Fintech group Capital Appreciation (Capprec) is benefiting from the shorter replacement cycle of payment terminals such as point-of-sale devices (POS), including debit and credit card machines, as its clients look to take advantage of new technological improvements and to comply with international card specifications and certifications.
“These trends all point to consistent demand for POS terminals over the medium term,” the company said on Wednesday in an update for the five months to end-August.
“Demand for point-of-sale terminals continues to be robust, particularly as the group’s addressable market increases.”
Some of its devices use the older Linux operating system, while others use newer Android-based systems. The R1.93bn company believes economic challenges and customers wanting more functionality of Android devices at lower price points are shifting the terminal sales mix in favour of these terminals.
“Maintenance and support fees continued to grow modestly as customers elected to monitor the operating costs of the new range of Android devices before entering into long-term maintenance and support contracts,” it said.
The unit responsible for the sale of terminals was the top division by revenue in its 2022 year as it generated 38.2% of its R830.98m in revenue.
Transaction-related income from terminals continued to grow, but Capital Appreciation warned it was unlikely to beat the stellar growth of the first half of its 2022 year, when it grew 68% as companies emerged from the Covid-19 pandemic. It still expects “satisfactory growth” for its 2023 year despite supply chain issues and the shortage of semiconductors remaining a problem.
The company also provides the back-end systems that allow these devices to accept payments, and the technology that banks and other financial services companies use to add more features to their digital platforms, including loyalty programmes and prepaid vouchers. Capitec and Old Mutual are among its customers.
Local and international demand for the products and services of its software division also grew, particularly encryption, payment card PINs protection and contactless payments. This was boosted by the company’s acquisition of The Responsive Group, which specialises in web and mobile solutions for clients such as MoneyGram and Nedbank, in March 2022 for R55m.
“In anticipation of strong growth, the software division has increased its headcount by 50% year on year, which includes a substantial intake of recently qualified graduates. The division has also materially increased its marketing and business development spend,” it said.
The company will enter a closed period on October 1 and plans to release its results for the six months end-September interim results on November 29.
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