Capital Appreciation had performed well in a market and financial year characterised by continued weak business confidence and low economic growth, it said in an update for the year ending March 31.
Even though these conditions caused some clients to delay decisions for major projects and capital spend, there continued to be strong demand for the group’s technology solutions, products and services, Capital Appreciation’s directors said in the update.
Increased business activity in the Payments division, improved expense management and strong cash flows resulted in a “robust improvement” in the group’s financial performance in the second half of the year.
“Both the Payments and Software divisions continued to attract new clients, diversify their revenue sources, and grow market shares. The results benefited from higher finance income, a much reduced expected credit loss raised after tax, for GovChat, and the contribution of Dariel Group, which was acquired in July 2023.”
In the Payments division, although terminal sales were slow in the first half, they recovered meaningfully in the second half, reaching levels close to the prior year. The size of the leased terminal estate doubled.
Payments-related annuity revenue streams saw high double-digit growth, as the division rolled out proprietary Value Added and transaction-related software solutions.
The Software division was affected by cost-cutting measures and the delay or deferral of contracts by its clients in the second half of the financial year.
With strong bench capability built in the first half, the division was adequately resourced to service clients, but delayed contracts had impacted profitability.
“Despite this, the Software division managed to generate good revenue growth, attract several new clients, develop expertise in the FMCG sector and deliver several operational accomplishments.”
The Competition Tribunal had granted GovChat the right to intervene as a direct party in the Competition Commission’s prosecution of Meta. The costs of the litigation against Meta would be shared by CTA and a group of other GovChat shareholders. As a result, the group limited its further funding of GovChat and its attributable losses would be materially lower for the 2024 financial year.
The group maintained a strong and unencumbered balance sheet with cash available consistent with prior reporting periods.
BUSINESS REPORT