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CAPITAL APPRECIATION LIMITED - Unaudited Interim Condensed Consolidated Results for the six months ended 30 September 2018 and cash dividend

Release Date: 14/11/2018 07:05
Code(s): CTA     PDF:  
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Unaudited Interim Condensed Consolidated Results for the six months ended 30 September 2018
and cash dividend

Capital Appreciation Limited
Incorporated in the Republic of South Africa
(Registration number 2014/253277/06)
Share code: CTA   ISIN: ZAE000208245
("CAPPREC", or the "Group")

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the six months ended 30 September 2018
and cash dividend declaration

About CAPPREC

Capital Appreciation ("CAPPREC") owns, manages, invests in, and promotes established and developing financial technology ("FinTech") enterprises, their platforms, solutions, products and
applications.

The Group has two business segments - Payments & Payment Infrastructure and Software & Services. African Resonance and Dashpay comprise the Payments segment and Synthesis comprises the
Software segment.

Payments & Payment Infrastructure: African Resonance is a leading provider of payment infrastructure and related technology solutions to established financial institutions, emerging
payment service providers, the hospitality industry and the entire retail sector, both directly and indirectly. Dashpay is positioned to provide innovative transaction processing services,
solutions and products focused on B2B commercial and payment activity. The Dashpay solution set is intended to complement existing payment services provided by the Group's established
banking and institutional client base.

Software & Services: Synthesis is a highly specialised software and systems developer, offering consulting, integration services and technology-based product solutions, to banking and
other financial institutions in South Africa and other emerging markets. Synthesis is uniquely positioned in Africa having become the first company on the continent to attain Amazon Web
Services' ("AWS") Advanced Consulting Partner Accreditation, with specialist competencies in both Financial Services and Development Operations ("DevOps").

International: Resonance Australia is an associate company investment in which CAPPREC owns 17.45%. Resonance Australia is still in its early stages of development and, when operational,
will employ a business model similar to that which Dashpay operates in South Africa.

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

Salient FEATURES

- Growth continues across all business units          - Contracted with new blue-chip clients
- 103 000 payment terminals owned by clients +33%     - Market share gains in "bank terminal market"
- Revenue R315.4 million +56%                         - EBITDA R81.4 million +24%
- Trading profit R82.8 million +25%                   - Headline earnings R63.3 million +13%
- EPS & HEPS 4.23 cents +13%                          - Normalised HEPS 4.55 cents +13%
- Cash generated from operations R92.4 million        - Cash conversion rate 112% of trading profit
- R551.5 million cash available for reinvestment      - Interim dividend per share 2.25 cents +12.5%

Commentary
INTRODUCTION
The operating performance of the business units within the Group has once again been solid and consistent with expectations, this, notwithstanding the challenging economic environment in
South Africa. These interim results once again demonstrate the strategic positioning and relevance of the Group's products and services, as well as our clients' recognition of CAPPREC as a
respected partner.

Technology's role as a key disruptor and differentiator in the financial services sector continues to accelerate, creating further opportunity for CAPPREC. The Group's businesses have a
long history of innovation and a good track record of responding to disruption and converting the resulting dislocation into viable commercial opportunity.

The Group's clients now proudly include all major banking institutions in South Africa, including Absa, Capitec, FNB, Investec, Nedbank and Standard Bank, as well as many other banks,
non-banking financial services companies and institutions.

Each of CAPPREC's businesses has continued to make good progress in pursuit of their long-term strategic objective - to be a valued partner to, and recognised as an industry innovator by,
established and emerging financial services companies in South Africa, across Africa and in other select jurisdictions CAPPREC elects to operate or invest in around the world.

OPERATING ENVIRONMENT
Shareholders and investors are cognisant of the general economic challenges and political uncertainties facing South Africa, which are being further exacerbated by low economic growth
and rising unemployment. These conditions, not unexpectedly, impact disposable incomes and generally weigh heavily on the national retail sector.

