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Capital Appreciation Limited - Audited Condensed Consolidated Financial Results For The Year Ended 31 March 2018 And Cash Dividend Declaration

Release Date: 16/05/2018 07:05
Code(s): CTA
 
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Audited Condensed Consolidated Financial Results for the year ended 31 March 2018 and Cash Dividend Declaration

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

CAPITAL
APPRECIATION
LIMITED
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the year ended 31 March 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 sector and Synthesis comprises the Software sector. 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 both directly and indirectly to the entire retail
sector in general. Dashpay is positioned to provide innovative transaction processing services, solutions and products focused on Business-to-Business ("B2B")
commercial and payment activity. The Dashpay solution set is intended to complement payment services provided by the Group's established banking and institutional
client base. 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. Resonance Australia is an associate company investment in which CAPPREC owns
17.45%. Resonance Australia is still in its early stages of development but, when operational, will employ a business model similar to that which Dashpay operates
in South Africa.

Each of these subsidiaries has made excellent progress in their first period under the CAPPREC banner and, going forward, collectively are likely to benefit from
both (i) expanding demand from the institutional/corporate sector; and (ii) demand created through Government's new focus, support and development for small and
medium enterprises ("SMEs"), a rapidly emerging and welcome transformational sector in South Africa and elsewhere on the continent.

More comprehensive details of these businesses are available on the Company's website, at www.capitalappreciation.co.za.

Salient FEATURES

R571.3 million
Revenue

R162.3 million
Operating Profit

R143.4 million
Headline Earnings, up 265%

9.53 cents
HEPS, up 204%

10.12 cents
Normalised HEPS

Completed viable asset acquisitions

2 cents
Final dividend per share

4 cents
Total dividend for the year

R166.9 million
Cash generated from operating activities

117%
Cash conversion rate of profits after tax

R513.2 million
Cash available for reinvestment

Transferred to the "Software and Computer Services" sector of the Main Board of the JSE

Commentary
INTRODUCTION
Shareholders and investors who have been tracking CAPPREC since its initial capital raising in October 2015 will, no doubt, conclude that the 2018 financial year
was a significantly transformative period for the Group. Not only were certain viable asset acquisitions concluded but, more importantly, each of the acquisitions
have successfully fulfilled their commencing expectations, as evidenced in this set of results. Having regard to the nature of the operating businesses acquired,
CAPPREC's Main Board listing on the JSE was transferred to the Software and Computer Services sector.

Given that the viable asset acquisitions were only approved by CAPPREC shareholders on 5 May 2017, it should be noted that these consolidated financial results
reflect 12 months of net investment income earned by CAPPREC for the year ended 31 March 2018, but only 11 months of trading performance for the acquired
businesses.

The Board is pleased to present these results as they reveal both solid trading performance and the appropriateness of the consideration paid for the businesses
acquired.

ACCOUNTING POLICIES AND BASIS OF PREPARATION
These reviewed provisional condensed consolidated 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 reviewed provisional condensed
consolidated results are in terms of IFRS and are consistent in all material respects with those applied in the most recent annual financial statements.

OPERATING ENVIRONMENT
Shareholders and investors will be more than mindful of the general economic challenges and political uncertainties that faced South Africa during this past year,
exacerbated by low economic growth and rising unemployment. These conditions, not unexpectedly, impact disposable incomes and generally weigh heavily on the
national retail sector and number of new merchants looking for card acceptance and terminal services. The Group's Payments & Payment Infrastructure business is
directly impacted by its clients' exposures to the retail sector. The Group's banking clients, as did companies in other commercial sectors, generally adopted
a more judicious approach to expansion and capital expenditure in light of these economic challenges.

In the software and services business, the significant and growing movement towards digitisation and new product and service distribution models has made the need
for cost-saving digitisation initiatives more urgent. Budgetary constraints, however, moderated the extent of these initiatives.

Notwithstanding these patterns of caution and control, the Group's subsidiaries in each case, successfully managed to expand the scope of their business with
existing clients and, given their well-established track record of quality and efficient service, have also been able to attract new clients. This collectively
enhanced and contributed to the Group's robust growth.

