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Financier Transaction Capital has advised shareholders to expect narrowing losses for the half-year to the end of March after the successful unbundling of WeBuyCars on the main board of the JSE.

However, its taxi business remains in an uphill battle to restructure, with Mobalyz — the newly established mobility platform resulting from Transaction Capital’s restructuring of its SA Taxi and Gomo businesses — reporting a one-off net loss of R966m.

The group expects to report a narrowing of 32%-22% in its headline loss per share to 153.8c-175.8c.

The investment holding company said the successful unbundling of WeBuyCars in April had allowed it to return R5.2bn to shareholders through the distribution of 256.3-million shares in the new listing.

Transaction Capital raised R1bn via the placement, which allowed it to materially pay down its debt and move to a net cash position at a holding company level, it said in a statement on Tuesday.

WeBuyCars’ share price was up 3.35% to R22.81 on Tuesday, while Transaction Capital closed 2.05% lower at R2.87. WeBuyCars initially listed at R18.75 on April 11, so has gained 21.7% in just over a month.

Conversely, Mobalyz, which houses the group’s credit, insurance and funding intellectual property, data sets and technologies, had a core loss from continuing operations in the interim period.

This was “driven primarily by the reduction of the absconsion, violation and credit shortfall cover (AVCS) in SA Taxi’s insurance business,” which has resulted in the nearly R1bn loss, the company said. “SA Taxi, together with the funders, elected to materially reduce this cover, resulting in an accelerated impairment charge,” it said.

The firm said despite the adverse affect that the accelerated impairment charge has had on the period’s earnings, it was necessary to create a sustainable insurance business, “which has now been achieved”.

Transaction Capital last year announced the overhaul of the business.

Minibus taxis are an integral part of SA’s economy and the group has maintained that the decision to aggressively restructure SA Taxi and take all required one-off restructuring provisions immediately, was difficult but necessary to ensure the long-term sustainability of the business.

The comprehensive restructuring process involves operational shifts, strategic executive realignment and balance sheet restructuring. 

However, in its update, it said that because SA Taxi had not yet achieved a balance sheet restructure, the business was subsequently being managed with a priority on preserving and generating cash as opposed to optimising profit.

SA Taxi is owed more than R17bn by taxi owners and has R5.3bn in debt that it is unable to service.

In March, Transaction Capital sold the Australian division of its debt collector and call centre operator, Nutun, enabling the division to focus on what the group describes as the “capital light” parts of its business. 

The group sold Nutun Australian Holdings to a subsidiary of private equity investor Allegro Funds for A$58.3m (about R710m). Nutun will still provide its call centre and customer relations support to the Australian business from SA, acting as a service provider.

The firm on Tuesday said that as a consequence of corporate activities in the half-year, “Transaction Capital has achieved its objective of becoming an unencumbered investment holding company with two assets: 100% of Nutun and 75% of Mobalyz with net cash of about R120m”.

Transaction Capital’s half-year results are expected on May 21.

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