CAPPREC's Payments & Payment Infrastructure business is directly impacted by its clients' exposures to the retail sector. In light of these economic circumstances, the Group's banking
clients, like many other commercial sectors' participants, have adopted a more judicious and cautious approach to network infrastructure expansion and other capital expenditure
initiatives.

In the Software & Services sector, in response to increasing consumer demands, there is a significant and growing movement towards digitisation. The systems required to accommodate this
migration, as well as the channels required to distribute the digital banking products, have made the need for technology-led cost-saving initiatives more urgent and have created more
demand for the Group's services.

Notwithstanding these patterns of caution and control, CAPPREC subsidiaries successfully managed to expand the scope of their business with existing clients and, given their well-
established reputations and track record of innovation and quality and efficient service delivery, have once again been able to attract important new "blue-chip" clients. The Board is very
pleased with the operational accomplishments of the Group and the high regard in which the business units are held by their clients and customers.

The management teams of each business are aligned to CAPPREC's strategic imperatives. The teams are focused and are making good progress in ensuring the Group's portfolio of products and
services is suitably positioned for current market conditions. While it remains early in the Group's journey, there is good momentum in delivering value to our clients. The contributions
being made by our staff, and the commitment they demonstrate to the Group and our customers, are both assuring and admirable and will serve the Group and our shareholders well into the
future.

SUMMARISED FINANCIAL RESULTS
In assessing the financial results, it should be noted that the comparative financial information for the Payments & Payment Infrastructure and Software & Services segments represents
trading for five months, as the acquisitions became effective on 5 May 2017.

CAPPREC generated Revenue for the period of R315.4 million (2017: R201.8 million), an increase of 56% and Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") of
R81.4 million (2017: R65.5 million), an increase of 24%. Profit Before Taxation increased by 13% to R88.4 million (2017: R78.2 million), with Profit After Taxation increasing by 13% being
R63.3 million (2017: R56.2 million). Headline Earnings for the period increased by 13% to R63.3 million (2017: R56.2 million) translating into EPS and HEPS for the period of 4.23 cents per
share, an increase of 13% relative to the EPS and HEPS of 3.75 cents per share in the comparable period.

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 that arose in connection with the asset acquisitions
concluded by the Group in May 2017. For the period under review, the Group achieved an increase of 13% in NHEPS to 4.55 cents (2017: 4.02 cents). The Group also considers Cash Earnings Per
Share to be an appropriate barometer of its performance and for the period under review, Cash Earnings Per Share was 4.60 cents (2017: 1.22 cents).

A unifying characteristic of all the underlying businesses within the Group is that they are in a growth phase of their respective lifecycles. Investment and expenditure to support this
anticipated growth are required to yield further income producing benefits in future timing periods.

During the period under review, operating costs, as expected, grew faster than revenue, as the Group incurred costs to build capacity in anticipation of growth in commercial activity in
both the Payments and Software segments. In Payments, the costs relate to development, marketing and capacity building expenditure associated with the launch of the Dashpay processing
services. The technology underlying Dashpay has been branded "Stratagem" and is in the process of being activated in a deliberately phased manner. In Services, the added costs related
to increased staffing and training substantially associated with the AWS cloud initiatives being pursued by Synthesis. There were also certain increased costs incurred at Group level for
additional executive management, administrative overhead and head office rental.

Finance income earned in 2018 is lower than 2017 mainly as a result of higher cash balances held in the five week period 1 April 2017 to 8 May 2017. The settlement date to the vendors for
the acquisition of subsidiary and associate companies was 8 May 2017.

During the period under review, the Group again demonstrated its highly cash generative nature with cash generation of 112% of Trading Profit. This characteristic of the Group's
operational enterprises is well reflected in the Group's cash resources at 30 September 2018 of R551.5 million. This amount, when compared to the Group's cash resources at 31 March 2018,
is after the payment of the declared dividend in June 2018, the buy-back of 4.68 million CAPPREC shares, and several other cash applications reflected elsewhere in this announcement. As of
30 September 2018, CAPPREC has purchased a total of 60.3 million shares at an average price of 76 cents per share. The Group's cash resources are invested in call and notice deposits with
major banks, which yield market related interest rates.

