FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation

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FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
FULL YEAR RESULTS
for the period ended 31 March 2019
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
CAPPREC overview
OUTLINE   1

          2   Highlights for the period

          3   The opportunity

          4   About our investments

          5   Financial performance

          6   Prospects

          7   Annexure

                                          2
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
ABOUT CAPITAL APPRECIATION

          We own, manage, invest in, and promote enterprises that innovate and seek to serve or
                     partner with established and emerging financial institutions

                                                 CAPPREC

                100%                             100%                   17.45%

       PAYMENTS & PAYMENT                SOFTWARE &                                    CTA ENTERPRISE
                                                                INTERNATIONAL *
         INFRASTRUCTURE                   SERVICES                                    DEVELOPMENT FUND

                                                                       AUSTRALIA

                                                                                                  CTA 35%

                                                                                                            3
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
HIGHLIGHTS

             4
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
COMPARING 2019 TO 2018

       COMPARISON VS.    The acquisition of subsidiaries became effective 5 May 2017. The 2018 financial
       PRIOR YEAR        results include performance of the acquired businesses for 11 months only.

       INVESTMENT IN     Subsidiaries are generating substantial topline growth and an investment in
       OPERATING         capacity to accommodate future growth was expensed during the year. This
       INFRASTRUCTURE    investment is in anticipation of future increased activity.

       CONTRACT WITH     In the interests of gaining increased volume and further market share gains,
       MAJOR CLIENT      African Resonance renegotiated certain terms of its relationship with a major
                         client.

                                                                                                           5
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
OPERATIONAL ACCOMPLISHMENTS
Proud to now be associated with all major SA banks and also many other banks and financial institutions

           Expanded and enhanced client relationships in both the Payments            Established new Synthesis office in Cape Town
           and Software divisions                                                     • Expanded reach with retailers
           • New blue-chip clients

                                                                                      Additional Amazon Web Services (AWS) accreditation received
           52% increase in number of terminals in the hands of clients                • Financial Services
           • More than 140 000 terminals (92 000 last year)                           • DevOps
           • Good pipeline
           • Scale operator with market share gains                                   Recruited additional accomplished team members
                                                                                      • Increased talent pool by 12% (27 new employees) and
                                                                                        21 new learnerships

           Concluded “ISO Agreement” with Nedbank to complement
           “Aggregator Agreement” with Mercantile Bank                                Executive recruitment

           • Progressing very well                                                    • Hired key experienced executives
                                                                                      • Management continuity

                                                                                      Improved B-BBEE rating
           Successful soft launch of Dashpay with annualised gross
                                                                                      • African Resonance – Level 2 contributor
           transaction value (GTV) of more than R2.2 billion*, an
                                                                                      • Synthesis – Level 3 contributor
           increase of c.57% since interim results

                                                                                                     * Based on GTV through the Dashpay network in April 2019 annualised   6
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
GROUP FINANCIAL METRICS
Solid results against backdrop of political uncertainty and economic difficulty

             Revenue                                                        Earnings & Dividends

                 Revenue                       R 607.7 million     19.6%
                                                                                  HEPS                           8.33 cents    (12.6%)

                 Payments                       R 469.9 million    13.2%          NHEPS                          9.01 cents    (11.0%)

                 Services                       R 137.8 million    48.0%
                                                                                  Cash EPS                      10.93 cents     49.8%

                                                                                  Full year dividends            4.25 cents      6.3%
             Profit

                 EBITDA                        R 159.5 million     (9.8%)

                 Trading profit                R 173.2 million     (7.5%)
                                                                            Capitalisation & Cash resources
                 Profit after tax              R 124.6 million    (12.8%)

                                                                                  Equity                     R 1.447 billion     3.9%
                 Normalised profit after tax   R 134.7 million    (11.6%)

                                                                                  NAV per share                    93 cents      3.9%

             Cash flow                                                            Available cash per share                      19.1%
                                                                                                                   39 cents

                 Cash flow from operations     R 212.7 million    27.4%           Cash available for                            19.1%
                                                                                                             R 611.2 million
                                                                                  investment
                 Cash conversion                      122.8%       5.2%
                 (% of trading profit)

                                                                                                                                         7
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
DIVISIONAL PERFORMANCE

 REVENUE                                                        Payments      Software     EBITDA                                                   Payments     Software

                                                                 13.2%         48.0%                                                                (10.9%)       31.0%
                                                   22.7%                                                                                 24.5%
                                                                                                                                                    (DECREASE) / INCREASE
                                           18.4%                  INCREASE VS. PRIOR                                             17.6%
                                                                                                                                                          VS. PRIOR

             FY19                     FY18                          Software & Services
                                                                                                 FY19                          FY18                    Software & Services

                                                                    Payments & Payment                                                                 Payments & Payment
                                   81.6                                                                                 82.4
                                                                    Infrastructure                                                                     Infrastructure
                                    %                                                                                    %
                           77.3%                                                                                75.5%

