Transaction Capital warns Covid-19 has broken profit growth streak
The taxi financier says the pandemic has demonstrated the importance of the industry to SA
Transaction Capital warned on Tuesday that the disruption from Covid-19 had brought a five-year profit growth streak to an end.
The group said it had been conservative in estimating the effect of future cash flow on, among other things, non-performing loans in its year to end-September, when it expects core headline earnings to fall by as much as 80% from the previous period’s R803m.
Transaction Capital said in a trading update that it has achieved compound annual growth in core headline earnings per share (HEPS) of 20% over the past five years. Core headline earnings are used as a profit measure that adjusts for items the group believes do not reflect the underlying business.
Transaction Capital’s core operations are SA Taxi, which provides finance and insurance to minibus taxi operators, and Transaction Capital Risk Services (TCRS), which is involved in debt collection and payment processes.
The group said Covid-19 has proven that the minibus taxi industry is indispensable to SA’s economic productivity.
“The industry has recovered quickly and transitioned smoothly to near-normalised operational activity as lockdown restrictions have been eased and the economy reopens,” the statement reads.