for the six months ended 30 september - capital appreciation · absent terminal delivery delay,...

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Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019 and Cash Dividend Declaration

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Page 1: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

Un

aud

ited

Inte

rim C

ond

ense

d

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

end

ed 3

0 S

epte

mb

er 2

019

and

Cas

h D

ivid

end

Dec

lara

tion

Page 2: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October
Page 3: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

1

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

Una

udite

d R

esul

tsFo

r the

six

mon

ths

endi

ng 3

0 S

epte

mbe

r 201

9

Page 4: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

2

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

2

OU

TLIN

E

CA

PP

RE

C o

verv

iew

Hig

hlig

hts

for t

he p

erio

d

The

oppo

rtuni

ty

Fina

ncia

l per

form

ance

Abo

ut o

ur in

vest

men

ts

Pro

spec

ts

1 2 3 4 5 6

Page 5: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

3

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

3

AB

OU

T C

API

TAL

APP

REC

IATI

ON

We

are

a fin

anci

al te

chno

logy

com

pany

that

see

ks to

ser

ve o

r par

tner

with

est

ablis

hed

and

emer

ging

fin

anci

al in

stitu

tions

and

oth

er la

rge

corp

orat

es

Paym

ents

& P

aym

ent

Infr

astr

uctu

reSo

ftwar

e &

Ser

vice

s

AF

RI

CA

N

CTA

Ent

erpr

ise

Dev

elop

men

t Fun

d

CTA

35%

Page 6: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

4

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

4

HIG

HLI

GH

TS

Page 7: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

5

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

5

INTR

OD

UC

TORY

CO

NSI

DER

ATIO

NS

–H

1 FY

’20

DEL

AY IN

DEL

IVER

IES

FRO

M S

UPP

LIER

INVE

STM

ENT

INO

PER

ATIN

GIN

FRAS

TRU

CTU

RE

Pro

duct

ion

and

deliv

ery

dela

ys fr

om a

sup

plie

r del

ayed

a s

ubst

antia

l ord

er a

nd

our a

bilit

y to

rece

ive,

pro

cess

and

dis

tribu

te te

rmin

als

to c

lient

s in

Sep

tem

ber.

The

term

inal

s w

ere

deliv

ered

to c

lient

s in

ear

ly O

ctob

er a

nd th

e re

venu

e, p

rofit

an

d ca

sh fl

ow w

ill re

flect

in H

2.

Sub

sidi

arie

s ar

e ge

nera

ting

subs

tant

ial t

op-li

ne g

row

th a

nd in

vest

men

t in

capa

city

to a

ccom

mod

ate

futu

re g

row

th is

inco

rpor

ated

in th

is p

erio

d’s

resu

lts.

This

inve

stm

ent i

s in

ant

icip

atio

n of

futu

re in

crea

sed

activ

ity.

Page 8: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

6

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

6

TRAN

SAC

TIO

NS

ANN

OU

NC

ED IN

JU

NE

CO

MPL

ETED

17

SEPT

EMB

ER 2

019

CTA

acq

uire

d al

l IP

unde

rlyin

g A

frica

n R

eson

ance

Lice

nce

agre

emen

t re

Das

hpay

’stra

nsac

tion

proc

essi

ng p

latfo

rm•

Acc

ess

to s

ourc

e co

de•

Allo

w fo

r ind

epen

dent

de

velo

pmen

t

CTA

acq

uire

d la

rge

com

plem

ent o

f sk

illed

dev

elop

men

t tal

ent

Tran

sact

ion

rece

ived

97%

sh

areh

olde

r app

rova

l

CTA

acq

uire

d 24

5 m

illio

n sh

ares

hel

d by

Dr.

Nei

shlo

san

d re

late

d pa

rties

at

80 c

ents

per

sha

re

Can

cella

tion

of s

hare

s ac

quire

d re

duce

s sh

ares

in is

sue

by c

.16%

CTA

sol

d its

inte

rest

in R

eson

ance

A

ustra

lia

Dr.

Nei

shlo

san

d E

itan

Nei

shlo

sre

sign

ed fr

om B

oard

of C

TA

Abs

olut

e al

ignm

ent o

f de

velo

pmen

t tea

ms

and

busi

ness

uni

ts

unde

rway

Incr

ease

d co

ordi

natio

n of

dev

elop

men

t re

sour

ces

acro

ss a

ll bu

sine

ss u

nits

Page 9: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

7

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

7

OPE

RAT

ION

AL

AC

CO

MPL

ISH

MEN

TS

Expa

nded

and

enh

ance

d cl

ient

rela

tions

hips

in b

oth

the

Paym

ents

an

d So

ftwar

e di

visi

ons

Synt

hesi

s C

ape

Tow

n m

akin

g gr

eat s

tride

s in

the

reta

il se

ctor

Addi

tiona

l Am

azon

Web

Ser

vice

s (A

WS)

cer

tific

atio

ns a

nd

accr

edita

tions

31%

incr

ease

in n

umbe

r of t

erm

inal

s in

the

hand

s of

clie

nts

•M

ore

than

150

000

term

inal

s•

Goo

d pi

pelin

e•

Scal

e op

erat

or w

ith m

arke

t sha

re g

ains

Das

hpay

cont

inue

s it’

s ph

ased

dep

loym

ent o

f tra

nsac

tion

serv

ices

with

mor

e th

an 1

00%

gro

wth

in g

ross

tran

sact

ion

valu

e (G

TV) s

ince

last

yea

r

B-BB

EE ra

ting

•Af

rican

Res

onan

ce –

Leve

l 3 c

ontri

buto

r•

Synt

hesi

s –

Leve

l 3 c

ontri

buto

r•

B-BB

EE s

pend

con

sist

ent w

ith p

rior p

erio

ds

* Bas

ed o

n G

TV th

roug

h th

e D

ashp

ayne

twor

k in

Oct

ober

201

9 an

nual

ised

Con

clud

ed “I

SO A

gree

men

t” w

ith A

bsa

to c

ompl

emen

t ISO

ag

reem

ent w

ith N

edba

nk a

nd “A

ggre

gato

r Agr

eem

ent”

with

M

erca

ntile

Ban

k

Prou

d to

be

asso

ciat

ed w

ith a

ll m

ajor

SA

bank

s an

d al

so m

any

othe

r ban

ks a

nd fi

nanc

ial i

nstit

utio

ns

Con

clud

ed te

rmin

al d

istri

butio

n ag

reem

ent w

ith w

orld

’s s

econ

d la

rges

t man

ufac

ture

r of p

aym

ent t

erm

inal

s

Page 10: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

8

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

8

GR

OU

P FI

NA

NC

IAL

MET

RIC

S

EBIT

DA

R 6

7.9

milli

on

Trad

ing

prof

itR

68.

2 m

illion

Prof

it af

ter t

axR

57.

9 m

illion

Nor

mal

ised

pro

fit a

fter t

axR

55.

9 m

illion

HEP

S3.

43 c

ents

NH

EPS

3.81

cen

ts

Div

iden

ds2.

25 c

ents

Earn

ings

& D

ivid

ends

Cap

italis

atio

n &

Cas

h re

sour

ces

Equi

tyR

1.4

57 b

illion

Avai

labl

e ca

sh p

er s

hare

32 c

ents

Cas

h av

aila

ble

for i

nves

tmen

tR

415

.9 m

illion

Prof

it

Six

mon

ths

ende

d 30

Sep

tem

ber 2

019

NAV

per

sha

re97

cen

ts

Rev

enue

R 2

81.6

mill

ion

Rev

enue

Paym

ents

Div

isio

nR

186

.3 m

illion

Serv

ices

Div

isio

nR

95.

3 m

illion

(16.

8%)

(17.

6%)

(8.6

%)

(17.

9%)

(10.

7%)

(26.

5%)

54.0

%

(16.

3%)

0%

(5.4

%)

(14.

0%)

(24.

6%)

4.8%

(19.