                PAYMENTS & PAYMENT INFRASTRUCTURE                                            SOFTWARE & SERVICES
HIGHLIGHTS

                •   Strengthened relationship with existing clients                          •    Strengthened relationship with existing clients
                •   New blue-chip client relationships established                           •    New blue-chip client relationships established
                •   Strong pipeline                                                          •    Secured additional AWS accreditation
                •   Continued to increase the number of devices supplied to market           •    Continued to cement AWS leadership
                •   Continued investment in and development of innovative platforms and      •    Diversified revenue stream
                    products                                                                 •    New office opened in Cape Town
                •   Successful soft launch of new Dashpay platform                           •    Increased operational capacity
                •   Continuing with deliberate, progressive roll-out of Dashpay services
                •   Increased operational capacity                                           •    AWS announced SA based regional data centre to open in early 2020

                                                                                                                                                                             8
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
POST YEAR-END TRANSACTIONS

    CTA acquires all IP underlying   CTA will acquire 245 million
    African Resonance from Uplink    shares held by Dr. Neishlos       Dr. Neishlos will resign from
                                     and related parties at 80 cents   Executive role within Group
                                     per share

    Revised licence agreement
    between Uplink and Dashpay
    re transaction processing
                                     CTA will sell its interest in     Dr. Neishlos and Eitan
    platform
                                     Resonance Australia to a party    Neishlos will resign from Board
    • Access to source code
                                     nominated by Dr. Neishlos         of CTA
    • Allow for independent
         development

    CTA will employ large            Various outstanding obligations   Transaction remains
    compliment of Uplink             among the parties will be         dependent on shareholder and
    development team                 settled                           JSE approval

                                                                                                         9
FULL YEAR RESULTS for the period ended 31 March 2019 - Capital Appreciation
B-BBEE COMMITMENT: ENTERPRISE DEVELOPMENT
CAPPREC’s subsidiaries established a not-for-profit fund to coordinate its enterprise development spend
       THE OPPORTUNITY

                                                                 SA startup GovChat announces it’s secured
                                                                 investment facility of up to R20m

       Capital Appreciation has also
       acquired a minority interest in
       black-controlled GovChat

       Motty Sacks appointed as
       Chairman of GovChat

                                                                  Eldrid Jordaan, Founder & CEO of GovChat with Motty Sacks, Chairman of
                                                                  Capital Appreciation

                                                                  Pretoria-based citizen engagement platform GovChat has secured an
                                                                  investment facility from The Enterprise Development Fund of JSE-listed firm
                                                                  Capital Appreciation.

                                                                                                                                                10
TECH-ENABLED NEW ENTRANTS IN SOUTH AFRICA

        c. 11 million clients   Vitality success demonstrates   Reportedly 4 minutes to   South Africa’s newest bank,
       Sought to be low-cost    the power of user experience,      on-board a client       aiming to launch this year
             provider            product bundling and data
                                          analytics

        Cost of delivery                                            Pain points
                                    Profitable, narrow
                                                                                               Focus on cost
                                    market segment
           Customer                                               User experience
           experience                                                                        User experience
                                    Bespoke offering
                                                                Simplicity of offering
       Focused strategy                                              and value                   Innovation
                                    User experience
                                                                    proposition

                                                                                                                        11
CHARACTERISTICS OF FUTURE PAYMENTS GLOBALLY
Innovations will make payments more cashless and invisible, also enabling data driven engagement platforms for clients

                         LESS CASH                        INVISIBLE PAYMENTS                       PAYMENTS AS A MEANS
                                                                                                      OF ENGAGMENT

                     THE VALUE OF DATA                    LOANS MADE EASIER                         TRANSACTION COSTS
                                                                                                     DECLINING RAPIDLY

                                                                                                     SOURCE: DERIVED FROM WORLD ECONOMIC FORUM REPORT   12
ELECTRONIC PAYMENTS CONTINUE TO GROW AND MUTATE IN RESPONSE
TO CONSUMER BEHAVIOUR

 DIGITAL CURRENCY                   MIDDLE CLASS                          REGULATION                     BIG DATA
 •    Increasing adoption and       •   Growing middle-class              •   Regulation and security    •   Consumer comfort with data sharing
      comfort with card-based and       in emerging economies                 driving installation and       leads to integration with payments
      digital currency:                 across Africa                         acceptance of devices      •   New products
     • Mobile                       •   Digital awareness and             •   Forcing accountability     •   New credit tools
     • Govt. payment distribution       engagement increasing             •   Encouraging digitization   •   Payment linked to and with content
        (SASSA)
     • Formalization (India)
     • Proliferation of payment
        methods (incl. wearables)

                                                                   PAYMENTS

                                                                   REG TECH

                                                                DIGITAL CHANNELS

                                                                  PLATFORMS

                                                                                                                                                  13
MOVE TO ELECTRONIC PAYMENTS CONTINUES
South Africa
                                                                                RTC                                                         RTC
                                                                       CLC      0%                                                                           In 2016, card-based
                                                                       2%                                                       CLC         1%
                                                                                                                                                          payments represented 56%
                                                                                                                                0%
                                                                             NAEDO                                                                          of transaction volume
                                                                               5%                                                      NAEDO      ATM
                                                                                                                                         4%
          RETAIL PAYMENTS
                                                                                      ATM                                                         11%
                                                                EFT DEBIT             14%                                       EFT DEBIT
                                                                  15%                                                  AEDO       10%
                                                       AEDO
                                                                                                                        1%
                                                        0%

                                                                         VOLUMES                                               EFT      VOLUMES
                                                                                                                              CREDIT
                                                               EFT         2010                                                13%        2017
                                                              CREDIT                        CARD                                                        CARD
                                                               19%
                                                                                             45%                                                         60%

