Capital Appreciation Thrives: 3% Revenue Surge, Global Growth, and Unwavering Dividends Amid Economic Headwinds

  • Resilient Performance: Capital Appreciation Limited reports a 3% revenue increase, showcasing resilience amidst economic challenges in South Africa.
  • International Expansion: The company experiences a significant 21% growth in international revenue, demonstrating its global appeal and market presence.
  • Dividend Declaration: Despite economic uncertainties, Capital Appreciation declares an unchanged interim dividend of 4.25 cents per ordinary share.
By Lethabo Ntsoane

In the face of challenging economic conditions in South Africa, Capital Appreciation Limited (JSE: CTA) has reported a resilient performance for the six months ended 30 September 2023. The company’s interim financial results reveal key operational and financial features, highlighting its ability to navigate temporary setbacks and capitalize on strategic initiatives.

Operational Highlights

Demand Strength and Diversification

Despite economic challenges causing delays in new orders and project commencements, Capital Appreciation experienced strong demand for its products and services. Revenue for the period increased by 3%, accompanied by a further diversification of revenue streams.

International Expansion

The company saw notable international revenue growth of 21%, reflecting its global appeal. Payments annuity income also surged by 24%, showcasing resilience in this segment.

Infrastructure Growth

Capital Appreciation’s terminal estate exceeded 344,000, marking a robust 9% year-on-year increase. The rental terminal estate saw an impressive surge of 158%, demonstrating the company’s commitment to expanding its infrastructure.

Software Division Performance

While the Software division achieved good top-line revenue growth, unforeseen delays in project commencements impacted profitability. The successful integration of two acquisitions in the past 19 months contributed positively to the division.

Financial Performance Snapshot

Financial MetricSeptember 2023 (R’million)September 2022 (R’million)Increase/Decrease
Revenue554.2538.13.0%
EBITDA126.9138.0-8.0%
EBITDA Margin (%)22.925.6-275 bps
Operating Profit105.3116.6-9.7%
EPS (cents)6.483.13107.1%
HEPS (cents)6.503.16105.6%
Interim Dividend (cents)4.254.25
Cash for Reinvestment (R’m)486.3535.7-9.2%
Net Asset Value (cents)124.5120.53.3%

Outlook and Confidence

Capital Appreciation’s management remains confident about the future, anticipating a stronger performance in the second half of the year. The company’s commitment to growth and expansion is underscored by its strong cash generation from operations.

Dividend Declaration

The Board has declared an interim dividend of 4.25 cents per ordinary share for the six months ended 30 September 2023. Shareholders should note that local dividends withholding tax is applicable at 20%.

Salient Dividend DatesDate
Declaration DateMonday, 4 December 2023
Last Day to TradeTuesday, 2 January 2024
Ex-Dividend DateWednesday, 3 January 2024
Record DateFriday, 5 January 2024
Payment DateMonday, 8 January 2024

Shareholders are advised that share certificates may not be dematerialized or rematerialized between 3 January 2024 and 5 January 2024.

Management’s Perspective

The company’s executives, including Executive Chairman Michael Pimstein, CEO Bradley Sacks, and CFO Alan Salomon, signed off on the report, expressing confidence in the outlook and emphasizing the responsibility they take for the accuracy of the financial information.

Conclusion

Capital Appreciation Limited’s ability to weather economic challenges, coupled with its strategic initiatives and strong financial performance, positions the company well for continued growth. South African investors can look forward to potential opportunities as the company navigates the evolving business landscape.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo