Araxi Limited (AXX) Earnings Call Transcript & Summary

Good day to you. And a very, very warm welcome to the Capital Appreciation annual results presentation for the period ending 31 March 2022. I'm Howard Feldman, Head of Marketing and People at Synthesis Software Technology, one of the Capital Appreciation companies. This is the first time that we've had our LinkedIn audience joining us for this event, and we extend the welcome to them -- to anyone who's accessed us via this platform. Investors have now a number of options that they can join us. It is my honor on behalf of Capital Appreciation Chairman, Motty Sacks, to welcome you today and to act as the guide for these proceedings. We have, unfortunately, just received the very sad news that our lead independent director, Meyer Kahn has passed away. He was more than just a Founding Director of Capital Appreciation, but was also a longtime friend and adviser. The Capital Appreciation families wish his loved ones condolences and strength for this very difficult time. May his memory always be for a blessing. The format today is straightforward and is as follows: We will begin with a presentation by Brad Sacks, Joint CEO, who will then hand over to Group Chief Financial Officer, Alan Salomon, he will give that his portion of the presentation, which will be concluded by Brad Sacks. Brad is currently, unfortunately, managing a COVID infection. And that means we need to be just a little bit patient with his voice. Brad, I do hope that your voice is holding up. How are you?

I find Howard, and nice to be here. Thank you for hosting us. And if you hear a dog barking, drilling on a dog, it's just me giving -- having a coughing fit. So please, just stick with us as we go through this.

Absolutely. And Brad, before I hand over to you, I just want to remind everybody that they should, in fact, post their questions, we will endeavor to answer them at the end of the presentation. If there isn't time, you can still e-mail them to [email protected], and we'll do our best to try and get those questions answered. Over to you, Brad.

Thank you, Howard. And before I get started, I, too, would like to recognize the passing of Meyer Kahn. He is a doyen of South African industry. He was a great patriot, having worked as the Head of the South African Police Force for a period of time and has done numerous things, most of which none of us know about. . And he had been a long-time family friend and adviser, and his presence will be missed. So with that, and a little bit of a heavy heart, I will go through the presentation. I apologize for my voice, and I may need to pop in a sucking sweet or two as we go through the materials, but it follows a format very similar to what we've used in the past. We go through our highlights. We'll talk about the opportunity. We'll talk about the strategy and our execution against that, and we'll talk about the performance, and I will lastly come back to discuss the prospects. So the Capital Appreciation Group has grown over the course of the last year, and we have grown in a number of ways. We've made 1 acquisition, that being the Responsive Group, which came together with some international operations called Regal. And we have started to mature some of the businesses that we had internally, those in payments, so Halo is a really good example, which was developed by our software organization but is a payments-related initiative which is now managed jointly under the Payments division and also the software division. And we have an affiliate interest in a company called LayUp, which we have spoken about, and I am very pleased to be able to provide some updated information on their performance, which we will be doing. And lastly, our enterprise development initiative in GovChat continues, and we will talk about that, too. So COVID, other than letting people start to sound like dogs every once in a while, has had some long-term consequences. Those long-term consequences are a real recognition for the need and importance of technology and need for technology in all walks of life, in everything that we do, in everything that -- in every manner in which we interact and how businesses interact with us. And so there has been this strong underlying pool and demand for technology-related products, services and ultimately, flexibility. Technology correctly applied, and it is correctly applied as opposed to just the application of technology for technology's sake. So technology correctly applied has huge long-term benefits. And it has certainly had benefits in the areas in which we operate, in our Payments division and in our Software and Services division, which provides those specific types of services. We have seen in payments, a huge demand for the application of new technologies. And in our instance, that means new terminal demand. It has also -- it has resulted in the demand for Android-based devices, Android being a new platform that has huge degrees of flexibility. It is also quite cost competitive and is going -- and has the basis upon which new value-added services can be rendered to merchants. So we have seen some very promising and positive orders for Android-based devices into our traditional customer base and ultimately, into small and large retailers. And what that comes with is a retailer's desire for incremental services to be offered off that device. In the software space, we have seen through the work-from-home activities -- excuse me, that proximity is no longer necessary. We have been able to secure contracts and relationships with customers as far away as Asia, as Europe and others without necessarily opening up offices there. And we are pleased as punch to be able to provide those services, recognizing that the quality of the capabilities that we have are truly world-class, because these customers aren't forced to buy in their backyard, they are going out on a global sourcing basis and have chosen Synthesis to deliver those services. And so those services and the Synthesis team are truly first-class. What I would say about ESG is ESG for us has been something that we have always done. It is something that we have always paid priority to. It is not an item that we have pounded our chest about on a regular basis under the moniker of ESG. But when we look at how we conduct our business and you think about the pedigree of people who sit around our Board, having come from some of the largest corporations in the country with some really fantastic experiences, we have made a small little company operate like a large multinational. So, we had very solid King IV principles. We have been very focused on low environmental impact. We do lots of recycling. We don't have a very big footprint, when it comes to carbon emission. And for us, the area that we can make a marked difference is in transformation and employment. And we have spent a tremendous amount of time and effort in working with our people to give them the best possible experiences that we have. And examples of that include 52 learnerships. We have spent over ZAR 2.8 million on CSI. And when we look at our growth of the business, since our acquisition in May 2017, we have been able to grow our employment by 266 jobs. And for us, for a small little company, that is a great contribution to South Africa broadly, and we take much pride in that. From a BEE perspective, I am absolutely delighted to indicate that the group has improved its BEE status in both the Synthesis division and in Dashpay. Synthesis is now a Level 2 provider. Dashpay is a Level 3 provider. African Resonance has remained Level 3, and the group overall has remained Level 4. This continues to be, as I said, an area of focus. We spend a lot of time with our Head of HR in looking at ways that we can enhance our ratings, job creation, as I mentioned, enterprise development, supply development. All of these are very important to us. And we've had a very big BEE ownership stake in our business since the very founding of Capital Appreciation. Our positioning, in a very difficult market, both domestically and globally, and we can't ignore the fact that we are currently sitting on the outskirts of a massive war in Ukraine. We've got some global supply chain issues. We're going to be encountering global inflation. Our business remains particularly strong, and we have managed our way through this exceptionally well. Our results overall, I think, are something to be proud of. We certainly are. The teams have worked very hard. The balance sheet is one of the big issues that helps us do that. We have a very strong balance sheet. And as a result, we can make decisions based on the long-term interest of shareholders without having to worry about short-term decisions that may require a little bit more or less cash. We can plan with a mindset of what makes long-term sense and what should we invest in. And I think we have done that well. The team that we have are very experienced, and we are delighted that our domain expertise and our proprietary technologies are being well regarded by our customers, and we are getting that demand coming through in the request by customers to assist them and the demand for our products and services that we apply, providing them. The accelerating demand for digitalization is working to our benefit. Obviously, constraints on the supply side are issues that we are conscious of. We are experiencing growing addressable markets. And for us, that is very important because technology also helps drive down the cost of providing certain services. It's not only providing a fancy-looking service, but it means that the service itself can be provided more cost effectively, which makes it a service that is more available to a larger universe of people and allows you to take the service to where the people are. And so we are enjoying the benefits of this growing addressable market. And I mentioned before that our products are evidencing, witnessing some global appeal. And we opened up an office in Amsterdam, as you had heard last year, and we think that we are really well positioned for that. The dislocation that we are seeing in the public markets in terms of pricing, I think, stands us in very good stead as it relates to inorganic growth opportunities. We have a large cash balance available to pursue acquisitions. We were slow and deliberate in not necessarily doing deals at valuations that we could not rationalize. I think there is a more rational regime which is affecting people's valuation expectations, and we are looking forward to being more active in the months ahead. So with that, I will turn to some high-level results before Alan will ultimately give us the more detailed results. But what we can see is that on the right-hand side, we have grown our headline earnings per share up by 30% and our dividends per share have grown by 36%. We have declared a full year dividend of ZAR 0.075, which is ZAR 0.0375 in the half year interim and another ZAR 0.0375 now, up 36%. And this is on the back of us having posted some really great results overall. Our terminal sales were up 51%. Our software sales were up 34%. Our international income was up 33%. We are firing on all cylinders, and this is an across the board good performance. This isn't an area where one division or one area has carried the others. Across the board, the group is functioning exceptionally well. Not only that, we have been able to extract really good operating margins, which is a result of the benefits of scale and discipline in the way that we have run the business. And this is all notwithstanding a lot of costs that we've incurred in either promoting Halo in international markets or opening up our international office in Amsterdam. And most importantly, when I get to the prospects, we have really good pipelines in all of our businesses. So we expect a continued good performance going into fiscal 2023. We have over ZAR 530 million of cash sitting on our balance sheet at the end of March, and we will continue to employ that as we have in the past