SUMMARISED FINANCIAL RESULTS
The Group's operating subsidiaries generated gross revenues for the year of R571.3 million (2017: R80.2 million). Profit before taxation amounted to R200.0 million
(2017: R60.3 million), with Profit after taxation, being R142.9 million (2017: R39.2 million). Headline Earnings for the year increased by 265% to R143.4 million
(2017: R39.2 million) translating into Earnings per Share ("EPS") and Headline Earnings per Share ("HEPS") for the year of 9.49 cents per share and 9.53 cents per
share respectively, an increase of 202.0% and 203.5% relative to the EPS and HEPS of 3.14 cents in the previous year. CAPPREC also reports on Normalised Headline
Earnings per Share ("NHEPS"), which together with Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA") are the primary measures used by
management to assess the Group'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 viable asset acquisitions. The Group generated EBITDA of R176.5 million (2017: R19.8 million loss) and NHEPS for
the year of 10.12 cents (2017: 3.14 cents), an increase of 222.3% on the prior year.

During the year, the Group was exceptionally cash generative, with cash generation of 116.8% of the 2018 profits after tax. This characteristic of the Group's
operational enterprises, is well reflected in the Group's cash resources at 31 March 2018 of R513.2 million. This amount, when compared to the Group's cash
resources at 31 March 2017, is after payment of the net cash portion of the viable asset acquisitions, the payment of an interim dividend in December 2017, the
buy-back of 55.6 million CAPPREC shares at an average price of 74.4 cents, the payment of 2018 provisional taxes, and several other cash applications reflected
elsewhere in this announcement. Based on the closing share price of a CAPPREC share on 31 March 2018 of 80 cents, 43% of that price 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 devices 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 performed exceptionally well, more than doubling the number of terminals previously managed and
serviced. Terminal procurement and deployments by various banking clients during the year increased by c.43 000 units. When added to the number of terminals in the
field at the date of acquisition, African Resonance today manages c.75 000 Ingenico terminals in the overall terminal fleet.

Dashpay was initially conceived as a traditional merchant acquirer when first established in 2013. Since that time a significant amount has been invested in the
development of Dashpay's systems and technology, with further resources being allocated to complete its exclusively licensed, unique and unrivalled, multi-product,
multi-party, universal transacting platform. Dashpay is now positioned to provide innovative transaction processing services, solutions and products focused on
B2B and Business-to-Business-to-Commercial ("B2B2C") 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.

The Payments & Payment Infrastructure division generated turnover of R415.1 million and a profit after tax of R111.0 million. For the past four years the division
has experienced a compound annual growth rate in operating profit of more than 241%, albeit off a low starting base. The current year's performance has outperformed
the results of the due diligence review concluded at the time of the acquisitions. We extend our compliments to Professor Neishlos and the Payments team for the
impressive outcome.

Synthesis is 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.

In addition to its current offerings, Synthesis is making considerable effort in research and development to deliver on the next phase of technological advancement,
which could include any of machine learning, artificial intelligence, big data, blockchain technology, and more. Commercial exploration continues in these areas.
Synthesis generated turnover of R93.1 million and a profit after tax of R23.8 million. This revenue was ahead of expectation, suggesting that their profit warranty
threshold will be attained at the end of fiscal 2020. The division has consistently generated solid earnings, with a compound annual growth rate in operating profit
of 28% per annum for the past four years.

Resonance Australia's planned budgeted development and administration costs for the period translated into CAPPREC's attributable share of loss of R958 211, which
is appropriately reflected as a separate item in the statement of comprehensive income. The Board is satisfied with the positive and evolving activity in Australia
and further information on the Company's progress will be reported on in the normal course.

PROSPECTS
No-one can deny that new and innovative technologies continue to impact our daily lives and it seems that new tools, new system and software design, new
communicative devices and other inventive applications, will continue to transform and impact today's traditional human and commercial behaviour. CAPPREC, with its
inspired, creative and innovative executive teams, will continue to develop new and effective services, solutions, systems, products and applications,
in association with our existing and future institutional clients, to meet the demands of their customers. This includes parties seeking efficient and affordable
models for financial inclusion of persons previously unserved or ill-served. We are pleased that the differentiated capabilities of the Group's operating
subsidiaries are being recognised by their principal clients.

The organic growth potential is large and compelling, and while we expect continued growth in our underlying businesses, the sector also presents several
interesting acquisition opportunities. These will also include opportunities for the expansion and technology transfer of our business models into new markets.
There is more confidence in the economy at this time than that experienced in recent years, and the Board is cautiously confident in suggesting better times ahead.