0%)

Abse

nt te

rmin

al

deliv

ery

dela

y,

Paym

ents

D

ivis

ion

reve

nue

wou

ld h

ave

exce

eded

prio

r pe

riod

Cas

h ba

lanc

e at

31

Oct

ober

201

9 w

as R

482m

, re

flect

ing

R66

m

of n

et c

ash

inflo

w in

Oct

ober

Page 11: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

9

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

9

(DEC

REA

SE) /

INC

REA

SE

VS. P

RIO

R54.0

%(2

6.5%

)

Pay

men

tsS

ervi

ces

66.2

%

33.8

%

FY18

FY19

DIV

ISIO

NA

L PE

RFO

RM

AN

CE

REV

ENU

E

Paym

ents

Serv

ices

PAYM

ENTS

& P

AYM

ENT

INFR

ASTR

UC

TUR

ESO

FTW

ARE

& S

ERVI

CES

•M

ore

than

150

000

term

inal

s in

han

ds o

f clie

nts

•N

ew b

lue-

chip

clie

nt re

latio

nshi

ps e

stab

lishe

d•

Stro

ng p

ipel

ine

•C

ontin

ued

to in

crea

se th

e nu

mbe

r of t

erm

inal

s su

pplie

d to

mar

ket

•C

ontin

ued

inve

stm

ent i

n an

d de

velo

pmen

t of i

nnov

ativ

e pl

atfo

rms

and

prod

ucts

•C

ontin

uing

with

del

iber

ate,

pro

gres

sive

roll-

out o

f Das

hpay

serv

ices

•In

crea

sed

oper

atio

nal c

apac

ity

•St

reng

then

ed re

latio

nshi

p w

ith e

xist

ing

clie

nts

•N

ew b

lue-

chip

clie

nt re

latio

nshi

ps e

stab

lishe

d•

Secu

red

addi

tiona

l AW

S ac

cred

itatio

n•

Con

tinue

d to

cem

ent A

WS

lead

ersh

ip•

Div

ersi

fied

reve

nue

stre

am•

Incr

ease

d op

erat

iona

l cap

acity

•Ad

ditio

nal p

artn

ersh

ips

with

com

plem

enta

ry te

chno

logy

pla

tform

s an

d so

lutio

ns

•AW

S SA

bas

ed re

gion

al d

ata

cent

re to

ope

n in

H1

2020

HIGHLIGHTS

(DEC

REA

SE) /

INC

REA

SE

VS. P

RIO

R47.8

%(2

9.6%

)

Pay

men

tsS

ervi

ces

64.5

%

35.5

%

FY18

FY19

EBIT

DA

80.4 %

19.6

%

79.2 %

20.8

%

Paym

ents

Serv

ices

Page 12: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

10

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

10

REP

RES

ENTA

TIVE

CLI

ENTS

Serv

ices

Paym

ents

OTH

ER R

ETAI

LER

S

Page 13: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

11

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

11

GO

VCH

AT -

OFF

ICIA

L LA

UN

CH

A ci

tizen

-gov

ernm

ent

enga

gem

ent p

latfo

rm in

co

oper

atio

n w

ith C

OG

TA

Plat

form

dev

elop

men

t be

ing

done

by

Synt

hesi

s

ELD

RID

JO

RD

AAN

C

EO &

FO

UN

DER

DEP

UTY

MIN

ISTE

R O

F C

OM

MU

NIC

ATIO

NS,

H

ON

. PIN

KY

KEK

ANA

PRES

IDEN

CY’

S D

EPU

TY D

G,

HO

N. M

ATSI

ETSI

MO

KH

OLO

“4IR

” #L

ETST

ALK

–AB

SA, S

YNTH

ESIS

, G

OVE

RN

MEN

T &

MTN

Page 14: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

12

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

12

THE

OPP

OR

TUN

ITY

Page 15: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

13

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

13

CO

MPE

LLIN

G S

ECTO

R O

PPO

RTU

NIT

IES

Cos

t to

serv

e cl

ient

s

Avai

labi

lity

of s

ervi

ce

Nat

ure

of s

ervi

ce

Incl

usiv

e se

rvic

e

Con

sum

er d

eman

d pu

ll

Tech

Big

dat

aR

egul

atio

n

New

ent

rant

ban

ks a

nd

emer

ging

fina

ncia

l se

rvic

es c

ompa

nies

Incu

mbe

nt b

anks

and

es

tabl

ishe

d fin

anci

al

serv

ice

prov

ider

s

Ret

aile

rsTe

leco

m a

nd o

ther

co

nsum

er-fa

cing

se

rvic

es c

ompa

nies

Page 16: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

14

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

14

AWS

is c

lear

mar

ket

lead

er g

ener

atin

g $9

bi

llion

in re

venu

e in

Q

3 ‘1

9 vs

. $7

billi

on

in p

rior y

ear

Sour

ce: G

artn

er, G

oldm

an S

achs

, Ins

ider

Inc.

PUB

LIC

CLO

UD

MA

RK

ET

Page 17: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

15

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

15

CLO

UD

AD

OPT

ION

IN S

OU

TH A

FRIC

A

CLO

UD

AD

OPT

ION

SA C

LOU

D C

OM

PUTI

NG

MAR

KET

SIZ

ING

EST

IMAT

E

Sour

ce: B

MIT

SA

Clo

ud C

ompu

ting

Ove

rvie

w &

Mar

ket S

izin

g 20

19

IDC

pre

dict

s cl

oud

serv

ices

will

gen

erat

e m

ore

than

100

000

net

new

jobs

by

2022

R m

illio

ns

Page 18: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

16

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

16

AWS

CA

PE T

OW

N D

ATA

CEN

TRE

LAU

NC

H H

1 ‘2

0

Mat

eria

l inv

estm

ent

by A

maz

on fo

r Afr

ica

regi

on

Mar

ketin

g of

clo

ud

offe

ring

in a

dvan

ce o

f la

unch

Rem

oves

“la

tenc

y”

and

“dat

a so

vere

ignt

y”

conc

erns

Synt

hesi

s w

ell p

ositi

oned

to b

enef

it fr

om th

is la

unch

Page 19: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

17

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

17

CLO

UD

PLA

TFO

RM

S IN

DIS

PEN

SIB

LE

Voda

com

is s

tart

ing

to m

ove

its s

ervi

ces

to th

e AW

S cl

oud

alre

ady

but a

lot o

f ser

vice

s,

espe

cial

ly w

here

ther

e ar

e la

tenc

y is

sues

, will

be

func

tiona

l ear

ly n

ext y

ear o

nce

the

AWS

regi

on is

fully

ope

ratio

nal i

n So

uth

Afric

a.

“”

Sham

eelJ

oosu

b C

EO o

f Vod

acom

For S

tand

ard

Ban

k G

roup

to re

mai

n a

lead

er in

Afr

ican

fina

ncia

l ser

vice

s, w

e re

cogn

ize

we

need

to

ado

pt a

clo

ud-fi

rst a

ppro

ach

to o

ur b

usin

ess,

” sa

id G

roup

CEO

Sim

Tsh

abal

ala.

"AW

S C

loud

te

chno

logy

will

cre

ate

a sp

ringb

oard

for S

tand

ard

Ban

k G

roup

, hel

ping

us

to ra

pidl

y ro

ll ou

t our

di

gitiz

atio

n an

d da

ta s

trat

egy

to b

ette

r cat

er to

cus

tom

ers

who

se n

eeds

are

con

stan

tly

evol

ving

."

He

says

the

mov

e w

ill a

llow

the

bank

to "

build

Afr

ica’

s fin

anci

al s

ervi

ces

orga

niza

tion

of th

e fu

ture

and

to b

e po

sitio

ned

as m

ore

than

a b

ank”

usi

ng A

WS’

s ag

ility

and

sec

urity

com

bine

d w

ith S

tand

ard

Ban

k’s

"cus

tom

er o

bses

sion

.