in ways that we think will deliver long-term shareholder value. So revenue was up 34% across the group. EBITDA margin was up by 46%. We were able to -- sorry, EBITDA was up 46%. Our operating profit was up 54%, and our margins have increased by 240 basis points at an EBITDA level and 324 basis points at an operating margin basis -- operating profit basis. So I think it is a very solid positive story across the entire group. And our teams deserve some really good recognition for trading in difficult environment. Our Payments division had revenue grow up 34%. Our Software division also 34%. Our international division, up 33%. This is starting to get a little bit repetitive. And I apologize for that, sort of -- we make the apologies for these great results. And our employee count is up 24%. So when you look at our group across a set of key performance indicators, across the entire swath of the business, we are performing very nicely. From a payments perspective, we always monitor the size of our terminal estate. We now have more than 277,000 terminals in the hands of clients, that's up 28% year-on-year. We continue to expect that number to grow. As I said, we have a good pipeline of orders. The solution of choice at the moment is the Android platform, and we have a really great collection of the Android devices, either both Ingenico and Newland. We launched the Halo Dot offering with 5 new customers. And we have a number of new ones that are also contracted for, and those names will be released as and when those products come to market. We've expanded our portfolio of solutions and options that we provide to customers. And generally, we are operating very nicely as it relates to payments. In Software, not to be outdone, the group was recognized as the AWS consulting partner of the year for Sub-Saharan Africa for 2021. And that's a huge accolade, that's out of thousands of AWS consulting partners around the globe. And it is not something that is easily won. It is a result of lots of hard work, some really great customer wins and then most importantly, implementing those customer projects in a manner that is expert. We were able to contract new business in the amount of ZAR 300 million. That new business will evidence itself in our income statement over the course of coming areas, but it is contracted for revenue. We've seen a material increase in the cloud projects that people want to undertake with us. Because from our perspective, cloud is really just [indiscernible]. So much more happens beyond that, around innovation, and I will talk about some of those things in a moment. We were able to increase our competencies with AWS. We now have more than 200 certifications. And we diversified our revenue stream in new verticals, in logistics and health care and in new geographies; in the Netherlands, Europe and Singapore. And we were able to conclude an acquisition. We were speaking about this at our results last year that it was imminent. It took us a little bit longer, but we acquired the Responsive Group, and I am going to share a little bit about the Responsive Group with you, and why we found them attractive. And we've laid a really solid foundation for our growth going forward. From an international perspective, other than the office, we've started to contract with clients in foreign jurisdictions. We will be sponsoring the Money20/20 conference, both in Amsterdam; in fact, it's happening today and tomorrow, and also the Money20/20 conference in Las Vegas later in the year. And we, concurrent with the Responsive acquisition, made an investment in a company called Regal Digital, which I will talk about, too, in a moment. We did that together with a VC partner that's based out of the Netherlands. They invested on the exact same terms as us. And so now those businesses which are already cash flow positive, and that's really important, have approximately EUR 1 million of working capital to help grow those businesses. They grow them from a position of strength, given that they have good paying customers who we obviously appreciate. Through this whole process, we've been able to continue to grow our blue chip customer base. You all know the South African banks that we operate with the financial institutions, retailers, we've added some really marquee health care, telecom and logistics clients. And we are -- we could not be more proud to work with many of those customers. So I said I would talk a little bit about cloud and the opportunity. And I've showed in this slide before, which talks about the reasons people have been adopting the cloud. And as you can see, cost savings is really just a small component. It's business agility and productivity that comprise the majority of the reasons. But I had never seen a study which actually was able to quantify that. And I'm pleased to say that we actually have found one. McKinsey came out with a study, and I thought it was very instructive because it indicates that the value of cloud, putting the niceties of it aside, is it has the potential to generate more than $1 trillion of value. And this is worldwide. This isn't only South Africa or the United States, it's worldwide globally, $1 trillion worth of value. And they're sort of segmented into 3 areas. The third area, they don't even quantify at all. So the first is in IT costs and infrastructure resilience, and they estimate that at $340 billion. But the real value for a business that isn't going to be a pioneer, which they don't estimate at all is $750 billion around innovation. And that's the ability to take the elements of cloud that are available to you and translate that into new business opportunities. And we think that that's just tremendously important. And what that presents is a huge opportunity that continues to exist in cloud and in opportunities around cloud and delivery of service based on cloud. And the reason I say the delivery of service based on cloud is because the next topic that I found quite interesting is the observation of that user interface and user experience. UI, user interface and UX is user experience. And the McKinsey study talks about how companies that are in the top echelons of user experience have outperformed the laggards in their stock price performance by virtue of the fact that customers enjoy engaging with those customers -- with those companies and those service providers, and it has long-term benefits that [indiscernible] to the corporates that pay attention to the user experience. And so it's with this mindset that we have -- that we decided to pursue opportunities with the group Responsive. Responsive, as an organization, has an ethos and a character, which is very similar to the corporate culture that we have at Capital Appreciation and at Synthesis. And their deliberate approach to -- to their business was something that we found very attractive. They specialize in user experience, they specialize in digital experience. And from our perspective, we think that there is huge synergy between what they do and what Synthesis does. So we ended up in a relatively complicated transaction, acquiring 100% of 2 businesses called Responsive Tech and Responsive Digital and 71% in a company called Rethink, and we invested in their international operations in the Netherlands, called FlameLink and Firelava where we have a 20% interest, together with another shareholder. In general, we paid ZAR 32.5 million upfront in cash and stock with an additional ZAR 23.2 million, which will be subject to profit warranties that we believe the teams are well on their way to achieving and we are delighted by that. So Responsive has a really nice group of clients, who we think can benefit by some of those services at Synthesis offers. And at the same time, we would be able to deliver services to some of this, and then to some of Synthesis clients. There are a number of projects that we are working on together. And ultimately, if you see the quote at the bottom I think Marsh sums it up really well. He views the group succeeding when the clients succeed, and look to them to develop long-term relationships. So this is all about partnering. And it is all about delighting users in a digital experience and wanting to exceed their expectations. There is a very deliberate approach as to how they go about this, and you may have heard this term being bandied about, it's called design thinking. And it is part of their approach. Design thinking effectively puts the customer at the center. And it is a very iterative agile process. We start by considering 5 elements. You have to empathize, you define, you ideate, you prototype and you test. But you do that again and again and again, it's iterative. And every time you do it, you look to try and solve a problem from the user's experience. And I think they have taken this to an art form and the impressive list of clients that they have, I think, is exemplary of this. Flamelink is one of our businesses that we invested in, in Amsterdam. And without wanting to get too technical. Firebase is a Google provided product. It has over 3 million apps that are powered off the Firebase infrastructure, and they need to interact with lots of end points, be it an iPhone, be it a VR headset, be it a desktop or laptop wherever the case may be, and they need to be able to interact with those end points in a way that is seamless and optimal. So Rethink developed a capability to do this for their specific clients, but very quickly recognized that the problem that they're encountering is not theirs alone and have converted it into a formidable product. And it's now provided as Software-as-a-Services, known as headless CMS Software-as-a-Service capability. It has over 19,000 users. There are 10,000-plus projects that are running on Flamelink. It is very closely aligned with the Google Firebase capability. And you can see the customers who are using it a really great software-as-a-service product, and we are looking forward