Amidst a challenging economic landscape in South Africa, Transaction Capital recently released its financial results for the year ending on September 30, 2023. The report highlighted significant setbacks faced by the group, primarily due to the struggles encountered by its subsidiary, SA Taxi.
The financial report revealed that SA Taxi incurred a headline loss from continuing operations, marking a staggering R3.7 billion for the year. This reflects a considerable increase from the previously reported R2.1 billion loss in the first half of 2023.
The loss was predominantly driven by a substantial increase in repossessed vehicle stock write-downs, totaling R1.1 billion, as notable adjustments were made to SA Taxi in the latter half of 2023. Consequently, the net asset value of SA Taxi stood at R1.6 billion by year-end, inclusive of a R2.2 billion non-interest bearing shareholder loan scheduled for capitalization.
Acknowledging the challenging circumstances, Transaction Capital announced plans for an operational restructure of SA Taxi, anticipated to conclude by March 2024. This strategy primarily focuses on stabilizing the business through cost reduction measures and repositioning efforts within the pre-owned minibus taxi market.
The success of SA Taxi’s restructuring relies significantly on a timely resolution with its existing debt funders by March 2024. Transaction Capital, while remaining supportive, clarified that no shareholder funding beyond March 2023 has been provided or planned for the future.
While not as severely impacted as SA Taxi, WeBuyCars observed a 14% decline in earnings, amounting to R658 million. However, a partial recovery was noted in the latter half of 2023, with earnings showing only a 4% decrease. The company also witnessed a 13% increase in vehicle sales, surpassing 140,000 units, with positive momentum carrying over into the new financial year.
In contrast, Nutun experienced a 10% growth in FY2023 earnings, reaching R479 million. This growth was attributed to robust expansion in experience management services. However, the company adopted a conservative approach in deploying capital due to prevailing market dynamics, specifically the non-performing loan market pricing and the adverse impact of SA Taxi’s situation on funding accessibility.
Transaction Capital’s overall financials depicted a substantial decline in headline earnings per share from continuing operations, plummeting by -144% to a loss of -99.0 cents compared to the previous fiscal year’s profit of 224.4 cents. The group’s overall headline earnings per share also suffered a significant drop, falling to a loss of -100.1 cents per share from 219.8 cents in the prior fiscal year.
Given the financial challenges, the group has suspended dividends until a successful restructuring is achieved.
Despite the adversities faced, Transaction Capital remains optimistic about the medium and long-term outlook for the second-hand vehicle market in South Africa. WeBuyCars is positioned strategically to adapt its strategies amidst fluctuating market conditions, ensuring alignment with evolving market demands.
However, uncertainties loom as the group navigates the restructuring process for SA Taxi and seeks continued support from existing debt funders.
Transaction Capital’s journey forward remains marked by challenges, yet it’s poised to navigate these waters, fostering stability and growth for its subsidiaries in the coming years.