”Si

m T

shab

alal

a,

Gro

up C

EO o

f St

anda

rd B

ank

Page 20: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

18

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

18

AB

OU

T O

UR

INVE

STM

ENTS

Page 21: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

19

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

19

CO

NSI

STEN

T EX

ECU

TIO

N S

TRAT

EGY S

tate

of t

he a

rt pr

oprie

tary

tech

nolo

gy

plat

form

s fo

r ser

vice

s

Ent

repr

eneu

rial c

ultu

re

Har

dwar

e ag

nost

ic

Inte

grat

e se

amle

ssly

with

lega

cy

syst

ems

Add

val

ue

Gro

w m

arke

t

Ser

vice

exc

elle

nce

Alle

viat

e pa

in p

oint

s

Use

r exp

erie

nce

Cre

ate

ecos

yste

m

Eng

ende

r tru

st

Act

as

an in

nova

tion

cata

lyst

for c

lient

s

Wor

k w

ith fi

nanc

ial i

nstit

utio

ns

Cre

ate

ecos

yste

ms

for

colla

bora

tion

B2B

2C

Del

iver

sol

utio

ns to

hel

p cl

ient

s

real

ise

thei

r stra

tegy

Focu

s on

infra

stru

ctur

e

B2B

Stra

tegy

has

del

iver

ed s

ubst

antia

l gro

wth

and

our

obj

ectiv

es r

emai

n un

chan

ged

sinc

e in

itial

ly fo

rmul

ated

PAR

TNER

INN

OVA

TEEX

ECU

TE

Page 22: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

20

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

20

PAYM

ENTS

& P

AYM

ENT

INFR

AST

RU

CTU

RE

SEG

MEN

T

BLU

E C

HIP

CLI

ENTS

Prov

ide

and

oper

ate

paym

ent a

nd p

roce

ssin

g so

lutio

ns fo

r lea

ding

bra

nds

and

Inte

rnat

iona

l Ban

ks

PRO

PRIE

TAR

YPL

ATFO

RM

Uni

que,

pro

prie

tary

tech

nolo

gy

plat

form

ena

blin

g ra

pid

deve

lopm

ent a

nd im

plem

enta

tion

of c

usto

mis

ed c

orpo

rate

sol

utio

ns

acro

ss a

div

erse

rang

e of

sec

tors

END

-TO

-EN

D

SOLU

TIO

NS

Des

ign,

dev

elop

, im

plem

ent a

nd

man

age

inno

vativ

e, e

nd-to

-end

so

lutio

ns th

ereb

y en

hanc

ing

and

stre

ngth

enin

g th

e re

latio

nshi

ps

betw

een

bank

s, c

orpo

rate

s an

d th

eir c

lient

s

CO

MPR

EHEN

SIVE

O

FFER

ING

S

Avai

labl

e on

a tu

rn-k

ey a

ll-in

clus

ive

basi

s or

à

la c

arte

UN

IVER

SAL

ACQ

UIR

ING

Pion

eer o

f “U

nive

rsal

Ac

quiri

ng” b

y su

ppor

ting

one

unifo

rm in

frast

ruct

ure

for f

inan

cial

and

no

n‐fin

anci

al tr

ansa

ctio

ns

Man

ages

PO

S te

rmin

al e

stat

es a

t sca

le

Enab

les

bank

s an

d co

rpor

ates

to e

xtra

ct a

dditi

onal

val

ue a

nd d

iffer

entia

te a

t the

poi

nt o

f acq

uirin

g

Page 23: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

21

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

21

PAYM

ENTS

REV

ENU

E M

OD

EL

MAI

NTE

NAN

CE

& S

ERVI

CES

•G

ener

ates

mon

thly

re

curr

ing

reve

nue

depe

ndin

g on

leve

l an

d sc

ope

of s

ervi

ces

cont

ract

ed

TRAN

SAC

TIO

NS

•Va

riabl

e ba

sed

on

trans

actio

n ty

pe a

nd

valu

e of

tran

sact

ion

LIC

ENSI

NG

&SO

LUTI

ON

S

•G

ener

ates

mon

thly

re

curr

ing

reve

nue

depe

nden

t on

solu

tion

•Fl

at fe

e•

Com

mis

sion

POS

ESTA

TE

MAN

AGEM

ENT

•G

ener

ates

mon

thly

re

curr

ing

reve

nue

depe

ndin

g on

leve

l an

d sc

ope

of s

ervi

ces

cont

ract

ed

POS

DEV

ICES

•Te

rmin

al s

ales

ge

nera

te g

ross

pro

fit•

Ren

tals

gen

erat

e m

onth

ly re

curr

ing

reve

nue

•R

elat

ions

hip

with

m

ajor

clie

nts

subj

ect

to lo

ng-te

rm m

aste

r su

pply

agr

eem

ents

Pred

icta

ble

but

lum

pyR

ecur

ring

reve

nue

tied

to th

e si

ze o

f th

e es

tate

Rec

urrin

g re

venu

e an

d pr

edic

tabl

eU

nlim

ited,

sub

ject

to

est

ablis

hed

econ

omic

mod

els

Unl

imite

d

Page 24: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

22

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

22

EXIS

TIN

G R

ELAT

ION

SHIP

WIT

H L

EAD

ING

TER

MIN

AL

SUPP

LIER

Exte

nsiv

e ra

nge

of te

rmin

als

Page 25: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

23

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

23

NEW

TER

MIN

AL

DIS

TRIB

UTI

ON

AG

REE

MEN

TAg

reem

ent f

or d

istr

ibut

ion

and

use

of N

ewla

nd P

aym

ent T

echn

olog

y te

rmin

als

NP

T, w

orld

’s s

econ

d la

rges

t man

ufac

ture

r of

paym

ent t

erm

inal

s

In re

spon

se to

clie

nt

dem

and

for a

dditi

onal

op

tions

and

pric

e po

ints

Page 26: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

24

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

24

3240

53

7795

120

Apr

il'1

7S

ep '17

Mar '18

Sep '18

Mar '19

Sep '19

SUB

STA

NTI

AL

GR

OW

TH IN

TER

MIN

AL

ESTA

TETe

rmin

als

at p

erio

d en

d, in

thou

sand

s

OW

NED

BY

CLI

ENTS

AC

TIVE

–IN

MA

RK

ETA

WA

ITIN

G D

EPLO

YMEN

T

•N

umbe

r of t

erm

inal

s de

liver

ed to

cl

ient

s gr

ew b

y 14

%in

the

last

6

mon

ths

and

42%

sinc

e Se

ptem

ber

2018

(52%

with

out d

eliv

ery

dela

y)

•Pa

id fo

r at t

ime

of d

eliv

ery

•St

art t

o ge

nera

te re

curr

ing

reve

nue

once

act

ivat

ed

•N

umbe

r of t

erm

inal

s in

use

gre

w b

y 23

%in

the

last

6 m

onth

s an

d 52

%

sinc

e Se

ptem

ber 2

018

•In

clud

es te

rmin

als

subj

ect t

o re

ntal

co

ntra

cts

•R

enta

ls m

ay b

e re

new

ed u

pon

expi

ry o

r rep

lace

d w

ith o

wne

d te

rmin

als

•N

ew te

rmin

als,

onc

e im

porte

d, a

re

prep

ared

for c

lient

and

read

ied

for

depl

oym

ent

•R

epre

sent

s pr

ospe

ctiv

e re

curr

ing

reve

nue

once

act

ivat

ed

•In

clud

es ”r

otat

ing

stoc

k” fo

r bac

kup

and

repl

acem

ent

3248

76

103

128

156

Apr

il'1

7S

ep '17

Mar '18

Sep '18

Mar '19

Sep '19

1622

3840

4142

Apr

il'1

7S

ep '17

Mar '18

Sep '18

Mar '19

Sep '19

TOTA

L TE

RM

INA

L ES

TATE

•N

umbe

r of t

erm

inal

s in

clie

nts’

han

ds

grew

by

10%

in th

e la

st 6

mon

ths

and

31%

sin

ce S

epte

mbe

r 201

8 (3

8% w

ithou

t the

del

iver

y de

lay)

•In

clud

es te

rmin

als

subj

ect t

o re

ntal

ag

reem

ents

4960

92

118

140

164

Apr

il'1

7S

ep '17

Mar '18

Sep '18

Mar '19

Sep '19

154

146

117

33

At e

nd o

f per

iod

Del

iver

ed in

Oct

ober

Page 27: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

25

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

25

EVO

LUTI

ON

IN P

AYM

ENT

SER

VIC

ES O

FFER

ING

BAN

K R

ELAT

ION

SHIP

S

NO

W^

THEN

*

* May

201

7 (fi

rst a

cqui

sitio

n m

onth

) // ^

Oct

ober

201

9 (la

test

trad

ing

mon

th)

TAR

GET

MAR

KET

OPP

OR

TUN

ITIE

S

Smal

l ind

epen

dent

m

erch

ants

Smal

l ind

epen

dent

m

erch

ants

Larg

er m

erch

ants

NO

W^

THEN

*

PRO

DU

CT

OFF

ERIN

G

Mul

tiple

pro

duct

s an

d se

rvic

es

Acqu

iring

is n

ow

only

anc

illiar

y

Trad

ition

al

Mer

chan

t Ac

quiri

ng o

nly

NO

W^

THEN

*

Con

tinui

ng b

ut d

elay

ed p

rogr

ess

in re

adyi

ng D

ashp

ayfo

r mas

s de

ploy

men

t

Oth

ers

in n

egot

iatio

n

Ente

rpris

e cu

stom

ers

for B

2B

and

B2B

2C

depl

oym

ent

Page 28: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

26

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

26

DA

SHPA

Y O

PER

ATIO

NA

LU

PDAT

E

MAY

‘17

NO

V‘1

8

R50

0m

R1.

4bn

R2.

2bn

OC

T ‘1

9^

480%

Tran

sact

ion

(Tx)

Dat

a

180%

57%

26* M

AY 2

017

(FIR

ST A

CQ

UIS

ITIO

N M

ON

TH) /

/ ^ O

CTO

BER

201

9 (L

ATES

T TR

ADIN

GM

ON

TH) /

/ AN

NU

ALIS

ED

APR

‘19

R2.

