Transaction Capital’s share price fell 3.6% yesterday even though it reported to be in a net cash position by the end of the half year to March 31, following the unbundling of WeBuyCars and other restructuring.
The share price traded at R2.65 yesterday afternoon on the JSE, well down from R33.87 only three years ago, prior to the company experiencing financial difficulties due to losses at its SA Taxi subsidiary.
The successful unbundling, placement and separate listing of WeBuyCars on the main board of the JSE allowed Transaction Capital to return R5.2 billion to shareholders through the distribution of 256.3 million WeBuyCars shares.
A further R1bn was raised for the group via the placement. This allowed Transaction Capital to pay down debt and move to a net cash position at a holding company level.
The results released yesterday thus primarily reflected the consolidation of losses incurred at SA Taxi. These losses were not funded by Transaction Capital nor did they impact the equity of Transaction Capital at a holding company level.
“Management believes it is important to assess these results against the progress made towards the strategic goals set in December 2023 and the performance and prospects of Nutun and Mobalyz.”
The basic loss per share from continuing operations attributable to the group fell 20.7% to 178.3 cents from 224.9 cents. The headline loss a share from continuing operations decreased 26.6% to 164.9 cents.
Core earnings per share from continuing operations attributable to the group decreased to a loss per share of 186.9 cents versus 0.1 cents earnings per share in the first half of 2023.
Mobalyz made a core loss of R1.8bn, driven by the reduction of the absconsion, violation and credit shortfall cover (AVCS) in SA Taxi's insurance business, which caused a R966m once-off loss.
“Despite the adverse impact that the decision to reduce the AVCS cover…it is necessary to create a sustainable insurance business,” Transaction Capital’s directors said.
Mobalyz's management team had been strengthened. Progress was made in developing Mobalyz's service offering, and in restructuring and rightsizing SA Taxi.
A business plan on a SA Taxi balance sheet restructure had been proposed to funders.
SA Taxi was being managed with a priority on preserving and generating cash, as opposed to optimising profit.
“Management believes this is the appropriate strategy for where the business finds itself and expects that this will continue to weigh on the full year earnings outlook to September 2024.”
Transaction Capital rationalised its board and head office structures. The Chief Financial Officer and Chief Investment Officer roles were merged, the board reduced from 14 directors to 10, and 6 board committees were consolidated into 3 to improve operating efficiencies at a holding company level.
After a review of Nutun's operations, Nutun Australia was sold and Nutun Transact was being sold. These would “materially strengthen Nutun's balance sheet and liquidity.”
In addition, a restructure was underway to streamline Nutun into two businesses: the CE business and a global business process outsourcing business through the merger of the customer experience management and recoveries businesses.
“As a consequence of the corporate activities in the first half of 2024, Transaction Capital can now be viewed as an unencumbered investment holding company comprising: 100% of Nutun, 75% of Mobalyz and net cash of approximately R120m,” its directors said.
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