CHANGES TO THE BOARD OF DIRECTORS
Professor Hanoch Neishlos, the founder of African Resonance, was appointed to the CAPPREC Board on 10 November 2017. No other changes took place prior to 31 March
2018. On 9 May 2018, four new director appointments were announced on SENS, those being Mr Kuseni Dlamini, Mr Errol Kruger, Ms Mathukana Mokoka and Mr Eitan
Neishlos. Simultaneously, Dr Dan Matjila resigned as a director. We welcome our new appointees to the Board and take this opportunity, once again, to express our
sincere thanks to Dr Matjila for his valuable contribution and guidance during his term in office.

DIVIDENDS
The Board has pleasure in announcing that a final dividend of 2 cents per ordinary share (gross) has been declared for the year ended 31 March 2018, making the
Group's maiden annual dividend an amount of 4 cents per ordinary share. We note the following:
- Dividends are subject to dividends withholding tax.
- The payment date for the dividend is Monday, 11 June 2018.
- Dividends have been declared out of profits available for distribution.
- Local dividends withholding tax is 20%.
- The gross final dividend amount is 2 cents per ordinary share, which is 1.60000 cents 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, 5 June 2018
- Shares commence trading ex dividend   Wednesday, 6 June 2018
- Dividend record date                  Friday, 8 June 2018
- Dividend payment date                 Monday, 11 June 2018

Share certificates for ordinary shares may not be dematerialised or rematerialised between Wednesday, 6 June 2018 and Friday, 8 June 2018, both days inclusive.

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. For further
information hereto, please refer to the section on page 49 captioned Accounting Policies and Basis of Preparation.

AUDITOR REVIEW
These results have been reviewed by CAPPREC's auditors, Ernst and Young Inc. The review was performed in accordance with ISRE 2410 ("Review of Interim Financial
Information Performed by the Independent Auditor of the Entity") and their unmodified review conclusion is available for inspection at the Company's registered
office. The auditor's report does not necessarily report on all the information contained in this announcement/financial results. Any reference to future financial
performance in this announcement has not been reviewed or reported on by the Company's auditors.

EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any material matter or circumstance arising since the end of the financial year that requires inclusion herein.

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
15 May 2018

Date of publication: 16 May 2018

Condensed Group statement of COMPREHENSIVE INCOME
for the year ended 31 March 2018
Figures in Rand
                                                                   2018*          2017
REVENUE                                                     571 266 306     80 172 952
Turnover                                                    508 203 850              -
Cost of sales                                              (264 578 499)             -
Gross profit                                                243 625 351              -
Other income                                                 23 625 187              -
Operating expenses                                          (88 961 943)    (5 014 412)
Trading profit                                              178 288 595     (5 014 412)
Share-based payment expense                                    (250 500)             -
Depreciation                                                 (2 743 109)       (69 339)
Amortisation of intangibles                                 (12 431 375)             -
Acquisition costs                                              (567 799)   (14 774 993)
Operating profit                                            162 295 812    (19 858 744)
Finance income                                               39 437 269     80 172 952
Finance costs                                                  (785 056)             -
Equity-accounted loss in associate                             (958 211)             -
Profit before taxation                                      199 989 814     60 314 208
Taxation                                                    (57 053 903)   (21 109 406)
Profit after taxation                                       142 935 911     39 204 802
Other comprehensive income                                            -              -
Total comprehensive income for the year                     142 935 911     39 204 802
Basic earnings per ordinary share (cents)                          9.49           3.14
Headline earnings per ordinary share (cents)                       9.53           3.14
Diluted basic earnings per ordinary share (cents)                  9.33           3.14
Diluted headline earnings per share (cents)                        9.36           3.14
Number of ordinary shares in issue (Note 3)               1 555 000 000  1 250 000 000
Weighted average number of shares in issue                1 505 442 013  1 250 000 000
Fully diluted weighted average number of shares in issue  1 532 647 492  1 250 000 000

* The financial information for the Payments & Payment Infrastructure and Software & Services divisions represents trading for 11 months, as the acquisitions
  became unconditional on 5 May 2017.