9bn

31%

MAY

‘17

NO

V‘1

8

1.6m

4.1m

5.7m

OC

T ‘1

9^

340%

156%

39%

APR

‘19

7.1m

25%

GR

OSS

Tx

VALU

EG

RO

SS T

x VO

LUM

E

Page 29: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

27

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

27

Site

s

Term

inal

s

Pot

entia

l mem

bers

> 20

0

> 36

0

> 50

0 00

0

SASO

L –

AA

LOYA

LTY

THE

SOLU

TIO

N E

NAB

LES

E

nrol

men

t

C

ard

linki

ng

E

arni

ng

R

edem

ptio

n

R

econ

Das

hpay

deve

lope

d an

d op

erat

es

the

AA

Fuel

Loy

alty

sol

utio

n at

Sa

sol s

tatio

ns n

atio

nwid

e

The

plat

form

pro

vide

s an

im

med

iate

plu

g-an

d-pl

ay s

olut

ion

Page 30: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

28

Cap

ital

Ap

pre

ciat

ion

Lim

ited

Un

aud

ited

Inte

rim

Con

den

sed

Con

solid

ated

Fin

anci

al R

esu

lts

for

the

six

mon

ths

30 S

epte

mb

er 2

019

28

SOFT

WA

RE

& S

ERVI

CES

SEG

MEN

T –

SYN

THES

IS

BLU

E-C

HIP

CLI

ENTS

Absa

, Afg

ri, C

apite

c, In

vest

ec,

Ned

bank

, Sta

ndar

d Ba

nk, W

oolw

orth

s Fi

nanc

ial S

ervi

ces

and

othe

rs

Lead

ing

prov

ider

of t

echn

olog

y pr

oduc

ts a

nd s

olut

ions

with

in th

e fin

anci

al s

ervi

ces

indu

stry

CLI

ENT

CEN

TRIC

Del

iver

ing

the

high

est b

usin

ess

valu

e w

ith a

stro

ng s

ervi

ce e

thic

THO

UG

HT

LEAD

ERS

Acqu

iring

and

reta

inin

g th

e be

st

softw

are

deve

lopm

ent s

kills

FOC

USE

DFo

cus

in th

e fin

anci

al

serv

ices

sec

tor

EXPE

RIE

NC

EDH

ighl

y in

nova

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Page 31: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

29

Cap

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six

mon

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29

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ITS

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inan

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secu

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Inte

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to e

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Page 32: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

30

Cap

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aud

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six

mon

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PRIO

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Page 33: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

31

Cap

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aud

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solid

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for

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six

mon

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mb

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CO

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ALL

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ELEV

AN

T &

TIM

ELY

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STO

MER

EN

GA

GEM

ENT

Syn

thes

is w

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ith S

tand

ard

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k IT

to b

uild

a h

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scal

e ca

pabi

lity

thro

ugh

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that

enab

les

the

dem

ands

of t

he b

usin

ess

and

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cust

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bas

e to

resp

ond

to a

var

iety

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vent

s in

real

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stom

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ply

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RES

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text

ually

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Page 34: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

32

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IN IN

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Page 35: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

33

Cap

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six

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plat

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-tim

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itect

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expe

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mill

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gist

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ve

mill

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CH

ALLE

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Page 36: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

34

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Page 37: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

35

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Page 38: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

36

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Page 39: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

37

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Page 40: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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Page 41: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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Page 42: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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Page 43: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

41

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Page 44: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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43

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Page 46: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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Page 47: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

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Page 48: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

NOTES

Page 49: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 47for the six months ended 30 September 2019

Unaudited Interim Condensed Consolidated Financial Resultsfor the six months ended 30 September 2019

and Cash Dividend Declaration

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Page 51: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 49for the six months ended 30 September 2019

Capprec is a financial technology company. The Company operates in two business segments – Payments & Payment Infrastructure (“Payments”) and Software & Services (“Services”). African Resonance and Dashpay comprise the Payments segment and Synthesis comprises the Services segment. African Resonance is a leading provider of payment infrastructure and related technology solutions to established financial institutions. Dashpay operates an innovative transacting platform and provides transaction processing services, solutions and products focused on business-to-business commercial and payment activity to emerging payment service providers, select industry bodies and associations,

healthcare practitioners, the hospitality industry and the retail sector.

Synthesis is a highly specialised software and systems developer that delivers technology solutions and services to the financial services, retail and telecommunications sectors in South Africa and other countries on the African continent. Synthesis is the foremost provider of Amazon Web Services (AWS) cloud services to the financial services sector.

Further detail on the nature of these specialised business units is available on the Company’s website, at www.capitalappreciation.co.za.

ABOUT CAPPREC

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50 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

SALIENT FEATURES

FINANCIAL

RevenueR281.6 million

-10.7%

EBITDAR67.9 million

-16.8%

Trading profit R68.2 million

-17.6%

Headline earnings R50.3 million

-20.5%

EPS of 3.94 cents-6.8%

HEPS of 3.43 cents-19.0%

Normalised HEPS3.81 cents

-16.3%

R416 millioncash availablefor reinvestment

Interim dividend of 2.25 cents per ordinary share(September 2018: 2.25 cents per ordinary share)

Period’s results negatively impacted due to late arrivalof budgeted terminal imports,

shifting expected revenues into 2nd period

Significant revenues booked and cash generated in October 2019

Page 53: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 51for the six months ended 30 September 2019

OPERATIONAL

African Resonanceacquires ownership of all core Intellectual Property

Strategic repurchase and cancellation

of 245 million shares successfully completed

African Resonance fleet of154 000 payment terminalsin the hands of clients, increase

of 10% since March 2019 (31% since September 2018)

African Resonance installedterminals grew by 23%

to 117 000 since March 2019 (52% since September 2018)

Synthesis continues itstrack record of 31%

compound earnings growth

Synthesis technology teamstake on a more pivotal role

within the Capprec group

Dashpay concluded Distribution and Use Agreement for a new

second source of quality terminalswith second largest

manufacturer of terminals globally

Dashpay roll outprogressing with

Annualised Gross Transaction Value (GTV) exceeding R2.9 billion,

up 31% since March 2019 and more than 100% year-on-year

Group investment to support growth continues

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52 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

Page 55: for the six months ended 30 September - Capital Appreciation · Absent terminal delivery delay, Payments Division revenue would have exceeded prior period Cash balance at 31 October

Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 53for the six months ended 30 September 2019

COMMENTARY

INTRODUCTIONGiven the now well publicised state of the country’s economic challenges and the broad adverse impact it has had on business, business confidence and South Africa’s communities, the Board is satisfied with the Company’s interim performance.

The Company’s well-established divisional reputations and track record of innovation, quality and efficient service delivery have assisted Capprec to attract and retain an impressive client base in the financial sector. This includes all major banking institutions in South Africa, many niche banks, large financial services institutions as well as other financial services companies. In recent times, the Company has also successfully diversified into the retail and telecommunications sector and continues to explore supplementary sectors where its products and services assist large corporate clients to improve service to their customers. Capprec continues to invest in additional capacity, including the development of new innovative product offerings in anticipation of growth in commercial activity in both its Payments and Services operations.

The current financial results do not fully reflect the underlying financial performance of the Company, mainly due to a late delivery of a sizable number of imported terminals from our supplier. These delayed terminals could not be delivered and transferred to customers prior to the cut-off period of 30 September 2019. Significant revenue, earnings and cash generation, therefore, took place in October 2019,

related, inter alia, to the aforesaid inventory, including strong cash inflows from receivables. This is highlighted in more detail later in this report. But for the delivery delay, revenue in the Payments sector would have exceeded that generated in the same period last year.

OPERATING ENVIRONMENTHaving regard to the state of the economy, our clients have adopted a cautious stance towards infrastructure expansion and capital expenditure in general. Despite this restraint, however, Capprec enterprises have made positive operational strides.

Capprec operates in an environment of rapidly evolving technological change, and increasing customer expectations, with growing regulatory compliance requirements. This places a substantial burden on industry participants, with more consumers embracing everyday use of technology. There is also the added pressure on clients to reduce costs, and this, notwithstanding the tough economic conditions, creates growing demand for the Company’s more cost effective, high tech services and applications. In order to satisfy these technology-led processes and systems, elevated levels of expertise and innovation are required. Capprec is well positioned to deliver products and value propositions to support our clients’ transformative journeys to become more digitally enabled. The prospect therefore exists to drive above-trend growth in the foreseeable future.

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54 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

SHARE REPURCHASE AND SMALL RELATED PARTY TRANSACTIONDuring the period, Capprec concluded and successfully executed an agreement with Dr Hanoch Neishlos, the principal vendor of African Resonance, and associates to acquire the intellectual property, technology and development platforms that were previously licensed by African Resonance from Uplink (an entity controlled by Dr Neishlos). The Company also employed those members of the Uplink team focused on Capprec customer technology and their development needs. This was an important milestone for Capprec as the Company now has absolute ownership over most of the core intellectual property used in the businesses.

The agreement also included the share repurchase and cancellation by Capital Appreciation of 245 million shares from Dr Neishlos and his affiliated parties for an aggregate amount of R192.7 million and the disposal of Capprec’s 17.45% interest and claims in Resonance Australia for an aggregate amount of R40 million. All related party loans, receivables and obligations were settled in full between the parties and both Dr Neishlos and Eitan Neishlos resigned as directors from all group companies. The successful implementation of the agreement has and will have various financial impacts which are detailed in note 3 of the condensed financials.

