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Cape Town – Minibus taxi finance provider and debt collector, Transaction Capital [JSE:TCP], has delivered 22% growth in its headline earning per share, according to its results for the first half of 2015.
According to group CEO David Hurwitz, the organic growth is sustainable over the medium term and comes against a backdrop of a challenging SA economy.
“While our asset-backed lending and risk services divisions perform better in a positive economic environment, they are also highly defensive businesses which are still able to thrive despite South Africa’s challenging macro- and socio-economic context,” he said.
“In addition to our strong growth in profit, it is also encouraging that the stricter credit-lending criteria and our specialist collection techniques continue to yield an improvement in all credit metrics. The non-performing loan ratio improved to 24.3%, with credit write-offs now below 5%.”
Transaction Capital shares are now valued at 31.1 cents and headline earnings have grown by 20% from R148m to R177m. The group’s interim dividend is up 67% to 10 cents per share.
Commenting on the group’s acquisitive growth strategy, Hurwitz said: “While the group is well positioned and suitably capitalised to affect significant acquisitive activity, the use of our capital for acquisitions will only be considered for optimal transactions”.
The acquisition search continues in earnest, but due to asset values being at historically elevated levels and the attractive risk-adjusted returns being generated organically from our established businesses, management will be particularly circumspect in its acquisitive endeavours.
“In the meantime Transaction Capital continues to reinvest significantly in organic capital deployment opportunities which should further enhance growth prospects,” he said.
