Transaction Capital, the South African financial services group led by multimillionaire businessman Jonathan Jawno, has announced in its recent trading update that it anticipates a more-than-41-percent decrease in earnings for the first half of its 2023 fiscal year.
According to its recently published trading update, Transaction Capital’s core earnings per share, a profit measure that excludes non-operational items, is anticipated to decrease by a range of 41 percent to 46 percent for continuing operations.
The company has also noted that total headline earnings per share could fall by up to 375 percent during the period under review.
Transaction Capital shares are down nearly 70 percent this year
The recent trading update from Transaction Capital comes amid a sharp decline in the company’s share price, as it continues to push back its plans to divest from its refurbishment and repairs business, resulting in the accounting of discontinued operations.
Over the past week, shares of the South African financial services group have dropped by 47 percent, falling from R20.21 ($1.1) on Tuesday, March 14 to R10.65 ($0.575) at the time of writing.
This has caused the company’s year-to-date losses to amount to 68.5 percent, while its market capitalization has declined to below R8.1 billion ($440 million), leading to losses for shareholders including Jonathan Jawno, one of the wealthiest investors on the Johannesburg Stock Exchange.
What you should know
Transaction Capital is a leading financial services group that provides specialized asset-backed lending and niche risk services, operating in South Africa and Australia. Founded in 2003 by Jawno, Michael Mendelowitz, and Roberto Rossi, the trio holds an indirect beneficial stake of 109 million shares (14 percent) in the company via Pilatucom Holdings.
Transaction Capital has been facing challenges with a recent update leading to a decline in share prices, which revealed a profit fall of at least 20 percent for its preferred measure and pressure on margins at WeBuyCars.
Its management deal has come under scrutiny following the sale of shares by a trust linked to CEO David Hurwitz in December. While the company intends to acquire an additional 15 percent stake in WeBuyCars, it has decided not to issue shares at this time due to the share price decline.