The share repurchase transaction became effective on 27 August 2019 (the date of the shareholder approval) and Capprec now has 1 310 million shares in issue. Final settlement of the transaction only occurred on 17 September 2019.

The benefits of the transaction are already evident in the enhanced cooperation between the technical teams of all Capprec business units. Bringing the technology skills and resources of Synthesis together with African Resonance and Dashpay, not only maximises the contributions from each division, but stimulates further innovation, eliciting better coordination and operational efficiency.

SUMMARISED FINANCIAL RESULTSCapprec generated gross revenues for the period of R281.6 million (September 2018: R315.4 million), a decrease of 10.7%. EBITDA of R67.9 million (September 2018: R81.4 million), reflects a decrease of 16.8%. Profit before taxation decreased by 9.3% to R80.2 million (September 2018: R88.4 million), with profit after taxation decreasing by 8.6% to R57.9 million (September 2018: R63.3 million). Headline earnings for the period decreased by 20.5% to R50.3 million (September 2018: R63.3 million) translating into basic EPS for the period of 3.94 cents per share (September 2018: 4.23 cents), down 6.8% and HEPS of 3.43 cents per share(September 2018: 4.23 cents), a decrease of 19.0%. Capprec realised a gain on the disposal of its interest in Resonance Australia of R8.7 million which

COMMENTARY CONTINUED

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 55for the six months ended 30 September 2019

is reflected in basic EPS but has been added back in the calculation of HEPS.

Capprec also reports Normalised Headline Earnings Per Share (“NHEPS”), which together with EBITDA are the primary measures used by management to assess Capprec’s underlying financial performance. NHEPS comprises HEPS adjusted for the after-tax amortisation arising from the value attributed to intangible assets arising on the asset acquisitions in May 2017. For the period under review, the Company’s NHEPS totalled 3.81 cents (September 2018: 4.55 cents), a decrease of 16.2%.

The significant step up in inventory was due to the delayed arrival of imported terminals referred to earlier herein. The terminals were accounted for as stock in transit at 30 September and were delivered to clients in October 2019. The unexpected delay had a measurable effect on revenue and profits for the reporting period, but is likely to contribute to an improved financial result in the Payments division for the second half of the year.

While the Company continues to incur expenditure to increase capacity and support anticipated growth, Capprec has managed to stabilise the growth of such operating costs. Expansionary efforts, however, designed to generate further cost-effective income producing benefits through enhanced skills and infrastructure will continue.

The Company had cash resources at the end of the period of R415.9 million, post the cash outflow effects of the share repurchase and small related party transaction. Capprec continues to be highly cash

generative, as evidenced by the generation of an additional R66 million of net cash inflow in October 2019. Cash resources at end of October 2019 amounted to R482 million.

Based on the closing price of a Capprec share on 30 September 2019, of 77 cents, 32 cents of that share price is represented by cash. The Company’s cash resources will be applied, in the first instance, to fund anticipated organic growth and thereafter to pursue or supplement the cost of new, but complementary acquisition opportunities. The Company will continue to opportunistically repurchase shares in the market.

Capprec has adopted IFRS 16 in the period, which has had a small, non-material impact on net profit after tax.

The Company purchased 1 921 500 Capprec treasury shares, costing R1 437 663 in the market during the period. As of 30 September 2019, Capprec has a total of 65 563 500 treasury shares at an average price of 76 cents per share.

DIVISIONAL REVIEWPayments Division (African Resonance and Dashpay)African Resonance is a solid, well-run business that continues to produce sustainable profits and cash flow. The company has attracted a strong client base comprising all the major banks in South Africa, as well as a range of other financial institutions both in South Africa and elsewhere in Africa. Its products have been

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56 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

well-received, allowing it to grow market share and build a sizable terminal base with a 5-year tenure on average. African Resonance has a longstanding relationship and supplier agreement with leading payment terminal manufacturer, French-based Ingenico and has been awarded the status of Ingenico Centre of Excellence for its development of innovative products.

The business has continued to consistently grow its terminal base. During the past six months, more than 18 000 additional terminals were sold, bringing the total number of terminals in the hands of customers to more than 154 000 terminals (c.146 000 sold and c.8 000 rented). Of these terminals 117 000 have already been deployed and are earning annuity-based maintenance and support service revenues. Maintenance and support fees, doubled year-on-year, due to the increased deployment over the period. Rental income has continued to decline in line with budget as current rental contracts reach the end of their rental term and due to customers shifting from rental to purchased terminals. Terminal sales for the period reflected a decline, due in large part to the delay in delivery of September orders into October.

Dashpay continued to firmly establish its business model despite tough economic conditions, generating Annualised Gross Transaction Value (GTV) exceeding R2.9 billion, up 31% since year-end and more than 100% year-on-year. The enterprise has continued to grow its transacting client base. Dashpay also signed an ISO agreement with Absa, in addition to its existing agreements with Nedbank

and Mercantile Bank. Dashpay continues to pursue development of new opportunities and continues to expend time, effort and capital on new technologies for deployment within the company.

Dashpay has signed a new distributor agreement with the world’s second largest terminal supplier and the largest in China, for the use and distribution of payment terminals for the SADC region. The agreement should further broaden Dashpay’s target market as these terminals will predominantly service SMMEs and enterprises which do not currently utilise the payment terminal environment. Dashpay will primarily focus on introducing Android and MPOS products to new markets, as these terminals offer an extremely competitive functionality, price and quality package and complement the bespoke VAS offered by Dashpay. This development was in response to client demand for alternative solutions tailored to specific market segments.

The Payments segment demonstrated a resilient trading performance notwithstanding continued macroeconomic headwinds and the transactional cut-off effects alluded to above. The division generated revenue of R186.3 million (September 2018: R253.6 million). Absent the unforeseen delayed sales in September, Revenue would have been in excess of the comparable period. EBITDA of R50.0 million (September 2018: R70.0 million), down 29.6% and a profit after tax of R30.6 million (September 2018: R50.7 million), down 39.6%.

COMMENTARY CONTINUED

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 57for the six months ended 30 September 2019

Services Division (Synthesis)Synthesis offers highly specialised software development, consulting and integration services and technology-based product solutions to banking, financial institutions, retail and telecommunications enterprises in South Africa and other emerging markets.

Synthesis’ main initiatives span four main areas:1. RegTech provides regulatory reporting

solutions to financial institutions.

2. Digital and Emerging Tech provides secure mobile and web digital channels for financial services institutions to enhance their customers’ experience, as well as provide access to emerging technologies which include machine learning, artificial intelligence, big data analytics and blockchain technology.

3. Cloud assists customers in becoming cloud-ready, executing mass migrations, harnessing the benefits of innovation and big data analytics, and extracting cost savings and regulatory benefits. Cloud is the fastest growing segment and Synthesis has a close strategic relationship with Amazon Web Services (AWS), the world’s leading cloud platform provider. The first AWS infrastructure region on the African continent is expected to open in Cape Town in the first half of 2020. As a leading AWS partner, Synthesis is well positioned to capitalise on the launch of the new AWS region for South African businesses.

4. Synthesis Academy provides onsite or digital-based training to enterprises and corporates on a range of emerging technology topics, such as cloud, artificial intelligence (AI) and machine learning. The Academy facilitators are among the region’s leading technology professionals. The commercialisation of the Synthesis Academy offering has shown significant promise to provide the much-needed skills development and training for the South African market.

It has been a very positive first half of the year for Synthesis, with notable demand across all four service offerings. This is evidenced by the significant growth in revenue and profits for the period. Cloud is continuing to grow in advance of the AWS region coming to South Africa, while the Digital area is benefitting from many of Synthesis’ clients requiring new digital offerings for their customers. The RegTech area has shown promising growth, attracting several new customers to the mix.

Synthesis concluded several new partnerships, including VM ware, Confluent, Hashicorp and Cloudflare. Synthesis acts as either seller or professional service providers on those technologies which complement its Cloud services and are helping to deliver more comprehensive service offerings related to real-time data streaming, cloud infrastructure, cloud security, artificial intelligence and machine learning (AI/ML) and personalisation to customers. Using machine learning, Synthesis has also started building a data analysis and data engineering practice that is complementary to its digital and Cloud areas. The Synthesis focus on new customer verticals has shown favourable results. The sectors being

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58 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

targeted are the Retail, Media and Telecoms, and Healthcare.

Synthesis increased revenue by 54.0% to R95.3 million (September 2018: R61.8 million), EBITDA by 47.8% to R27.2 million (September 2018: R18.4 million), and profit after tax by 31.0% to R17.6 million (September 2018: R13.4 million).

BROAD-BASED BLACK ECONOMIC EMPOWERMENTTransformation remains a key imperative for the Company and Capprec has continued to support and advance a number of BEE initiatives, being consistent with that provided in previous years.