Based on CAPPREC's Net Asset Value ("NAV") per share at 30 September 2018 of 95 cents, 37 cents of that NAV per share is represented by cash. The Group'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.

DIVISIONAL REVIEW
African Resonance and Dashpay, as described earlier, comprise the Payments & Payment Infrastructure division of the Group.

African Resonance primarily sells, distributes, maintains, rents and manages payment terminals to, for and on behalf of its banking and institutional clients. African Resonance has a
distribution agreement with terminal manufacturer, Ingenico (France), a relationship that has developed with reciprocal respect and advantage since the formation of African Resonance in
2003. This division has continued to generate a sizeable number of terminal sales with more than 27 000 additional terminals being sold during the period. African Resonance at period
end has more than 103 000 terminals owned by clients. The Group's initial objective was to have 100 000 terminals owned by clients by the end of March 2019.

Dashpay was initially conceived as a traditional merchant acquirer when first established in 2013. Since that time a significant amount has been expensed in the development of Dashpay's
systems and technology, with further resources being allocated to complete its exclusively licensed multi-product, multi-party, universal transacting platform, recently branded
"Stratagem". Dashpay is now positioned to provide innovative transaction processing services, solutions and products focused on B2B and Business-to-Business-to-Consumer ("B2B2C")
commercial and payment activity. The Dashpay platform, ecosystem and solution set are intended to complement the traditional payment services provided by the Group's established banking
and institutional client base, are device agnostic and integrate seamlessly with existing legacy systems. Moreover, Dashpay services are ideally suited to serving the rapidly changing
needs for secure payment systems and financial management across Africa.

Stratagem is in the process of being activated in a deliberately phased manner and the response at this early stage is encouraging. The value of transactions processed through the Dashpay
network, Gross Transaction Value ("GTV") for the month of October 2018 is more than double the level of activity achieved during any month in the previous financial year and when
annualised approximates R1.4 billion. GTV is a key operating metric used to measure the scale of the business and the degree to which Dashpay has and will be able to penetrate the market.

The Payments & Payment Infrastructure segment demonstrated a resilient trading performance notwithstanding continued macro-economic headwinds and low consumer confidence. The division
generated revenue of R253.6 million (2017: R164.2 million), up 54%, EBITDA of R70.0 million (2017: R54.8 million), up 28% and a Profit After Tax of R50.7 million (2017: R38.4 million), up
32%. As noted previously, a large part of the Payments segment's performance is dependent on the state and nature of the economy and the retail sector, in particular. Given the new banking
licences recently approved by SARB, particularly to entities promoting technology enabled digital products and services as their primary business, there is likely to be increased pressure
on banks to expand services at reduced costs. This will continue to evolve and present the Group with both opportunities and challenges. The opportunities will arise through banks having
to compete and provide innovative, contemporary solutions that reduce cost and drive revenue. The challenge is likely to be to the margins the Group will generate as it seeks to respond to
clients' desires to reduce existing operating costs.

Synthesis comprises the Software & Services business that offers highly specialised software development, consulting and integration services and technology-based solutions to banking and
other financial institutions in South Africa and other emerging markets. Synthesis' initiatives span three main areas (i) Cloud, (ii) RegTech, and (iii) Digital Channels. Cloud is the
fastest growing segment and has a close strategic alignment with AWS, the cloud computing division of Amazon. Amazon recently announced its intention to establish a regional infrastructure
data hub in South Africa, which is expected to open in early 2020. As one of the leading AWS consulting partners in Africa, this should prove to be positive for Synthesis. RegTech provides
regulatory reporting solutions to financial institutions, whereas Digital Channels provide secure mobile and web access points for financial services institutions, to enhance their
customers' experience.

