Motus Holdings Limited (MTH) Earnings Call Transcript & Summary

Thanks to each one of you for making the time to be here. It's nice to have some nonexecutives here. Actually, we've got Saleh here. It didn't seem -- Ashley said he will be here. Our Chairman couldn't be here. He is in Cape Town with Sanlam. So nice to see some of the ExCo members here as well. And to each one of you, I know you're waiting for the budget speech. I think we'll be a bit more exciting than the budget speech because the budget speech, he can't raise more taxes, but he doesn't know cutting spending. So he's caught up between those 2 worlds. On the one side, it's the money and the other side that you've got policies that ANC doesn't want to change either. So those guys got a real mixed bag to deal with this afternoon. Once again, thank you. And nice to see you again. We try and avoid the budget day, but we clash with logistics, then we clash with budget, we clash with somebody. So hopefully, the timing is better than what it was. So we're not doing it this afternoon. Normally, we get someone here from the investment analyst society to introduce us, but they couldn't make it today. So that's why we are on our own, but as long as you've come, that's important. I'll go through the results. There's an agenda there. It looks busy, but we'll try and get to the salient features as we go along. I'm going to say a few things, which you've read a lot about, you've watched a lot of news in Sky News and BBC and CNN. But just to give you some context, obviously, we all know that the global and South African political and economic situations remain unstable. In fact, when I wrote this, corona had just started. But since Monday, I'm more worried because, obviously, you see what's happened in the stock markets in Asia, then you saw what happened to us and now it will move across. And then when you see 7 people passing away in Italy as well, you wonder now where did that come from, especially in Milan. So I don't think so anyone knows the impact of the coronavirus. But we can all guess about it. I can tell you the turnover may be affected by ex-rents like you saw happen at Checkers, they're talking about ZAR 100 million turnover, but who knows. No one knows the fact about corona, what impact it's going to have. So yes, the coronavirus has affected the world economies and will affect it in the next couple of months. We've got a weakening global economy, and remember, in the weakened global economy, emerging markets like us will take the first knock and that's what happened. And the global economies come after that. What's happening in South Africa, we're still very much a South African business, with 67% of our turnover from here and 93% of our profits coming from this region. This is still very much home and this is where we are. I think our Vice Chairman has just walked in, Ashley, nice to see you. I would just say in the introduction, we were missing you, but now it's nice to see you. Obviously, the economic outlook remains weak and challenging, and hopefully, there's some positive news this afternoon. But together with it, the consumer and the investor conference is depressed. We know that. We read about what's happening at the banks as well. Low economic growth rates projected for the immediate and medium term because there's no new jobs being created. The job -- unemployment rate at 29.5% is not moving, it's not budging, it was 25%, 3 years ago, but now we're sitting at 29.5%. So you can see that's not budging. The fiscal position start changing unemployment. I mean if we look -- just read what's happening this year, from January already, we had close to 10,000 jobs that are going to not be there. And you feel sorry for the people that to get jobs is so difficult and people in jobs are getting out of jobs. So it's very difficult. I don't want to talk about the political challenges. You all know more than I do, uncertain policies, the SOE problems, we can't fix up SAA and obviously, load shedding. That when you go home tonight, you're not sure whether you're going to have lights or whether you're going to charge your car. So that's the difficulty. And the downgrade, I mean we don't know what's going to happen there either. So hopefully, we paddle our way out of it this afternoon, but it's not going to disappear. It comes back 6 months from now, so that's the uncertainty. And then in a competitive market, the market is down by 2%. We've done it 6 months because that's our reporting period. So it's slightly down by 2%, but you'll see our numbers are a bit better than that. Unfortunately, the other areas that we operate in haven't gone unscathed. If you look at United Kingdom, political and economic instability, weak business. Obviously, they have a Brexit problem, which, yes, there was uncertainty up to end of December. They've decided now December 2020 is the date. But when you hear the French about what's going to happen and how they're going to be playing hardball, then you wonder whether that's now concrete date, the 2020 December date. That uncertainty is still there. The new vehicle is down 1%, it's a bit misleading. The passenger vehicle -- the passenger market is more down. The commercials have gone up by 1%, but cars have gone up by 2%. So that's how you're seeing a minus 1%, but it's -- actually on the passenger side, it's worse than the trucks. And I think in the U.K., they don't move much of their goods on trains. They move them on trucks. That's why the truck market will continue for a while. And it will still be a bit more positive than the passenger. Passenger is where the consumer gets more involved. But on the trucking side, it's mostly fleet customers. And the vehicle market remains unstable and is competitive. That's the nature of the U.K. Australia, unfortunately, that didn't go unscathed either, although they were at the southern tip of Africa on the other side -- on the Australian side in the Southern hemisphere, but they didn't get -- they were affected by the trade wars between USA and China. The bulk of the exports from Australia go to China. So if you look at the mining houses, their exports all end up in China and with China buying less, it did impact the economy. So it's -- and they're exporting raw materials, but they import everything else, and that's where they get the [ tension ] from. And then obviously, the environmental factors haven't been kind to them with fires and floods. So -- and then we had a bit of a hailstorm as well in Sydney and that impacts some of the dealerships because, with all the vehicles parked outside, they do have a problem. We were okay it didn't affect us in the areas we're in, but Sydney was impacted by the hail as well. And then they're going through some of this pain of legislation about 4 years after us. So they're going through some legislation on lending conditions, the consumer and the rules that are coming through with lending, so that's hurting them now. We've been through it about 5 years ago and they're battling through it now. The vehicle market there is just like the U.K., it's fragmented. But I think the important thing to understand that Australia has got 25 