On Tuesday, 22 June, Capital Appreciation (Capprec), a financial technology (“FinTech”) enterprise, announced its financial results for the year ended 31 March 2021. Synthesis Software Technologies comprises the Software and Services segment of Capprec. The innovative software development and consulting company continued to achieve pleasing results in a challenging financial year. This continues Synthesis’ steady and increasing trend of year-on-year growth.
During this period, Synthesis expanded its service offering within its existing customer base and with several new customers, including a number outside of South Africa.
Synthesis’ revenue increased by 13.9% to R222.1 million (2020: R195.0 million). Annuity income from licence and subscription fees increased by 47.2% due to the roll-out of Halo and Keystone products, as well as strong demand for RegTech products and a significant focus on subscriptions revenue and resale of software products. Profit margins were maintained due to solid cost control with operating expenses remaining flat at R83.3 million. EBITDA increased by 6.8% to R56.5 million (2020: R53.8 million) and profit after tax increased by 2.8% to R37.9 million (2020: R36.9 million). The business was a particularly strong cash generator this year, with a cash conversion of more than 100%.
Synthesis continued to invest in its its intellectual property assets, which will support revenue growth and profitability in future periods. Synthesis’ three main businesses, Cloud services, Digital, and RegTech, all showed comparable growth, with a strong contribution from new areas such as Managed Services (MSP), and Intelligent Data, and Payments, albeit these come off a low base.
Besides Synthesis’ success with its Halo project, the company is also looking at other ways to internationalise its service offering given its ability to deliver services anywhere in the world. While geographic expansion is in the early stages of launching, Synthesis is already operating in 10 markets outside South Africa, has been successful in growing its Mauritian market, and is exploring opportunities in Asia Pacific. Revenue outside South Africa increased by 27.3% to R27.1 million from R21.3 million in the prior year. Synthesis anticipates opening a European office in Amsterdam in the 2022 Financial Year.
Synthesis has fostered a new partnership with Salesforce – one of the world’s largest cloud-based software companies providing customer relationship management and a complementary suite of enterprise applications focused on customer service, marketing automation, and customer analytics. Synthesis’ endeavour with Salesforce will commence in the 2022 Financial Year.
Customer demand increased notably in the second half of the 2021 financial year and Synthesis enjoys a strong position in terms of committed orders, with a healthy pipeline at the start of the 2022 Financial Year. Good growth is expected to continue in the new financial period. The strategy to target new customer verticals of retail, telecoms, and healthcare continues to gain further traction.
“In times of adversity and challenge, we discover who we are and uncover the opportunity to adapt and rise,” says Michael Shapiro, Synthesis Managing Director. “I am proud of the Synthesis team who continue to rise to the challenges that Covid has produced. We look back at the year that was with pride and appreciation of our team, customers and partners. Our technological skills created a meaningful impact whether through advancing our customers, accelerating digital payments or creating equality through our worthy CSI initiatives.”
For more information on the innovative work Synthesis has done for its blue-chip clients, contact:
072 236 3572
Synthesis is a true South African success story. Synthesis believes that providing innovative solutions based on emerging technologies will help their clients become globally competitive. Synthesis focuses on banking and financial institutions, retail, media and telecommunications sectors in South Africa and other emerging markets.
In 2017 Capital Appreciation Limited, a JSE-listed Fintech company, acquired 100 percent of Synthesis. Following the acquisition, Synthesis remains an independent operating entity within the Capital Appreciation Group providing Cloud, Digital and RegTech services as well as corporate learning solutions through the Synthesis Academy.