FULL YEAR RESULTS PRESENTATION For the year ended 31 March 2020 1
1 Introduction OUTLINE 2 Highlights for the period 3 The opportunity 4 About our investments 5 Financial performance Prospects 6 2
PAYMENTS & PAYMENT INFRASTRUCTURE CAPITAL APPRECIATION We are a financial technology company that seeks to serve or partner with established and emerging financial institutions and other large corporates SOFTWARE & SERVICES CTA ENTERPRISE DEVELOPMENT FUND 3
ORGANISATIONAL RESPONSE OPERATIONAL RESPONSE Our team’s health was our first priority Client service was our priority RESPONSE TO COVID-19 Remote work of all non-essential staff Prior disaster preparedness and infrastructure investment paid dividends Group companies were classified as Essential staff had protective gear and essential services and were fully we implemented social distancing operational during “Level 5 Lockdown” All services continued uninterrupted Regular decontamination of work area Used our expertise to help Government address the crisis – GovChat led All staff remained employed initatives All suppliers paid on time 4
MACRO ENVIRONMENT SILVER LINING AND OPPORTUNITY All sectors of economy impacted Technology solutions exist to address IMPACT OF many key issues that have arisen - Social distancing COVID-19 Consumer confidence shattered - Remote work - Remote customer engagement - Remote learning Long-term implications are still Serious unemployment crisis unknown Era of digitalisation has been yanked Non-essential retail impacted markedly, forward and likely to accelerate slow recovery Increased impetus to reduce cash Many small businesses may not reopen transactions Increased focus on financial inclusion 5
CAPITAL CAPPREC well capitalised APPRECIATION’S POSITIONING Experienced management team While challenges will undoubtedly exist Client exposure mostly larger, more resilient businesses and operating conditions will be tough, CAPPREC’s business is resilient Manageable exposure to “at risk” businesses Deep domain expertise in “high demand” areas Accelerating need for economy to digitalise Asset light business model with efficient working capital 6
HIGHLIGHTS 7
Growth continues across all business Synthesis expands into new units with expanded and enhanced verticals client relationships OPERATIONAL Additional Amazon Web Expanded international service Services (AWS) certifications offerings across the Group ACCOMPLISHMENTS and accreditations Synthesis a key launch partner for launch of SA’s region Proud to be associated with all major SA banks as well as many other banks Launched GovChat Platform... and financial institutions, retailers and 32% increase in number of terminals ...directed resources to assist corporates in the hands of clients Government with COVID-19 response • More than 185 000 terminals • Dept of Social Development – SRD • Good pipeline Grant • Scale operator with market share • Dept of Health – Screening, Test gains Facility Locator and Symptom Monitoring tool Concluded ISO and Aggregator B-BBEE ratings maintained at Level 3 Agreement with Absa to complement and will look to enhance ratings in ISO and Aggregator Agreement with coming year Nedbank 8
Revenue Earnings & Dividends Revenue R 701.2 m 15.4% EPS 11.24 cents 34.9% HEPS 10.67 cents 28.1% Payments Division R 506.2 m 7.7% GROUP Dividends 5.00 cents 17.6% Services Division R 195.0 m 41.5% FINANCIAL HIGHLIGHTS Capitalisation & Cash resources Profit EBITDA R 204.7m 29.1% Equity R 1 309.0 m Fiscal 2020 - Year Ended 31 March 2020 Trading profit R 206.1 m 19.0% Available cash per share 39 cents Profit after tax R 149.8 m 20.2% Cash available for investment R 505.1 m Items impacting results Noteworthy observations Cash conversion – 100% of Trading Profit Specific Share Repurchase and other related transactions concluded in September 2019 Cash balances is after cash outflows of more than Unrealized gain on open foreign exchange contract R225 million on non operational items 9
REVENUE EBITDA Group Up 15.4% Group Up 29.1% DIVISIONAL + 24.1% + 41.5% 25.0% 27.8% CONTRIBUTION Services 19.6% Services 20.8% Headcount grew by 68 people across the group, up 25% + 19.6% + 7.7% Payments 80.4% 72.2% Payments 79.2% 75.0% FY19 FY20 FY19 FY20 10 10
✓ More than 185 000 terminals in hands of clients, up 32% PAYMENTS ✓ Continued to gain market share HIGHLIGHTS ✓ Annuity based Estate Management fees up 56% ✓ Strong pipeline ✓ Expanded portfolio of transaction solutions ✓ Enhanced capability of solutions ✓ Android solutions warmly received ✓ Increased operational capacity 11