million people. But they sell 1.2 million vehicles. So let me just put that into context. South Africa has got 58 million people, we sell 530,000 vehicles. So Australia for half our population sells double the number of vehicles. So when they get into trouble, it's not a trouble for a long time because, A, you've got an affluent community. B, you've got the car market to play with. When 1.3 million becomes 1.2 million, they all get worried, but 1.2 million is plenty of cars, plenty of vehicles. So as much as I'm saying it's 7% down, but they have a quick ability to get out the starting blocks because of the wealth and the economy and the foreign investment that takes place in that country. If we're down by 7 and 10, we could be there for 2 years. We don't get out in a hurry, but those economies get out quickly. Turning to our results. You can decide whether these were good, bad or where did they sit. We're very comfortable that in the current economic climate, I think the Motus management team have done a great job to come up with these kind of results. Because remember, we operate in the economy you read about. So if you look at our turnover, we're up 7%. Operating profit has been flat, earnings per share gone up 10%. Don't forget, the earnings per share had a knock last year; in the H1 in last year, we had a knock of ZAR 160 million, which was the -- after unbundling, we had to do the Ukhamba entry, and we had to do an entry for our share appreciation rights that added up to ZAR 160 million. So that makes us look better this year, but that was in that number last year. Because remember, earnings per share, all the debits and credits get taken in. In the HEPS, you take out some and you don't take out some. But in EPS, everything comes in. And your HEPS looking healthy at 9% from ZAR 0.474 to ZAR 0.517. We've managed to keep the dividend flat. And the guideline that we use is 45% of HEPS. So all your accountants are going to do the exercise and take the HEPS down 45%, we're slightly over. In the interest of our shareholders, we round it up and we didn't round down. So I know you're going to do the computation. It's -- by the way, it's ZAR 2.33, if you do the number, but we've rounded up. So relax, we thought about it when we were doing the number. Because I know there's quite a few accountants, and it's nice to see that my colleagues from Deloitte and all the other 3 firms are all well represented here. So I know you're going to do the numbers. The cash generated, I think it's a big plus for us. But generally, in the first half, we battle with cash because of our working capital. This year, when you're comparing December to December, the working capital was flat, but that helped us generate some nice cash of ZAR 1.1 billion. And it's always -- I mean even the accountants will tell you when you look at your profit figure and you look at your cash and if you can convert your profit into cash, we're doing the right thing. So I think that's pointing us in the right direction that when your operating profit starts looking closer to your cash flow, then we're not making accounting entries, we're making money for real because we're converting it into cash. The ROIC, yes, we've gone a bit down, but I think to be fair with our ROIC that generally, we -- in the first 6 months, it's always tight and then we do much better in the full year, but we had some big investments, and we'll talk about it now in the car rental business. The debt to equity has gone slightly out. We've invested more, like I said, in the car rental, so that moved your debt to equity. But again, we're very comfortable that this will come down by June. Because generally, what happens in the motor business is that your first half is heavy in terms of working capital and car rental fleet buildup. In the second half, you sell more cars, your car rental fleet comes down. And then obviously, some of the variable margins that the OEMs promise you turn into cash. So your cash position in your second half generally is better than your first half, and that's why debt ratio looks a bit high, but we'll bring it down to where we need to bring it to. And then the EBITDA, it's not something we focused on in the past. But recently, we've been looking at it quite closely. The covenants start from 3 onwards. So we are within the banking covenants. We're in the comfortable space. And the 1.8 is not where we want it to be, we're normally at 1.5. But again, like I said, we should be able to get there in the second half of the year. Okay. So how did we achieve this? And there may be a bit of duplication in what I'm going to say and Ockert is going to talk about in the financials, but these things just span out that you talk about them in this section and then you talk about them in the division, so there's a bit of duplication. We apologize for that. So our revenue has gone up by 7%. And where did that come from? So we're fortunate that our volumes have gone up by 2%, both in new and preowned. Now you saw the markets were down, but we've managed to move our units up. What suited our business is the 3 importers that we have, we have Hyundai, Kia and Renault, and we've got Mitsubishi, but they don't play in the small SUVs and the small hatches. The brands like Hyundai, Kia and Renault focus a lot on small SUVs and medium SUVs and small hatches because the South African market has moved towards small SUVs, medium SUVs and hatches, and that's a space we play in. Our 3 importers play well in that space. So you can see that when customers come out of premium brands, where they're going to. They're coming into these brands. The other brands have it as well, which play well will be Toyota and VW, but we have those brands as well. But the 3 importer brands where we control quite a bit of the value chain, and we control about 70% of their sales, that helps our market. So it plays into our game, which is down buying comes into our brands, and we do well. So you can see we've done well under the circumstances moving volume. Yes, they come at a slightly less margin, but they keep the workshops busy and they keep the parts business growing as well because we are growing the car park. What is interesting in this half was that the rendering of services have improved as well. So you can see people are coming back and using the workshops in our parts businesses to do the repair. So the rendering of services have gone up. And yes, in the 7%, there is some price increase as well, so we benefited from that. And then we did a bolt-on acquisition in Ford & DAF in the U.K. Because what happens in the U.K., you control an area and that OEM gives you an area. And sometimes, you have a competitor in your area in DAF, where the OEM could come to you and say, there's an opportunity, don't you guys want to come in. We'll look at the area, and that's why we call it bolt-on. It's not something we purposely go look for. But if it's protecting an area like DAF, we had to take 4 dealerships to protect an area. It was sad the way it was sold. It's not that we went to look for it. What happened there is that a husband and wife [ were ] working in their business, and their son committed suicide