Transaction Capital says SA Taxi will be fundamentally restructured in the current financial year.
The taxi financer said that the poor performance of SA Taxi heavily affected its unaudited interim results for the half-year ended 31 March.
However, the JSE-listed company said that it was confident that the restructuring of SA Taxi will give it “operational, financial and strategic flexibility to recover and grow.”
Transaction Capital said that its other operations, WeBuyCar and Nutun, continued to have robust balance sheets, with both organisations isolated from SA Taxi’s restructuring.
In terms of overall financials, headline earnings per share decreased by 355% to a loss per share of 183.3 cents.
The group’s management said that a more appropriate metric to measure performance was core earnings per share, which dropped 48% from 90 cents to 46.5 cents.
In the midst of headline and basic losses over the period, no interim dividend was declared.
In terms of SA Taxi’s finances, core earnings dropped by 77%.
Below is a detailed table of SA Taxi’s financial performance:
Plans for SA taxi
Transaction Capital’s management has decided to accelerate the restructuring of SA Taxi’s business model, with the environment unlikely to rebound in line with original expectations.
It said that the downward adjustment of loan originations to match the new market conditions is paramount in restructuring SA Taxi, which will have the following knock-on effects:
- Reducing the volume of repossessed vehicles to be refurbished and refinanced;
- Requiring alternative disposal channels for repossessed vehicles that are not to be refurbished, which will result in lower loan recovery rates on repossessed vehicles;
- Adjustment to provision model input assumptions in response to the lower loan recovery rates;
- Curtailment and sale of SA Taxi’s auto refurbishment and repair facilities;
- Resizing the cost base as future loan origination levels and refurbishment are materially less than the last three years; and
- Augmenting the management team.
“We believe it is prudent to acknowledge and decisively tackle the issues facing SA Taxi. In the context of continuing macroeconomic challenges and the headwinds affecting South Africa’s taxi Industry, the imperative in the current year is to restructure the business model of SA Taxi and take all required once-off restructuring provisions immediately,” Transaction Capital, CEO David Hurwitz, said.
“Although highly disappointing, these adjustments are necessary to set a solid base for SA Taxi to resume future growth.”
“While we understand that this has come at a cost to our half-year results and will weigh on the full-year outlook to September 2023, we are confident that the group’s response in rebasing this business will give it the operational, financial and strategic flexibility to recover and grow.”
Read: How much it costs to own and operate a taxi in South Africa
