SA Taxi owner Transaction Capital published its results for the year ended September 2019, showing headline earnings growth of 18% despite South Africa’s strained operating environment characterised by low consumer and business confidence.
SA Taxi grew headline earnings by 38% to R519 million and debt collection business, Transaction Capital Risk Services (TCRS), grew headline earnings by 15% to R313 million.
Core headline earnings and core headline earnings per share increased 18% to R803 million (2018: R682 million) and 131.3 cents (2018: 111.7 cents) respectively.
Basic earnings per share increased 6% to 118.8 cents (2018: 111.7 cents) and basic headline earnings per share increased 5% to 117.5 cents (2018: 111.7 cents).
The group declared a total dividend per share up 22% to 61 cents.
Transaction Capital chief executive officer, David Hurwitz said: “Transaction Capital has maintained its record of delivering strong financial results over the last 7½ years since listing on the JSE in June 2012. SA Taxi and TCRS continue to demonstrate resilience as highly defensive businesses able to deliver good commercial returns in poor economic conditions.”
SA Taxi provides developmental finance, insurance and other services to empower minibus taxi owners, thus enhancing the sustainability, reliability and safety of South Africa’s public transport infrastructure.
Approximately 250,000 minibus taxi’s complete more than 15 million commuter trips every day in South Africa.
Although not immune to difficult economic conditions, the minibus taxi industry is supported by population growth and increased urbanisation, which have resulted in higher commuter density, Transaction Capital said.
SA Taxi grew headline earnings 38% resulting in Transaction Capital’s attributable portion thereof growing by 21% to R446 million. The loans and advances portfolio grew by 16% to R10.8 billion, comprising about 32,500 loans, it said.
Toyota’s increased production of minibus taxis, SA Taxi’s launch of a lower interest rate product for better quality customers and higher loan origination volumes on Nissan vehicles supported this growth.
“Strong momentum in the sale and finance of SA Taxi’s fully refurbished pre-owned minibus taxis also contributed to portfolio growth as minibus taxi operators seek a more affordable but reliable alternative to buying a new minibus taxi in this challenging economic environment,” Transaction Capital said.
It noted that an ownership transaction between SA Taxi and the South African National Taxi Council (Santaco) was finalised in February, with Santaco now owning 25% of SA Taxi.
Santaco is the only government-recognised representative body of the minibus taxi industry.
SA Taxi’s short-term insurance business, SA Taxi Protect, grew gross written premiums by 20% to R823 million driven by new products and new customer acquisition.
The business broadened its client base via its broker network, specifically targeting open market clients – being insurance clients not financed by SA Taxi Finance.
SA Taxi Rewards is an example of the shared value created as a result of the ownership transaction between SA Taxi and Santaco. In close collaboration with the minibus taxi industry, SA Taxi Rewards was established to leverage the industry’s purchasing power to enable minibus taxi operators to procure higher quality parts and consumables at a lower cost.
The number of minibus taxis sold through the retail dealerships grew 14%, generating revenue of about R900 million. New dealerships are being considered in the medium term.
“SA Taxi intends to leverage its telematics and rewards programmes data to connect to South Africa’s 250 000 minibus taxi operators selling existing finance and insurance, and new products suited to the needs of minibus taxi operators,” said Hurwitz.
TCRS’s collection services business delivered organic revenue growth of 21%.
Excellent revenue growth in the collection of non-performing consumer loan portfolios acquired as a principal performed ahead of expectations, and has positively offset the impact of the expected slowdown in outsourced contingency collections in South Africa.
TCRS invested R1.2 billion in non-performing consumer loan portfolios this year.
“This investment will support strong and predictable annuity revenue over the medium term estimated at almost R4.5 billion,” Transaction Capital said.
In its most significant business activity, collection services, TCRS acts either as a principal in acquiring and then collecting on non-performing consumer loan portfolios, or as a service provider on an outsourced contingency or fee-for-service basis.