in the business. So they said, we're out of here, they walked out of the business. And the OEM came to us and said, please take these businesses and help, and we took it over, and it's working well for us. The 4 dealerships, we got it from the OEM. They like what we do, they got references from us in South Africa. And they said, can you please take our dealerships, and we got it from the OEM, no bidding process with banks and things like that, we got it on our own. So that was a positive that when you don't go into that kind of process, the pricing is very competitive. Then if you look at the operating profits, they're stable. You saw that number, but the gross margin is under pressure. And remember, you make less gross margin on entry level than you make on premium vehicles. So that hurts a bit. On the operating expenses, we -- excluding our depreciation, because I'll talk a bit about IFRS and all of those that you've been listening to results presentations, you know IFRS is causing a bit of a change this year, it will be normal from next year onwards. So the operating expense decreased by 6%. There is good cost containment. And obviously, there is a reduction in the operating lease charge. So what happens? Quickly, you don't have the rental charge anymore. We'll have your charge in the depreciation line, and then you have it in your interest line. So operating margin has benefited from IFRS, but your PBT hasn't because the 2 debits then come in your depreciation and your interest bucket. So if we exclude the IFRS adjustment, the expenses decreased by 1%. So we're quite pleased with that because if you take inflation at 4s and 5s, you would have thought that we could have gone up, but the management team at Motus is very focused on cost containment. So they've looked at that number, and you can see that was the benefit that we've had. Now I know we can't cut costs all the time, but it's a big focus for the management team to review this number all the time. And then over the past 3 years, by the way, we've -- our costs have been quite well managed. Very busy slide. I'm not going to go through this. You've got the booklet. It's just an overview of our business. So you know that, but it's a nice reminder of where we are and where the money comes from and what we actually do. This -- these charts haven't changed much. The revenue hasn't changed at all. So you're only seeing one for the 2 years and -- for the 2 periods, and the operating profit minor adjustments. If you can look at retail and rental 40% to 42% -- 42% to 40% and look at the other way around, they're all very immaterial. Let's talk about our divisions. The 4 divisions. The first division, we have the import and distribution business. You can see there the revenue went up by 4%, helped a bit by selling prices, but helped by the models I talked about. And the increase in the new car -- in the entry-levels as well. And you'll see that. And just so that you understand, for example, in Renault, you've got the Kwid, that's an entry-level vehicle. You've got the Captur. You've got the Sandero. You can see they play in that space, entry and small SUVs. If you look at the Hyundai and the Kia range, they're playing well. If you look at, for example, the Kia, there's -- new Seltos has come up, beautiful vehicle, small SUV. You look at Hyundai, they've got the i10, i20, then they just brought up the Venue, beautiful vehicle, small, compact SUV. And then obviously, if you want the medium one, then you go to the Creta, and then you go to the Tucson and then you go to the Santa Fe. So the range is beautiful. And lately, I'm sure you see the advert of the driver, where the guy even goes to his neighbor by car. So you saw that advert, watch that advert, it's a beautiful compact vehicle, and we believe that's going to go places. It's a 7-seater and real value for money as well. So if you look at our operating profit, the volumes are plus, we improved our operating profit by 11%. The favorable exchange rates have helped, and I'll talk a bit about that in a sec, and the cost containment. So the 3 importers that are sitting here, Niall Lynch is here. You've got Gary Scott and Jaco Oosthuizen. They're very aware that we watch them like hawks. They've got to watch this number. They try their tricks with us. They do the advertising by car, and they do this by car, but being accountants, we've been through those tricks. We watch them quite tightly on their cost base. So they try, but they don't -- Ockert and I are quite smart for them, so we catch them [ off now and then ]. And you can see what happened to the market share. There's nice market share growth in a declining economy. That's the important thing. That because we're playing in the right space, we managed to hit the right patterns in getting a 15.2% market share from last year's 14.6%. Let's talk about the forward cover. You can see the forward up we've got is ZAR 14,71: US dollar and ZAR 16,43: Euro, doesn't look sexy. [ It ] forward points to your current spot rate. So if you're euro today, ZAR 16 for 20 or 30, you could add ZAR 0.09 to ZAR 0.10 a month and add that for 6 months. That's why we think we're very comfortable with these rates that we had because we carry forward cover. In this particular example, you can see we've got to end of September. So the rates we've got are very good for where the market is. And then if you look at the dollar at ZAR 14,71, the current rate is just close to the ZAR 15 mark, [ it ] forward points, for the dollar you add about ZAR 0.06 a month. That's another ZAR 0.36 for you going forward. So that's why we're comfortable with the rates that we've got, how far we are going, things like that. And with Renault, we've got till July and Mitsubishi with all the committed orders. That means whatever we've committed, whatever is going to be delivered we've got that fully covered. So you can see we're in a nice space when it comes to forward cover as well. If we look at our retail and rental business, this business under the circumstances has done well. Yes, they strained, we'd like to see the operating income at least flat, but we were 2% down. Turnover has gone up nicely, but we've talked about the revenue. I've talked about those -- the preowned numbers are looking quite good. We did quite well on preowned this year. We haven't achieved the 1 to 1. That's a target that we like in our business. If we can get 1 new versus 1 trading -- 1 used or preowned, that will be ideal. So our target is still there. And if we can achieve that, we've achieved the best of both worlds. Because on the new side, you've got the restrictions of the OEMs, the margins. On the used side, if you've got good quality used cars, there's always a market for them in our economy. Because remember, some of the entry-levels, the new ones don't work for the families and second cars in the houses, the used -- the preowned works well. But again, we're very fortunate that we have Europcar and the Tempest producing us 10,000 to 12,000 preowned vehicles that we put into Auto Pedigree. And we're one of the groups that don't give our cars away. We bring those car and vehicles back into Auto Pedigree. And