Load-shedding costs Capital Appreciation 5,000% more in 2022

Financial services company Capital Appreciation’s load-shedding costs increased by more than 5,000% in the 2022/23 financial year.

Capital Appreciation released its results for the year ended 31 March 2023 on Tuesday, which showed a significant increase in diesel costs in its payments division. 

Capital Appreciation is a small-cap company listed on the JSE which consists of three divisions – payments, software, and international.

Payments is the company’s largest division and generates revenue through the sale of payment terminals, terminals’ rental income, maintenance and support serviced fees from terminals, and transaction-related income from terminals.

This means the payments division is more affected by the impact of load-shedding on smaller businesses than the company’s other divisions.

“Hardest hit by closures, these small businesses left acquiring banks with surplus point-of-sale terminal stock, leading to a decrease in the number of terminals sold after achieving record sales in the prior year,” said the company.

“The lower volume and a change in product mix towards lower-priced Android terminals moderated revenue growth.”

The division’s revenue decreased marginally from R533.8 million in 2022 to R524.8 million in 2023. 

While the reporting period saw strong growth in the payment division’s annuity income, up 24.1%, the division’s EBITDA decreased by 5.5%.

This was mainly a result of the slightly lower revenue and the inflationary increase in operating expenses due to diesel costs. 

Load-shedding caused the company to spend R419,000 on diesel for generators, a massive increase from the R8,000 it spent on diesel in 2022.

While this is far less than big retailers like Pick n Pay and Shoprite spend to keep the lights on, this 5137.5% increase comes at a significant cost to smaller businesses.

In addition, Capital Appreciation is anticipating this cost to exceed R1 million in 2024. This expectation comes despite politicians’ promises that load-shedding will be significantly reduced by the end of 2023 and eliminated in 2024, which indicates low business confidence going forward.