Profit dips as Capital Appreciation invests for growth


Profit dips as Capital Appreciation invests for growth

Published Date: 2019-06-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Profit dips as Capital Appreciation invests for growth

The FinTech business is developing new productions and building capacity as it signs on more financial institutions as customers.

Capital Appreciation (CAPPREC) says each of its business units delivered in line with expectations last year. That was despite a challenging economic environment in SA, particularly in the retail sector in the second half of its financial year. However the cost of developing new innovative products and building capacity has affected its financial performance.

The financial technology (FinTech) group has two business segments including Payments & Infrastructure and Software & Services. It grew the number of payment terminals in the hands of clients by 52% over the year to 140,000. It said African Resonance, which provides payment infrastructure to banks and retailers, amongst others, gained market share as it installed more terminals in banks. Due to the growth and the addition of more blue-chip clients, it said some of its service and maintenance fees were renegotiated with a big client in the interests market consistency and in anticipation of future terminal growth.

It now counts all the big banks, as well as many of the smaller ones, as clients and said the role of technology as a key disruptor and differentiator in the financial services sector had resulted in large institutions focusing on overall cost containment in parallel with their own system revisions and technology upgrades.

Revenue rose 20% to R608 million over the year. But earnings before interest, tax, depreciation and amortisation (EBITDA) fell 9.8% to R160 million. Earnings and headline earnings per share declined to 8.33c, down 12.2% and 12.6% respectively. Normalised headline earnings per share fell 11% to 9.01c. It's paying a final dividend of 2c per share, taking its total dividend for the year to 4.25c, up 6.3%.

Cash generation increased by 27% to R213 million. It said it had R611 million in cash available for reinvestment.

Apart from several interesting investment opportunities in SA, it said it was researching the possibility of expanding its business models into new markets.

Its shares fell 6.3% to 74c yesterday.

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