                                                      Combined Card Volumes                                           Combined Card Values
          CARD ACTIVITY

                                                              CAGR                                                             CAGR
                            MILLIONS (TRANSACTIONS)

                                                                                                   MILLIONS (RANDS)
                                                                                                                                                         SOURCE: PASA ANNUAL REPORT 2017   14
CLOUD OPPORTUNITY IS MASSIVE

                      • According to IDC, spending on public cloud
                        services in South Africa will nearly triple over
                        five years from R4.3-billion in 2017 to R11.5-        OTHERS
                        billion in 2022                                         48%

                      • The adoption of cloud services will generate
                        112 000 net new jobs in South Africa by the
                        end of 2022
                      • The new AWS “infrastructure region” will be                  CLOUD
                                                                                     MARKET   AWS
                        launched in the first half of 2020                           SHARE    33%
                      • African organisations already moving to AWS
                      • Enterprises such as Absa, Investec,
                        MedScheme, MiX Telematics, Old                     AZURE
                        Mutual, Pick n Pay, Standard Bank,                  13%
                        Travelstart, and Vodacom already use AWS                   GOOGLE
                                                                                     6%
                      • Microsoft Azure opened its data centres in
                        Cape Town and Johannesburg in March 2019

                                                                                                    15
CLOUD PLATFORMS INDESPENSIBLE
…AWS is the world leader

     “     For Standard Bank Group to remain a leader in African financial services, we recognize we need
            to adopt a cloud-first approach to our business,” said Group CEO Sim Tshabalala. "AWS Cloud
           technology will create a springboard for Standard Bank Group, helping us to rapidly roll out our
                 digitization and data strategy to better cater to customers whose needs are constantly
                                                         evolving."

             He says the move will allow the bank to "build Africa’s financial services organization of the       Sim Tshabalala,
            future and to be positioned as more than a bank” using AWS’s agility and security combined            Group CEO of
                                     with Standard Bank’s "customer obsession.                                    Standard Bank

                                                                                                              ”
     “         Vodacom is starting to move its services to the AWS cloud already but a lot of services,
              especially where there are latency issues, will be functional early next year once the AWS
                                      region is fully operational in South Africa.

                                                                                                              ”
                                                                                                                  Shameel Joosub
                                                                                                                  CEO of Vodacom

                                                                                                                                    16
ABOUT OUR INVESTMENTS

                        17
CONSISTENT EXECUTION STRATEGY
Strategy has delivered substantial growth over last 18 months and our objectives remain unchanged since initially formulated

                  PARTNER                                          INNOVATE                                      EXECUTE

                                                        State of the art proprietary technology
          Work with financial institutions                                                                     Service excellence
                                                                platforms for services

              Create ecosystems for
                                                               Entrepreneurial culture                        Alleviate pain points
                   collaboration

                        B2B                                      Hardware agnostic                              User experience

                      B2B2C                                           Add value                                Create ecosystem

          Deliver solutions to help clients               Integrate seamlessly with legacy                    Act as an innovation
               realise their strategy                                  systems                                 catalyst for clients

              Focus on infrastructure                               Grow market                                 Engender trust

                                                                                                                                      18
PAYMENTS & PAYMENT INFRASTRUCTURE SEGMENT

                             Enables banks and corporates to extract additional value and differentiate at the point of acquiring

         PROPRIETARY                           BLUE CHIP                           END-TO-END                   COMPREHENSIVE                      UNIVERSAL
          PLATFORM                              CLIENTS                            SOLUTIONS                      OFFERINGS                        ACQUIRING

   Unique, proprietary technology           Provide and operate            Design, develop, implement and     Available on a turn-key all-     Pioneer of “Universal
       platform enabling rapid            payment and processing           manage innovative, end-to-end          inclusive basis or         Acquiring” by supporting
  development and implementation         solutions for leading brands      solutions thereby enhancing and             à la carte            one uniform infrastructure
  of customised corporate solutions       and International Banks           strengthening the relationships                                      for financial and
  across a diverse range of sectors                                        between banks, corporates and                                     non‐financial transactions
                                                                                     their clients

                                                                    Manages POS terminal estates at scale

                                                                                                                                                                          19
PAYMENTS REVENUE MODEL

        POS DEVICES              MAINTENANCE                POS ESTATE              TRANSACTIONS              LICENSING &
                                  & REPAIRS                MANAGEMENT                                         SOLUTIONS

     • Terminal sales          • Generates monthly       • Generates monthly       • Variable based on      • Generates monthly
       generate gross profit     recurring revenue         recurring revenue         transaction type and     recurring revenue
     • Rentals generate          depending on level        depending on level        value of transaction     dependent on
       monthly recurring         and scope of services     and scope of services                              solution
       revenue                   contracted                contracted                                          • Flat fee
     • Relationship with                                                                                       • Commission
       major clients subject
       to long-term master
       supply agreements

        Predictable but         Recurring revenue         Recurring revenue          Unlimited, subject          Unlimited
            lumpy                and predictable          tied to the size of          to established
                                                              the estate             economic models

                                                                                                                                  20
EXTENSIVE RANGE OF DEVICES…
Devices range in functionality, price and margin

                                               …AND MORE TO COME
                                                                   21
DASHPAY – INNOVATION IN PROCESSING
Creating new value opportunities through platform ecosystem

