Transaction Capital raises dividend by double digits
The taxi financier has achieved annual compound growth in core headline earnings per share of 20% over the past five years
Taxi financier Transaction Capital has reported another year of double-digit dividend growth, saying on Tuesday that as minibus taxi transport remained a non-discretionary spend for most commuters the sector continued to carve out market share in a tough economic climate.
The group’s total dividend rose 22% to 61c a share, in the six months to end-September, saying on Tuesday it had achieved compound annual growth in core headline earnings per share of 20% over the past five years.
The taxi sector remained defensive and growing, the company said, with commuters continuing to choose taxi transport over rail or bus, due to competitive pricing, convenience and accessibility.
Core headline earnings per share rose 18% to 131.3c a share, with SA Taxi growing core headline earnings 38%.
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.
TCRS grew headline earnings 15% to R313m, with the company reporting a 20% increase in collection activities.
The company said on Tuesday the trading environment remained tough, with low wage growth and a volatile rand posing risks to trading.
Lower fuel prices since October 2018 may have alleviated some pressure on household spending and debt burdens, the company said, but the relief was short-lived. Higher fuel levies in April 2019 have contributed to current prices being only 6% below the record highs set in 2018.
During the year, average petrol and diesel prices rose 6% and 10% respectively, the company said, while taxi prices rose 4.2%.
“Despite strong demand for minibus taxi services, the industry has been mindful of the economic hardship faced by commuters and kept fare increases muted in 2019.”