natsure, and a shareholding in KLK Landbou Property Majik Majik is a private equity structure which invests in commercial real estate in the Unit Kingdom. The investment is held through Majik Property Holdings Limit, which is a limit partner in the Squarestone Growth Limit Liability Partnership (Squarestone). The business of Squarestone involves the acquisition, active management, holding, marketing and sale of secondary commercial real estate in the Unit Kingdom, with a prominant focus in Scotland and the North of England.

30 Val de Vie Val de Vie is an establish luxury residential estate locat in Paarl. After a recent acquisition, Pearl Valley Estate now forms part of Val de Vie. The result will be a mega estate. Paarl is fast becoming a new node separate from the Cape Town northern suburbs Other The other portfolio investments include: Setso Property Fun Setso is a majority black own unlist real estate fund with a diversifi portfolio comprising commercial and retail assets. The portfolio is spread across Gauteng and the Western Cape and covers square meters of lettable space. ARC Property Deveeopment - consisting of additional fix property in Val de Vie Other Flge Capital Flge Capital is an independent investment company bas in South Africa. Flge provides funding solutions to private companies within a wide range of industries. Investments include Safari and Outdoor, WeBuyCars and Better Life. ARC advanc R200 million to Flge during the period under review in the form of a loan, which will convert to equity when Competition Commission approval for the equity transaction is obtain. The Fund will ultimately acquire a 51% interest in Flge Capital Diversifi Financial Services Insurance and Asset Management Alexander Forbes ARC Financial Services Holdings owns 10% of the operating company Alexander Forbes Limit and owns 8,9% in the list company Alexander Forbes Group Holdings Limit. ARC Financial Services Holdings has the right to convert its shareholding in Alexander Forbes Limit for shares in Alexander Forbes Group Holdings Limit in two years time. The conversion ratio per the agreement currently translate to shareholding of 8.8%. The efective combin shareholding in Alexander Forbes Group Limit on conversion is currently 16.9% (after taking into account the dilution impact of the fip up on current shareholding in the list entity). The ARC Fund (through its 49.9% in ARC Finholdco) thus has an efective shareholding of 8.4% ARC Health Group ARC Health is a private investment company, majority own by ARC and manag by ARC Health Managers. This business primarily consists of three key underlying businesses operating in various parts of the value chain servicing mainly the entry-level market. The ARC Fund has engag with ARC Health Managers after the reporting period with a view to simplify the holding and management structure during the following 6 months.

31 Colourfield Colourfield Liability Solutions is an asset management firm which specialises in Liability Driven Investment (LDI), goals-bas investing, the management of infation link bonds and smart beta equity management solutions. Colourfield recently enter into an agreement with Alexander Forbes Investments to provide a new LDI retirement solution call Alexander Forbes ClarityTM. It is an investment framework that provides members of retirement funds with an ability to meaningfully focus on and engage with their retirement income goals. The launch of Clarity will significantly enhance the value proposition of Alexander Forbes to its clients Other The other portfolio investments include: Santam Limite - list Inwe Broker Services - Indwe is an independent South African general insurance broker that provides personal insurance, business insurance and specialist risk consulting services to private, commercial and corporate clients. EBS Internationae - EBS International provides host member administration and asset management solution platforms as well as providing technology, consulting, disaster recovery and business continuity services Specialist Financial Services Ooba Ooba is primarily a mortgage originator with a strong life and general insurance business fowing from the origination. Ooba is one of the leading players that dominates the South African origination landscape. The company is generally performing well despite subdu economic conditions. The value increase is attributable to both the origination and insurance businesses Other The other portfolio investments include: A2X - An alternative stock exchange for the secondary listing of companies Consteeeation Capitae - A research and broking business in the South African equity and currency derivative market. Ege Growth - A leading enterprise and supplier development firm that focuses on strategic partnerships between business and SME development, commercial leadership and enterprise development strategy. Aeternative Prosperity - A majority black-own company that ofers products and services in responsible investment, transformation and sustainability. Bravura - Bravura ofers astute and sound financial solutions underpinn by an independent and fexible approach as well as rigorous risk management practices. Sinayo Securities - Sinayo Securities specialises in equity sales and trading of list South African companies. It provides quality services to institutional investors. Sinayo Securities is majority own by black women and Level 1 B-BBEE.

32 10. Notes to the unaudit condens interim financial statements for the period end 31 December 10.1 Investment in ARC Fund at FVTPL The company obtains exposure to and has indirect interests in a diversifi pool of list and unlist investments (Portfolio Companies) by investing as a Limit Partner into an en commandite partnership establish in South Africa known as the ARC Fund Partnership (SA) (the ARC Fund or the fund) through commitments into the fund, manag by a Black-own and controll Fund Manager, UBI General Partner Proprietary Limit (UBI GP Co.) as the General Partner. Investment objective Company's mium- to long-term objective is to grow its NAV by at least 16% per annum, risk adjust, gross of dividend distributions and any management fees paid to the general partner of the ARC Fund and any performance participation. Each investment opportunity will be expect to exce this minimum risk-adjust return hurdle on a stand-alone basis (i.e., without taking into account potential synergy benefits that can be deriv from being part of a diversifi portfolio). The Company has a detail Investment Policy, which has been formulat in compliance with section 15 of the Listings Requirements as well as certain other ancillary matters, which sets out its investment strategy, investment objective, investment focus and investment parameters which is also mirror in the ARC Fund Investment Guidelines. The details of the investment policy and guidelines of the Company are available on its website. Any material changes to the Investment Policy of the Company must be approv by Shareholders of the Company by way of ordinary resolution. Any future changes to the investment guidelines of the ARC Fund must be approv by the Company, as an amendment or variation to the Partnership Agreement. " The investment in ARC Fund is a financial asset designat at fair value through profit or loss (financial asset at FVTPL) and measur in accordance with IFRS 13, Fair Value Measurement, principles as set out in note 7, Basis of preparation. Categorisation of investments The investment in the ARC Fund is a financial asset that is designat as fair value through profit or loss ("FVTPL") upon initial recognition. The investment is manag and its performance evaluat on a fair value basis, in accordance with the company s document risk management and investment strategy, consequently information about the investment is provid internally on that basis. It is stat at fair value, with any gains or losses arising on re-measurement recognis in profit or loss. Investments made by the fund are broadly categoris as: - Equity interests in Portfolio Companies which are a group of financial assets that are designat as fair value through profit and loss ("FVPL") upon initial recognition and is manag and its performance evaluat on a fair value basis, and the basis of accounting is the same as the investment in the ARC Fund describ above. The investments are initially recognis at cost with associat transaction costs directly attributable to the investment capitalis to the cost of the investment. Day one gains, which typically arise in Broad-bas Black Economic Empowerment ("B- BBEE") transactions which result in an investment at a discount to the fair value at acquisition date are recognis in profit and loss.