                                  Traditional
                                  processing
                                                          New economic model – Platform economics

                                  Challenged              • Introduces brutal efficiency to transaction processing
                                   economic
                                     model                • Universal processing - processes all transaction types on a
                                                              single platform

                                   BASE 24                • Platform economics drives boundary, frictional and
                                                              transactional costs lower
                                                          • Multi-party environment leads to multi-product opportunity
                      EVOLUTION

                                   TANDEM                     • Opportunity for new B2B applications – those that don’t
                                                                 exist and those that benefit from digitisation
                                                              • Opportunity to integrate multiple disparate products on
                                  POSTILLION                     single platform
                                                          • Traditional acquiring is possible but not the focus
                                                              • To be done in cooperation with banking clients
                                   DASHPAY
                                  PROCESSING

                                                                                                                          22
DASHPAY’S EVOLUTION
Material progress has been made in readying Dashpay for mass deployment

    BANK RELATIONSHIPS                        TARGET MARKET OPPORTUNITIES                                 PRODUCT OFFERING

      THEN*              NOW^                    THEN*               NOW^                                      THEN*                              NOW^

                                              Small independent   Small independent                       Traditional                         Multiple products and
                                              merchants           merchants                               Merchant                            services
                                                                  Larger merchants                        Acquiring only                      Acquiring is now only
                                                                                                                                              ancilliary
                                                                  Enterprise customers for
                      Others in negotiation
                                                                  B2B and B2B2C
                                                                  deployment

                                                                                  * MAY 2017 (FIRST ACQUISITION MONTH) // ^ APRIL 2019 (LATEST TRADING MONTH) // ANNUALISED   23
DASHPAY OPERATIONAL UPDATE
Transaction (Tx) Data

                               Gross Tx Value                                          Gross Tx Volume

                          340%                                                       250%
                                                          R2.2bn                                                        5.7m
                                              57%                                                         39%
                                                                                                 4.1m
                                    R1.4bn

                        180%                                                     156%

               R500m                                                     1.6m

                THEN*               NOV ‘18               NOW^         THEN*                   NOV ‘18                   NOW^

                        18 months              6 months                          18 months                  6 months

                                                                   * MAY 2017 (FIRST ACQUISITION MONTH) // ^ APRIL 2019 (LATEST TRADING MONTH) // ANNUALISED   24
DASHPAY
Expanding client and brand penetration

                                         25
SOFTWARE & SERVICES SEGMENT – SYNTHESIS
Leading provider of technology products and solutions within the financial services industry

                       BLUE-CHIP CLIENTS                        CLIENT CENTRIC                       THOUGHT LEADERS
                  Absa, Investec, Standard Bank, HSBC,      Delivering the highest business        Acquiring and retaining the best
                  Nedbank CIB, Citibank, RMB, Capitec,      value with a strong service ethic        software development skills
                            Afgri and others

                           EXPERIENCED                               FOCUSED                    STRATEGIC RELATIONSHIPS
                    Highly innovative team with track            Focus in the financial           Key partnerships with Amazon’s
                    record of only successful delivery              services sector             AWS, the top rated provider of cloud
                                                                                                         services globally

                                                                                                                                       26
OPERATING UNITS WITHIN SYNTHESIS

              CLOUD                                                   DIGITAL                                    PLATFORM INTEGRATION
            CONSULTING                                               CHANNELS                                         PRODUCTS

     Cloud transformation to assist the                    Delivering exceptional end-user client                   Integration to enable regulatory
   Enterprise in becoming cloud ready,                    experience web and mobile touch points                 reporting solutions for SARS (tax) and
   execute mass migrations and harness                     for financial services institutions while             SARB (balance of payments), payment
    the benefits of public cloud platform                   maintaining information security and                 processing and exchange connectivity
    First AWS Advanced Consulting                                  transactional integrity
              partner in MEA

                                                                      SYNTHESIS LABS
                                                   Artificial intelligence, blockchain, machine learning

                                                               SYNTHESIS ACADEMY
                                            Technical and cloud training tailored to organisational objectives

                                                                                                                                                          27
SYNTHESIS ACADEMY
Technical and cloud training tailored to organisational objectives

       “        “Synthesis is a learning organisation
                  with deep technical and business
                   skills. We are well positioned to
                                                                     • Outcomes-driven onsite or e-Learning LMS
                                                                       based training
                                                                     • Practical Labs to move from theory to
                                                                       application
                  provide both these practical and
               theoretical skills to our customers. By
                  providing scaled learning we can
                  address the vast technical skills
                    shortage in the South African                    • 120+ Amazon Web Services (AWS)
                          technology sector “                          certifications

                                                         ”
                                                                     • Tap into real insight and experience to fast-
                                                                       track projects
                      Darren Bak, Head Synthesis Academy

                                                                                                                       28
GLOBAL STABILITY – DISCOVERY VITALITY USE CASE

                                                                                Synthesis delivers
                                                                              advanced support and
                                                                               global scalability to
                                                                             Discovery Vitality Group

                                                                                 VITALITY STATS

       Discovery Vitality Group has built a
       massively flexible and scalable platform on           140m                      4m                 15
       AWS Cloud for its global Vitality program
       using a microservices architecture

