Transaction Capital’s Interim Results: Debt Reduction, Segment Challenges, and Governance Improvements Drive Performance

Transaction Capital Limited recently released its unaudited interim results for the half-year ending 31 March 2024. This report provides a detailed look into the company’s financial performance, strategic moves, and future prospects. Below, we delve into key aspects of these interim results.

WeBuyCars Unbundling and Strategic Shift

Unbundling Success

Transaction Capital successfully unbundled and listed WeBuyCars on the JSE. This move returned R5.2 billion to shareholders through distributing 256.3 million WeBuyCars shares. Additionally, the group raised R1.0 billion through the placement, significantly reducing its debt.

Financial Restructuring

This strategic restructuring allowed Transaction Capital to move to a net cash position at the holding company level. The group’s primary focus now shifts towards managing its remaining businesses, Nutun and Mobalyz.

Financial Performance Overview

The financial performance for H1 2024 reflects several strategic decisions and their impact on the group’s bottom line.

Continuing Operations

MetricH1 2024H1 2023 (Restated)% Change
Basic Loss Per Share (cents)178.3224.9-20.7%
Headline Loss Per Share (cents)164.9224.6-26.6%
Core Earnings Per Share (cents)-186.90.1>-100%

Including Discontinued Operations

MetricH1 2024H1 2023 (Restated)% Change
Total Basic Loss Per Share (cents)178.4221.9-19.6%
Total Headline Loss Per Share (cents)172.5222.1-22.3%
Total Core Earnings Per Share (cents)-142.232.0>-100%

Segment Performance Analysis

Mobalyz: Strategic Realignment

Mobalyz reported a core loss of R1.8 billion in H1 2024. This was driven primarily by a reduction in the absconsion, violation, and credit shortfall cover (AVCS) in SA Taxi’s insurance business, resulting in a net loss of R966 million.

Insurance Business Overhaul

Despite the adverse impact, reducing AVCS cover was necessary to create a sustainable insurance business. The restructuring and rightsizing of SA Taxi’s operations have been significant, with a new management team under Sean Doherty.

Future Prospects

A detailed business plan for SA Taxi’s balance sheet restructure has been proposed to funders. If accepted, this plan will reduce losses and support operational stability.

Nutun: Streamlining Operations

Nutun’s operations underwent an intensive review, leading to the sale of Nutun Australia and the identification of Nutun Transact as non-core. These sales will strengthen Nutun’s balance sheet and liquidity.

Operational Restructuring

Nutun is being streamlined into two distinct businesses: a capital-enabled (CE) services business and a global business process outsourcing (BPO) business. This restructuring is expected to unlock shareholder value in the medium term.

Corporate Governance and Efficiency Improvements

Board and Structural Changes

Transaction Capital continues to rationalize its board and head office structures. The CFO and CIO roles have been merged, and the board has been reduced from 14 to 10 directors. Additionally, board committees have been consolidated from six to three, improving operating efficiencies.

Future Outlook

Transaction Capital now operates as an unencumbered investment holding company. The company holds 100% of Nutun, 75% of Mobalyz, and net cash of approximately R120 million. This structure provides a strong foundation for future growth and strategic investments.

Conclusion

Transaction Capital’s interim results for H1 2024 highlight significant strategic shifts and financial restructuring. The successful unbundling of WeBuyCars and subsequent debt reduction have positioned the company for a more stable financial future. While challenges remain, particularly with Mobalyz and SA Taxi, the strategic realignments and operational restructuring efforts are expected to yield long-term benefits. Nutun’s streamlined operations and future sales will further strengthen the group’s financial position. Transaction Capital is now better positioned to leverage its core assets and explore new growth opportunities, ensuring sustained value creation for its shareholders.