Capital Appreciation’s payments division has won two separate multi-year tenders to update the terminal estates of Absa and Nedbank. These and other contract wins mean the group is enthusiastic about its prospects, CEO Bradley Sacks said.
He said in the integrated annual report released yesterday, that the Absa and Nedbank contracts were the result of lengthy negotiations and an adjudication process, and the deals could increase the group’s existing terminal estate by another 50% over the next three to five years.
“We were also successful in a vital fuel tender. These contracts will have a marked impact on the financial performance of the payments division,” Sacks said. Capital Appreciation has grown fast, starting in 2017 with zero revenue and in the year to March 31, 2024 it generated R1.2 billion in revenue.
Sacks said their payments division was likely to benefit from several factors in their 2025 financial year, including increasing demand for payment-related software solutions and the need to update currently deployed terminal estates.
These updates were necessary to ensure the devices no longer rely on the 2G and 3G communication networks, which are planned to be decommissioned by December, 2027.
He said the payments division aimed to further expand the device market, introduce new payment services and products, and develop hardware-agnostic solutions. Collaborating with local clients would provide them with hardware and software support across Africa, while there would also be expansion into other international markets.
He said their software division would continue to leverage partnerships with international suppliers, including Confluent, AWS, and its relationship with Google cloud platform and Azure.
“Software (division) has expanded its cloud initiatives and is increasing its licence revenue from proprietary software. The division invests resources into new products and technologies, mainly focusing on cutting edge capabilities in Generative AI, Real-time AI and Web3.”
Sacks said the software division’s bench resources were being strategically utilised, as they expected that the division’s performance would recover to previous-levels in the years ahead. The division would also continue to expand activities in international markets.
In the past year the group saw “robust top-line growth”. The payments division gained market share in the point-of-sale terminal market, entered new market sectors, secured payments-software solutions tenders, and acquired new clients.
Terminal sales also recovered “meaningfully” in the second half of the year. The first multi-lane installation had been deployed in Clicks in partnership with FNB. This opened an opportunity of up to 100 000 additional devices.
The division was also doubling down on the payments-software initiative with ACI Worldwide, which would take the group into African and international markets.
Demand for the software division’s products and services continued to be strong, but sales cycles were more protracted, which resulted in some excess capacity. The delays resulted in the group having to incur costs against which it could not recognise revenue, impacting profitability of the division.
“We have implemented a series of remedial measures, one of which is to moderate hiring. However, finding talented resources is challenging, and we have elected to keep all our existing people on board. With respect to the delayed projects… Those contracts have not been cancelled nor have they gone to competitors. The excess capacity is also productively employed in innovation, research-and-development initiatives, while the resources await deployment onto new projects,” said Sacks.
The software division had seen “robust demand” in the cloud and digital areas this year, resulting in the acquisition of several new customers and completion of a variety of projects.
GovChat had exited business rescue. The group had terminated operations and agreed with other shareholders to split costs in the outstanding litigation against Meta and the Competition Commission’s prosecution of them in front of the Competition Tribunal. “We look forward to being successful in that endeavour,” said Sacks.
“With substantial cash resources and no debt, the group actively pursues strategic acquisitions that complement our core businesses and expansion goals. Strategic alignment and cultural fit are paramount,” said chairman Michael Pimstein.