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No slowing Transaction Capital
No slowing Transaction Capital
Published Date: 2019-05-16 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments
The SA Taxi owner says it extended its track record of high-quality organic earnings growth, raising its interim dividend by 29%.
Transaction Capital says its first-half results are a continuation of its track record of high-quality organic earnings growth, notwithstanding the persistent economic headwinds in SA. It says both its businesses are resilient to the negative trends and it's not factoring any prospect of an economic upturn into its prospects - leaving upside potential for its growth predictions over the next three to five years.
The group provides finance, insurance and repairs to the taxi industry through its SA Taxi business, while Transaction Capital Risk Services (TCRS) buys and manages non-performing loan portfolios. While it's busy expanding TCRS in Australia and Europe, SA Taxi is well established in a market where more than two-thirds of SA households use minibus taxis, equating to more than 15 million trips a day. It's a non-discretionary expense for most South Africans.
SA Taxi was the standout performer over the six months to end-March, growing profit by 22% to R211 million. During the period, the group sold a 25% stake in the business to the SA National Taxi Council (SANTACO), strengthening SA Taxi's balance sheet. It said this would help it to maintain its dividend policy at 2 to 2.5 times cover and improve its payout rates over the medium term.
TCRS grew profit by 13% to R134 million as it acquired 13 non-performing loan portfolios with a face value of R2.1 billion for R404 million. It buys these from risk-averse clients who preferred an immediate recovery. It said the trading environment for its debt collection operations in Australia remained positive and it expected improving returns from its investments in the business. It spent R33 million on Australian portfolios over the period. It said the acceleration in acquiring loan books was expected to continue over the financial year, supporting future revenue growth. It's also expanding into the European specialised credit market, which is many times larger than South Africa and Australia, and has secured a commercial property non-performing loan portfolio for â‚¬1.3 million so far.
Interest income rose 11% over the reporting period to R1.18 billion and non-interest revenue increased by 17% to R1.3 billion. Attributable earnings declined by 7.4% to R287 million. Core headline earnings per share jumped 17% to 59.4c and it's raised its interim dividend by 29% to 27c per share. Headline earnings are the main gauge of a company's profitability. The core number excludes once-off non-cash costs of R81 million related to the deal with SANTACO, as well as R3 million of early settlement debt costs.
Its shares closed 1% up at R19.70 yesterday.
Transaction Capital showing no signs of a slowdown, earning up 17% thanks to SA Taxi sub which grew earnings by a staggering 31% with 31543 taxi's on their loan book.-- Bright The Dividend Papi ðŸ¤'ðŸ'° (@briteless) May 15, 2019
SANTACO paid R1.7bn for a 25% stake in SA Taxi. A deal that was well-timed & a gangster move by TCP!
Transaction capital very good result. Eps up 17%. SA taxi 22% the best division with debt collection a little behind : 13%. Again a company that will benefit greatly when economy recovers-- Wayne McCurrie (@WayneMcCurrie) May 15, 2019