Auto Pedigree will sell between 10,000 and 11,000 vehicles to the market. They're known for it, 1 year old, small cars, clean cars. In fact, they spent about 2,500 -- a minimum of ZAR 2,500 rent per car to clean the car up and put it into shape so it gets into a showroom. So that's why we're quite bullish about the used car market. We believe that will give us some opportunity to grow. If you look at the operating profit, obviously, we're under a bit of pressure there because, like I said, the premium vehicles have slowed down. The entry levels give you a lower margin. So we're hurt a bit there. We hurt a bit in Australia, predominantly in 2 areas, we -- in Sydney and Traralgon. Traralgon is about 2 hours' drive from Melbourne. Sydney, the problem is Ford. We are heavy on Ford, and Ford hasn't got new product lineup. They've got the Mustang, they've got the Ford Ranger, but they don't have much else. And that's why we're looking at that footprint as well. But not the biggest in our business, but still we're going to work on Sydney and get that sorted out. And the U.K., we had a bit of an improvement. The DAF business is doing well. The passenger business was okay. The Mercedes didn't do so -- our trucking business didn't do so well in H1 2019, but we're getting a better result now. We've got a new leader in play, and they're doing some nice things there. So we -- that performance will turn around. And in South Africa, obviously, the lower margins I talked about, the premium vehicles declining -- car rental took a bit of a knock, not from managing the excellent cost, for example, they did well with that, the utilization has gone up, but it was in the cost of sales. Car prices have gone up more than what we could pass on to the customer. So the margins were eaten a bit in that. But there are plans to try and recover that as well. And then what did we offset by, I talked about cost containment and the new model launches. So all in all, I think under the circumstances, this -- one of our biggest businesses has come up quite nicely. That's the car rental. The U.K. revenue, you can see -- on the U.K. side, [ Trevor, we did -- shop that picture, you can -- there's a lot -- looks -- blue sky ] that you see there well that's not far from Old Trafford, but you can see there's normally lot of cloud, they window shopped that one. And like I said, the U.K., under the current circumstances, trucking is doing fine. On the passenger side, we'll go through a bit of pain, but that will turn around once Brexit is sorted out. The other problem is in the U.K., remember, we got big market share with DAF and with Merc. But on the passenger side, we're still small. So we don't benefit from a broad range of brands. So we've got a limitation in our brands. Australia, we've talked about, the revenue is slightly down, and we need to do some work there to get that business up to speed. What's interesting that you've got a Vauxhall picture there is that Vauxhall in the U.K. has been brought up by Peugeot. So what's happening there is that Vauxhall is going to now use a lot of the platforms that Peugeot is using for cars. So they're going to benefit from R&D, they're going to benefit from manufacturing and platform costs. So that's a big plus for us. Ockert and I actually met the CEO, and I said, where is your future. And when he discussed his future, the product lineup and where they're going to give us a lot of comfort, we were worried that if you got an American brand sitting in the U.K., it couldn't last long. But we've got very comfortable that it's bought by Peugeot and Peugeot's got a lot of plans to grow this brand as well. They're not killing the brand, but they'll shape R&D and production costs. The motor-related financial businesses, always a nice business to be in. It's asset-light, so it doesn't hold your capital, very cash generative. And it knits this family together. Because if you think about it, we import a car and then we're retailing it. But who's the group that holds the whole thing together is financial services. They put their arms around the whole family because they work in the importers, they look after the customers in retail, and they make sure that whatever products that they develop will cut across the structure. So that's the nice part of having a financial services business, but you couldn't have this business if you didn't have a big importer business. So they feed off each other. And that's why you'll see in our results we don't give you the ROEs by division, very difficult to do that because our business cross-pollinate quite a bit. So that's why it will be unfair. If we gave you that number, it wouldn't reflect the true position. But the operating profit is the true operating profit position of where the financial services are. So if you look at the revenue, the revenue is quite flat. Operating profit is quite flat. Clearly, you could have helped the 1% and created some revenue there. I mean it's a bit difficult to display some -- explain a minus 1%. But again, what happened there is that the importer businesses did fewer vehicles with other car rental companies in the first 4 months of the year. They picked up in the mid of October, November and December, but the financial services business was missing that money. The banks are looking at their provisions. So our JVs with the banks have suffered from higher provisions. So many, I thought this would work in our favor, but it hasn't worked. So in your days, it worked much better, but nowadays, it's hurting us a bit. But we're missing some of that [ money. Manny, de Canha ], by the way, for all of you that don't know him, he started the importer business in our business, and he got the JVs going as well. So we're benefiting, but benefit is a bit less this year. And then obviously, you've got the profitability that's enhanced by penetration of service plans. What happened now we put service plans into entry-level because what the customer wants. For example, if you buy a Kwid, you buy a 1-year service plan. No, 1-year insurance, 2-year service plan and a 5-year warranty. So when the customer drives out, drives with a peace of mind, that I've got my insurance, I've got my service plan and I've got a warranty. And remember, these are first-time buyers, they don't come from the affluent centers and the centers and the Rosebanks of the world. They come from previously disadvantaged areas. So what happens is that they walk out knowing I've got peace of mind. I can drive this entry-level vehicle, and I'm okay. If you look at the entry levels in Kia and Hyundai, they're doing the same thing. So the customer is walking out of the floor with peace of mind. And remember, we can price these better than anyone else because Kerry negotiates this very hard with the OEMs. So the labor wage she pays as minimum as she can. If the person walks into the floor, obviously, they pay more, the part she negotiates hard. That's how she gets the service plan in as well. So everyone will tell you, the consumer is better off without a service plan or the maintenance plan, be careful of that perception. Because what does the consumer want? The consumer wants peace of