Transaction Capital bucks trend with strong growth
TRANSACTION Capital yesterday bucked the trend to report double-digit growth for the six months to end March. The group said its divisions shone despite the Covid-19 pandemic to increase its core headline earnings 19 percent to R402 million, while core headline earnings per share rose 18 percent to 65.4 cents.
Transaction Capital operates SA Taxi and Transaction Capital Risk Services (TCRS). SA Taxi increased its core headline earnings 20 percent to R230m, and TCRS inched up 23 percent to R158m.
Chief executive David Hurwitz said SA Taxi and TCRS had demonstrated resilience in variable conditions in many years and had managed to grow its core headline earning by 20 percent for the past five years.
Hurwitz said the results were in line with past performance and expectations. “Our strongly positioned divisions within resilient market sectors, the measures taken to strengthen our capital structure and ensure adequate liquidity, and the defensive character of our divisions, will support the group’s return to earnings and dividend growth.”
The group adjusted the results to include the Covid-19 impact on its business, slashing core headline earnings from continuing operations 17 percent to R281m.
Hurwitz stressed that the performance under review did not necessitate Covid-19 adjustments on assets.
“However, in adopting a conservative approach, some adjustments have been made. In SA Taxi, an increase in impairment provisions of R126m was recognised and in TCRS, the carrying value of its purchased non-performing loan portfolio was reduced by R65m; both adjustments before tax.
“Importantly, the adjustments are non-cash and relate to assets held on March 31, and not the origination of future assets,” Hurwitz said.
The group did not declare any dividend to retain capital for Covid-19.
Last year Transaction Capital declared a 27c dividend.
Hurwits said the group was well capitalised with undeployed capital of R800m and an undrawn R400m liquidity facility available to alleviate any short-term cash-flow pressures.
The board will consider a dividend at year-end should it have certainty on the impact of Covid-19, he said.
Transaction Capital shares closed 3.30 percent higher at R15.65 on the JSE yesterday.