Transaction Capital Limited, a key player in the South African financial sector, has released its audited results for the year ending September 30, 2023. The report sheds light on the contrasting performances of its subsidiaries, with SA Taxi facing challenges while WeBuyCars demonstrates resilience in a dynamic market.
SA Taxi Struggles Amidst Restructuring Efforts
- SA Taxi reported a headline loss of R3.7 billion, a substantial increase from the R2.1 billion loss in H1 2023.
- The loss was driven by a R1.1 billion surge in repossessed vehicle stock write-downs in H2 2023.
- SA Taxi is in the midst of an operational restructure, aimed at stabilizing the business through cost reductions.
- The strategic focus shifts towards origination of pre-owned taxis at lower volumes.
Balance Sheet Restructure:
- The balance sheet restructure is deemed critical to SA Taxi’s viability, targeted to be completed by March 2024.
- The success relies on existing debt funders remaining committed.
- Auto refurbishment and repair business, initially classified as discontinued, is now part of continuing operations.
- SA Taxi’s balance sheet restructuring includes a review of SA Taxi Protect’s insurance products.
WeBuyCars Shows Resilience
Earnings and Volumes:
- WeBuyCars reported earnings of R658 million, marking a 14% decrease from the prior year.
- In H2 2023, the company recovered momentum, with earnings only 4% down from H2 2022.
- Volumes of vehicles sold grew impressively by 13%, reaching 141,851 units.
- WeBuyCars exhibited agility by swiftly adjusting its business model in response to market changes.
- The focus shifted to lower-priced second-hand vehicles, aligning with current consumer demand.
- The company continued to invest in its online capabilities, with 22.4% of total sales occurring through e-commerce channels.
- Business-to-consumer (B2C) online sales grew to 7% of total sales, reflecting a shift in consumer preferences.
Nutun’s Growth Amid Conservative Capital Deployment
Earnings and Challenges:
- Nutun experienced a 10% growth in earnings, reaching R479 million in FY2023.
- Capital-enabled services faced challenges due to non-performing loan market dynamics and negative sentiment surrounding SA Taxi.
- Nutun deployed capital conservatively during the year, responding to market pricing dynamics.
- Management is actively pursuing options to raise traditional and new alternative funding.
Group’s Financial Overview
Headline and Core Earnings:
- Headline earnings per share from continuing operations attributable to the group decreased 144% to a loss per share of 99.0 cents.
- Core earnings per share from continuing operations attributable to the group decreased by 81% to 32.2 cents.
Balance Sheet and Liquidity:
- Transaction Capital is well-capitalized at the holding company level.
- WeBuyCars and Nutun together cover net debt adequately.
- SA Taxi aims to complete its restructuring initiatives for a sustainable base in FY2024.
- Ongoing support from existing debt funders is crucial for SA Taxi’s viability.
Transaction Capital remains committed to navigating the challenges in the South African market, with a focus on adapting to changing industry dynamics and driving growth where possible. The company’s strategic moves and adaptability will play a crucial role in shaping its trajectory in the coming years.