Transaction Capital’s earnings decline by 65%
DURBAN - TRANSACTION Capital yesterday reported a 65 percent decline in core headline earnings from continuing operations to R276 million for the year to the end of September, hurt by the impact of Covid-19 on SA Taxi and Transaction Capital Risk Services (TCRS).
In SA Taxi, the group said credit impairment charges against loans and advances increased by 160 percent to R836m, while in TCRS the adjustment to the carrying value of purchased book debts surged by 270 percent to R588m.
Core headline earnings per share from continuing operations fell by 66 percent to 44.3 cents a share. This was a deviation from its performance of the past five years to September 2019, in which the group’s core headline earnings per share achieved compound annual growth of 23 percent.
Chief executive David Hurwitz said prior to the effects of Covid-19, the group was on track to deliver earnings growth in line with past performance and guidance given at the time of their annual general meeting in March.
“Despite the operational disruption of Covid-19, with most of the business operations restricted and in certain instances fully closed for more than two months, the group’s core pre-provision profit from continuing operations grew by 10 percent. Both SA Taxi and TCRS have demonstrated resilience in their agile responses to the volatile dynamics accompanying the pandemic,” Hurwitz said.
However, its profit declined by 74 percent to R203m, and earnings per share from continuing operations declined by 66 percent to 39.3c.
The group opted not to declare a dividend for the year.
Transaction Capital announced Royal Bafokeng Holdings as a longterm strategic shareholder after investing R500m after acquiring 12 million shares, representing about 1.8 percent, through a secondary purchase in the market on November 20.
The group said Royal Bafokeng Holdings was expected to increase its stake by subscribing for a further 12.4 million shares in January 2021, subject to shareholder approval.
The group also acquired a 49.9 percent stake in WeBuyCars for R1.86bn.
Transaction Capital said it was excited about the growth potential of WeBuyCars, which had recovered well from the impact of Covid-19 and was expected to lift the group’s growth trajectory above historical trends.
Looking ahead, Hurwitz said Covid-19 had re-affirmed the essential role of the minibus taxi industry in the South African economy.
Transaction Capital’s shares rose 5.43 percent to close at R23.50 on the JSE yesterday.