to the growth that, that delivers. So Firelava is the other international business. And if we're looking for sort of watch words, Web 3.0 is a word that -- or phrase that we have often heard. And the question is, what is Web 3.0? So when I sat down with Tom Wells, our Chief Disruption Officer, and we spoke about how we're going to explain Web 3.0 because it is an area that we've invested in and we will continue to invest in. We sort of came at it from a few different ways. One is let's talk about Web 1, Web 2 and Web 3. You can sort of categorize it by timeframes, so you can see the times that are most commonly associated with Web 1. It's prior to 2000. The last 20 years would be Web 2, and from 2020 on, you would start to talk about Web 3. However, when Tom saw the bottom half of the slide, he said to me, Bradley, this just speaks volumes to me because it effectively tells me as a technologist what I'm engaged in. So the first was the information technology -- the information economy where you just consume information, you there as a recipient. The platform economy is there is an intermediary and you have to access through a gatekeeper, in this instance, whether it's Google or Facebook or Twitter. And Web 3 is about the ownership. Your ability to just connect and the data that you have is yours. You get to share what you want, when you want, but there is no third-party intermediary. And so how that all plays out over time, is still to be seen, but there is no doubt that there is a tremendous move afoot within the Internet, and Web 3 is where it's at. So another way of thinking about it is to look at companies that we all know, certainly the Web 1 and Web 2 companies we know that we have used and have been party to. And you can see the absolutely enormous number of Web 3 companies that are out there. So we -- the ones that people will understand would include Bitcoin and Cardano and a number of others. We're not developing those infrastructures, but we are helping people deploy those infrastructures and capabilities and help them understand how it affects their business, and there are potential service offerings that we will offer as a service, software-as-a-service, that will help us in the Web 3 area. The growth in Web 3 is expected to reach billions of dollars, and we are right at their forefront. I'm going to speed up a little bit because some of this information we have been through before. The digital acceptance footprint in South Africa is continuing to grow, which for us is a great thing. It's not only because there are more retailers, it's because we are growing the universe of retailers that are able and willing to accept digital payment, and that brings me to the slide that I've shown in the past where small and medium enterprise businesses and the informal sector are now starting to be able to accept digital payment, whether that's through a product like Halo or through some of our low-end devices that we use that are cost effective. So, I will turn to our strategy. This slide has been -- since our very beginning, it hasn't changed. I think what we are doing is working. I think our results speak to that. We look to partner. We ultimately rest on our ability to innovate and then we execute, and we're only as good as our ultimate execution. So we are fanatical about wanting to execute well. Our estate has grown very handsomely, and we look forward to it to continue to do so. We have 220,000 devices active in the market and that will continue to expand. That's a 5-year CAGR of 47%. Halo Dot. We're looking at opportunities globally. We've spoken about this before. There was a study that says by 2026, they expect there to be more than 25 million devices that are handheld -- Android handheld devices that accept payment, and we expect a nice portion of those to be using our Halo Dot capability. Our Payment Services division which is Dashpay has also continued to operate very nicely. If there was one weak spot in our results this year, I would say this is it. The growth in transaction volume between March of last year and March of this year, it is a result of a supply chain issue primarily that we encountered ourselves, and it's getting enough terminals that were certified into our own hands for our use as opposed to into the hands of our customers, but that situation has been sorted out and I look forward to having returned good top line transaction activity coming through. But what really is important here is that our transaction-related revenue increased by 69%. So it's not only the transaction value that affects us, it's a lot of the other services that we offer. And the thesis is proving itself to be true. So that takes me to lay-by or LayUp. There's been a lot of chat about buy-now-pay-later. There's lots of concern about credit quality. There's lots of concern about credit exposure. Our solution is a save now, buy later solution, and this business has performed exceptionally nicely. It's coming off of a low base, I grant you that, but it has been able to do some phenomenal numbers. We have increased the number of payment plans by more than 10x. We have more than 3x merchant sign-ups. Monthly new users has increased by 9x. And the monthly transaction value is greater than 5x in the prior month. I did receive a text this morning from Andrew indicating that he -- that the results for the month of May, which just ended 2 days ago, were continued growth. So I'm really pleased to see that. Our payments growth strategy is to continue to do everything that we have been doing. It's worked with our existing clients, expand with them across Africa, introduced new services. We are doing that all the time. We are looking to enhance the enterprise-related solutions that we have built out these ecosystems and ultimately continue to innovate. So our growth strategy is to continue marching forward on the basis that we have. Our Synthesis operating business, you have seen all of these business units before. I'm not going to delve into any of them, but we have had some really strong demand for our digital and cloud services, our managed services and intelligent data. Continuing with our prior approach of leading with ideas. This continues to be the watchword for Synthesis. We are about to launch Synthesis TV. Howard, you will see him on the YouTube channel more frequently. We had great success and were recognized by many people for the Synthesis podcasts. COVID, given my case as the exception, is sort of behind us now. And so we're going to remove the podcast, unless there is an event that requires [Dr. Meiberg's ] intervention, but we're moving over to Synthesis TV. We have done a lot by way of publications, over 1,000 publications. We have opened up our internal classes because we believe educating and training clients and others is really important, and so we are doing that amongst other things. I did mention this previously, but it warrants repetition. Synthesis was the AWS Partner of the Year for 2021. And this is across thousands of companies across the globe. So a tremendous accomplishment and achievement. As is custom, we always provide a case study. Here is a case study in the logistics space. It is for a company out of Singapore. They are a more -- they are a long-term participant in the shipping business. They found themselves slipping behind in terms of the contemporariness of their solutions, and they needed to implement solutions that would help them modernize really quickly. And we have done that and in the process of doing that with them, it has turned out to be a fantastic project for us and for them, and we look forward to more success with them in the months to come. Within the employment sector, we have worked with DG Capital to help them develop a Software-as-a-Service solution for their customers, and they are a financial services type provider, and it builds very nicely on our Software-as-a-Service infrastructure capabilities. So lastly, I'm going to turn to GovChat. We all know what GovChat does. It has transmitted more than 600 million messages. It has more than 9.2 million users. And you can look at this slide at a later date to look at all the other different products and services that we have offered to government over the course of the year. And those are material numbers. The item which I am going to address today is the case that we had between GovChat, Meta, WhatsApp and Facebook that was in front of the Competition Tribunal at first, which was then referred to the Competition Commission. The Competition Commission has determined that WhatsApp, Meta, Facebook did act in an anti-competitive way. They did abuse their position of dominance and have elected to refer them now under prosecution by the Competition Commission to the tribunal. And that process is now underway. They have also asked the tribunal to impose the maximum fine on Meta, which is equal to 10% of the group SA revenues. And what this means from our perspective is that until that is fine is adjudicated, we continue to have access to the WhatsApp platform and South Africans will continue to enjoy the benefit and access to GovChat. It is unfortunate that this process has taken as long as it has. It's been almost 2 years, and GovChat has been retarded in its ability to deliver services, notwithstanding the great services that it has delivered and the great users that it has been able to -- a usership that has been able to post to date. It was retarded through the Meta-WhatsApp approach, and we are going to continue to cooperate with the Competition Commission to bring WhatsApp and Facebook to final adjudication on this matter. And so we are pleased with the outcome of that and look forward to GovChat being able to realize its true self and its promise in the months to come. So with that, it has taken me a little bit longer than I hoped and partly because of my voice, I apologize, but I'll turn it over to Alan who can talk about the financials.