Condensed Group statement of FINANCIAL POSITION
at 31 March 2018
Figures in Rand                                                  2018           2017
ASSETS
Property, plant and equipment                              15 275 684        211 725
Intangible assets                                          71 452 462              -
Goodwill (Note 1)                                         728 577 776              -
Other financial assets                                     17 625 214              -
Investment in associates (Note 2)                          28 788 310              -
Deferred tax                                                2 643 528              -
Non-current assets                                        864 362 974        211 725
Inventories                                                21 320 108              -
Trade and other receivables                                68 034 527        589 232
Loan to associate                                           4 512 392              -
Taxation receivable                                           307 957        247 229
Cash and cash equivalents                                 513 169 862  1 047 788 681
Current assets                                            607 344 846  1 048 625 142
Total assets                                            1 471 707 820  1 048 836 867
EQUITY AND LIABILITIES
Capital and reserves
Share Capital                                           1 211 781 099  1 000 002 500
Constituent ordinary share capital                                  -      4 000 000
Share based payment reserve                                   250 500              -
Contingent consideration reserve                           24 900 000              -
Retained income                                           155 355 981     38 820 070
Total equity                                            1 392 287 580  1 042 822 570
Deferred revenue                                            7 066 667              -
Contingent liability                                        8 689 618              -
Deferred tax                                               19 931 987              -
Non-current liabilities                                    35 688 272              -
Trade and other payables                                   33 091 148      6 014 297
Other financial liabilities                                 2 989 613              -
Deferred revenue                                            1 325 000              -
Taxation payable                                            6 326 207              -
Current liabilities                                        43 731 968      6 014 297
Total equity and liabilities                            1 471 707 820  1 048 836 867

Condensed Group statement of CASH FLOWS
for the year ended 31 March 2018
Figures in Rand                                                  2018           2017
Cash flow from operations                                 166 936 511    (18 770 820)
Finance income received                                    39 427 325     80 166 500
Finance costs paid                                           (248 493)             -
Dividends paid                                            (30 400 000)             -
Taxation paid                                             (61 154 563)   (21 442 419)
Net cash flow from operating activities                   114 560 780     39 953 261
Cash flows from investing activities
Acquisition of property, plant and equipment               (4 872 247)      (184 984)
Acquisition of intangible assets                             (182 160)             -
Proceeds on disposal of property, plant and equipment         405 075              -
Acquisition of subsidiary net of cash acquired           (553 009 486)             -
Acquisition of associate                                  (30 206 520)             -
Loan to associate                                          (5 024 791)             -
Repayment of loans                                          4 153 532              -
Net cash flow from investing activities                  (588 736 597)      (184 984)
Cash flows from financing activities
Repayment of loans                                        (19 071 601)             -
Purchase of 55 620 000 treasury shares                    (41 371 401)             -
Net cash flow from financing activities                   (60 443 002)             -
Net (decrease)/increase in cash and cash equivalents     (534 618 819)    39 768 277
Cash and cash equivalents at the beginning of the year  1 047 788 681  1 008 020 404
Cash and cash equivalents at the end of the year          513 169 862  1 047 788 681

Condensed Group statement of CHANGES IN EQUITY
for the year ended 31 March 2018
Figures in Rand                                                             Ordinary     Constituent                 Constituent  Share-based     Contingent       Retained             Total
                                                                       share capital  ordinary share                       costs      payment  consideration         income            equity
                                                                                             capital                                  reserve        reserve
Balance at 1 April 2016                                                1 000 002 500       4 000 000                 (22 543 311)                                22 158 579     1 003 617 768
Total comprehensive income for the year ended                                                                                                                              
31 March 2017                                                                                                                                                    39 204 802        39 204 802
Transfer of constituent costs to retained income                                                                      22 543 311                                (22 543 311)                -
Balance at 31 March 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                                                                                                           250 500                                         250 500
Contingent consideration reserve                                                                                                                  24 900 000                       24 900 000
Purchase of treasury shares                                              (41 371 401)                                                                                             (41 371 401)
Cash dividend paid                                                                                                                                              (30 400 000)      (30 400 000)
Total comprehensive income for the year ended                                                                                                                             
31 March 2018                                                                                                                                                   142 935 911       142 935 911
Balance at 31 March 2018                                               1 211 781 099               -                           -      250 500     24 900 000    155 355 981     1 392 287 580