mind. That when something happens to the car and there's a service plan, it's taken care of. Someone's looking after that. If you take the maintenance plan, peace of mind. And then over and above that, you've got the warranty plan. So something happens to Motus, OEM will stand behind your warranty plan. So please be careful how you guys are reading articles about the right to repair and things like that. That the service plans, the maintenance plans and the warranty plans have a place. They buy peace of mind. And above all, the most important thing, the banks rely on it for the residual values. Don't forget that. Because they know the quality of car they're going to get back in 2 to 3 or 4 years' time, depending on when that person sells that car. But because it's under warranty, they know it's serviced with proper parts and there's a maintenance plan, they take comfort in that. So I know you all read a lot about us -- because you've got the right to hear as well, Roy is sitting in front of me, but it's something that you guys must be aware of. That as much as everyone is talking about a peace of mind for the customer, we give that peace of mind through these plans, and that's what we're doing. And don't underestimate the value the banks place on the RVs of these vehicles. Hopefully, Kerry, I did a selling speech for you as well. So -- and then in this business, obviously, we continue with the innovation because this is one of those businesses when you get off the treadmill, you're going to stop. You don't die of a heart attack, you just stop making money. So this is a business where you continually develop new products and services. So when the old one falls off, a new one comes into play. So that's what they do. And what Kerry has done with her team, they've actually created an innovation hub with a team of people. They invite speakers. They've been to Silicon Valley, they have been to Berlin, they've been to Cape Town, and they're seeing what the industry is doing, and they're starting to develop new products and services in this industry. So sometimes you wonder that you're not showing us profitability. Remember, some products fall off but a new one came in to hold. So this is one of those businesses where you just continue running on a treadmill to stand still because of the change that's taking place all the time. Like I said, there's synergies between the vehicle importer and the retailer and that's what financial services do. Again, Kerry is very well aware of the disciplines that we have in the business for costs. So she manages that quite well. And we want to grow the fleet management business, a bit difficult in these times because there isn't much growth, but we've got a department that does that. And then we work with financial institutions to sell product to them that they can add to their customer base. So it's taking a bit longer than we [ anticipated ]. But once we get there, it's a big customer base we'll be talking to, because financial institution, whether it be a bank, whether it's an insurance house, they got big customer base that need our products. The aftermarket parts business. Again, they grew their turnover, but profits have been flat. And the reason for the sales are that we've got a wider brand representation because the customers are moving from premium products to the middle end and the middle customers are moving to the bottom end. So obviously, we're getting -- we're working harder to hold the sales, but it's hurting the profitability. And that's why we got to effect profitability there. The other thing is that being conservative accountants, all the costs we've incurred in Shanghai to set up the distribution center, all those costs have been expensed. We don't carry anything in our balance sheet. So we expense as we go along with. I know the auditors -- I always tell the auditors that I can't be sued for being conservative. So that's why we prepare our books in that way that we are conservative. If we incur the expense, we write it off. So there's opportunity for this business in the Shanghai business, and I'll talk about that later in the slides. Ockert, I think I've covered the business. You go into the financials.

Okay. Always difficult following your boss if he was the previous CFO. He really explained all the numbers. So if you start with the income statement, you can see on the slide there. First up is really the revenue line, which we just need to pause on a little bit. And there you would have heard, as Osman said, we've been able to adapt quite nicely to the environments we're in. It's definitely very tough out there. But the fact that we've been able to sell a lot more of those entry-level vehicles as well as the used, you would assume that we've still got volume growth and over and above that, we've also had the additional impact of a 9% growth in our service and also on the used car line. So that certainly gave us a bit of impetus on the revenue line. Unfortunately, if you move into that space, there is also a little bit of margin pressure, and that margin pressure has certainly been felt, as you would have seen an -- even a better result at our operating profit level. That margin pressure came in was offset by nice cost reductions, and we always challenge our teams, as Osman just reminded you there, to try and save on costs as far as possible. Certainly, anyone who's visited our offices, and recently, I've seen quite a lot of international banks, quite surprised that we're out there in the east in really quite moderate offices. But at the same time, that's the way we run it. And we run it lean and mean. And I think we're not going to change and deviate from that in the future. There's a lot of noise in the system around IFRS and the like. And I think just, in a nutshell, I think the whole Motus business if you take it all the way down to PBT, the total net impact on our IFRS 16 implementation is only a ZAR 19 million negative. So you will see that even though there's a lot of noise maybe inside some of the numbers, I think one also needs to be mindful that if you see through it, all the credits and the debits really offset. And if you do your analysis, just keep that in mind as well. So on the PBT line, it's a ZAR 19 million negative. The only other number there that's quite meaningful is maybe that financial interest line, the finance costs that went up quite a bit. Once again, there's some IFRS noise in there. But even if you strip that out, the finance cost did go up, mainly as a result of the prior year being a bit lower than what we really had a problem in this year. So just to remind anyone who did not follow us for that long, in the prior year, we started the year with very low volume, very low inventory at the importers. And during the 6 months, going up to or leading up to that H1 in 2019, which was December 2018, they started increasing their revenue again -- their inventory again. So during that time, the finance costs were actually quite low. And this year, the increase is actually not that high, if you take that into account. If you look at the lines going down on the income tax expense, you'll see that it's nicely controlled. We do