Fintech company Capital Appreciation is seeing strong demand for its products and services, and would continue to invest in organic and geographic growth opportunities, joint CEO Bradley Sacks said yesterday.
Revenues increased 22.5% to R538.1 million in the six months to September 30. Ebitda (earnings before interest, tax, depreciation and amortisation) was stable at R138m, with good operational performance being offset by significant investment in capacity and for future growth. Operating profit was down 49.5% to R60m.
Headline earnings increased 4.3% to R95.1m and headline earnings per share (Heps) was up by 4.4% to 7.76 cents. An interim dividend of 4.25 cents was declared, up 13.3%.
Sacks said in a telephone interview the company attracted several new local and international clients, adding to its clients in the banking, financial, retail, healthcare, telecommunications, and logistics sectors.
Notably, international revenue from the Software and Payments divisions increased by 195%, off a low base, with services now delivered in over 20 countries. Diversification and development of revenue streams had created further growth opportunities.
“The demand for digitalisation is accelerating the adoption of electronic payments, cost-saving software solutions and online applications that improve access to products and services. These trends support the demand for our products and services, notwithstanding challenges from a weaker economy being experienced both globally and in South Africa,” he said.
Sacks said that Capital Appreciation was using its “substantial cash resources” to actively invest in skills, expand product offerings, develop new business and expand internationally,” while at the same time they would continue to ensure shareholder interests were taken care of.
The Payments division saw 23% growth in annuity-based maintenance and support fees, and transaction-related income. Terminal sales approached last year’s record sales, resulting in a 22% increase in the terminal estate to 315 000 terminals.
Revenue generation in the Payments division was steady, at R318.3m and Ebitda decreased modestly to R119.5m. The adoption of Android devices with their higher functionality and better price points remained strong, said executive director Michael Shapiro.
Dashpay continued to invest in and launched Dashpay Glass, a tap-on-phone SoftPOS App for Android phones using Halo Dot as its core software engine. Dashpay Glass targets SMME merchant customers who want to rapidly accept card payments.
LayUp, a recent start-up and Africa’s first fully digital Lay-By and recurring payments business, continued to make progress and was adjudicated winner of the MTN Best Incubated Business App of the Year award, he said.
The Software division delivered exceptional top-line revenue and profit growth, with significant increases in cloud, data and digital consulting services, as well as security hardware and third-party licence fees.
The division’s revenue increased 75.4% to R219.8m and Ebitda increased by 57.1% to R45.6m. A focus on demand generation, brand awareness and skills development yielded benefits; attracting new clients, securing new project business and building pipelines and multi-year initiatives.
“These initiatives attracted more than R300m of contracted sales the prior year, as well as strong sales in the current period, for which the revenues continue to flow through this year and into subsequent years too,” said Sacks.
Demand for cloud and digital services continued to accelerate, there was 51% growth in revenue in these areas.
The International division remained in the early stages of its development. A key initiative was to commercialise and sell the Halo Dot tap-on-phone product globally.
Halo Dot was live for five clients, with more to launch imminently, including two in the UK.
Capital Appreciation had cash resources of R535.7m at September 30, 20% higher than the prior year. The funds would be applied to fund anticipated organic growth, develop new solutions and pursue or supplement the cost of new investment and acquisition opportunities.
BUSINESS REPORT