Wrap Text
Business Update for the six months ended 30 September 2025
Capital Appreciation Limited
Incorporated in the Republic of South Africa
(Registration number 2014/253277/06)
Share code: CTA ISIN: ZAE000208245
("Capital Appreciation" or the "Group" or "the Company")
BUSINESS UPDATE FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2025
This announcement provides shareholders and other interested parties with a brief update on
the Group's operating performance for the first six months of the 2026 financial year and the
state of the markets in which we operate.
This is the last business update that the Group will be making as Capital Appreciation, having
received shareholder approval for a name change on 3 September 2025. Our new name will be
Araxi Limited (JSE short name: Araxi and JSE share code: AXX), a name inspired by the ancient
Greek word for "river". A river is in constant motion; it represents continuous forward motion
— adapting, carving new paths, and moving with purpose. This embodies our vision for the future
and the energy that drives us to keep innovating. We believe Araxi is more representative of the
Company's identity as a premier financial technology and software group providing fintech
solutions and other contemporary and innovative technology platforms to clients. We look
forward to Araxi earning its rightful place as a trusted corporate brand within South Africa and
beyond.
The pace of technological change and digital transformation continues to accelerate, compelling
enterprises to participate in the shift to remain competitive, boost efficiencies and meet growing
consumer demands. The Group's divisions have been strategically positioned in market sectors
with promising long-term growth prospects, and we are encouraged by the extent to which they
have capitalised on this positioning. Their capacity to significantly enhance clients' performance,
efficiency and competitiveness has amplified the Group's reputation and allowed Capital
Appreciation to generate substantial value for clients and its shareholders.
HY2026 Features
- The momentum in the Payments division has continued, both in terminal sales growth and in
executing strategic diversification initiatives.
- The Software division's project conversion remains below our desired level, but vital projects
are being awarded, and internal cost-saving initiatives and efficiencies are starting to take
effect.
The South African economy remained subdued during the period, despite interest rate cuts, an
easing of energy constraints and modest inflation. Business confidence was cautious, reflecting
a mixed and fragile sentiment, influenced by domestic economic factors as well as international
trade uncertainties.
Despite the weak economic backdrop and challenges faced by the Software division, the Group
operations have continued to perform in line with expectations, supported by a keen focus on
expense management.
Capital Appreciation maintains a strong and unleveraged balance sheet, with ample liquidity to
fuel organic growth, pursue strategically meaningful acquisitions and execute share repurchase
programs to enhance shareholder value. The Group continues to drive expansion through
targeted investment in innovation and market development efforts across both divisions.
The strong performance from the Payments division continues
The Payments division has made a strong start to the financial year, driven by dilligent execution
and growing market demand. There have been robust terminal sales and the deployment of
leased terminals has continued. Payment Application license fees and related services grew
strongly, reflecting the expansion of the POS terminal estate. The growing terminal rental estate
has also supported recurring rental income. Annuity revenue accounts for more than half of the
division's total income and continues to grow, enhancing the resilience and predictability of
earnings in this division.
Payments' white-label MicroPOS solution continued to gain traction. The solution has been
downloaded by more than 25 000 merchants, validating its appeal as a "business-in-a-box"
offering for small and micro enterprises. Expansion into Africa is starting to take shape, and while
activity levels remain modest, the prospects continue to look attractive.
Halo Dot continued to make good progress in the current period with numerous opportunities
being readied for announcement, across three continents. Halo Dot will announce these
successes in the coming months.
As the drive for financial inclusion continues, bank clients are showing increased interest in
serving merchants in lower-tier markets. The Payments division has introduced an Android
device particularly responsive to this market segment and is excited about the opportunity it
presents for consumers, merchants, our clients and the Group. Payments is cautiously optimistic
about its prospects for the full year.
The Software division remains well-positioned for a return of investment activity by enterprise
clients. The division continues to position itself at the forefront of technology innovation, and
its recent award of a strategic Agentic AI project by a major bank reflects its capabilities in AI
and Cloud.
While the Software division has secured reasonable sales and maintains a strong forward
pipeline, project and revenue conversion remain slow due to continued enterprise caution.
Given that this is an industry-wide phenomenon, the market has become highly competitive for
traditional projects, with customers being very cost-sensitive.
Software was recently awarded a highly strategic project by one of the major South African banks
to deploy Agentic AI capabilities to enhance customer experience through digital agents, support
front-line staff in the wealth advisory and contact centre areas, and improve security and
automation. The project has exciting industry-wide applicability with the potential to generate
ongoing project and licensing revenue in the years to come. The Software division continues to
position itself as a preeminent provider at the forefront of technology innovation. Its capabilities
and activities in AI, Agentic AI and Cloud are reflective of this ethos.
The remedial plans implemented by the division late in FY2025 have optimised the business
structure, and together with diligent expense management across all areas, have resulted in
significant cost savings. These will become more notable in the second half of the financial year
and in FY2027. Returning to previous levels of performance by the end of fiscal 2027 remains a
strategic imperative for the division and is a key management priority. The H1 results will include
one-time costs associated with the remedial plans.
Looking ahead, the medium-term outlook remains positive. The Software division's skills and
intellectual property are in demand, and its projects are considered mission-critical and
strategically important. Addtionally, the Software division's continued investment in compelling
technologies such as AI and Cloud directly supports the Group's strategic objective of driving
digital transformation across the payments landscape and the financial services sector.
Timetable for the name change
Shareholders are reminded that the change of the Company name and the associated
amendments to the Memorandum of Incorporation is being registered with the Companies and
Intellectual Property Commission ("CIPC") and finalisation announcement is expected to be
released on a or about Thursday, 18 September 2025.
In closing, a final thought - while not deliberate, if one removes the "rax" from Araxi, one is left
with AI, a sure sign that we are on the right track.
The information in this business update has not been reviewed or reported on by the Group's
external auditors.
Capital Appreciation's closed period will commence on 1 October 2025. The Group intends to
release its interim results for the six months ended 30 September 2025, on or about 2 December
2025.
Johannesburg
15 September 2025
Sponsor: Investec Bank Limited
Date: 15-09-2025 11:36:00
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