Good afternoon, ladies and gentlemen. Once again, thank you for your continued interest in Capital Appreciation. At the outset, I'd also like to express sincere condolences to the near and family on the very sad passing of Meyer Kahn who contributed significantly to Capital Appreciation. He was a mentor and an adviser to all of us, and we would sadly miss him. We are pleased to present a very strong performance in the current challenging environment. Our businesses have taken full advantage of the increased demand for our products and services, post the worst of the COVID-19 pandemic and have grown at an exceptional pace. We have continued to invest in additional technical skills, product infrastructure, marketing and business development to position ourselves for more growth in 2023. We are very pleased with the increase in number of new clients and projects contracted in the past year. This is no doubt attributable to our business' ability to service our customers with strong focus on service excellence and to innovate and add tangible valuable -- value to our clients. We salute the management teams of our companies for their outstanding achievement. Our spend in building capacity in our group and developing the right oversight structures, talent pools and skill sets as well as the necessary technical platforms from which to serve our clients has again culminated in strong operational momentum and solid financial results. As a group participating in our high-growth sector of the economy, we continue to invest judiciously with a full understanding that for some of the costs incurred and expensed in the income statement, we will only see the financial and earnings benefits in future timing periods. We see evidence of some of the benefits and impact of this ongoing investment from previous periods in this set of results. COVID has, in many cases, accelerated and expanded the demand for our products and services as well as our platforms and skills. And I have no doubt that we will continue to benefit from the structural investments made in past years. Some of our proprietary owned intellectual capital developed in the past 2 years, such as Halo Dot, has started contributing to our success and will no doubt have significant benefit in the future. This set of results is particularly clean and uncomplicated with no unusual accounting treatment to affect comparability. Importantly, there are no normalized type transactions to consider in conjunction with these results. Capital Appreciation generated gross revenues for the year of ZAR 831 million and an EBITDA of ZAR 225 -- sorry, ZAR 251 million. You will note that we have substantially outperformed the prior year that was affected by the COVID pandemic. But more importantly, we have also improved our performance for the year before the pandemic, which highlights the sustainability and resilience of the group in difficult times. I'll refer to financial performance, Payments. In returning to the current results, please refer to Slide 45. The Payments division delivered strong results with revenue growth for the year of 34.3% to ZAR 533.8 million and grew EBITDA by 55.4% to ZAR 218.2 million. The excellent revenue growth was due to the fulfillment of large terminal orders in the year as well as pleasing growth in specialized transaction-related payment services. The nature of customers' capital investment in payment terminals is unpredictable, uneven and periodic and often time inconsistent, and therefore, does not always strictly follow financial years and cut off reporting periods. The scenario has further exacerbated when customers require bespoke terminals which often extends the anticipated 3-month lead time from overseas suppliers. In the past year, we increased the total number of terminals in the hands of plants by 27.7% to 277,000. Our terminal sales growth reflects a compounded annual growth of 41% since the acquisition of the businesses in 2017 when the state was approximately 49,000 terminals. This growth is a result of both a growing market opportunity and material gains in market share. Android terminals, in particular, were in great demand given the attractive price points and additional functionality, and we have been in a fortunate position to be able to meet customers' needs despite the delivery challenges in the microchip sector. The increased scale in the Payments division had a significant positive impact on EBITDA margins, increasing by 550 basis points. The payments business continues to be a very strong cash generator. Payments revenue composition. We remain very positive about the outlook for this division. We have reported on a substantial growth in the terminal state in a prior slide, which in itself will lead to a greater and sustainable further annuity revenue from terminals deployed. Cash-based specialized payment value-added service offerings also made good progress. Transaction-related income increased by 69%, boosted by the official launch of our shopping app developed for the Attacq Property Group, which was first rolled out to the Mall of Africa, and is now set to roll out in the rest of the Attacq malls nationwide. Tap-on-phone app [indiscernible] will be formally released in the first half of the new financial year, and we are positive about the opportunities that this new technological product will bring to the SMME market with its innovative and competitive offering. Financial performance, the software division. Synthesis has continued to make excellent progress in expanding and diversifying both its client base and revenue streams. The business developed another solid set of financial results, increasing revenue by 33.8% to ZAR 297.2 million and EBITDA by 21.9% to ZAR 70.1 million. Software has generated 5 years of uninterrupted revenue and EBITDA growth since we acquired the business in 2017, even during the COVID period where many clients were reticent to embark upon new projects. In the current year, Synthesis achieved many new client contract wins, generated significant software sales and saw the commencement of several long-term projects, which translated into more than ZAR 300 million worth of contracted sales in the current year. These revenues will continue to flow into the 2023 and other financial years going forward. Profit margins for the core software business have grown pleasingly. The sales mix has been changing due to growth in sales of third-party software products, which yield a lower gross margin, notwithstanding the added benefit of being mostly foreign currency denominated revenue. Synthesis has also continued to make further investments in infrastructure and increased its workforce in the financial year, to fulfill the strong demand for its services in anticipation of meeting and servicing substantial pipeline already contracted for 2023 financial year and thereafter. We believe the opportunities for this business are exceptional, and we are starting to see some exciting developments in its international expansion. Looking at the software revenue composition. Services and consultancy fees grew by 33.8% due to the increased demand for cloud and digital projects. Hardware security modules or so-called HSM sales increased threefold during the year on the back of new project wins to provide customers with security for payment, card pins, contactless payments and enterprise encryption. We achieved good traction in markets outside South Africa with international revenue growing by a healthy 33%. Our new office in Amsterdam will provide an excellent platform from which to expand our international offering and will receive additional benefits through our new investment in Regal Digital. We continue to be very excited about the Halo Dot product, which we expect to show substantial growth potential in the coming years. Statement of comprehensive income. In looking at the statement of comprehensive income, there are a couple of items to note. We have already mentioned the significant growth in top line revenue. The strong demand has continued. We are pleased to report that each of the businesses also has a significant pipeline for the 2023 financial year. Expenses were well managed, other than payroll, which constitutes a major component of the group's costs, management successfully contained all operating costs within the current South African inflation rate. As mentioned earlier, we continue to make and expense notable expenditure on growth-related initiatives. Amongst others, the group increased its headcount by 24% to 427 staff members, which includes new senior appointments as well as additional learners in our leadership programs. We strongly believe these key investment initiatives for future growth. We achieved improved operating and EBITDA margins due to economies of scale benefits and operating efficiencies. Our share-based payment expense line increased measurably due to the allocation of new long-term share awards during the year. The fintech sector is a skills intensive industry, and our long-term share incentive scheme provides the group with the ability to offer an attractive employee proposition and a competitive advantage to attract and retain the right skills. Finance income earned on the group is significant cash balances increased commensurate with a modest increase in interest rates and higher cash balances. We draw your attention to the nonoccurrence of an ZAR 11.3 million reduction in the prior year's tax charge, which was due to the recognition of a deferred tax asset in Dashpay in 2021. Absent the tax benefit in 2021, the 22 percentage increase in earnings per share and headline earnings per share would have been similar to the percentage increase in EBITDA. Headlines earnings per share increased by 29.6% to ZAR 0.134 per share compared to 10.34 cents last year. The Board declared a final dividend of ZAR 0.0375, bringing the total dividend for the year to ZAR 0.075 per ordinary share, 36.4% up on the prior year. Capital Appreciation repurchased 13.4 million shares during the period at an average price of ZAR 1.23 per share, sold 1.38 million treasury shares [indiscernible] share options, and allotted 11.1 million shares to the vendors as partial initial share consideration for the responsive acquisitions. As of 31st of March 2022, the group had a total of 80.9 million treasury shares. Given appropriate circumstances, the group will continue to consider the future repurchase of shares on the market. I'll now turn to the statement of financial position. Capital Appreciation, which consists of asset-light businesses maintains an uncomplicated, easy to understand balance sheet with no contingent liabilities, no post-retirement obligations and no debt. Capital Appreciation divisions remain highly cash generative, which has continued to strengthen the group's balance sheet during the year. Goodwill increased by 41.1 million due to the Responsive acquisition, which we acquired on the 1st of March 2022. Our buildup of receivables to the value of ZAR 146.2 million at the end of the financial year was largely settled in April and May 2022. And together with the ZAR 533.4 million in cash at year-end, this provides the group with a notable cash arsenal to fund organic growth and new acquisitions. In terms of its capital allocation, the group remains strongly focused on first and foremost, supporting the organic growth of our divisions and thereafter, acquiring companies that can expand and generate scale within a reasonable time frame. It can provide satisfactory organic growth and returns to shareholders and where capital appreciation, capital and strategic capability can be successfully leveraged. CapEx cash is invested with South Africa's top banks and interest rate risks are managed very conservatively, and with a view to maximizing yield through appropriate interest rate cover. The underlying businesses generated the robust cash flows necessary to take advantage of organic growth opportunities available to each of our business units. As a group participating in a high-growth sector of the economy, we continue to invest judiciously with a full understanding that for some of the costs incurred and expensed, we will only see the financial and earnings benefits in future timing periods. In this period, we have experienced very strong demand for our products and services as well as our platforms and skills and that will continue to benefit from the investments made. The net asset value, net of treasury shares increased by 7.8% since 31st of March 2021 to ZAR 1.26 per share. I now refer you to the importance of our cash flow statement. Our asset-light businesses remain highly cash generative. The main cash outflows during the year have been the repurchase of treasury shares of ZAR 16.4 million, additional loans to associates of ZAR 33.8 million as well as the payment of the initial cash consideration of responsive acquisitions amounting to ZAR 13.27 million. Capital Appreciation granted GovChat further loan funding of ZAR 29 million to continue developing its technology platforms and services offered. We believe it has a critical role to play as a partner to government engaging with South African citizens. Our 27.4% investment in LayUp Technologies, which is in its early stages of development, has an interesting opportunity set. We granted the loan funding of ZAR 5 million to LayUp to support its next stage of development. Despite these cash outflows as well as a substantial increase in dividends paid of ZAR 82.1 million, the group had cash resources of ZAR 533.4 million at year-end. I'll refer you to our dividend history. One of the defining characteristics of capital appreciation's portfolio of businesses is that they are highly cash generative. This stood us in good stead during the COVID-2019 pandemic, when many businesses had to balance growth and liquidity very carefully. Capital Appreciation has a 5-year track record, since the acquisition of our first businesses in 2017, of sustainably growing its dividend payments to shareholders, well covered by cash flow from operations. In 2022, our dividend increased by 36.4% to ZAR 0.075 per share. In the 5 years since we became a fully operational fintech enterprise, Capital Appreciation has generated operating cash flows of ZAR 990 million and paid dividends of ZAR 374 million or ZAR 0.2625 per share. In conclusion, we had 1 post year-end event. As part of the responsive transaction, capital appreciation subscribed for 20% of the Netherlands-based Regal Digital BV for EUR 6,178, ZAR 105,000. Capital Appreciation will also provide Regal Digital with a noninterest-bearing loan capital of 498 -- sorry, EUR 494,000, which is represented at a cost of ZAR 8.4 million. Simultaneously, another European-based fintech co-investor also subscribed for 20% of Regal Digital on the same terms and conditions as Capital Appreciation. A net consequence of these transactions is that Regal Digital now has a EUR 1 million in additional working capital to further grow the business in Europe and globally. Finally, the group is in a strong position to benefit from the exciting opportunities in the growing markets we serve. While our outlook remains dependent on the South African economy, we are optimistic given that each of our underlying businesses has a solid pipeline for the next period. We are well entrenched with our existing customers, international principles and suppliers and have several exciting products to capitalize in the growing markets. I will now hand you back to Brad. Thank you.

