Capital Appreciation is booming

Capital Appreciation (Capprec) has released its annual financial results for the year ended 31 March 2024, revealing strong revenue and operating profit growth.

The company says its business performed well despite weak business confidence and challenging economic conditions.

“Capital Appreciation also evolved its revenue mix with the introduction of new products and services, spread across more sectors and regions,” it says.

“This creates significant growth opportunities for the Group going forward.”

Capprec’s revenue broke through the R1-billion threshold, growing by 19% from R995.1 million to R1.2 billion.

Its operating profit also grew substantially, increasing by 12% to R215.8 million.

However, its earnings before interest, taxes, depreciation, and amortisation (EBITDA) saw the highest growth at 53%.

“The financial results benefited from improved operational performance, higher finance income, a significantly reduced expected credit loss raised for GovChat and the first-time contribution of the Dariel Group (acquired July 2023),” it said.

Earnings per share and headline earnings per share grew by 84% and 83%, respectively.

“The Group has maintained its unbroken, year-on-year growth in dividends for the seventh consecutive year, declaring a total dividend of 10.00 cents per share for the year, an increase of 21% on the prior year,” it added.

While Capital Appreciation’s software division — which includes Synthesis — grew revenue during the financial year, the company noted that its financial performance didn’t meet expectations.

It said the division encountered unanticipated challenges due to bench overcapacity, which delayed the commencing of some large client projects.

“Despite delivering several successful software projects, acquiring new customers, and receiving numerous accolades, the division’s financial performance did not meet expectations,” it said.

“Revenue increased by 31% to R618.8 million.”

Capital Appreciation added that service and consultation fees accelerated by 44% due to increased demand for cloud and digital products. Licence and subscription fees increase by 20%.

However, the software division’s EBITDA decreased by 11% to R77.8 million, which the company attributes to higher staff costs, which resulted in a significant increase in operating expenses.