       Synthesis provides a managed service
       offering to meet the objectives of security,
       standardisation, stability and performance on   Insurance customers       Worldwide members      Countries
       this platform

                                                                                                                    29
REG TECH – REPORTING & COMPLIANCE

                                                                       Synthesis helped one of
                                                                        SA’s biggest banks to
                                                                       upgrade their Balance of
                                                                           Payments (BoP)
                                                                          Reporting system

                                             One of the largest
                                                                          The new software is
                                         authorised Forex dealers
                                                                        replicable and scalable,
               Use of the Synthesis       in the country, benefits
                                                                       offering opportunities for
             RegTech product allows      from an improvement to
                                                                       the bank to roll it out into
                 dealers in foreign        speed, accuracy and
                                                                        other SADC markets in
             currency to easily ensure   stability of reporting, and
                                                                         which it operates, with
              regulatory compliance        ability to quickly and
                                                                          support for multiple
                                          easily respond to future
                                                                               regulators
                                            regulatory changes

                                                                                                      30
FINANCIAL PERFORMANCE

                        31
FINANCIAL PERFORMANCE
Payments & Payment Infrastructure Division

                                                                                                                                     469.9
 500                                                                                                                                                                       GROWTH

                                                                                                                                                               Revenue              13.2%

                                                                                                           415.1
 450
                                                                                                                                                               EBITDA               (10.9%)
                                                                                                                                                               Operating profit     (14.4%)
 400

 350
                                                                                                                                                                             CAGR
                                                                                                                                                                Revenue              60%
 300
                                                                                                                                                                EBITDA               71%

 250

                                                                                   202.9
                                                       196.1
 200

                                                                                                                     151.7

                                                                                                                             149.5
                              140.7

                                                                                                                                               135.5

                                                                                                                                                       127.9
 150

                                                                                             77.5
 100

                                                                                                    60.9
        44.2

                                                                 42.1
                                        24.9

                                                                        22.7

  50
                                               10.6
                 9.4

                        1.1

   0
               FY '14                 FY '15                   FY '16                      FY '17                  FY '18                    FY '19

                                                      Revenue           EBITDA   Operating Profit

                                                                                                                                                                                              32
TERMINAL ESTATE ANALYSIS
Terminals at period end

                                      140000
                                                                                      128000
                             118000
                                                                             103000                                                   95000
                     92000
                                                                                                                              77000
                                                                     76000
                                                                                                                                                                              40000   41000
             60000                                                                                                                                                   38000
                                                                                                                     53000
    49000                                                    48000                                           40000
                                                                                                    32000                                                    22000
                                                    32000
                                                                                                                                                    16000

    April '17 Sep '17 Mar '18 Sep '18 Mar '19       April '17 Sep '17 Mar '18 Sep '18 Mar '19       April '17 Sep '17 Mar '18 Sep '18 Mar '19       April '17 Sep '17 Mar '18 Sep '18 Mar '19

            TOTAL TERMINAL ESTATE                             OWNED BY CLIENTS                               ACTIVE – IN MARKET                             AWAITING DEPLOYMENT

•    Number of terminals in clients’            •    Number of terminals delivered to           •    Number of terminals in use grew            •    New terminals, once imported,
     hands grew 18% in the last 6                    clients grew by 24% in last 6                   by 23% in last 6 months and 78%                 are prepared for client and
     months and 52% during the year                  months and 68% during the year                  during the year                                 readied for deployment
•    Includes terminals subject to              •    Paid for at time of delivery               •    Includes terminals subject to              •    Represents prospective recurring
     rental agreements                                                                               rental contracts                                revenue once activated
                                                •    Start to generate recurring
                                                     revenue once activated                     •    Rentals may be renewed upon                •    Includes ”rotating stock” for
                                                                                                     expiry or replaced with owned                   backup and replacement
                                                                                                     terminals

                                                                                                                                                                                                33
FINANCIAL PERFORMANCE
Software & Services Division

 160
                                                                                                                                                                         PERIOD GROWTH

                                                                                                                                          137.8
                                                                                                                                                                  Revenue                    48.0%
 140
                                                                                                                                                                  EBITDA                     31.0%
                                                                                                                                                                  Operating profit           26.7%
 120

                                                                                                                   93.1
 100                                                                                                                                                                           CAGR
                                                                                                                                                                   Revenue                   27%

                                                                                            77.6
                                                                                                                                                                   EBITDA                    28%
  80

                                                            51.9
  60
                                46.1

                                                                                                                                                                  EBITDA and Operating Profit is

                                                                                                                                                    44.0

                                                                                                                                                           42.1
         41.6

                                                                                                                                                                  after expensing additional

                                                                                                                            33.9
                                                                                                                                                                  ramp-up costs related to AWS

                                                                                                                                   33.2
                                                                                                     29.9

                                                                                                            29.4
  40                                                                                                                                                              Cloud Migration projects, the
                                                                                                                                                                  benefits of which will accrue in
                                                                            19.4
                                                                     19.8
                                                15.6

                                                                                                                                                                  subsequent periods
                                         15.9
                         12.4
                  12.6

  20                                                                                                                                                              The benefit of last year’s
                                                                                                                                                                  expenditures is visible in this
                                                                                                                                                                  year’s growth
   0
                FY '14                 FY '15                      FY '16                          FY '17                 FY '18                  FY '19