Govchat and the Capital Appreciation Enterprise Development FundAs part of its transformation initiatives, Capprec established the Capital Appreciation Enterprise Development Fund in 2019, with its first funding allocation to GovChat Proprietary Limited, a South African black-controlled technology enterprise that facilitates engagement between citizens and their elected officials and which aims to make government responsive, agile and transparent in its engagements. GovChat concluded an agreement with the Department of Co-operative Development and Traditional Affairs to provide such services. GovChat recently launched its new headquarters in Cape Town, which includes a training centre designed to facilitate guidance and instruction on critical

subjects of interest to government in their engagement with citizens. GovChat also offers monthly roundtable engagements bringing together government, civil society and corporates to tackle critical issues, informed by data from the GovChat platform. Capprec is closely involved with the enterprise, offering in-house expertise and support in addition to the enterprise development funding. The team at Synthesis is responsible for building the GovChat technology platform. The relationship with GovChat presents a number of potential commercial opportunities which are consistent with the strategic objectives of Capital Appreciation.

PROSPECTSThe challenging economic and political environment in South Africa continues to be of concern, with few indicators suggesting any short-term improvement. This no doubt weighs heavily on the commercial activity of our clients and not unexpectedly, instils a cautious approach to their investment decisions. This state of affairs naturally dictates a well-considered and judicious approach to our future planning.

Notwithstanding the above, while the prevailing economic climate cannot be ignored, there is a well-developed pipeline of compelling organic and acquisitive growth opportunities that have been presented to Capprec management for evaluation. This provides a sense of cautious confidence as to the continued organic growth prospects of the group’s business units.

Innovative technologies and applications are accelerating at a rapid rate and are

COMMENTARY CONTINUED

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 59for the six months ended 30 September 2019

demanding the review of traditional business models, revenue streams, consumer expectations, products offered, services rendered, including operating cost structures and regulation. Managing this rapid and evolving change requires the appropriate skills and experience and a track record of creativity and innovation. Each of Capprec’s subsidiaries has a proven, well established reputation in such technology matters and this positively positions the Company to be regarded as a trusted partner to participate in this evolution.

Given the Company’s strong operating cash flows, cash resources and potential borrowing capacity, Capprec has the capacity to consider various Fintech related investment opportunities. Any acquisition will typically depend on the strategic fit, ideally at an earnings enhancing valuation, which can provide satisfactory growth, where Capprec’s capital and strategic capability can be successfully leveraged.

Investors should note that, due to the repurchase and cancellation of the 245 million shares on 27 August 2019, basic and headline earnings per share for the full year will be positively impacted by the reduced number of shares in issue.

On behalf of the Board

Michael (Motty) SacksNon-Executive Chairman

Michael Pimstein and Bradley SacksJoint Chief Executive Officers

Alan SalomonChief Financial Officer

Sandton18 November 2019

DIVIDENDSThe Board has pleasure in announcing that an interim dividend of 2.25 cents per ordinary share has been declared for the six months ended 30 September 2019 (September 2018: 2.25 cents per ordinary share).

We note the following:

• Dividends are subject to dividends withholding tax.

• The payment date for the dividend is Monday, 9 December 2019.

• Dividends have been declared out of profits available for distribution.

• Local dividends withholding tax is 20%.

• Gross dividend amount is 2.25 cents per ordinary share, which is 1.8000 cents per ordinary share net of withholding tax.

• Capprec has 1 310 000 000 ordinary shares in issue at the declaration date.

• Capprec’s Income Tax Reference Number is 9591281176.

The salient dates relating to the dividend are as follows:

Last day of trade cum dividend

Tuesday,3 December 2019

Shares commence trading ex-dividend

Wednesday,4 December 2019

Dividend record date Friday,6 December 2019

Dividend payment date Monday,9 December 2019

Share certificates for ordinary shares may not be dematerialised or rematerialised between Wednesday, 4 December 2019 and Friday, 6 December 2019, both days inclusive.

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60 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

ACCOUNTING POLICIES AND BASIS OF PREPARATIONThese unaudited interim condensed consolidated financial results have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), its interpretations issued by the IFRS Interpretations Committee, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, presentation and disclosure as required by International Accounting Standard (IAS) 34 ‘Interim Financial Reporting’, the JSE Limited Listings Requirements and the requirements of the Companies Act, 71 of 2008 of South Africa. The accounting policies and methods of computation used in the preparation of the unaudited interim condensed consolidated financial results are in terms of IFRS and are consistent in all material respects with those applied in the most recent consolidated audited annual financial statements.

The fair value disclosures required by IAS 34:16A(j) and (i) are not disclosed in this announcement but are included in the unaudited interim consolidated financial results which are available for inspection at our offices.

PREPARATION OF UNAUDITED INTERIM FINANCIAL REPORTSThe unaudited interim condensed consolidated financial results herein have been prepared under the supervision of Mr Alan Salomon CA(SA) in his capacity as the Company Chief Financial Officer and were approved by the Board on 12 November 2019. For further information hereto, please refer to the section above captioned Accounting Policies and Basis of Preparation.

UNAUDITED INTERIM FINANCIAL RESULTSThis announcement contains forward-looking statements with respect to the economy and the results of the operations of Capprec, which by their nature, involve risk and uncertainty on economic circumstances that may or may not occur in the future.

Neither the financial information contained in this interim results presentation, nor any of the forward-looking statements recorded herein, have been audited or reviewed by Capprec’s external auditors.

COMMENTARY CONTINUED

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 61for the six months ended 30 September 2019

Figures in Rand Notes

Unaudited6 months

ended30 September

2019%

change

Unauditedsix months

ended30 September

2018

Revenue 2 281 550 507 (10.7) 315 418 112Cost of sales (160 270 700) (184 734 426)

Gross profit 121 279 807 (7.2) 130 683 686Other income 589 827 –Operating expenses (53 635 316) 11.9 (47 917 020)

Trading profit 68 234 318 (17.6) 82 766 666Share-based payment expense (758 500) (196 600)Depreciation (7 995 166) (3 479 355)Amortisation of intangibles (7 858 144) (6 804 622)

Operating profit 51 622 508 (28.6) 72 286 089Finance income 21 812 962 17 663 935Finance charges (1 580 415) (299 676)Equity accounted in loss of associate (346 092) (1 205 636)

Gain on sale of investment in associate 3 8 664 739 –

Profit before taxation 80 173 702 (9.4) 88 444 712Taxation (22 302 491) (25 142 547)

Profit after taxation 57 871 211 (8.6) 63 302 165Other comprehensive income – –

Total comprehensive income for the year 57 871 211 (8.6) 63 302 165

Basic earnings per share (cents) 3.94 (6.8) 4.23Headline earnings per share (cents) 4 3.43 (19.0) 4.23Diluted basic earnings per share (cents) 3.86 (6.7) 4.14Diluted headline earnings per share (cents) 3.36 (18.9) 4.14Number of ordinary shares in issue 5 1 310 000 000 (15.8) 1 555 000 000Weighted average number of shares in issue 1 468 535 272 (1.9) 1 497 743 079Diluted weighted average number of shares in issue 1 498 535 272 (2.0) 1 529 650 423

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOMEfor the six months ended 30 September 2019

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62 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

CONDENSED GROUP STATEMENT OF FINANCIAL POSITIONat 30 September 2019

Figures in Rand Notes

Unaudited30 September

2019

Unaudited30 September

2018

Audited31 March

2019

ASSETSProperty, plant and equipment 25 667 776 18 764 233 21 737 333Right-of-use asset 7 28 396 674 – –Intangible assets 65 597 653 66 654 548 62 258 622Goodwill 728 577 776 728 577 776 728 577 776Other financial assets 3 – 18 297 738 19 011 040Investment in associates 3 – 27 582 673 26 360 129Deferred tax 6 085 509 6 416 309 5 141 435

Non-current assets 854 325 388 866 293 277 863 086 335

Inventories 52 852 857 10 102 704 16 167 245Trade and other receivables 131 697 408 108 304 450 44 367 518Loan to associate 3 – 5 091 841 5 179 241Taxation receivable 3 150 549 510 154 4 588 251Cash and cash equivalents 415 896 136 551 525 305 611 227 490

Current assets 603 596 950 675 534 454 681 529 745

Total assets 1 457 922 338 1 541 827 731 1 544 616 080

EQUITY AND LIABILITIESCapital and reservesShare capital 5 1 009 048 437 1 207 330 459 1 204 657 490Share-based payment reserve 1 930 900 447 100 1 172 400Contingent consideration reserve 24 900 000 24 900 000 24 900 000Retained income 241 265 050 188 690 386 216 385 606