Group segment analysis
                                                              Payments & Payment
                                                                 Infrastructure1             Software & Services1                     Corporate                        Group
Figures in Rand                                               2018          2017                2018         2017              2018             2017             2018           2017
Turnover                                               415 105 927             -          93 097 923            -                 -                -      508 203 850              -
Trading profit/(loss)                                  151 983 411             -          33 637 947            -        (7 332 763)      (5 014 412)     178 288 595     (5 014 412)
Depreciation                                            (2 231 340)            -            (423 576)           -           (88 193)         (69 339)      (2 743 109)       (69 339)
Amortisation of intangibles                                      -             -            (269 042)           -       (12 162 333)               -      (12 431 375)             -
Operating profit                                       149 483 029             -          33 214 370            -       (20 401 587)     (19 858 744)     162 295 812    (19 859 744)
Profit after taxation                                  111 024 267             -          23 783 189            -         8 128 455       39 204 802      142 935 911     39 204 802
Total assets                                           120 872 337             -          34 890 492            -     1 315 944 991    1 048 836 867    1 471 707 820  1 048 836 867
Total liabilities                                       31 037 414             -          16 177 317            -        32 205 509        6 014 297       79 420 240      6 014 297
Net assets                                              89 834 922             -          18 713 176            -     1 283 739 482    1 042 822 570    1 392 287 580  1 042 822 570

1 The financial information for the Payments & Payment Infrastructure and Software & Services divisions represents trading for 11 months, as the acquisitions
  became unconditional on 5 May 2017.

Notes
Figures in Rand                                                                                                     2018           2017
NOTE 1. GOODWILL
Carrying amount                                                                                              728 577 776              -
Movement in goodwill
Carrying value at the beginning of the year                                                                            -              -
Goodwill and intangible assets arising on acquisition  of businesses                                         811 925 776              -
Intangible asset allocation                                                                                  (83 348 000)             -
Carrying value at the end of the year                                                                        728 577 776              -

NOTE 2. INVESTMENT IN ASSOCIATES
Resonance Australia Proprietary Limited
17 580 shares at cost                                                                                         29 746 521              -
Share of loss of associate                                                                                      (958 211)             -
                                                                                                              28 788 310              -
Impairment of South African-based associate of Synthesis Software Technologies Proprietary Limited               459 999              -

                                                                                                                    2018           2017
NOTE 3. SHARE CAPITAL
Reconciliation of issued ordinary shares
Number of issued ordinary shares at the beginning  of the year                                             1 250 000 000  1 250 000 000
Number of ordinary shares issued during the year                                                             305 000 000              -
Number of issued ordinary shares at the end of the year                                                    1 555 000 000  1 250 000 000
Number of ordinary share repurchased during the year                                                         (55 620 000)             -
Number of issued ordinary shares, net of treasury  shares at the end of the year                           1 499 380 000  1 250 000 000
During the year the Group repurchased 55 620 000 ordinary shares at an average price of 74.4 cents per share.

NOTE 4. RECONCILIATION OF HEADLINE EARNINGS
Profit for the year attributable to ordinary shareholders                                                    142 935 911     39 204 802
Impairment on investment in associate                                                                            459 999              -
Headline earnings                                                                                            143 395 910     39 204 802

NOTE 5. DIVIDENDS PAID
An interim dividend of 2 cents per share was declared on 14 November 2017 and paid on 1 December 2017. The total cash consideration was R30 400 000. 

NOTE 6. ACQUISITIONS OF BUSINESSES
6.1 Acquisition of African Resonance
The Company acquired 100% of the shares in African Resonance Business Solutions Proprietary Limited for a purchase price of R485.9 million, with R295 million
settled in cash and the issue of 230 million shares which have been valued at 83 cents per share being the share price on the closing date 5 May 2017. African
Resonance is based in Johannesburg, South Africa and provides a variety of technology solutions, services and related technical support services to financial
institutions and others in the financial services sector. The acquisition has been accounted for in terms of IFRS 3 Business Combinations.

Assets acquired and liabilities assumed
The preliminary fair values of the identifiable assets and liabilities of African Resonance as at 5 May 2017, the date of acquisition, were:

                                                   Fair value
                                                   recognised
                                               on acquisition
Assets
Property, plant and equipment                       8 932 671
Deferred taxation                                     264 819
Inventory                                          15 398 881
Loan to shareholder                                16 396 613
Trade, other receivables and prepayments           26 404 520
Other financial assets                             10 484 372
Cash and cash equivalents                          40 128 839
                                                  118 010 715
Liabilities
Non-current other financial liabilities             3 454 974
Trade and other payables                           10 782 350
Current other financial liabilities                 8 473 713
Taxation                                            4 102 053
                                                   26 813 090
Total identifiable net assets at fair value        91 197 625
Goodwill arising on acquisition                   371 835 895
Intangible asset arising on acquisition            31 759 000
Deferred tax on intangible asset                   (8 892 520)
Purchase consideration transferred                485 900 000
Purchase consideration
Cash                                              295 000 000
Shares: 230 million at 83 cents per share         190 900 000
Total                                             485 900 000

