Fintech group Capital Appreciation (Capprec) is bullish about the continued growth of its international business after its foreign revenue more than doubled in the past financial year.
On Tuesday, the group reported that non-SA revenue grew 177% for the year to end-March, and is now making up 15.2% of group revenue, up from 6.6% just 12 months ago.
“Our international activity is definitely gaining significant traction. We’re attending all the major trade shows in Europe and the US. Capital Appreciation, and Synthesis in particular, is becoming more well known internationally,” CFO Alan Salomon told Business Day.
Capprec’s business includes selling payment terminals such as point-of-sale devices, including debit and credit-card machines.
It 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.
“A lot of that business is currently being transacted and executed in SA but in foreign currency. So we’re doing the work in SA but we’re billing in pound, euro or Singapore dollar because we’ve got a very big client in the logistics business in Singapore,” Salomon said.
Capprec opened an offshore operation in Amsterdam in the middle of 2021, which is already gaining “traction and giving us exposure to European technology activity and opening up opportunity for us”.
Capprec, which is valued at just more than R1.95bn, is no stranger to acquisitions.
The company listed as a special purpose acquisition company (Spac) on the JSE and raised R1bn through a private placement of shares in late 2015. Since then, it has acquired 100% of African Resonance, Dashpay and Synthesis Software Technologies, as well as a 17.45% interest in Resonance Australia. It also has a 35% stake in government messaging platform GovChat.
In May, the group said it had agreed to buy local software engineering and development company Dariel Solutions for R131.2m as it looks to invest in established companies that deliver innovative and disruptive solutions to mainly institutional clients.
This comes as the cash-flush fintech group hiked its dividend despite a drop in annual profit, as it reported stronger demand for its product over the past year and looks to cash in on future acquisitions.
Its results showed that gross profit, revenue minus the cost of sales, improved 16.5% year on year to R499.5m, but operating expenses rising 43.8% led to operating profit, generated from a company’s core operations, falling 8.9% to R193m.
Net profit shrank 43.7% to R91.9m and headline earnings per share, a common profit measure in SA that excludes certain items, fell 44.5% to 7.44c.
Despite the drop, Capprec declared a final dividend of 4c per share to bring the total for the year to 8.25c, up about 10% over the previous year.
In November, Capprec said it was looking at investing specifically in payments businesses and that it could comfortably make an acquisition worth R1bn to R2bn.
The group is optimistic about the future of its payments businesses as demand for point-of-sale (POS) terminals is expected to continue as customers replace older terminals to take advantage of new technology.
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