                                                       Gross Revenue               EBITDA     Operating Profit

                                                                                                                                                                                                     34
GROUP SUMMARISED STATEMENT OF COMPREHENSIVE INCOME

                                                                                      % increase /     Strong growth from all
  (R million)                                         31 March 2019   31 March 2018                          divisions
                                                                                       (decrease)

  Revenue                                                     607.7           508.2        19.6%        Development of new
                                                                                                      innovative products and
  Operating expenses                                          128.0            80.0        59.9%        building of operating
                                                                                                               capacity
  EBITDA                                                      159.5           176.8        (9.8%)

  Trading profit                                              173.2           187.2        (7.5%)       Includes c.R19m of
                                                                                                     incremental capacity and
                                                                                                          support-related
  Net finance income                                           37.7            38.7        (2.5%)
                                                                                                            expenditure
  Profit before taxation                                      173.8           200.0       (13.1%)
                                                                                                     Includes R2.4m loss, after
  Profit after tax                                            124.6           142.9       (12.8%)        tax, attributable to
                                                                                                        Resonance Australia
  Normalised profit after tax                                 134.7           152.3       (11.6%)

  Headline earnings per share (cents)                          8.33            9.53       (12.6%)          After reversal of
                                                                                                     amortisation of intangibles
  Normalised headline earnings per share (cents)               9.01           10.12       (11.0%)     arising from acquisitions

  Cash earnings per share (cents)                             10.93            7.30        49.8%
                                                                                                           Effective asset
  Number of shares in issue (millions)                      1 555.0         1 555.0                         management

  Weighted average number of shares in issue
                                                             1495.5          1505.4
  (millions)                                                                                         Purchased 8.02m treasury
  Number of shares in issue, net of treasury shares                                                          shares
                                                            1 491.4          1499.4
  (millions)                                                                                         Total number of treasury
                                                                                                         shares is 63.6m

                                                                                                                                   35
DIVISIONAL REVENUE COMPOSITION

 (R million)                                                                                   31 March 2019                  31 March 2018                         Growth

 Payments & Payment Infrastructure division
 Rental income                                                                                           79.3                           82.4                           (3.8%)
 Maintenance and support service fees                                                                    73.9                           45.1                           63.9%
 Sale of terminals                                                                                      290.9                          276.0                            5.4%
 Transaction fees                                                                                        15.1                           11.6                           30.2%
 Other revenue *                                                                                         10.7                                 -                                -
 Total                                                                                                  469.9                          415.1                           13.2%
 Software & Services division
 Services and consultancy fees                                                                          102.2                           71.3                           43.3%
 Licence and subscription fees                                                                           32.9                           18.8                           75.0%
 Hardware                                                                                                 2.7                            3.0                         (10.0%)
 Other turnover                                                                                                -                              -                                -
 Total                                                                                                  137.8                           93.1                           48.0%
 Total revenue                                                                                          607.7                          508.2                           19.6%

 Geographic region
 South Africa                                                                                           593.6                          496.3                           19.6%
 Rest of Africa and Indian Ocean Islands                                                                 14.1                           11.9                           18.5%
 Total revenue                                                                                          607.7                          508.2                             19.6

                                           Recurring income represents approximately 47.4% of total revenue in 2019 (2018: 42.8%)

                                                                                                                                       * IN FY2018 REFLECTED AS OTHER INCOME       36
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2018

  (R million)                        31 March 2019    31 Mar 2018

  ASSETS

  Goodwill                                    728.6          728.6

  Intangible assets                            62.3           71.5

  Other non-current assets                     72.2           64.3

  Non-current assets                          863.1          864.4
                                                                     Available for investment
  Cash and cash equivalents                   611.2          513.2   in organic growth and
                                                                     acquisition opportunities
  Other current assets                         70.3           94.1

  Total assets                               1544.6        1 471.7

  EQUITY AND LIABILITIES

  Equity                                     1447.1        1 392.3

  Non-current liabilities                      34.6           35.7

  Current liabilities                          62.9           43.7

  Total equity and liabilities               1544.6        1 471.7

  NAV per share (cents)                        93.1           89.5

  Cash available per share (cents)             39.3           34.2

                                                                                                 37
CASHFLOW (KEY FEATURES)

    (R million)                                                    31 March 2019       31 March 2018

    Cashflow from operations                                               212.7                166.3
                                                                                                         Cash conversion ratio of
                                                                                                         112.8% of Trading Profit
    Changes in working capital                                               51.7               (12.6)

    Acquisition of property, plant and equipment                           (16.5)                (4.8)
                                                                                                              Effective asset
                                                                                                               management
    Acquisition of subsidiaries net of cash acquired                               -           (553.0)

    Acquisition of associate                                                       -            (30.2)      Total of 63.6 million
                                                                                                         shares at an average price
                                                                                                           of 76 cents per share
    Purchase of 8.0 million treasury shares (2018: 55.6 million)            (7.1)               (41.4)

    Repayment of loans                                                      (3.0)               (14.9)

    Dividends paid                                                         (63.6)               (30.4)

    Cash & cash equivalents at period end                                  611.2                513.2

                                                                                                                                      38
PROSPECTS

            39
PROSPECTS
Capital Appreciation is well capitalised, with the management skills and
technology to drive it’s growth strategy