In addition to its current offerings, Synthesis is making considerable effort through its research and development division (Synthesis Labs) to deliver on the next phase of technological
advancement, which includes, inter alia, machine learning, artificial intelligence, big data and blockchain technology. Synthesis continues to explore opportunities for the commercial
application of these developments and research efforts.

Synthesis generated Revenue of R61.8 million (2017: R37.6 million), up 64%, EBITDA of R18.4 million (2017: R10.8 million), up 70%, and a Profit After Tax of R13.4 million (2017: R7.8 million), up
72%. These strong results are the result of organic growth - higher services and consulting fees earned from a wider base of customers, as well as more diversified sales - partially
attributable to the prior year's investment in capacity.

Resonance Australia continues to make positive progress as it nears operational readiness. The company incurred the anticipated development and administration costs for the period.
CAPPREC's share of the resultant deficit of R1.2 million is appropriately reflected as a separate item in the statement of comprehensive income. The Board is satisfied with the evolving
activity in Australia and further information on the company's progress will be provided in the normal course.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT ("B-BBEE")
During the period under review, both African Resonance and Synthesis had their B-BBEE status reviewed. We are delighted to report that African Resonance received a Level 2 and Synthesis a
Level 3 contributor accreditation. This is a remarkable achievement and consistent with the Group's overall commitment to B-BBEE. Dashpay remains in its early developmental state and will
begin to focus on its B-BBEE rating once more substantial commercial activity is under way.

PROSPECTS
The economic environment in South Africa continues to be challenging, with all sectors affected by low levels of consumer confidence and muted commercial activity. Against this backdrop,
and while the pressures of the economic climate cannot be ignored, CAPPREC, with a level of cautious confidence, believes that (i) the growth potential of the Group's subsidiary
enterprises continues to be substantial and compelling, and (ii) a reasonable rate of continued organic growth is expected in each of the business units.

Technology continues to have an accelerating impact on the financial services sector, thereby affecting business models, revenue streams, consumer expectations, products offered, services
rendered, operating cost structures and regulation. Changes in each of these will precipitate disruptions that will, in themselves, present opportunities for innovative solutions.
CAPPREC's subsidiary enterprises each have a long history of innovating in their respective fields and being responsive to clients' needs. Our standing as a trusted partner positions
CAPPREC well in the rapidly evolving FinTech sector.

The sector in which CAPPREC operates and invests also presents several interesting acquisition opportunities and, given the Group's strong operating cash flows, cash resources and
borrowing capacity, these prospective opportunities will receive management's careful consideration. Opportunities also exist for the expansion and technology transfer of our business
models into new markets and certain of these are presently being researched.

DIVIDENDS
The 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 2018 (2017: 2.0 cents). We note the
following:
- Dividends are subject to dividends withholding tax.
- The payment date for the dividend is Monday, 10 December 2018.
- 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 1.80 net of withholding tax.
- CAPPREC has 1 555 000 000 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, 4 December 2018
- Shares commence trading ex dividend        Wednesday, 5 December 2018
- Dividend record date                       Friday, 7 December 2018
- Dividend payment date                      Monday, 10 December 2018

Share certificates for ordinary shares may not be dematerialised or rematerialised between Wednesday, 5 December 2018 and Friday, 7 December 2018, both days inclusive.

ACCOUNTING POLICIES AND BASIS OF PREPARATION
These unaudited interim condensed Group 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 Group financial results are in terms of IFRS and are consistent in all material respects with those applied in the most recent Group
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 consolidated interim Group financial results which are
available for inspection at our offices.

PREPARATION OF SUMMARISED FINANCIAL REPORTS
The financial results herein have been prepared under the supervision of Mr Alan Salomon CA(SA) in his capacity as the Group Chief Financial Officer, and were approved by the Board on 13
November 2018. For further information hereto, please refer to the section below captioned Accounting Policies and Basis of Preparation.

UNAUDITED INTERIM FINANCIAL STATEMENTS
This 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.

