Huge changes for SA Taxi as CEO steps down
Transaction Capital CEO David Hurwitz will leave his role amidst a challenging time for the company with SA Taxi floundering.
Hurwitz will leave his position on 31 December 2023 but will still be available to the group for the rest of the 2024 calendar year (his notice period) to ensure a smooth transition.
Jonathan Jawno, a co-founder and executive director of the group, will take over the role of CEO on top of his role as chairman of SA Taxi.
In a trading statement for the year ending 30 September 2023, the group said that it has made progress in the restructuring of SA Taxi’s operations and balance sheet, which has created a more stable business.
Transaction Capital said that the restructuring of SA Taxi has included the following:
- The successful implementation of management changes that were communicated on 20 June 2023.
- An aggressive cost reduction and restructuring towards a more variable cost model is almost complete and will result in annualised savings of approximately R500 million per annum.
- Focus on higher quality credit risk has resulted in a lower absolute quantum of loans originated. Initial indicators are positive and show that this credit tightening is achieving improved collection ratios on recent loans originated.
- Collection strategies have been supplemented through the appointment of Nutun as an outsourced partner, which is yielding greater collection efficiency. Despite this, loan collection rates remain below pre-Covid levels on the historic portfolio.
- The operations have been simplified, including the downscaling and potential sale of SA Taxi’s auto refurbishment and repair facilities to support lower refurbishment volumes and lower loan origination volumes.
- As part of an aggressive focus to reduce the quantum of repossessed vehicles held in stock, SA Taxi continues to introduce new channels and strategies to dispose of repossessed vehicles, in addition to refurbishing repossessed vehicles into quality renewed taxis (“QRTs”) which are resold and refinanced into the minibus taxi industry. These include the selling and refinancing of repossessed vehicles as second-hand taxis, auction sales and salvage of vehicles through GoBid.
“However, this restructuring process and the related non-recurring costs incurred to get the business to a sustainable base will impact Transaction Capital’s full-year core EPS, HEPS and basic EPS,” the group said.
In addition, WeBuyCars’ FY2023 earnings are expected to be roughly 20% down on the prior year.
Although Nutun, FKA Transaction Capital Risk Services, is expected to grow compared to the prior year, the group warned that this will be at a lower rate than previously communicated.
“Pressure on disposable income fuelled by increased interest rates, inflation and elevated levels of
unemployment has impacted the consumer’s propensity to repay outstanding debt,” the group said in regard to Nutun.
However, the group said that Gomo is expected to scale up significantly over the next few, allowing the company to originate a larger number of vehicle loans. This was made possible through an agreement with Standard Bank.
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