Thank you, Alan. So I'm going to just deal with our general prospects I don't think it should be a surprise to anybody that we think our prospects are pretty good. We are well positioned. We are in an area where we have great domain expertise. The capabilities that we have, have proven themselves to be of interest to customers, and we are in a position where we have sufficient scale that we're able to demonstrate real operating leverage. So from an operational perspective, I think all of our businesses are now in a position to continue to operate well and grow and grow in -- grow from strength to strength as opposed to having come through a turnaround. So we think that there are great opportunities organically. Some of the new solutions that we are introducing in payments, a broad applicability to some existing clients as well as potential new clients. In the services area, there is always work to be done, and we are going to be very active in pursuing that. One of the things that we have to do very judiciously is client selection because you can find yourself getting pulled into a project that doesn't go very far. And it absorbs an enormous amount of effort and is difficult to extricate yourself from. And so we are very judicious in project and client selection. And we haven't had any of those, but we haven't had any of those because we've been so judicious in how we've gone after our clients and chosen the projects to be involved in. The same is true in payments as it is in software, and we will continue to drive those businesses organically. We are very excited about Halo Dot. There are a number of very exciting opportunities that we are working on and look forward to being in a position to announce 1 or 2 of those in the not-too-distant future. That then takes us to acquisitions. We have often -- and it's not for lack of trying, we have looked and explored a lot of acquisition opportunities, but we have been very diligent in wanting to pay a price that we thought had the right risk-reward trail. And so with a change in pricing regime, we think that we are well positioned to be able to revisit some of the opportunities that have not transacted in businesses that we thought were suitable to bring under the Capital Appreciation umbrella, and we may be able to conclude 1 or 2 of those as well, and so we continue to watch the space. That leaves us with the reasons to invest in Capital Appreciation. And our track record now starts to speak for itself. It's not only listening to me and hearing what I have to say, it's looking at what we've done. And I think our track record is pretty good. But we do have leadership positions in the industries that we operate in. Those industries are exhibiting long-term strong secular growth, which bodes well for organizations like ours that has operating leverage and has the skills to be able to pursue those. We have a really good culture internally, one of innovation and our desire to do better. We are a partner of choice for many institutions, and I think that speaks volumes. And we have a healthy balance sheet. So we have the luxury to be able to pursue these opportunities that have long-term value to us, without worrying about how are we going to pay for the investment required to activate the opportunity. So all that said, I think we are in a really good position. We have performed exceptionally well in fiscal '22. It was a tough year. Overall, 2023 is -- has started off really well for us operationally. Today is a sad day given Meyer Kahn's passing. And we will obviously pay tribute to him at an appropriate time and an appropriate place. So thank you, everybody, for your participation. We have run a little bit long, but we do have a little bit of time, Howard, for some Q&A. So if you want to do that, please lead the way.

