Capital Appreciation reports healthy 29.7% earnings increase

JSE-LISTED financial technology (fintech) group Capital Appreciation yesterday reported a 29.7 percent increase in earnings for the six months to end September despite operating in a period dominated by the Covid-19 outbreak.

Its headline earnings per share (Heps) increased to 4.45 cents a share while headline earnings increased by 7.8 percent to R54.2 million.

Last year, the group concluded and successfully executed a transaction that included the share repurchase and cancellation of 245 million shares and said the lower number of shares in issue benefited its Heps, which reflected an increase of 29.7 percent.

Its revenue increased by 15 percent to R323.7m and earnings before interest, tax, depreciation and amortisation (Ebitda) inched up by 20.2 percent to R81.6m, with all business units performing well in the period of the most severe lockdown restrictions under the Covid-19 pandemic.

“Capital Appreciation continued to grow its client base of blue chip, well-capitalised institutions in the financial, retail, and telecoms sectors,” the group said.

Joint-chief executive Bradley Sacks said the ongoing acceleration in digital transformation, electronic payments and related advances had received further impetus during the pandemic.

“Capital Appreciation is ideally positioned to benefit from this evolution, with the appropriate skills, experience, and track record of innovation to assist our clients to implement and benefit from these technological advancements,” Sacks said.

The group held cash resources of R488.4m at the end of the period and said that it would eye opportunities for reinvestment.

The group declared an interim dividend of 2.5c.

Capital Appreciation added that it was excited about the appetite for, and opportunities presented by new payment platforms, such as Android.

The group operates Payments and Services (Synthesis) divisions.

It said that the increasing adoption of new technologies and ways that clients were seeking to transact have generated a strong pipeline for its Payments division.

“The themes of cloud services, emerging digital technology, and evolving forms of payments are also accelerating and Synthesis is well-positioned to deliver products and value propositions to support its clients’ journeys to becoming more digitally enabled,” the group said.

The Payments division reported a 15.6 percent increase in revenue to R215.3m and a 33 percent increase in Ebitda to R66.5m. The division provides end-to-end terminal estate management and payment services.

Its customers include all of the major banks in South Africa, as well as a range of other financial institutions, retailers and other large corporate customers both in South Africa and the continent.

Synthesis division reported a 13.8 percent increase in revenue to R108.4m, with services and consultancy fees increasing by more than 20 percent, due to increased demand for cloud and digital projects. Ebitda increased by 3.1 percent to R28m.

Capital Appreciation’s shares closed 0.96 percent higher at R 1.05.