Christopher Seabrooke


Nonetheless, the group's divisions SA, Taxi and Transaction Capital Risk Services (TCRS), are highly defensive and resilient businesses, strategically well positioned in their chosen markets. They have adjusted to the persistently difficult economic conditions by refining and diversifying their scalable fintech platforms and achieving operational efficiency.


Despite positive political developments in South Africa, macro- and socio-economic conditions have deteriorated, with the country entering a technical recession in the first half of 2018.

Details on the operating environment for SA Taxi and TCRS are included in their respective market context sections.

Consumer and business confidence are low, with high household debt-to-income levels (at 71.3%), a volatile Rand, fuel prices at record highs, a 1% increase in value-added tax (VAT) to 15%, and stagnating credit extension. Although the inflation rate remained within the South African Reserve Bank's target range of 3% to 6% (increasing to 5.1% in July 2018), the rising cost of household essentials is exceeding wage growth, placing further strain on consumers and limiting the ability of highly indebted consumers to recover. As a result of these factors, consumers remain vulnerable and the consumer outlook is subdued.

In Australia, credit-active consumers remain highly leveraged with household debt-to-income levels exceeding 190% and monthly debt servicing costs (excluding home loan repayments) at 51%. However, low levels of unemployment (5.3% at August 2018), strong levels of credit extension, a stable and evenly balanced regulatory environment, and higher success in contacting and transacting with consumers, enhances debt recovery. This provides a favourable trading environment in the Australian debt collections market.


For detailed disclosure on the financial performance of the group and its divisions, see the Financial director's report.

Since listing on the JSE Limited in June 2012, the group has consistently achieved compound annual growth in earnings per share of 20%, with dividends per share growing even faster at 33%, supported by high cash conversion rates. In the 2018 financial year, the group extended its track record of high-quality organic earnings growth, with core headline earnings up 18% to R682 million.

Despite concerns about South Africa's sovereign rating, Transaction Capital has maintained strong ratings performance across all its rated note programmes.

The group's executive and divisional management teams continue to demonstrate their ability to deliver strategic initiatives that deepen vertical integration in their core market segments and grow into complementary segments, to further diversify earnings. This has been achieved by deep participation in their respective industries, which delivers commercial returns while creating broader stakeholder value.

For details on the impact of the ownership transaction on Transaction Capital, see the Q&A with David Hurwitz, CEO.

Details on benefits in respect of SA Taxi and the broader minibus taxi industry can be found in the Q&A with Terry Kier, SA Taxi CEO.

A significant milestone for the group, which demonstrates its focus on shared value, is the historic transformational partnership transaction between SA Taxi and the South African National Taxi Council (SANTACO – a national body that represents the interests of its members who are individual minibus taxi operators). Given their long-standing partnership and the excellent progress made by SA Taxi in providing commercial benefits to taxi operators, SANTACO's acquisition of a 25% interest in SA Taxi represents a tangible example of formalising broad-based participation in the value chain for industry participants.

The partnership stands to benefit SANTACO and SA Taxi, but importantly, benefits will also flow to all levels of the industry. A portion of dividend income will be allocated to support relevant infrastructure and other developmental projects designed to create sustainable value for the minibus taxi associations, operators, commuters and other stakeholders.


Following the interim dividend of 21 cents per share (2017 interim: 15 cents per share), and in line with the stated dividend policy of 2 to 2.5 times, the board of directors (the board) declared a final gross cash dividend of 29 cents per share (2017: 25 cents per share) for the six months ended 30 September 2018. The dividend was declared out of income reserves.

With compound annual growth of 33% for dividends per share since listing in 2012, the group continues to demonstrate its ability to drive sustainable growth.


On 8 March 2018, Everglen Capital Proprietary Limited (Everglen) sold approximately 72 million shares in an accelerated bookbuild that was oversubscribed. While this has reduced Everglen's shareholding from 41% to 29%, it remains Transaction Capital's largest shareholder.

Details on the Everglen bookbuild can be found in the SENS announcements on 7 and 8 March 2018, available at

Everglen's partial divestment represents the next phase of Transaction Capital's evolution beyond its foundation phase. It has significantly increased the group's free float to 68% (from 56% in the prior year), enhancing liquidity and daily trade. This has expanded the base of local and specifically international investors, with the latter increasing to 16% at 30 September 2018 (from 6% in the prior year) and institutional shareholding increasing from 51% to 62%, which reflects the attractiveness of Transaction Capital's investment proposition to these investors.

Details on the off-market sale and acquisition can be found in the SENS announcement on 23 November 2018, available at

Subsequently, shareholders were notified in November 2018 of the off-market sale and acquisition of ordinary shares by the family of Jonathan Jawno, one of the founders of Transaction Capital. The family's look-through interest of shares held by Everglen has been sold to the Kimberley Investment Trust (KIT), of which Jonathan Jawno is a trustee and contingent discretionary beneficiary. As a result, the shareholders of Everglen now comprise the family trusts of Michael Mendelowitz and Roberto Rossi in equal proportions, which owns 19.45% of the issued ordinary share capital of Transaction Capital, with KIT holding 9.72% of the issued ordinary share capital of Transaction Capital directly. Combined, the shareholdings of Everglen and KIT remain at 29%, representing no change in the absolute beneficial ownership of the group post the off-market sale and acquisition.


The board is pleased to welcome Diane Radley, who was appointed as an independent non-executive director with effect from 15 July 2018. Ms Radley now serves as chairperson of the audit, risk and compliance (ARC) committee and as a member of the asset and liability committee (ALCO).

The board is also pleased to welcome Buhle Hanise, who was appointed as an independent non-executive director with effect from 1 January 2019. Ms Hanise serves as a member of the ARC committee and ALCO.

Olufunke Ighodaro resigned as an independent non-executive director and chairman of the ARC committee on 30 November 2018 due to her other executive responsibilities. The board thanks Ms Ighodaro for her valued contribution to the group and wishes her well with her future endeavours.

Transaction Capital conforms to the principles contained in the King IV Report on Corporate Governance™ for South Africa, 2016 and continues to focus on entrenching ethical and effective leadership in every area of the group. The annual performance evaluation of the board, conducted in November 2018, reaffirmed the effectiveness of the board in its direction of the group.


Transaction Capital's investment into, and precise implementation of, various strategic initiatives continues to position the group for strong performance and high-quality earnings.

Given the socio-economic conditions facing South Africa and the urgent need to address structural inequalities, the group is demonstrating that a shared-value approach to business can balance commercial returns and social benefits. This further enhances the sustainability of the group, its stakeholders and the industries in which it operates.

I extend my appreciation to the group's leadership for strategic clarity and execution, and for navigating the complex environment without losing sight of purpose. I also acknowledge the dedication and commitment of its employees. My thanks also extend to the board for ongoing strategic counsel and guidance, and the group's bankers, funders and advisers for their continued support.