Condensed Group statement of COMPREHENSIVE INCOME
for the six months ended 30 September 2018

Figures in Rand                                                                         Unaudited
                                                                                   6 months ended
                                                                Unaudited            30 September
                                                           6 months ended                    2017
                                                             30 September       %    Re-presented
                                                     Note            2018  change          (1) (2)
Revenue                                                 2     315 418 112      56     201 775 680
Cost of sales                                                (184 734 426)           (120 289 977)
Gross profit                                                  130 683 686      60      81 485 703
Operating expenses                                            (47 917 020)    210     (15 470 048)
Trading profit                                                 82 766 666      25      66 015 655
Share-based payment expense                                      (196 600)                (25 985)
Depreciation                                                   (3 479 355)             (3 260 565)
Amortisation of intangibles                             3      (6 804 622)             (5 528 333)
Operating profit                                               72 286 089      26      57 200 772
Finance income                                                 17 663 935              21 633 307
Finance costs                                                    (299 676)               (180 421)
Equity-accounted loss in associate                             (1 205 636)               (452 526)
Profit before taxation                                         88 444 712      13      78 201 132
Taxation                                                3     (25 142 547)            (22 047 330)
Profit after taxation                                          63 302 165      13      56 153 802
Other comprehensive income                                              -                       -
Total comprehensive income for  the period                     63 302 165      13      56 153 802
Basic earnings per share (cents)                                     4.23      13            3.75
Headline earnings per share (cents)                                  4.23      13            3.75
Diluted earnings per share (cents)                                   4.14      12            3.69
Diluted headline earnings per  share (cents)                         4.14      12            3.69
Number of ordinary shares in issue                      4   1 555 000 000           1 555 000 000
Weighted average number of  shares in issue                 1 497 743 079           1 495 935 842
Diluted weighted average number  of shares in issue         1 529 650 423           1 520 198 137

(1) In terms of IFRS 3 - Business Combinations, management completed the purchase price allocation ("PPA") in the latter part of the 2018 financial year. Accordingly the impact has
    been re-presented in the 30 September 2017 results. Refer to Note 3.
(2) The financial information for the Payments and Software and Services division represents trading for 5 months, as the acquisitions became effective on 5 May 2017.

Condensed Group statement of FINANCIAL POSITION
at 30 September 2018

Figures in Rand                                                      
                                                                            Unaudited
                                            Unaudited        Audited     30 September                                        
                                         30 September       31 March             2017          
ASSETS                            Note           2018           2018   Re-presented(1)
Property, plant and equipment              18 764 233     15 275 684       15 864 752
Intangible assets                    3     66 654 548     71 452 462       78 165 645
Goodwill                             3    728 577 776    728 577 776      728 577 776
Other financial assets                     18 297 738     17 625 214       16 952 674
Investment in associates                   27 582 673     28 788 310       36 333 335
Deferred tax                                6 416 309      2 643 528        3 020 684
Non-current assets                        866 293 277    864 362 974      878 914 866
Inventories                                10 102 704     21 320 108                -
Trade and other receivables               108 304 450     68 034 527       98 703 029
Loan to associate                           5 091 841      4 512 392                -
Taxation receivable                           510 154        307 957          247 229
Cash and cash equivalents                 551 525 305    513 169 862      463 481 526
Current assets                            675 534 454    607 344 846      562 431 784
Total assets                            1 541 827 731  1 471 707 820    1 441 346 650
EQUITY AND LIABILITIES
Capital and reserves
Share capital                        4  1 207 330 459  1 211 781 099    1 234 340 906
Share-based payment reserve                   447 100        250 500           25 985
Contingent consideration reserve     3     24 900 000     24 900 000       24 900 000
Retained income                      3    188 690 386    155 355 981       98 973 872
Total equity                            1 421 367 945  1 392 287 580    1 358 240 763
Deferred revenue                            6 404 167      7 066 667        8 391 667
Contingent consideration             3      8 975 889      8 689 618        8 163 000
Deferred tax                         3     18 074 467     19 931 987       21 789 507
Non-current liabilities                    33 454 523     35 688 272       38 344 174
Trade and other payables             3     72 361 880     33 091 148       29 121 897
Bank overdraft                                      -              -          349 869
Other financial liabilities                         -      2 989 613        7 370 229
Deferred revenue                            1 325 000      1 325 000          662 500
Taxation payable                           13 318 383      6 326 207        7 257 218
Current liabilities                        87 005 263     43 731 968       44 761 713
Total equity and liabilities            1 541 827 731  1 471 707 820    1 441 346 650

