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Condensed Audited Results for the period ended 31 March 2016
Capital Appreciation Limited
Incorporated in the Republic of South Africa
(Registration number 2014/253277/06)
Tax number 9591281176
JSE Share Code: CTA
ISIN: ZAE000208245
(the "Company")
CONDENSED AUDITED RESULTS FOR THE PERIOD ENDED 31 MARCH 2016
INTRODUCTION
The directors have pleasure in submitting their report for the period ended 31 March 2016.
Capital Appreciation Limited issued a Pre-Listing Statement on 28 September 2015 for the purpose of raising capital and
being listed on the Main Board of the Johannesburg Stock Exchange ("JSE"). The Company raised R1 billion through a
private placement and obtained a listing on 16 October 2015 on the JSE in the Non-Equity Investment Instrument sector as a
Special Purpose Acquisition Company ("SPAC"). The primary purpose of the SPAC is to pursue the acquisition of a viable
asset being an investment in a commercial enterprise with high growth potential.
Unless and until such viable asset is acquired, the only material asset of a SPAC is the cash which it holds pursuant to the
capital raise through the issue of shares. That cash is held in escrow and invested conservatively for the protection of the
Company's shareholders. If the acquisition of a viable asset is not completed within a period of 24 months from the date on
which the SPAC was listed or such later date as the JSE may permit, the SPAC is required to return the subscription funds
initially invested to shareholders, plus accrued interest, less certain permissible expenses and taxation.
REVIEW OF ACTIVITIES
The Company did not acquire a viable asset during the period under review. Basic and Headline Earnings per share of
1,77 cents consists of interest received from funds managed, less operating expenses and taxation.
Both before and after the Company's listing, the Executive Directors made it known in the market that the Company was
seeking the acquisition of a viable asset. Since the listing, management has diligently evaluated numerous potential
acquisition opportunities and engaged with certain vendors on propositions that would satisfy the Company's vision and
values. As of the date hereof, discussions are in progress with certain of the aforesaid vendors
It is certainly comforting to know that the Company has sufficient resources to make a meaningful investment, using cash,
equity and debt, or a combination of the three if required. Given the market volatility and uncertainty during the period under
review, the Company has been purposely cautious in its objectives.
While the Board is mindful of its mandate on behalf of shareholders to acquire a viable asset, the Board has consciously concluded
that the right investment takes preference over any investment. Therefore, in accordance with the JSE Listing Requirements
and the SPAC rules, shareholders will be informed of developments towards the conclusion of such an acquisition as and
when the Company is in a position to do so. In the meantime, the Company's funds are being well managed by the
executive, with compliance oversight by the appointed Escrow Agents. The yield on the Company's funds have increased by
100 basis points since the listing in October 2015, yielding an annualised interest return of approximately R80 million.
CONDENSED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2016
2016 2015
R R
Assets
Non-Current Assets
Property, plant and equipment 172,685
172,685
Current Assets
Accounts receivable and prepayments 479,640
Cash and cash equivalents 1,008,020,404 *
1,008,500,044 *
Total Assets 1,008,672,729 *
Equity and Liabilities
Equity
Redeemable ordinary share capital 1,000,002,500 *
Constituent ordinary share capital 4,000,000
Constituent costs (22,543,311)
Accumulated profit 22,158,579
1,003,617,768 *
Liabilities
Current Liabilities
Accounts payable 4,969,177
Tax liability 85,784
5,054,961
Total Equity and Liabilities 1,008,672,729 *
*Less than R1
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
2016
R
Revenue 32,995,626
Operating expenses (2,214,856)
Profit before taxation 30,780,770
Taxation (8,622,191)
Profit for the period 22,158,579
Other comprehensive income -
Total comprehensive profit for the period 22,158,579
Earnings per share (cents)
Basic and diluted earnings per share (cents) 1,77
Headline earnings per share (cents) 1,77
Number of redeemable ordinary shares in issue 1,250,000,000
CONDENSED STATEMENT OF CHANGES IN EQUITY
Redeemable Constituent
ordinary share ordinary share Constituent Accumulated
capital capital costs profit Total equity
R R R R R
Issue of ordinary share capital * *
Balance at 1 March 2015 * *
Conversion of ordinary share
capital to constituent ordinary share capital * *
Issue of redeemable ordinary
share capital 1,000,000,000 1,000,000,000
Issue of founders' initial ordinary
share capital 7,500 7,500
Issue of constituent ordinary share capital 4,000,000 4,000,000
Redemption of founders' initial
ordinary share capital (5,000) (5,000)
Redemption of constituent ordinary share
capital * *
Constituent costs (22,543,311) (22,543,311)
Total comprehensive profit for
the period 22,158,579 22,158,579
Balance at 31 March 2016 1,000,002,500 4,000,000 (22,543,311) 22,158,579 1,003,617,768
*Less than R1
CONDENSED STATEMENT OF CASH FLOWS
2016
R
Cash flows from operating activities 2,283,658
Interest income 32,995,626
Tax paid (8,536,407)
Net cash from operating activities 26,742,877
Cash flows from investing activities
Property, plant and equipment (181,662)
Net cash from investing activities (181,662)
Cash flows from financing activities
Issue of redeemable ordinary share capital 1 000,000,000
Issue of founders' initial ordinary share capital 2,500
Issue of constituent ordinary share capital 4,000,000
Payment of constituent costs (22,543,311)
Net cash from financing activities 981,459,189
Total cash movement for the year 1,008,020,404
Total cash at end of the year 1,008,020,404
1. Basis of preparation
The condensed audited financial statements have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), IAS 34 Interim Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the South African Companies Act, 71 of 2008, as amended and the Listings Requirements of the JSE Limited. The
accounting policies and methods of computation used in the preparation of this report are consistent with those of the previous
year and with those applied in the annual financial statements for the period ended 31 March 2016.