There we go. Thanks, Alan. Thanks, Brad. And certainly, Brad, given your COVID management, I think you've done exceptionally, exceptionally well. So we're actually not going to let it run on too long. But there are a couple of questions, and some of them, let's try and get to. I want to start with Bheki Mthethwa from Bateleur Capital asking in terms of the new business relationships established with additional banks, please can you speak to the competitive landscape and any market share movement possibly due to the supply chain issues? Brad, do you want to talk to that?

So It's hard to talk about market share movements because we're not quite sure what we are replacing. We're talking to banks about new solutions, and we are providing banks with something that they don't currently have. So as those projects end up being better consummated and our relationships with these new banks ultimately gets cemented, we will have a better sense. But we certainly do have an exceptional compendium of products and solutions that fit a whole host of use cases, and we do our own software development which is a marked difference than many others. And so if the solution off-the-shelf doesn't fit exactly right, we're able to make changes. In terms of supply chain, I didn't address it in the presentation, but it's worth noting. Our Newland's supplier, our Newland devices coming out of China have had a much lesser impact by supply chain. They have done a really good job in managing their component shortages and are able to deliver within reasonable timeframes. Our Ingenico supplier has had a harder time with their component shortages, and we are working with them to try and figure out how to minimize and optimize that supply delay.

All right. Thank you. And Sandile Magagula from Umthombow Wealth asking what synergies can be identified between existing operations and newly acquired businesses? Can this be quantified at this stage?