(1) In terms of IFRS 3 - Business Combinations, management completed the purchase price allocation ("PPA") in the latter part of the 2018 financial year. Accordingly the impact has
    been re-presented in the 30 September 2017 results. Refer to Note 3.

Condensed Group statement of CASH FLOWS
for the six months ended 30 September 2018

Figures in Rand                                                                                             Unaudited        
                                                                                           Unaudited         6 months     
                                                                                            6 months            ended        Audited
                                                                                               ended     30 September     year ended
                                                                                        30 September             2017       31 March
                                                                                 Note           2018   Re-presented(1)          2018
Profit before taxation                                                                    88 444 712       78 201 132    199 989 814
Adjustments for:
Finance income                                                                           (17 663 935)     (21 633 307)   (39 437 269)
Finance costs                                                                                299 676          180 421        785 056
Non-cash flow items                                                                       11 512 616        9 285 611     18 152 278
Changes in working capital                                                                 9 829 932      (25 388 603)   (12 553 368)
Cash flow from operations                                                                 92 423 001       40 645 254    166 936 511
Finance income                                                                            17 663 935       21 633 307     39 427 325
Finance costs paid                                                                           (13 405)               -       (248 493)
Dividends paid                                                                           (29 967 760)               -    (30 400 000)
Taxation paid                                                                            (23 472 972)     (22 409 002)   (61 154 563)
Net cash flow from operating activities                                                   56 632 799       39 869 559    114 560 780
Acquisition of property, plant  and equipment                                             (8 269 827)      (5 126 371)    (4 872 247)
(Acquisition)/disposal of intangible assets                                               (2 006 708)          34 345       (182 160)
Proceeds on disposal of property,  plant and equipment                                     1 301 921         (115 319)       405 075
Acquisition of subsidiaries net of  cash acquired                                   3              -     (553 009 486)  (553 009 486)
Acquisition of associate                                                            3              -      (30 496 520)   (30 206 520)
Loan to associate                                                                                  -       (5 024 791)    (5 024 791)
Repayment of loans                                                                                 -        4 153 532      4 153 532
Net cash flow from investing activities                                                   (8 974 614)    (589 584 610)  (588 736 597)
Cash flows from financing activities
Purchase of treasury shares                                                               (4 450 640)     (18 811 594)   (41 371 401)
Repayment of loans                                                                  3     (4 362 102)     (16 130 379)   (19 071 601)
Net cash flow from financing activities                                                   (8 812 742)     (34 941 973)   (60 443 002)
Net increase/(decrease) in cash  and cash equivalents                                     38 845 443     (584 657 024)  (534 618 819)
Cash and cash equivalents  at the beginning of the period                                512 679 862    1 047 788 681  1 047 788 681
Cash and cash equivalents  at the end of the period                                      551 525 305      463 131 657    513 169 862
Split as follows:
Cash and cash equivalents                                                                551 525 305      463 481 526    513 169 862
Bank overdraft                                                                                     -         (349 869)             -
                                                                                         551 525 305      463 131 657    513 169 862
Condensed Group statement of  CHANGES IN EQUITY
for the six months ended 30 September 2018