2. Share capital
2016 2015
Authorised shares Number Number
10,000,000,000 redeemable ordinary shares of no par value 10,000,000,000 4,000
4,000 constituent ordinary shares of no par value 4,000
Issued shares R R
1,250,000,000 redeemable ordinary shares of no par value 1,000,002,500 *
4 constituent ordinary shares of no par value 4,000,000
1,004,002,500
Reconciliation of issued redeemable ordinary shares
Balance at the beginning of the period *
Founders Initial ordinary shares issued at date of listing 750,000,000
Subscription for redeemable ordinary shares at date of listing 1,000,000,000
Redemption of founders initial ordinary shares (500,000,000)
Balance at the end of the period 1,250,000,000
*Less than R1
3. Revenue R
Bank – interest income 32,995,626
Total interest income is calculated, using the negotiated interest rates with ABSA Bank and Investec Bank respectively, on cash held
in the bank and on call and notice deposit accounts.
4. Related parties
4.1 In terms of International Accounting Standards (IAS 24) the Company is obliged to disclose parties that directly or indirectly fall
within the scope and definition of a Related Party.
4.2 The Company has established the Capital Appreciation Empowerment Trust (“the Trust”) with the object of facilitating economic empowerment
of and advancing the interests of Black Persons, by conferring vested interests in redeemable ordinary shares held by the Trust. The Trust
initially subscribed for 50,000,000 redeemable ordinary shares and 25,000,000 founders initial ordinary shares. These shares are currently
held by CAET Holdings (Pty) Ltd of which the Trust is a 100% shareholder. The funding for the initial subscription was facilitated through
facilities granted by CAET Holdings (Pty) Ltd. The Trust is included as a Related Party as the Chairman of the Company serves as a Trustee
of the Trust. The Company is indebted to the Trust to the sum of R11,584 related to certain administrative expenses.
4.3 Given the 26.66% shareholding by the Public Investment Corporation (PIC) in the Company and their representation on the Board, their interest
is deemed to enable the PIC to exercise significant influence. Significant influence is the power to participate in the financial and operating policy
decisions of the Company. Accordingly, the PIC fall within the definition of a Related Party. During the period the Public Investment Corporation
subscribed for 250,000,000 redeemable ordinary shares and 83,333,333 founders initial ordinary shares.
4.4 In terms of the undertakings by the constituent shareholders set out in the Pre-Listing Statement, the constituent shareholders subscribed
for 4 constituent ordinary shares in the Company in the amount of R4 million. The proceeds thereof were used as a contribution towards the
constituent costs. The constituent shareholders, B Sacks, M Sacks, M Pimstein and A Salomon consequently and collectively fall within the definition
of a Related Party.
5. Fair Values
The fair values of the recognised financial instruments are not materially different from the carrying amounts reflected in the
statement of financial position.
6. Going Concern
The financial statements have been prepared on the basis of accounting policies applicable to a going concern.
7. Events after the reporting period
The directors are not aware of any matter or circumstance arising since the end of the financial period.
8. Year end
During the period the Company changed its year end from 28 February to 31 March.
9. Dividends
No dividend was declared during the period under review.
10. Preparation
Mr. A Salomon (CA(SA)), Chief Financial Officer, is responsible for this set of financial statements and has supervised the
preparation thereof in conjunction with the Financial Manager, Ms. C Sacharowitz (CA(SA)). These summary financial statements
for the year ended 31 March 2016 have been audited by Ernst & Young Inc. who expressed an unmodified opinion thereon. The
auditor also expressed an unmodified opinion on the annual financial statements from which these summary financial statements
were derived. A copy of the auditor's report on the summary financial statements and of the auditor's report on the annual financial
statements are available for inspection at the Company's registered office.
The auditor's report does not necessarily report on all of the information contained in this announcement. Any reference to pro
forma or future financial information included in this announcement has not been reviewed or reported on by the auditors.
Shareholders are advised that in order to obtain a full understanding of the nature of the auditors' engagement they should obtain a
copy of that report together with the accompanying financial information from the Company's registered office.
By order of the Board
Chairman Chief Financial Officer
Michael Sacks Alan Salomon
Directors
M Sacks (Chairman), M Pimstein*(Chief Executive), B Sacks*(Chief Executive), A Salomon*, Dr. D Matjila, R Morar, B Bulo,
J M Kahn, V Sekese, C Valkin *Executive
Registered Office
4th Floor, 1 Vdara, 41 Rivonia Road, Sandhurst, 2196
Company Secretary
Horwath Leveton Boner
Auditors
Ernst & Young Inc.
Sponsor
Investec Bank Limited
Email
investor@capitalappreciation.co.za
Website
www.capitalappreciation.co.za
Sandton
19 May 2016
Date: 19/05/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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