Taxi financier Transaction Capital eyes post pandemic organic growth
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JOHANNESBURG - Listed taxi financier Transaction Capital expects to resume dividend payments in the medium term as it eyes organic growth in 2021 following the Covid-19 pandemic.
The group said in its 2020 integrated annual report released yesterday) that its current assessment of operating conditions and growth prospects saw it resuming its strong organic growth trend in the coming year, with 2021 exceeding 2019 levels in line with pre-Covid-19 growth rates.
“Should this expectation materialise, we anticipate being in a position to resume dividend payments within our stated dividend policy in the medium term,” said group chairperson Christopher Seabrooke.
Transaction Capital has operations in South Africa and Australia and its subsidiaries include SA Taxi, Transaction Capital Risk Services (TCRS) and We Buy Cars.
The group adopted a conservative approach to buffer the impact of the Covid-19 pandemic by opting to retain capital and not to pay a dividend for 2020.
“This cautious and conservative approach to preserve capital will help to ensure adequate financial capacity and flexibility to weather adverse economic conditions and invest in our strategic growth initiatives,”said Seabrooke.
Transaction Capital’s growth trajectory was disrupted by the Covid-19 pandemic, giving rise to far higher non-cash impairments at both SA Taxi and TCRS in 2020.
In SA Taxi, the credit impairment charge against loans and advances increased 160 percent to R836 million, compared with R322min 2019. In TCRS, the adjustment to the carrying value of purchased book debts was R588m in 2020, 270 percent higher than the R159m adjustment in 2019.
Transaction Capital said that the pandemic saw its financial performance taking a nosedive, with core headline earnings from continuing operations falling 65 percent to R276m and core headline earnings per share from continuing operations decreasing by 66 percent to 44.3 cents.
TCRS has had to adjust to the lower expected collections levels by cutting costs and raising efficiencies.