Figures in Rand                                                                          Constituent   Share-based     Contingent                         
                                                                             Ordinary       ordinary       payment  consideration       Retained          Total
                                                                        share capital  share capital       reserve        reserve       income(1)        equity
Balance at 1 April 2017                                                 1 000 002 500      4 000 000             -              -     38 820 070  1 042 822 570
Issue of ordinary share capital                                           253 150 000                                                               253 150 000
Repurchase of constituent ordinary share capital                                          (4 000 000)                                  4 000 000              -
Share-based payment reserve                                                                                 25 985                                       25 985
Contingent consideration reserve                                                                                       24 900 000                    24 900 000
Purchase of treasury shares                                               (18 811 594)                                                              (18 811 594)
Total comprehensive income for the six months ended  30 September 2017                                                                56 153 802     56 153 802
Balance at 30 September 2017                                            1 234 340 906              -        25 985     24 900 000     98 973 872  1 358 240 763
Share-based payment reserve                                                                                224 515                                      224 515
Purchase of treasury shares                                               (22 559 807)                                                              (22 559 807)
Cash dividend paid                                                                                                                   (30 400 000)   (30 400 000)
Total comprehensive income for the six months ended  31 March 2018                                                                    86 782 109     86 782 109
Balance at 31 March 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
Purchase 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

(1) The opening balance of Retained income in the prior year has been re-presented to reflect IFRS 3 - Business combinations.

Notes

NOTE 1. CONSOLIDATED SEGMENT ANALYSIS
                                                 Payments                   Software & Services               Corporate                       Group
Figures in Rand                                      30 September                   30 September                  30 September                  30 September
                                                             2017                           2017                          2017                          2017
                                       30 September  Re-presented     30 September  Re-presented   30 September   Re-presented   30 September   Re-presented
                                               2018        (1) (2)            2018        (1) (2)          2018         (1) (2)          2018         (1) (2)
Revenue                                 253 582 243   164 169 445       61 835 869    37 606 235              -              -    315 418 112    201 775 680
Trading profit/(loss)                    69 981 401    54 765 156       18 380 501    10 792 629     (5 595 237)       457 870     82 766 665     66 015 655
Depreciation                             (2 980 227)   (3 028 900)        (267 863)     (191 141)      (231 265)       (40 524)    (3 479 355)    (3 260 565)
Amortisation of intangibles                (170 622)            -                -             -     (6 634 000)    (5 528 333)    (6 804 622)    (5 528 333)
Operating profit                         66 830 552    51 736 256       18 112 639    10 601 488    (12 657 102)    (5 136 972)    72 286 089     57 200 772
Profit after taxation                    50 732 788    38 413 910       13 428 855     7 780 492       (859 578)     9 959 400     63 302 065     56 153 802
Total assets                            190 898 644   163 844 145       47 369 131    35 563 336  1 303 559 956  1 241 939 169  1 541 827 731  1 441 346 650
Total liabilities                        70 330 835    32 679 221       19 227 101    17 991 152     30 901 852     32 435 514    120 459 788     83 105 887
Net assets                              120 567 809   131 164 923       28 142 030    17 572 184  1 272 658 106  1 209 503 656  1 421 367 945  1 358 240 763

(1) In terms of IFRS 3 - Business Combinations, management completed the purchase price allocation ("PPA") in the latter part of the 2018 financial year. Accordingly the impact has
    been re-presented in the 30 September 2017 results. Refer to Note 3.
(2) The financial information for the Payments and Software and Services division represents trading for 5 months, as the acquisitions became effective on 5 May 2017.

Figures in Rand                            
                                                         
NOTE 2. REVENUE                          30 September  30 September
Payments division                                2018        2017(2)
Rental income                              44 793 577    44 258 910
Maintenance and support service fees       28 630 633    20 147 166
Sale of terminals                         165 675 777    88 649 237
Transaction fees                            7 441 404     5 050 627
Other revenue                               7 040 852     6 063 505
                                          253 582 243   164 169 445
Software & Services division
Services and consultancy fees              45 915 512    29 807 588
Licence and subscription fees              14 038 895     5 305 632
Hardware                                    1 881 462     2 277 302
Other turnover                                      -       215 713
                                           61 835 869    37 606 235
Total revenue                             315 418 112   201 775 680
Geographic Region
South Africa                              307 363 110   196 239 395
Rest of Africa and Indian Ocean Islands     8 055 002     5 536 285
                                          315 418 112   201 775 680

(2) The financial information for the Payments and Software and Services division represents trading for 5 months, as the acquisitions became effective on 5 May 2017.