Total equity 1 277 144 387 1 421 367 945 1 447 115 496

Deferred revenue 8 229 167 6 404 167 9 154 167Long-term portion of right-of-use lease liabilities 7 23 151 720 – –Contingent consideration 9 635 790 8 975 889 9 271 591Deferred tax 14 359 427 18 074 467 16 216 947

Non-current liabilities 55 376 104 33 454 523 34 642 705

Trade and other payables 112 560 085 72 361 880 53 356 931Bank overdraft – – 2 434 271Operating lease liability – – 1 182 800Short-term portion of right-of-use lease liabilities 7 7 351 847 – –Deferred revenue 2 427 501 1 325 000 1 850 000Taxation payable 3 062 414 13 318 383 4 033 877

Current liabilities 125 401 847 87 005 263 62 857 879

Total equity and liabilities 1 457 922 338 1 541 827 731 1 544 616 080

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 63for the six months ended 30 September 2019

Figures in Rand Notes

Unauditedsix months

ended30 September

2019

Unauditedsix months

ended30 September

2018

Auditedyear ended

31 March2019

Profit before taxation 80 173 702 88 444 712 173 795 675Adjustments for:Finance income received (21 812 962) (17 663 935) (38 280 325)Finance costs paid 369 194 299 676 601 735Non-cash flow items 6 849 720 11 512 616 24 882 833Changes in working capital 6 (45 501 681) 9 829 932 51 698 155

Cash flow from operations 20 077 973 92 423 001 212 698 073Finance income received 21 164 766 17 663 935 36 896 736Finance costs paid – (13 405) (19 763)Dividends paid (29 827 160) (29 967 760) (63 583 229)Taxation received – – 309 425Taxation paid (26 318 000) (23 472 972) (62 276 347)

Net cash flow from operating activities (14 902 421) 56 632 799 124 024 895

Cash flows from investing activitiesAcquisition of property, plant and equipment (9 757 896) (8 269 827) (16 532 856)Acquisition of intangible assets (11 197 175) (2 006 708) (4 789 880)Proceeds on disposal of property, plant and equipment 122 956 1 301 921 1 467 511Repayment of loan from associate 3 5 021 341 – –Proceeds from disposal of associate 3 34 978 659 – –Costs associated with circular to shareholders (1 585 001) – –Costs associated with sale of associate (299 883) – –

Net cash flow from investing activities 17 283 001 (8 974 614) (19 855 225)

Cash flows from financing activitiesRepurchase of cancelled ordinary shares 3 (192 726 496) – –Costs associated with repurchase of cancelled shares (1 444 894) – –Repurchase of treasury ordinary shares (1 437 663) (4 450 640) (7 123 610)Repayment of loans – (4 362 102) (2 989 613)

Net cash flow from financing activities (195 609 053) (8 812 742) (10 113 223)

Net increase/(decrease) in cash and cash equivalents (193 228 473) 38 845 443 94 056 447Cash and cash equivalents at beginning of period 608 793 219 512 679 862 513 169 862Net foreign exchange difference 331 390 1 566 910

Cash and cash equivalents at end of period 415 896 136 551 525 305 608 793 219

Split as follows:Cash and cash equivalents 415 896 136 551 525 305 611 227 490Bank overdraft – – (2 434 271)

415 896 136 551 525 305 608 793 219

CONDENSED GROUP STATEMENT OF CASH FLOWSfor the six months ended 30 September 2019

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64 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITYfor the six months ended 30 September 2019

Figures in Rand

Ordinaryshare

capital

Share-basedpayment

reserve

Contingentconsideration

reserveRetained

incomeTotal

equity

Balance at 1 April 2018 1 211 781 099 250 500 24 900 000 155 355 981 1 392 287 580

Share-based payment reserve – 196 600 – – 196 600

Repurchase of treasury shares (4 450 640) – – – (4 450 640)

Cash dividend paid – – – (29 967 760) (29 967 760)

Total comprehensive income for the six months ended 30 September 2018 – – – 63 302 165 63 302 165

Balance at 30 September 2018 1 207 330 459 447 100 24 900 000 188 690 386 1 421 367 945

Share-based payment reserve – 725 300 – – 725 300Repurchase of treasury shares (2 672 969) – – – (2 672 969)Cash dividend paid – – – (33 615 469) (33 615 469)Total comprehensive income for the six months ended 31 March 2019 – – – 61 310 689 61 310 689

Balance at 31 March 2019 1 204 657 490 1 172 400 24 900 000 216 385 606 1 447 115 496

Repurchase and cancellation of ordinary shares (192 726 496) – – – (192 726 496)Costs associated with repurchase of ordinary shares (1 444 894) – – – (1 444 894)Costs associated with circular to shareholders – – – (1 585 001) (1 585 001)Share-based payment reserve – 758 500 – – 758 500Repurchase of treasury ordinary shares (1 437 663) – – – (1 437 663)Cash dividend paid – – – (29 827 160) (29 827 160)Total comprehensive income for the six months ended 30 September 2019 – – – 57 871 211 57 871 211Settlement of pre-acquisition tax receivable – – – (2 169 537) (2 169 537)Deferred tax adjustment on adoption of IFRS 16 – – – 589 931 589 931

Balance at 30 September 2019 1 009 048 437 1 930 900 24 900 000 241 265 050 1 277 144 387

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 65for the six months ended 30 September 2019

Figures in Rand

Ordinaryshare

capital

Share-basedpayment

reserve

Contingentconsideration

reserveRetained

incomeTotal

equity

Balance at 1 April 2018 1 211 781 099 250 500 24 900 000 155 355 981 1 392 287 580

Share-based payment reserve – 196 600 – – 196 600

Repurchase of treasury shares (4 450 640) – – – (4 450 640)

Cash dividend paid – – – (29 967 760) (29 967 760)

Total comprehensive income for the six months ended 30 September 2018 – – – 63 302 165 63 302 165

Balance at 30 September 2018 1 207 330 459 447 100 24 900 000 188 690 386 1 421 367 945

Share-based payment reserve – 725 300 – – 725 300Repurchase of treasury shares (2 672 969) – – – (2 672 969)Cash dividend paid – – – (33 615 469) (33 615 469)Total comprehensive income for the six months ended 31 March 2019 – – – 61 310 689 61 310 689

Balance at 31 March 2019 1 204 657 490 1 172 400 24 900 000 216 385 606 1 447 115 496

Repurchase and cancellation of ordinary shares (192 726 496) – – – (192 726 496)Costs associated with repurchase of ordinary shares (1 444 894) – – – (1 444 894)Costs associated with circular to shareholders – – – (1 585 001) (1 585 001)Share-based payment reserve – 758 500 – – 758 500Repurchase of treasury ordinary shares (1 437 663) – – – (1 437 663)Cash dividend paid – – – (29 827 160) (29 827 160)Total comprehensive income for the six months ended 30 September 2019 – – – 57 871 211 57 871 211Settlement of pre-acquisition tax receivable – – – (2 169 537) (2 169 537)Deferred tax adjustment on adoption of IFRS 16 – – – 589 931 589 931

Balance at 30 September 2019 1 009 048 437 1 930 900 24 900 000 241 265 050 1 277 144 387

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66 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

CONSOLIDATED SEGMENT ANALYSISfor the six months ended 30 September 2019

NOTE 1

Figures in Rand

Payments Software and Services Corporate Group

30 September2019

30 September 2018*

30 September2019

30 September 2018*

30 September2019

30 September 2018*

30 September2019

30 September 2018*

Revenue 186 326 683 253 582 243 95 223 824 61 835 869 – – 281 550 507 315 418 112Trading profit/(loss) 49 314 651 69 981 401 27 196 300 18 380 501 (8 276 633) (5 595 237) 68 234 318 82 766 665Depreciation: Property, plant and equipment (5 653 035) (2 980 227) (1 527 329) (267 863) (814 802) (231 265) (7 995 166) (3 479 355)Amortisation of intangibles (600 711) (170 622) (623 433) – (6 634 000) (6 634 000) (7 858 144) (6 804 622)Operating profit 42 872 714 66 830 552 24 504 419 18 112 639 (15 754 625) (12 657 102) 51 622 508 72 286 089Profit after taxation 30 635 162 50 732 788 17 597 959 13 428 855 9 638 090 (859 478) 57 871 211 63 302 165Total assets 260 828 608 190 898 644 85 634 290 47 369 131 1 111 459 440 1 303 559 956 1 457 922 338 1 541 827 731Total liabilities 106 342 429 70 330 835 40 061 402 19 227 101 34 374 120 30 901 852 180 777 951 120 459 788Net assets 154 486 179 120 567 809 45 572 888 28 142 030 1 077 085 320 1 272 658 106 1 277 144 387 1 421 367 945

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 67for the six months ended 30 September 2019