 • A broad range of organic as well as acquisitive growth opportunities available to CAPPREC
 • Acquisition activity will depend on strategic fit as well as valuations
 • Political environment and economic climate are impacting our clients and remain present in our planning
            GROWTH OPPORTUNITIES

                                      PAYMENTS & PAYMENT INFRASTRUCTURE                                SOFTWARE & SERVICES

                                   ▪ Accelerated growth in POS device estate as           ▪ Strong and growing adoption of cloud-based
                                     penetration increases in banking as well as            solutions
                                     SME sector                                           ▪ Regulatory compliance requirements
                                   ▪ Introduction of new platforms will generate          ▪ Further international expansion, especially
                                     new growth                                             African hub
                                   ▪ New product pipeline                                 ▪ Significant opportunity in new technologies

                                                                                                                                          40
OUR INVESTMENT CASE

•   Well-positioned in an industry with healthy organic growth prospects

•   A trusted partner to a strong network of large financial institutions

•   Clients are well capitalised and established

•   Clients already have a presence in Africa – providing the potential ability for CAPPREC to expand regionally with them

•   Founders with a very strong network of relationships on which to build future business

•   Well-established FinTech subsidiaries with strong track records
       •   Innovation
       •   Quality execution
       •   Financial performance

•   Subsidiaries have strong organic growth prospects and acquisition opportunities

•   Strong Group balance sheet with adequate headroom for organic and acquisitive growth

•   Subsidiaries are highly cash generative with cash conversion exceeding 100%

•   Our products and services are targeted at mission-critical applications

                                                                                                                             41
T H A N K   Y O U

                    42
ANNEXURE

           43
COMPARABLE INTERNATIONAL COMPANIES
Illustrative of breadth and depth of international “Payments” marketplace

                                                                                                                                            POS / CASH
             NETWORKS                      MERCHANT ACQUIRORS                   EMERGING PAYMENTS
                                                                                                                                          DISBURSEMENT

            $264 043 // 25.9x           $4 672 // 8.5x    $2 201 // 12.3x       $305 // NA        $7 964 // 13.4x                             $1 423 // 7.6x

            $370 290 // 23.1x          $26 048 // 13.2x   $24 917 // 18.0x   $133 501 // 27. 5x     $20 680 // NM                              $273 // 13.8x

                                        $203 // NA        $22 684 // 18.1x     $1 086 // 3.8x       $865 // 14.2x                             $5 288 // 10.9x

                                       $8 857 // 13.9x    $38 792 // 21.6x   $30 226 // 72.4x      $20 680 // 24.2x                            $913 // 10.4x

                                       $2 503 // 19.5x     $651 // 19.5x       $4 225 // NM

                                                                                                  MARKET CAPITALISATION (IN US $ MILLIONS) // CY19E EV/EBITDA AS OF JUNE 6 2019   44
PAYMENTS & PAYMENT INFRASTRUCTURE
Historical performance

         (R million)      2014     2015    2016    2017     2018     2019    CAGR
                                                                             ’14 – ‘19

         Revenue          44.2    140.7   196.1   202.9    415.1     469.9      60%

         EBITDA            9.4     24.9    42.1    77.5    151.7     135.5      71%

         Margin

         EBITDA          21.3%   17.7%    21.5%   38.2%   36.5%     28.8%

         Growth

         Revenue                 218.3%   39.4%   3.5%    104.6%    13.2%

         EBITDA                  164.9%   69.1%   84.1%   96.1%    (10.9%)

                                                                                         45
SOFTWARE & SERVICES
Historical performance

          (R million)     2014    2015    2016    2017     2018    2019   CAGR
                                                                          ‘14 – ‘19

          Revenue         41.6    46.1    51.9     77.6    93.1   137.8      27%

          EBITDA          12.6    15.9    19.8     29.9    33.9    44.0      28%

          Margin

          EBITDA         30.3%   34.5%   38.2%   38.5%    36.4%   31.9%

          Growth

          Revenue                10.8%   12.6%   49.5%    20.0%   48.0%

          EBITDA                 26.2%   24.5%   51.0%    12.4%   31.%

                                                                                      46
PERIOD ON PERIOD SECTOR PERFORMANCE
Financial performance

      INFRASTRUCTURE
                        (R million)   H1 ‘18   H2 ‘18   H1 ‘19   H2 ‘19
         PAYMENTS &
          PAYMENT

                        Revenue       173.8    241.3    253.6    216.3

                        EBITDA          57.3     94.7     70.9     64.6

                        Margin

                        EBITDA         33%      39%      28%      30%

                        (R million)   H1 ‘18   H2 ‘18   H1 ‘19   H2 ‘19
        SOFTWARE &
         SERVICES

