Fintech group Capital Appreciation sees share price surge following positive annual results

Capital Appreciation’s payments and software divisions attracted new clients, initiated new projects with existing clients, and renewed long-term contracts, the fintech group’s annual results for the year to March 31 showed.

Investors appeared heartened by the results, as the share price had risen 8.43% to R1.80 per share by Tuesday afternoon, while the JSE All Share Index was up by only 0.53% at the same time. Capital Appreciation's share price has gained 45% over a year.

“Capital Appreciation’s businesses are well positioned, and the prospects are encouraging. With the pace of technological advances and the digital transformation needs evident throughout the economy, we anticipate the current prospective pipeline will transform positively as further business,” CEO Bradley Sacks said in a statement.

He said that over the past eight years, they had returned R765 million, or 56.5 cents a share to shareholders in the form of dividends. “While we anticipate low economic growth to persist for the 2026 financial year, several initiatives are underway with the potential to deliver exceptional performance,” he added.

In the past year, gross revenues were up by 7.6% to R1.25 billion, and earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 23.3% to R333.9m. Headline earnings a share increased by 25.6% to 17.57 cents. A final dividend of 7.50 cents was declared, up 30.4%. The total dividend for the year came to 12 cents per share, a 20% increase over the prior year.

Sacks said the Payments division strengthened its position as a leading operator of payment infrastructure in South Africa by executing growth initiatives. The Software division's performance was hindered by bench overcapacity; however, remediation plans were starting to take effect.

Growth initiatives were being invested in, including leased terminals in Payments and product development in Software. This diversification and organic expansion were expected to create significant opportunities for future growth, the directors said in the results.

The Payments division increased revenue by 21.5% to R689.2m, with terminal sales (up 41.1%), an expanding terminal rental portfolio (up 15.3%), and transaction-related income (up 18.6%) as the primary contributors to the strong growth.

EBITDA increased by 25.4% to R297.8m. Terminals in the hands of customers increased 18.8% to 424,000, buoyed by two multi-year contracts secured in the first half, which were expected to support terminal estate growth over their three- to five-year terms.

The Payments division also drove expansion into Africa and beyond, through payments software initiatives and innovations such as its “Business-in-a-Box” MicroPOS solution for small and micro-merchants.

The Software division was impacted by the cost and capital expenditure concerns of major clients, as well as continued delays in new project starts. Its revenue declined 7.6% to R549m and EBITDA by 31.8% to R61.3m. The division, however, did finish the year stronger than it began, said Sacks.

The sales pipeline had improved, and several long-term contracts were renewed. Synthesis and Dariel were recognised as trusted advisors in the software market, winning numerous awards. AWS elevated Synthesis to Premier Partner status, its highest level of accreditation, awarded to only a select number of partners worldwide.

The group balance sheet was free of debt, with ample cash to support organic growth, pursue acquisition opportunities, make investments, and do additional share repurchases, the directors said. The group held R402m in cash as at March 31, 2025.

The Payments division comprises the operating companies African Resonance and Dashpay, LayUp Technologies, a recent start-up in which Capital Appreciation is a 27.4% partner, and Halo Dot, a proprietary software solution that allows any near-field communication (NFC) enabled Android-based device to accept payments.

The Software division comprises Synthesis, a specialised software and systems developer; Responsive Group, which designs and develops web and mobile digital applications; and Dariel, an engineering-focused IT architecture and software development group.

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