6.2 Acquisition of Rinwell
The Company acquired 100% of the shares in Rinwell Proprietary Limited which is a 100% shareholder of Dashpay Proprietary Limited ("Rinwell Group") for a purchase
price of R225 million settled in cash. Rinwell Group is based in Johannesburg, South Africa and provides a variety of technology solutions, services and related
technical support services to financial institutions and others in the financial services sector. The acquisition has been accounted for in terms of IFRS 3 Business
Combinations.

Assets acquired and liabilities assumed 
The preliminary fair values of the identifiable assets and liabilities of Rinwell Group as at 5 May 2017, the date of acquisition, were:

                                                   Fair value
                                                   recognised
                                               on acquisition
Assets
Property, plant and equipment                       3 434 388
Intangible assets                                     353 676
Trade, other receivables and prepayments            9 208 868
Cash resources                                      4 339 088
                                                   17 336 020
Liabilities
Trade and other payables                            6 409 074
Current other financial liabilities                10 484 372
Bank overdraft                                         17 052
                                                   16 910 498
Total identifiable net assets at fair value           425 522
Goodwill arising on acquisition                   231 768 478
Intangible asset arising on acquisition             7 300 000
Deferred tax on intangible asset                   (2 044 000)
Purchase consideration transferred                237 450 000
Purchase consideration
Cash                                              225 000 000
Shares: 15 million at 83 cents per share           12 450 000
Total                                             237 450 000

The Company granted 15 million shares in respect of a restraint of trade agreement entered into with the owner of Rinwell.

6.3 Acquisition of Synthesis
The Company acquired 100% of the shares in Synthesis for a purchase price of R132.1 million, with R82.3 million settled in cash and the issue of 60 million shares
which have been valued at 83 cents per share being the share price on the closing date of 5 May 2017. Synthesis is based in Johannesburg, South Africa and addresses
the complex technology needs of financial institutions. The acquisition has been accounted for in terms of IFRS 3 Business Combinations.

Assets acquired and liabilities assumed
The preliminary fair values of the identifiable assets and liabilities of Synthesis as at 5 May 2017, the date of acquisition, were:

                                                   Fair value
                                                   recognised
                                               on acquisition
Assets
Property, plant and equipment                         969 502
Deferred taxation                                   2 535 166
Loan to shareholder                                 4 153 532
Trade, other receivables and prepayments           22 140 957
Cash and cash equivalents                           6 613 473
                                                   36 412 630
Liabilities
Non-current deferred income                         8 281 250
Trade and other payables                            7 194 042
Taxation                                            1 178 295
Current portion of deferred income                  1 325 000
Current portion of long-term loan                  10 132 526
                                                   28 111 113
Total identifiable net assets at fair value         8 301 517
Goodwill arising on acquisition                   124 973 403
Intangible asset arising on acquisition            44 289 000
Deferred tax on intangible asset                  (12 400 920)
Purchase consideration transferred                165 163 000
Purchase consideration
Cash                                               82 300 000
Shares: 60 million at 83 cents per share           49 800 000
Contingent consideration (see below)               33 063 000
Total                                             165 163 000

Should Synthesis achieve its profit warranty, as included in the acquisition agreements, the Synthesis shareholders will receive R10 million cash and an issue of 30
million shares. The period of the warranty is 37 months. For the purposes of the annual financial statements, it has been assumed that the profit warranty targets
will be met and these 30 million shares are valued at the price of 83 cents per share on the closing date and the cash portion is present valued. The Synthesis
profit warranty consideration has been included as part of purchase consideration.

                                                Fair value
                                                recognised
                                            on acquisition
Cash: R10 000 000 at present value               8 163 000
Shares: 30 million at 83 cents per share        24 900 000
Total                                           33 063 000

CORPORATE INFORMATION
Registered office
61 Katherine Road, 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#, DK Dlamini#, EM Kruger#, MG Mokoka#, E Neishlos#
* Executive, # Non-Executive

Company Secretary: Horwath Leveton Boner
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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