NOTE 1

Figures in Rand

Payments Software and Services Corporate Group

30 September2019

30 September 2018*

30 September2019

30 September 2018*

30 September2019

30 September 2018*

30 September2019

30 September 2018*

Revenue 186 326 683 253 582 243 95 223 824 61 835 869 – – 281 550 507 315 418 112Trading profit/(loss) 49 314 651 69 981 401 27 196 300 18 380 501 (8 276 633) (5 595 237) 68 234 318 82 766 665Depreciation: Property, plant and equipment (5 653 035) (2 980 227) (1 527 329) (267 863) (814 802) (231 265) (7 995 166) (3 479 355)Amortisation of intangibles (600 711) (170 622) (623 433) – (6 634 000) (6 634 000) (7 858 144) (6 804 622)Operating profit 42 872 714 66 830 552 24 504 419 18 112 639 (15 754 625) (12 657 102) 51 622 508 72 286 089Profit after taxation 30 635 162 50 732 788 17 597 959 13 428 855 9 638 090 (859 478) 57 871 211 63 302 165Total assets 260 828 608 190 898 644 85 634 290 47 369 131 1 111 459 440 1 303 559 956 1 457 922 338 1 541 827 731Total liabilities 106 342 429 70 330 835 40 061 402 19 227 101 34 374 120 30 901 852 180 777 951 120 459 788Net assets 154 486 179 120 567 809 45 572 888 28 142 030 1 077 085 320 1 272 658 106 1 277 144 387 1 421 367 945

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68 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

Figures in Rand30 September

201930 September

2018*

NOTE 2. REVENUEPayments divisionRental income 15 790 539 44 793 577Maintenance and support service fees 57 027 562 28 630 633Sale of terminals 98 968 383 165 675 777Merchant acquiring and set-up fees 8 270 620 7 441 404Sundry revenue 6 269 579 7 040 852

186 326 683 253 582 243

Software and Services divisionServices and consultancy fees 68 154 819 45 915 512Licence and subscription fees 25 685 108 14 038 895Hardware 1 383 897 1 881 462

95 223 824 61 835 869

Total revenue 281 550 507 315 418 112

Geographic regionSouth Africa 268 412 616 307 363 110Rest of Africa and Indian Ocean Islands 6 238 946 8 055 002United States of America 6 898 945 –

281 550 507 315 418 112

NOTE 3. SHARE REPURCHASE AND SMALL RELATED PARTY TRANSACTIONThe Company and the founder and principal vendor of African Resonance, Dr Hanoch Neishlos, concluded a comprehensive agreement on 9 June 2019, certain key terms of which are follows:

• The transaction was approved by shareholders on 27 August 2019 and the settlement occurred on 17 September 2019.

• The Company repurchased 245 000 000 shares held by Dr Neishlos and related associates, amounting to R192 726 496 plus associated costs of R1 444 894. The shares repurchased were cancelled with effect from 27 August 2019.

• The Company sold its 17.45% interest in Resonance Australia Proprietary Limited and its claims on loan account, for an aggregate amount of R40 million, which was settled on 17 September 2019.

• African Resonance Business Solutions (Proprietary) Limited (“African Resonance”) acquired the African Resonance and Dashpay (Proprietary) Limited related intellectual property from Uplink Technology Services (Proprietary) Limited for R5 million plus associated costs of R1 122 569.

NOTESfor the six months ended 30 September 2019

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 69for the six months ended 30 September 2019

• Dr Neishlos repaid his loan on 17 September 2019 to African Resonance amounting to R19 658 163.

• All related party receivables and obligations were settled in full between the parties on 17 September 2019.

Sale of investment in associateBalance as at 31 March 2019 26 360 129Equity accounted loss during the period to effective date of sale (346 092)Related costs 299 883

Balance at date of sale 26 313 920Proceeds on disposal 34 978 659

Gain on sale of investment in associate 8 664 739

Settlement of loan claim in associateBalance as at 31 March 2019 5 179 241Mark to market foreign exchange loss during the period to date of settlement. (157 900)

Amount settled on 17 September 2019 5 021 341

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70 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

NOTESfor the six months ended 30 September 2019

Figures in Rand30 September

201930 September

2018*

NOTE 4. RECONCILIATION OF HEADLINE EARNINGSProfit for the year attributable to ordinary shareholders 57 871 211 63 302 165Less: Gain on sale of investment in associate (8 664 739) –Add back: capital gains tax on sale of investment in associate 1 104 823 –

Headline earnings 50 311 295 63 302 165

30 September2019

31 March2019

30 September2018

Number Number Number

NOTE 5. SHARE CAPITALReconciliation of issued ordinary sharesNumber of issued ordinary shares at the beginning of the period 1 555 000 000 1 555 000 000 1 555 000 000Number of issued ordinary shares repurchased and cancelled during the period (see note 3) (245 000 000) – –

Number of issued ordinary shares at the end of the period 1 310 000 000 1 555 000 000 1 555 000 000

Number of issued ordinary treasury shares on hand at end of the period (65 563 500) (63 642 000) (60 300 000)

Number of issued ordinary shares, net of treasury shares at the end of the period 1 244 436 500 1 491 358 000 1 494 700 000

During the reporting period the Company repurchased 1 958 500 treasury ordinary shares at an average price of 74.3 cents per share.

30 September2019

31 March2019

30 September2018

Number Number Number

NOTE 6. CHANGES IN WORKING CAPITALInventories (36 685 612) 11 217 404 5 152 863Deferred income (347 499) (662 500) 2 612 500Trade and other receivables (87 329 889) (40 269 923) 23 667 009Other financial assets 19 658 163 – –Trade and other payables 59 203 156 39 544 951 20 265 783

Changes in working capital (45 501 681) 9 829 932 51 698 155

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Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results 71for the six months ended 30 September 2019

NOTE 7. CHANGES IN ACCOUNTING POLICIESThe unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the audited annual financial statements and should be read in conjunction with the Group’s audited annual financial statements as at 31 March 2019. The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s audited annual consolidated financial statements for the year ended 31 March 2019, except for the adoption of new standards effective as at 1 April 2019.

IFRS 16 (LEASES)IFRS 16 supersedes the previous standards relating to the accounting treatment of leases (IAS  17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease). The Group has adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application being 1 April 2019, using the incremental borrowing rate as opposed to the interest rate implicit to the lease, across all leases. Therefore, the comparative information for 2018 is reported under IAS 17 and not comparable to the information presented for 2019.

On adoption of IFRS 16 at transition date, the Group recognised a right-of-use asset to the value of R31 217 716 (the derecognition of the previous operating lease straight-line liabilities of R1 182 800 was offset against the right-of-use asset) and a lease liability of R33 583 316. There was no impact to equity on initial application.

As a result of adopting IFRS 16, operating profit after tax for the six months ended 30 September 2019 has decreased by R262 297 due to the replacement of operating lease expenses with depreciation on the right-of-use assets (R4 003 817) and interest expense on lease liabilities (R1 211 222), totalling an amount of R5 215 039.

The effects of the adoption of IFRS 16 is as follows:

Impact on the statements of financial position as at 30 September 2019:

AssetsRight-of-use assets 32 400 491Accumulated depreciation (4 003 817)

Total assets 28 396 674

LiabilitiesLease liability 30 503 567

Total liabilities 30 503 567

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72 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

Impact on the statement of comprehensive income for the period ending 30 September 2019:Depreciation (4 003 817)IAS 17 rent expense 4 713 854

Profit from operating activities 710 037Finance cost (1 211 222)Impact on income tax expense 238 888

Impact on profit after tax for the period (262 297)

8.1 Standards and interpretations adopted in the current year

8.1.1 IFRS 16 – Leases: The impact of these amendments has been accounted for in the September 2019 interim results (see note 7)

8.2 Standards and interpretations not yet effective

Standards, amendments and interpretations issued but not yet effective have been assessed for applicability to the Company and management has concluded that they are not expected to have a material impact on future financial statements.

NOTE 9. POST PERIOD-END EVENTSThe directors are not aware of any matter or circumstance arising since the end of the financial period.

NOTESfor the six months ended 30 September 2019

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Registered office

61 Katherine Street, Sandton, 2196

Directors

MI Sacks# (Chairman), MR Pimstein* (Joint Chief Executive), BJ Sacks* (Joint Chief Executive), AC Salomon* (Chief Financial Officer), MB Shapiro*, B Bulo#, KD Dlamini#, JM Kahn#, EM Kruger#, R Morar#, VM Sekese#, CL Valkin#,

*Executive #Non-executive

Company Secretary: PKF Octogon, [email protected]

Auditors: Ernst & Young Inc.

Sponsor: Investec Bank Limited

Email: [email protected]

Website: www.capitalappreciation.co.za

Transfer Secretary

Computershare Investor Services Proprietary LimitedRosebank Towers, 15 Biermann Street, Rosebank, 2001(PO Box 61051, Marshalltown, 2107)

CORPORATE INFORMATION

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74 Capital Appreciation Limited Unaudited Interim Condensed Consolidated Financial Results for the six months ended 30 September 2019

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