get a little bit of a benefit there by having some of our operations in the U.K., but our income tax expense is exactly at 28%, slightly offset again, of course, with the business in Australia, which is sitting at 30%. And then attributable to noncontrolling interest didn't really move that much during the year. If you look at our financial position at the end of December, really a few lines to note there. The one is really on the goodwill and property was mainly just around 1 or 2 of the small acquisitions. But the amount that has certainly caught attention in the -- of most will be that vehicles for hire. And maybe just to explain exactly what happened there is, it's much easier to look at December 2018. This is a business that goes through a cycle. In June, it's normally quite low, and this is our car rental fleet, then it bulks up during December. And if you take it year-on-year, you will see it has actually gone about ZAR 700 million. And there's 2 components to that. The one is just your normal inflationary environment you're in. So vehicle prices has gone up about 5%. But the other bit had to do with a decision we made to change our contractual arrangement where we had leases in the past, and we've changed quite a bit of those two to owned now, and that would have added another about ZAR 400 million to that line. Deliberate decision. We do sell a lot of used cars at the moment. And we do prefer all those cars coming back to us, where we can get the nice second grace again in the defleeting cycle. So that's the first line, I think we just need to pause on. And the other one, you'll see there's quite a few lines that are, once again, the right-of-use assets and so on all around the IFRS. So you can see it was a ZAR 1.8 billion on that line as well as a finance lease receivable of ZAR 110 million. And you'll see in the next slide that the liability that we brought into the balance sheet is equal also at about ZAR 2 billion. Working capital, very much in line with the prior year. And once again, we're in that cycle where June is normally quite low and December is an uptick. On this slide, I think you see that lease liability, but I think over and above that, what is important is the contract liabilities, the contract liabilities, that's where we host our service and maintenance plans. And as Osman just explained, we have put away quite a bit in this last year around the contract liabilities, where we've made a decision to extend some of those lives into the service and maintenance plans into the new entry-level vehicles, and that will actually just give you sustainability for the future. So you'll see that, that line has increased quite a bit in the last year. And that should actually give you comfort about the sustainability of this business. On the core debt, right at the top, you will see that has also just been a factor of the vehicles for hire, that has actually increased our core debt, and you'll see on the ratios now that it did go out a little bit on that. On the cash flow side, very comfortable with the cash that this business still generates. You can see ZAR 1.7 billion are generated, and that's really an EBITDA type of number generated before interest and tax and the CapEx on the vehicles for hire. You can see that that's quite healthy at ZAR 1.7 billion. And even after you take -- you deduct all the interest and the taxes paid, this business still generated the ZAR 1.1 billion cash. And yes, we did spend quite a bit on our vehicles for hire. But at the same time, you'll see that we were able to afford all of that. The cash utilized by operation is then a negative of ZAR 801 million. But at the same time, it left enough cash left in the business to pay a healthy dividend over the cycle. And also do some more of those share buybacks that we started in the previous year. You'll see we still bought back another 1 million shares at about ZAR 71. So once again, that is opportunistic in our environment, and we will continue to look at those. The growth trajectory, I think it's quite pleasing to see that this business over time just continues to have a very stable and profitable growth. I think it's quite difficult to keep it going half years and half years, and we do have some cyclicality, but at the same time, I think it shows a nice picture if we start looking 3 years in a row. Our gearing, quite important for a few of the bankers in the room. You'll see our gearing did collapse slightly to the 1.8 level. You'll see it is always sort of at 1.6, 1.5 around December. But there's still plenty of headroom up to the 3x EBITDA gearing that we've got. So quite comfortable with those levels. And it gives us enough firepower for any additional expansions that may come our way. And then I think it's also just to note that 36% of the debt is sitting at fixed rates if you exclude the floor plans. On the acquisition side, there has been some acquisitions not that many that might have hit the radar. I think on the aftermarket parts side, there was quite a few additional retail stores that we've picked up. And then on the retail and rental, we continuously look at the optimization of that footprint. So if we decide to change geographies, we normally talk with our OEM and try and get -- and optimize in our footprint as we see fit. I think there will still be quite a bit of that going forward as you see the market contract. And we're quite keen to talk to the OEMs in that regard. And then on the international front, we had those 2 bolt-on acquisitions we had on the Ford and the DAF business. And then most recently in just post December, we purchased 8 passenger dealerships in Australia. It's in Ballarat. I know we did mention before that we were looking at these provincial towns, provincial town, or city as they call it in Australia. At the moment, they've gone through quite a bit of a cycle where they're trying to move business outside of the city centers of Sydney and Melbourne. Ballarat is one of those provincial cities, and anyone who watched the Super Rugby, you would have seen that the Rebels played there last Saturday in Ballarat, of all places. I don't think they actually watch much -- watch rugby there. They're actually more into the footy but in any case. I think this is all in line with the strategy that we've employed there that we say it's very difficult inside the city centers and the metro areas of Sydney and Melbourne. We need to move slightly further away. And Ballarat is one of those cities that we identified some time ago. And this was opportunistic time for us to actually go and make that acquisition. You can see the purchase price is still not 100% fixed because there is a final adjustments around NAV still there, and the deal only went through now in February. But I think it's important to note that we're still sticking to that expansion plan. And that will give us a nice footprint. It added more and more brands, which we didn't have before. And once again, it expands that concentration risk you have within the city centers.

