Capital Appreciation has grown its revenue by 19% to R1.18-billion for the year ended 31 March 2024.

The growth at the fintech group came in spite of “weak business confidence” thanks to a diversified revenue mix, with new products and services spread across more sectors and regions.

“The group has a strong balance sheet and large cash resources, supported by healthy operating cash flow,” said CEO Bradley Sacks. “With significant financial strength, we are well positioned to pursue organic growth opportunities and consider additional, complementary acquisitions.”

Group Ebitda – earnings before interest, tax, depreciation and amortisation – grew by 53% year on year from R164.9-million in R252.8-million. It has a healthy balance sheet, with cash reserves at year-end of R467.4-million. Cash generated from operations rose by 75%.

Capital Appreciation has three main divisions: payments, software and international business.

The payments division has slowly been transitioning away from a reliance on income from the sale of point-of-sale terminals towards annuity income from rentals on these devices as well as after-sales services. Payments revenue grew by 7% to R562.8-million in the period. Annuity income grew by 28%, with the number of leased terminals doubling in the 2024 financial year.

The payments division also benefited from strong operational performance, which led to 20% year-on-year growth Ebitda, with margins rising from 39% to 44% for the division.

Software division

“Payments were successful in several meaningful tenders that were awarded post-year-end. These new contracts extend over a three- to five-year period,” Capital Appreciation said in a statement.

The software division delivered a solid performance despite not meeting revenue expectations due to “unexpected challenges”.

According to the group, many large-scale contracts were put on hold due to market uncertainty in the first half of the year.

Speaking to TechCentral in an interview, chief financial officer Alan Salomon said this cautious approach by the market was felt across the industry, but Capital Appreciation did not lose business in the period.

Having geared up for these projects already, the software division faced higher staff costs, with many of its developers “on the bench” awaiting the commencement of projects. This increase in expenses is reflected in the 11% decline in the division’s Ebitda to R77.8-million.

Capital Appreciation chief financial officer Alan Salomon

Despite this, software revenue increased by 31% year on year to R618-million, with service and consultancy fees up by 44%, largely due to demand for cloud-related services.

The international business – which seeks to take advantage of arbitrage by building software using developers paid in rands for markets with stronger currencies – was the only division in the group to show negative growth, with revenue shrinking by 9% year on year from R151-million to R137-million. Salomon said it is important to look at these numbers against the backdrop of strong growth in the previous financial year, where the international business grew its revenue nearly threefold.

“We are not deterred, particularly because of the base that [the international business] came from. It is a high act to follow,” said Salomon.