✓ Strengthened relationship with existing clients ✓ New blue-chip client relationships established SERVICES ✓ Secured additional AWS accreditation HIGHLIGHTS ✓ Continued to cement AWS leadership ✓ Diversified revenue stream – New verticals and geographies – Academy – Data Science ✓ Increased operational capacity ✓ Additional partnerships with complementary technology platforms and solutions ✓ AWS SA-based cloud region launched April 2020 12
GOVCHAT Available online, through FB Messenger, PLATFORM WhatsApp and USSD LAUNCHED Effective 1 March 2020 A citizen-government > 80 million engagement platform in cooperation with messages transmitted COGTA Platform > 2.5 million development being done by Synthesis unique users 13
Department of Social Development GOVCHAT RESPONSE TO COVID-19 “Use case” specific Screens applicants and onboards functionality potential “Social Relief of Distress” developed and (SRD) grant applicants, arguably one of tested on existing the largest digitalisation initiatives in platform within a grant programmes across Africa week Launched 11 May 2020 14
Department of Health GOVCHAT RESPONSE TO COVID-19 Screening tools, symptom tracking, testing facility referrals, test result notification, recent contact identification and notification, Diverted resources to open Platform to health form onboarding address Government’s urgent needs in fighting the pandemic Live but not officially launched - >25 000 surveys already 15
THE OPPORTUNITY 16
We have an opportunity to disrupt the business banking market and improve the way in which businesses bank in South Africa. We will continue to make use of technology to understand our clients better and further improve credit quality and client experience. COMPELLING - Capitec 2020 SECTOR OPPORTUNITIES New entrant Incumbent banks Cost to serve banks and Digital increasingly important in and established clients emerging a post COVID-19 world financial service financial services providers companies Availability of service Nature of service Telecom and offered other consumer- Retailers facing services Inclusive service companies Consumer demand pull Tech Big data Regulation 17
AWS CAPE TOWN REGION – NOW 23 rd AWS region in the world and the first in 50+ AWS services LIVE! Africa, comprising 3 readily available Availability Zones Synthesis and GovChat were Key “Launch Partners” Enables compliance with the Protection of Personal Info Act (POPI) Support for low latency workloads Data sovereignty concerns eliminated As a leading AWS partner Synthesis is well positioned to benefit from this launch 18
PUBLIC CLOUD MARKET Market share of global providers AWS is clear market leader generating $10.2 billion in revenue in Q1 ’ 20, up 33% on prior year Source: Gartner, Goldman Sachs, Insider Inc. 19 19
SA CLOUD COMPUTING CLOUD ADOPTION CLOUD ADOPTION MARKET SIZING ESTIMATE R millions IN SOUTH AFRICA IDC predicts cloud services will generate more than 100 000 net new jobs by 2022 Source: BMIT SA Cloud Computing Overview & Market Sizing 2019 20
Total COVID IMPACT: 2% 8% 31% 26% GLOBAL PLANNED CLOUD USAGE Enterprise 2% 9% 29% 30% More than 50% of respondents state that cloud usage will be higher than initially planned SMB 2% 4% 37% 13% Note, excludes responses where no change stated; SMB is small or medium businesses Source: Flexera 2020 State of the Cloud Report 21
Digital employee experience: digital workspaces, collaboration… Telecom services: fixed and mobile data packages Devices (laptops, smartphones, tablets, etc…) COVID IMPACT: Security: architecture, governance, skills SA TECH SPENDING Public Cloud Software-as-a-service (SaaS) Mobile apps, mobile device mgmt. etc. PRIORITIES Big Data & Analytics Current vs Pre-Covid Public Cloud infrastructure-as-a-service Robotic process automation (RPA) Disaster recovery: own or 3 rd party DC Applications transformation: DevOps, containerisation Enterprise networks: WAN optimization, SDN etc. Artificial intelligence (AI) Private / hybrid clouds Infrastructure (datacentre hardware, servers, storage,… Internet of Things (loT) Source: IDC COVID-19 Market Impact Survey 22
Big $2.1B Finance $1.6B Government COVID IMPACT: $1.5B Communications SA IT SPEND BY $1.1B Manufacturing 2019 IT Spending Size VERTICAL $790M Professional & Personal Services Size Retail & Wholesale $744M $705M Resource Industries $494M Utilities $482M Healthcare Transportation $357M Small $228M Education Source: IDC Industry & Company Size Spending Guide 23
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