Okay. Thanks, Ockert. When you look at the next 2 slides that we're going to go through, we're talking about strategy, they sound fluffy, and that's deliberate. But I can't give you all the detail yet because some of these things need OEM approval, A. B, some will need competition commission approval. And then obviously, we're aware that our competitors look at our numbers at our strategy as well. So we're going to give you the broad picture. But you sitting there want to know where we're going to, we tried to find a medium between where you want us to go to and what we can disclose to you in the public domain. So that's the dilemma we have. So we sound a bit fluffy, but that's the nature of where we are. So on the importer side, we enhanced customer experience through the vehicle ownership. Remember, we control that. So you've got Jaco there looking after Renault, you've got Niall Lynch looking after Hyundai and Gary looking after Kia. They control that because they control 70% of the -- they import the vehicle. They control 70% -- into the market. So they control 70% of the retail. So that what gives them the ability to look at the footprint, what added services they want to put on, what they want to take out, manage their cost. So we're doing that all the time. And it's not a type where we'll just say rationalizing dealership footprint in the importer and the retailer, because those 3 guys -- we haven't got Mitsubishi here, Pedro is not here, but that's a small part of our business. But these 3 guys look at the footprint all the time and say, what works, what doesn't work, close up, move here, and that's what they do. That's the 3 importers. And then obviously, the big part in their business is managing their cost in the forward cover. So forward cover, you see where we are, touch wood, we're in the good place. And as long as we don't buy forward cover for -- at 1 hit, that means we've got some September, now we'll buy October, then we'll buy November. So your averaging will look much better than if you buy it at a point in time. And I think that's what the 3 importers do all the time. And like we talked about, we're very fortunate with the cars that their OEMs are coming with. There's some new good lineups coming out in all 3 of the importers, and we're very comfortable where they're coming from, and they're suiting our market in South Africa. On the retail side, again, there when you rationalize your footprint, you got to do it with the OEM. So Corne sitting there behind you, he looks after the retail and the car rental business in South Africa, but he's going to work with the OEM. So again, he may close there, open there, but it has to be done with the OEM. So they're continually rationalizing the footprint, especially manufacturers like Ford and Nissan are changing all the time. But thank God, when we look at our portfolio, we're small in their cuts. So if you've got 7, they may look at 1. If you've got 10, they may look at 1 that they're going to -- they're thinking of closing. But it suits us, but what I'm saying is that if you had 54 dealerships, you'd be in real trouble because of 15 Nissans or whatever. But we're fortunate that we're not overexposed in a particular brand, and Corne is very active working with the OEM sorting that out. And then again, enhancing the customer experience. We all know that the buyer is changing all the time. The buyer is not like the buyer that bought 15, 20 years ago. They're looking for different things. They've made up their mind. They know what they want. They've done all their homework. You've got to make sure that you deliver on the floor. So we're watching this experience. Now again, IT sounds fluffy because you can do anything with IT. There's a lot of processes behind the scene. In car rental, we went through their plan. They're doing a lot of things. In the retail business, they're doing a lot of things to move us from too much paper to less paper, valuation models, all that is being worked on in the background to say, how do we make the customer experience and the process better in what we do, especially on the used car side because we believe that the used car model that was there over the last 25 years is not going to be the same going forward. The dilemma you have is that the bible in the used car business was the M&M book, the Mead & McGrouther book. So you go there, you pull out the book, you said trade value, he will tell you their value, and you'll say, yes or no, and you put it in. Today, it doesn't work like that. You've got people that use algorithms that they've developed over the past 8, 9 years. They can give you a history for the last 15 years what your particular car range has traded in, what mileage and this is the value. So that's the kind of development we're looking at to develop into the future because we can't just rely on the past. We've got to think differently and be more agile in getting new cars. So the used car strategy is a big strategy in our life, but it needs IT. So that's what we're busy working on at the moment. And bolt-on acquisition, improving brand, we always do that. It's part of the course. You do that like I talked about Ford and DAF in the U.K. We'll do that in Australia, even in South Africa. Where we're underrepresented, we will look for it. Last year, in the first half, Gary and Niall took me to buy dealerships, and we bought 2 dealerships in the urban area, the [ Sandton ] ones, we bought Hyundai and Kia. So like that, we will continue with our [ term and ] independent, and then obviously, we're going to optimize our network, which I've talked about, in the U.K. and Australia. In the financial services, again, it's expanding this name -- this game by developing more services, more products and making sure that we're touching the customer in different places to sell a product. So you can see that we, like I said, Kerry works across the range from the importer and the retailer and the rental business. And then obviously, she's looking at the digital wave that's hitting us with automation trends and changing customer needs like the buying patterns and things like that, the innovation hub I've talked about. But the important thing about the innovation is not only getting the speakers in it, but how people feel in their businesses about being innovative, allowing them the space to think, and I think that's what Kerry and the team are trying to do, is allowing the people to think out of the box and come up with new ideas and saying, okay, we're going to get 100 ideas, but there are 5 that could work. And that's the difficult job she has because, she and her team, to assess out what works and what doesn't. We're not angels, we're going to make a few mistakes. But I think there's sufficient knowledge in the business to control the mistakes so that we can get the right products into the future. The aftermarket parts side of the business, it's very much a pick and pay or [ will use ] model, you buy well, you sell well. Because remember, you're buying aftermarket parts and you're selling to a consumer you don't fit those parts in. So there, we believe the strategy of, firstly, don't carry too much stock in the centralized warehouse, like a wood -- [ Meadowdale ]. You'd rather carry some stock in Polokwane, you carry in [ Delville ], in Bloemfontein, spread the stock out. Go one step back, and that's why we're in Shanghai. The Chinese don't like selling one container with brake pads, air filters, oil filters, that kind of thing. They want a container with brake pads, a container with that. So we can buy bulk in China, store in China, break up package, send to South Africa as you need. It takes about 5 weeks. The minute it leaves China, to get it, it takes us 5 weeks. So it's not the end of the world. But currently, but at the moment, there's no ships leaving certain ports. But under normal circumstances, that will happen. So that's why the thinking of going to China and keeping the warehouse there. But once you're in China, like we've done in ARCO in Taiwan, we actually bought an engine parts distribution business. We own 60% of it. Now we're sourcing there. That will supply to Shanghai, we can break up and send it through. 