Enhanced Investments - Financial Portal

Unaudited Interim Financial Results for the six months ended 30 September 2022 and Cash Dividend

Published: 2022-11-29 08:06:15 ET

Capital Appreciation Limited
"the Company" or "the Group",
Incorporated in the Republic of South Africa
Registration number: 2014/253277/06
Registered office: 1st Floor, 61 Katherine Street, Sandton, 2196
JSE share code: CTA
ISIN: ZAE000208245

Unaudited interim summarised consolidated financial results

for the six months ended 30 September 2022 and cash dividend declaration

Operational features

- Digitalisation intensifies the demand for Capital Appreciation's products and services
- Robust revenue growth of 22.5% and further diversification of revenue streams
- Strong growth in revenue outside South Africa
- Excellent performance from the Software businesses
- Successful integration of Responsive acquisition
- Terminal estate exceeds 315 000, up 22%
- Terminal sales maintained robust momentum, just off prior-year record levels
- Pleasing growth in Payments' annuity income
- Android terminals continue to enjoy significant demand
- Impairment of loan to 35% Associate, GovChat, R56.3 million
- Earnings impacted by expensing of significant budgeted costs for early growth-related initiatives, both locally
  and internationally
- Strong cash generation from operations

Current year performance
Capital Appreciation has continued to experience significant demand for its innovative technology
products and solutions over the past six months. The Group's financial results reflect, inter alia,
exceptional top-line revenue and profit growth in the Software division, with substantial increases
in cloud, data and digital consulting services, as well as security hardware and third-party licence
fees. The Payments division generated a resilient performance with pleasing growth in annuity-based
maintenance and support fees and transaction-related income and terminal sales approaching last year's
record sales. Capital Appreciation's non-South African revenue grew by almost 200% as the Group continued
to expand its presence outside of South Africa. The Group continued to expense significant budgeted costs
in growth-related initiatives, the revenue benefit of which will only manifest in the medium term.
Capital Appreciation impaired its loan to 35% Associate, GovChat, an enterprise development technology
startup, in the amount of R56.3 million in this period (refer to the full announcement for more information).
Capital Appreciation's divisions remain highly cash-generative, supplementing Group cash resources of
R535.7 million at 30 September 2022, 20% higher than the prior year. These resources will be applied
to fund organic growth, the development of new solutions, as well as new complementary acquisition
opportunities. Digital transformation as well as an acceleration in demand for electronic payments,
cloud services, and related advances are creating numerous opportunities for the Group and continue to
support positive growth prospects over the medium term.

Financial features

                                  September   September              %
                                       2022        2021         change

Revenue (R'million)                   538.1       439.4           22.5
Trading profit (R'million)            150.5       147.5            2.0
EBITDA* (R'million)                   138.0       138.7              -
EBITDA margin (%)                      25.6        31.6      (600) bps
Operating profit (R'million)           60.2       119.2         (49.5)
Headline earnings (R'million)          95.1        91.2            4.3
EPS (cents)                            3.13        7.44         (58.0)
HEPS (cents)                           7.76        7.43            4.4
Interim dividend (cents)               4.25        3.75           13.3
Cash available for reinvestment
(R'million)                           535.7       446.1           20.1
Net asset value (cents)               120.5       116.7            3.3

* excluding GovChat loan impairment

Dividends
The Board has pleasure in announcing that an interim dividend of 4.25 cents per ordinary share has
been declared for the six months ended 30 September 2022 (Sept 2021: 3.75 cents per ordinary share).
We note the following:
- Dividends are subject to dividends withholding tax.
- Dividends have been declared out of profits available for distribution.
- Local dividends withholding tax is 20%.
- The gross dividend amount is 4.25 cents per ordinary share, which is 3.40 cents per ordinary share
  net of withholding tax.
- Capital Appreciation has 1 310 000E000 ordinary shares in issue at the declaration date.
- Capital Appreciation's Income Tax Reference Number is 9591281176.

The salient dates relating to the dividend are as follows:

Last day of trade cum                                       Tuesday,
dividend                                            20 December 2022
Shares commence                                           Wednesday,
trading ex-dividend                                 21 December 2022
Dividend record date                                         Friday,
                                                     23 December 2022
Dividend payment date                                        Tuesday,
                                                     27 December 2022

Share certificates for ordinary shares may not be dematerialised or rematerialised
between Wednesday, 21 December 2022 and Friday, 23 December 2022, both days inclusive.

Short-form notice
The contents of this short-form announcement are the responsibility of the Board
of Directors of the Company.

Shareholders are advised that this short-form announcement represents a brief
summary of the information contained in the full announcement, published on
https://senspdf.jse.co.za/documents/2022/jse/isse/ctae/HY2023.pdf and Capital Appreciation's
website www.capitalappreciation.co.za. The full announcement is available for inspection at the
registered office of the company during business hours and at no charge. Investors and/or
shareholders may request copies of the full announcement by contacting the Company Secretary,
details of whom are set out below.

Any forecast financial information contained in this announcement is the responsibility of
the directors and has not been reviewed or reported on by the external auditors.

The directors of Capital Appreciation take full responsibility for the preparation of this
report and the financial information has been correctly extracted from the underlying
group financial statements.

Any investment decisions by investors and/or shareholders should be based on a consideration of
the full announcement as a whole and shareholders are encouraged to review the full announcement
as directed above.

Signed on behalf of the Board

Michael (Motty) Sacks           Michael Pimstein
Chairman                        Joint Chief Executive Officer

Alan Salomon                    Bradley Sacks
Chief Financial Officer         Joint Chief Executive Officer

Sandton, 29 November 2022

Directors: MI Sacks# (Chairman), MR Pimstein* (Joint Chief Executive), BJ Sacks* (Joint Chief Executive),
AC Salomon* (Chief Financial Officer), MB Shapiro*, B Bulo#, KD Dlamini#, EM Kruger#, RT Maqache#, VM Sekese#,
CL Valkin#
*Executive,   #Non-executive

Company secretary: PKF Octagon: PeterKatz@PKFoctagon.com
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Sponsor: Investec Bank Limited    Auditor: Ernst & Young Inc.

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
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Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

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Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.