So, it's hard to quantify it in rands and cents, but I can tell you that the teams have worked together to pitch on new customer opportunities. And one of those -- and I got to see one of those presentations, and I have to tell you that it was one of the best presentations I have ever seen out of our group because it got the best out of Synthesis and the best out of Responsive, and the 2 teams did an absolutely bang up job in presenting a unified approach to addressing the customers' need with a focus on user experience. And I think that the opportunity is around new revenue and business wins as opposed to quantifying cost savings.

And Steph Erasmus from Anchor Capital asking why is the rest of Africa revenue lower in the financial year 2022?

It was just a matter of focus over the course of this financial year versus others. We had lots of opportunities elsewhere, and we ended up focusing on those.

Yes, it's interesting because you and I have had these conversations about how technology just changes the lives of so many in Africa and how it empowers. And that's very, very much the part of the vision of Capital Appreciation to empower people through technology, Africa being in a place where this empowerment is so necessary and so much the focus.

Well, that's when I spoke about the growth in market opportunity during the presentation. It's the ability to do things cost effectively that makes it cheaper to service different market segments. And if you're able to cost effectively target a person sitting in a rural area that transacts once a month, but it doesn't require a lot of infrastructure, that person can now have access to a digital financial service. If it required a branch or an ATM or a visit by some type of mobile ATM, it makes it very difficult to justify with technology you're providing these really great services, but you're also growing the market. And you're growing the market at relatively modest, if any, incremental CapEx cost.

Absolutely. Halo being one of those incredible opportunities. Taking a look at some of the other questions going back to Bheki Mthethwa asking as well. How should we think about the growth in headcount going forward, and more specifically, the growth in head office corporate costs of ZAR 49 million growing -- growth going forward?

Well, our group has grown substantially, as you can see with a number of new roles within the organization. So with that comes a little bit of incremental infrastructure. But our primary growth in personnel has been related to capacity. We have now been -- if people think back a number of presentations ago, we had shown the number of devices that are handled through our centers, and they were in the low thousands, let's say, 6,000, 7,000 a month on average. We've now got to points where we are in the double digits, 12,000, 13,000. And in those instances, you need capacity. So we've hired people to work in our distribution centers. We've also hired people to work in Synthesis. And we have an absolutely phenomenal team of people at Synthesis. They have a truly magical culture. And that's no thanks to people like you, Howard and Mike Shapiro who spend enormous amounts of your time focused on these things, they didn't just happen without the effort. And we're going to continue to recruit because our competitive advantage is in our ideas, and our ideas come from our people and having the right people who have the right level of enthusiasm, who come to work every day, who show up every day with a desire to work is what sets us apart. And I think our results that we've posted are a true testament to our team. So in addition to the shareholders who we need to thank for their continued support and our Board for their guidance, and my partners at management for their continued efforts, we really do need to thank our staff and the teams that work at Capital Appreciation in each of the business units. We wouldn't be able to do what we have done without their commitment and effort. So thank you all for everything that you've done.

Thank you, Brad. Last question, and that's a question for me, actually, not from any of the investors. What excites you most about the next year going forward?

To be able to get on a plane without worrying about wearing a mask.

Absolutely right.

I have a lovely joke saying I can't wait to walk down the aisle, and then be told by the flight attendant to take my seat.

Absolutely, absolutely. And as we emerge from this period, it's -- this is the one area that you're not an early adapter with COVID, but we wish you well. I wish you a speedy recovery, and we're not going to keep you any longer. I want to thank everybody. Thank you for your participation today. Thank you for the questions. We will -- we do have a list of the questions, which we'll endeavor to come back to you on the ones we were not able to get to. And we also want to thank you for your ongoing support. Thank you to the teams that make up the incredible Capital Appreciation family, and thanking you for allowing us to do what we do best, and that is to partner, to innovate and to execute. Have a fantastic day forward. I am Howard Feldman. Have a great day.