NOTE 3. RE-PRESENTED RESULTS
In terms of IFRS 3 Business Combinations, management completed the PPA in the latter part of the 2018 financial year. Accordingly the impact has been re-presented in the 30 September 2017
results.
                                                     
                                                                  30 September  
                                                   30 September           2017
                                                           2017     Previously                
Statement of financial position                    Re-presented       reported
Intangible assets                                    78 165 645        345 978
Goodwill                                            728 577 776    753 158 608
Contingent consideration reserve                    (24 900 000)             -
Contingent liability                                 (8 163 000)             -
Deferred tax                                        (21 789 507)             -
Trade and other payables                            (29 121 897)   (26 755 169)
Retained income                                     (98 973 872)  (102 954 272)

Statement of comprehensive income
Amortisation of intangibles                          (5 528 333)             -
Deferred taxation                                     1 547 933              -

Statement of cash flows
Acquisition of subsidiaries net of cash acquired   (553 009 486)  (569 889 865)
Acquisition of associate                            (30 496 520)   (29 746 520)
Repayment of loans                                  (16 130 379)             -


                                                                                  30 September       31 March   30 September
                                                                                          2018           2018           2017
                                                                                        Number         Number         Number
NOTE 4. SHARE CAPITAL
Reconciliation of issued  ordinary shares
Number of issued ordinary shares  at the beginning of the period                 1 555 000 000  1 250 000 000  1 250 000 000
Number of ordinary shares issued during the period                                           -    305 000 000    305 000 000
Number of issued ordinary shares  at end of the period                           1 555 000 000  1 555 000 000  1 555 000 000
Number of issued ordinary treasury shares on hand at end of the period             (60 300 000)   (55 620 000)   (25 000 000)
Number of issued ordinary shares,  net of treasury shares at end  of the period  1 494 700 000  1 499 380 000  1 530 000 000

During the period the Group purchased 4 680 000 ordinary shares at an average price of 95.1 cents per share.

NOTE 5. NEW STANDARDS AND INTERPRETATIONS
5.1 Standards and interpretations adopted in the current year

5.1.1 IFRS 9 Financial Instruments: IFRS 9 has been adopted in the current year using modified retrospective method and not restating comparatives. The implementation of IFRS 9 had no
material financial impact in the results.

5.1.2 IFRS 15 Revenue from Contracts with Customers: IFRS 15 has been adopted in the current year using modified retrospective method. The implementation of IFRS 15 had a disclosure impact
whereby items such as Finance Income are no longer presented in Revenue from Contracts with Customers and are accordingly presented. The implementation of IFRS 15 had no material financial
impact in the results.

5.2 Standards and interpretations not yet effective

5.2.1 IFRS 16 Leases: The impact of these amendments is currently being evaluated by the Group.

NOTE 6. POST PERIOD END EVENTS
The directors are not aware of any matter or circumstance arising since the end of the financial period.

On behalf of the Board

Michael (Motty) Sacks          Michael Pimstein and Bradley Sacks         Alan Salomon
Non-Executive Chairman         Joint Chief Executive Officers             Chief Financial Officer

Sandton
14 November 2018

Corporate INFORMATION
Capital Appreciation Limited
Incorporated in the Republic of South Africa
(Registration number 2014/253277/06)
Share code: CTA   ISIN: ZAE000208245
("CAPPREC", or the "Group")

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), R Morar#, B Bulo#, JM Kahn#, Prof H Neishlos#,  VM
Sekese#, CL Valkin#, KD Dlamini#, EM Kruger#, MG Mokoka#, E Neishlos#
* Executive  # Non-Executive

Company Secretary: Crowe Jhb
Auditors: Ernst & Young Inc.
Sponsor: Investec Bank Limited
Email: investor@capitalappreciation.co.za
Website: www.capitalappreciation.co.za

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



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