RECM and Calibre : Unaudited Unreviewed Condensed Interim Financial Results for the Six Months ended 30 September 2020

RECM AND CALIBRE LIMITED

Incorporated in the Republic of South Africa

(Registration number 2009/012403/06)

Preference share code: RACP

ISIN: ZAE000145041

("RAC")

UNAUDITED UNREVIEWED CONDENSED

INTERIM FINANCIAL RESULTS

for the six months ended 30 September 2020

Contents

	Page
Letter to shareholders	1
Statement of financial position	7
Statement of comprehensive income	8
Statement of changes in equity	9
Statement of cash flows	9
Notes to the condensed interim results	10

Letter to shareholders

Dear fellow shareholders

At 30 September 2020, RAC's Net Asset Value ("NAV") per share (both ordinary and participating preference shares) amounted to R19,02. This represents a decrease of 6,4% over the first six months of the financial year, and a decrease of 34,1% compared to the NAV per share at 30 September 2019. The JSE All Share (Total Return) index increased by 24% and 2% over the respective periods.

The following chart illustrates the progression of the RAC share price and NAV per share against the JSE All Share Index. R10 invested in RAC participating preference shares in June 2010 has grown to R19,02 in NAV after all fees and taxes. The same amount invested in the JSE All Share Index would have grown to R27,40 before taking account of any fees and taxes.

GENERAL COMMENTARY

Our last communication with shareholders was on the 19th of August 2020, at our annual meeting with preference shareholders. At the time we shared with you up to date information. Since then, our investee companies have experienced two further months of economic activity under less stringent levels of the national lockdown.

When we applied our judgement on the valuation of our various investments for the year-end results, South Africa had already been placed into lockdown to prevent the spread of the COVID-19 virus. Our valuations reflected this. We have therefore not had to make any material adjustments to our estimates of the enterprise value or the value of the 'franchise' of the various investee companies at the end of this reporting period. We think it is too early to make any upward adjustments. To the extent required, we have only applied downward adjustments. The changes in valuation over the six months mainly reflect the effect which the actual trading experience during the period had on the balance sheet of the various companies. Put differently, we have either decreased our valuations to account for increased liabilities that came about during the ceasing of business activities, or increased our valuations to reflect the increases in cash from profitable businesses.

Our valuation approach remains consistent with prior reporting periods, despite the temptation to try and 'adjust' earnings numbers for COVID-19. Once one crosses that line, there will always be an excuse to adjust.

We accept that our view might contrast with that of the average investor in the JSE. The fact that the All Share Index is trading close to its pre-COVID-19 levels, suggests to us that investors, in aggregate, hold the opinion that the prospects of the average listed company have been largely unaffected by the global lockdown of economic activity for a protracted period. Global stock investors certainly expect fairly positive outcomes, as most major indices currently approach all-time highs.

This might be true, but we would not underestimate the ongoing impact of COVID-19, as evidenced by the introduction of more stringent lockdown levels recently in major economies.

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Letter to shareholders

continued

As at 30 September 2020, the make-up of our NAV on a look-through basis consists of:

			Directors fair value * (R'm)
	%	% total	30 September	31 March		30 September
	ownership	assets	2020	2020		2019
Core investments		94,9	1 165,2	1 192,0		1 688,6
Goldrush	58,8	64,8	795,9	858,1		1 329,4
Outdoor Investment Holdings	33	9,2	113,0	79,3		102,7
JB Private Equity Investors Partnership	90	6,5	79,2	76,1		85,7
Astoria Investments	100	4,8	58,8	66,1		87,9
ISA Carstens	49	3,5	43,1	43,7		49,0
Vehicle Care Group	49,9	3,2	38,8	32,2		-
Trans Hex	39,5	3,0	36,5	36,5		33,9
Portfolio investments		3,3	41,0	38,1		41,3
RECM Flexible Value Prescient QI	N/A	3,3	41,0	38,1		41,3
Hedge Fund
Other investments		1,1	13,0	21,1		92,5
Cash and receivables		0,7	8,2	43,7		39,2
Total assets			1 227,5	1 294,9		1 861,6
CGT and other liabilities			(4,7)	(4,9)		(133,0)
Bank funding			(250,1)	(250,1)		(251,5)
Net assets			972,8	1 039,9		1 477,1
NAV per share ("R")			19,02	20,33		28,88

• For an explanation of our valuation philosophy and approach, as well as our approach to fees, expenses and taxes, we refer you to previous shareholders letters, or our last annual report.

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