                        Revenue         37.6     55.5     61.8     76.0

                        EBITDA          10.8     22.8     19.3     24.7

                        Margin

                        EBITDA         29%      41%      31%      33%

                                                                          47
GLOSSARY
   AEDO       Authenticated early debit order                                      ISO     Independent sale organisation
   AI         Artificial intelligence                                              IT      Information technology
   ATM        Automated teller machine                                             M       Million
   AWS        Amazon Web Services                                                  NA      Not available
   B2B        Business to business                                                 NAEDO   Non-authenticated early debit order
   B2B2C      Business to business to consumer                                     NAV     Net asset value
   B-BBEE     Broad-Based Black Economic Empowerment                               NFC     Near field communication
   Bn         Billion                                                              NHEPS   Normalised headline earnings per share
   CAGR       Compound annual growth rate                                          NM      Not meaningful
   CAPPREC    Capital Appreciation Limited                                         POS     Point of sale
   Cash EPS   Cash flow from operations, less taxation paid, divided by weighted   R       Rand
              average number of shares in issue
                                                                                   R&D     Research and development
   CLC        Code line clearing
                                                                                   REIT    Real Estate Investment Trust
   CRM        Customer relationship management
                                                                                   RTC     Request to credit
   EBIT       Earnings before interest and tax
                                                                                   SA      South Africa
   EBITDA     Earnings before interest, tax, depreciation and amortisation
                                                                                   SARB    South African Reserve Bank
   EFT        Electronic fund transfer
                                                                                   SARS    South African Revenue Services
   EMV        Europay, Mastercard, Visa
                                                                                   SME     Small and medium enterprise
   EPS        Earnings per share
                                                                                   Tx      Transaction
   FinTech    Financial technology
                                                                                   US$     United States Dollar
   FY         Fiscal year
                                                                                   ZAR     South African Rands
   GTV        Gross transaction value
   HEPS       Headline earnings per share

                                                                                                                                    48
IMPORTANT NOTICE, DISCLAIMER AND BASIS OF PRESENTATION

For the purposes of this notice, this presentation (the “Presentation”) shall mean       This Presentation does not constitute or form part of, and should not be                This Presentation contains forward-looking statements, including in relation to
and include the pages and slides that follow, its contents including the                 construed as, an advertisement, invitation, solicitation and/or offer to sell, issue,   the prospects of CAPPREC, which include all statements other than statements
information forming part thereof or referred to in the Presentation, the oral            purchase or subscribe for, any shares and/or securities in any jurisdiction, or an      of historical facts, including, without limitation, any statements preceded by,
presentation of the pages and slides by Capital Appreciation Limited                     inducement to enter into investment activity. This Presentation does not                followed by or including the words “targets”, “believes”, “expects”, “aims”,
("CAPPREC") its officers, directors, employees and/or advisers, any question-            constitute an offer to the public for the sale of or subscription for, or an            “intends”, “may”, “anticipates”, “would”, “could” or similar expressions or the
and-answer session that follows that oral presentation, hard copies of this              advertisement or the solicitation of an offer to buy and/or subscribe for, securities   negative thereof. Forward-looking statements by their nature involve known and
document and any materials and/or information (in whatever form) distributed at,         as defined in the Companies Act, 71 of 2008 ("the Act") or otherwise and will not       unknown risks, uncertainties, assumptions and other important factors because
or in connection with, that oral presentation. By attending the meeting at which         be distributed to any person in South Africa in any manner which could be               they relate to events and depend on circumstances that might occur in the future
the Presentation is made, or by reading the Presentation slides, you will be             construed as an offer to the public in terms of the Act. Furthermore, this              whether or not outside the control of CAPPREC.
deemed to have (i) agreed to all of the following restrictions and made the              Presentation does not constitute an advertisement or a prospectus registered
following undertakings; and (ii) acknowledged that you understand the legal and          and/or issued under the Act.                                                            Such factors may cause actual results, performance or achievements to be
regulatory sanctions attached to the misuse, disclosure or improper circulation of                                                                                               materially different from future results, performance, developments or
the Presentation.                                                                        The information contained herein has been prepared using information available          achievements expressed or implied by such forward-looking statements. Such
                                                                                         to CAPPREC at the time of preparation of this Presentation. External or other           forward-looking statements are based on numerous assumptions regarding
This Presentation is provided to you solely for information purposes and does            factors may have impacted on the business of CAPPREC and the content of this            present and future business strategies, prospects and the relevant operating
not constitute, and may not be relied on in any manner as, legal, tax or                 Presentation, since its preparation. In addition all relevant information about         environment in the future.
investment advice and/or an investment recommendation.                                   CAPPREC may not be included in this Presentation.
                                                                                                                                                                                 Accordingly, no assurance is given that any such forward-looking statements will
This Presentation is not directed to, or intended for distribution to or use by, any     The information in this Presentation has not been independently verified. No            prove to have been correct. These forward-looking statements speak only as at
person or entity that is a citizen or resident of, or located in, any locality, state,   representation or warranty, expressed or implied, is made as to the accuracy,           the date of this Presentation. CAPPREC expressly disclaims any obligation or
country or other jurisdiction where such distribution or use would be contrary to        completeness or reliability of the information contained herein and no reliance         undertaking to disseminate any updates or revisions to any forward-looking
law or regulation or which would require any action (including registration or           should be placed on such information.                                                   statements contained herein to reflect any change in its expectations with regard
licensing) within such jurisdiction for such purpose.                                                                                                                            thereto or any change in events, conditions or circumstances on which any of
                                                                                         Neither CAPPREC, its officers, directors, employees nor any of its advisers,            such statements are based.
This Presentation is not, and should not be construed so as to constitute, an            connected persons or any other person accepts any
offer of securities for sale or acquisition in any jurisdiction, including in the        liability for any loss howsoever arising, directly or indirectly, from this
United States, Canada, Australia or Japan.                                               Presentation or its contents.

                                                                                                                                                                                                                                                                   49
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