Capital Appreciation FY revenue breaks R1bn threshold

Capital Appreciation, a JSE-listed financial technology group, has reported a remarkable 87 percent increase in headline earnings and a 19 percent surge in revenue for the fiscal year ending March 31, 2024. This growth has been attributed to the robust demand for the company's payments and software products, driven by new client acquisitions, diversified revenue sources, and an expanded market presence. Brad Sacks, the Chief Executive Officer of Capital Appreciation, joined CNBC Africa to discuss the factors contributing to the company's impressive performance. Sacks highlighted that the increase in profitability was mainly due to the exclusion of an expected credit loss associated with the company's investment in GovChat from the previous year's results. He emphasized that the company does not engage in credit provision and clarified that the credit loss provision was made against loans provided to GovChat, which has now exited business rescue. Sacks further explained that the company experienced significant growth in its payments business, securing relationships with two new banks in South Africa and winning a tender in the fuel sector for providing payment devices at petrol forecourts. Additionally, Capital Appreciation expanded its services into Africa, offering high-margin payment software as a service. However, the software division faced challenges with contract delays and reduced project initiations, impacting profitability and margins. The company's strategic focus on Africa includes following South African clients onto the continent and providing remote payment services, keeping physical footprint minimal while generating revenue from clients across Africa. Despite deploying 123 million in capital expenditure for acquisition, rental asset increase, and intellectual property development, Capital Appreciation anticipates a robust return of over 20 percent on the investments made. Looking ahead, Capital Appreciation expects growth from both its payments and software businesses. The company foresees continued momentum in the payment sector, driven by the second-half performance in the financial year and hopes for economic and political stability in South Africa, encouraging institutional clients to resume delayed projects and drive top-line growth in the software division. In conclusion, while Brad Sacks refrained from offering an outlook on the market beyond his expertise, he expressed optimism for the company's growth prospects. With a strong financial performance and strategic expansion initiatives in place, Capital Appreciation is poised for further success in the upcoming periods.