60% of that company's parts are being sold by us. And from there, they will sell to Turkey, Brazil and elsewhere. So we quite like that model, and we've earmarked about 4 or 5 businesses in China that we think sell a lot to us, but we can have a stake in the business and control the process. Because in the Chinese economy, commissions work and you get traders. So you never buy from a factory, you buy through a trader, and the trader eats you at 5% or 6%. In the aftermarket parts business, that's a big percentage. So that's why us being there, identifying the factories, we can buy directly from factories. We're not going to do it all the time. But for the bulk stuff, we can. So you'll cut out the middle man, be more competitive, send stuff through South Africa. So we like this business, A, because once you've set up Shanghai, it runs well, it's a cash-generative business, it's working capital, and the minute you can get -- it won't give you the car margins, it will give you better margins. Good margins, strong cash flows and the minute -- if you manage your working capital, this is a win-over business. So we quite like this business as well. We've got Michelle here, Michelle is at the back there. She looks after the people in our business. You can see we've got 18,600 people, 15,000 in South Africa, 73% are black and 38% of our dealer principals are black. The target is over the next 2 to 2.5 years, we'd like that to be 50%. So there's plans in progress to move that number up. I'm not going to go through all the slides, but the key thing there is that we all know that vocational training in this country died about 10 years ago. So no artisans are being trained. We've got 3 schools. We do it ourselves, and we're training 1,900 artisans every year. We don't use them. We create them for the market. But we've got schools doing that. And they train on the latest technologies to make sure that we can have artisans in our industry. So that's what we're doing there. You can see our annual training spend is about ZAR 140 million. And obviously, health and safety is a big priority in our business. So we push that hard and we make sure the CEOs that are sitting here, they focus on health and safety as well. Sustainability. I'm not going to go through all those points there, but the big thing, it's nice to see, I see [ Christian ] is here from the bankers well. They helped us facilitate a loan of GBP 120 million. You can multiply by 19.5 for those of you who are doing it in rands. And what happens there is that they look at your usage of electricity and water. And the better you manage that, you get a kickback on your interest rate. So again, it's good for the bankers because they're putting their money where sustainability is maintained. It's good for us because we're very careful about how we manage that business. So for them sitting at the back, it was his last big deal for us before he takes his full-time job in Imperial, so [ William and Russell ] and Ockert and the team did a great job with the bankers, putting us into this facility, which took a lot of long hours because you deal with multiple banks, multiple lawyers, but I think it is a fantastic thing. So to the team, well done on getting that loan through. And we're still on the FTSE4Good Index, so that's quite positive. And yes, it's important that we make money, but we put back into the community. So the 2 big projects that we involved in, and it's not about us taking pictures and walking away, we involved with 43 what you would understand as libraries in the Soweto, Ennerdale, Evaton, Sebokeng and now we started the first one in Tembisa. And we put in the library. It cost us about 1.5 million upfront. We put in about 6,000, 7,000 books. We put in 2 librarians that are on our payroll, and we've employing about 85 people, 75 were unemployed before. We trained them, make them librarians, learn them how to -- teach them how to teach the children and we get the libraries going. And then you can see the learners they're touching. There's 48,500 learners. Just one breaking point for my team is that one of the students that came out of here from Orange Farm, grew up in a squatter camp, he is doing astronomical engineering at Wits, second year this year with all -- last year in year 1 and year 2, he's doing that. Not going for a fancy home, no electricity at home, no water at home. That youngster is at Wits. The group just put him up in accommodation, sorted out his fees, and he's doing second year. And I'm talking about one, but I just want to brag about one that the Motus team has developed, but they're doing plenty of that. And you can see there's 48,500 learners. The other -- Unjani Clinic, that's the clinic project that we do -- both these projects are done with Imperial, so we do it together because we were together. And now we still sponsor it together, and we do it together. You can see we've got 70 clinics. What we do is we take a container, we refurb it, recruit a nurse, nurses can prescribe drugs up to schedule 4. We stock it up and then we're in the townships, in Daveyton or in Tembisa. We're in the townships. So you don't have to catch a taxi and go to a doctor's surgery and wait for your flus and stomach aches and migraines and things like that. You can go to these people, and we've got 70 clinics. The last number I saw, the consultations per annum are 1.1 million people that our people see. So again, right in the heart of the community. You don't see many pictures of them, but it's happening. It's together like the libraries as well. And that was the picture of the libraries that, in fact, Niall and I were there. Niall from Hyundai and I were there. We opened the last one. Okay. So why all this effort? What are we trying to do with this integrated business model? We want to deliver a stable profit margins and cash flows; maintain the strong balance sheet, so that will help our working capital; bolt-on acquisitions; and then manage the vertical integration I talked about in the aftermarket parts business with the Chinese business; and then obviously, at the right price, we share -- we buy back shares. We've done it last year. Since listing, Ockert and I have been involved in the share buyback. We bought in 13 million shares back. That's just to tell you that how we watch this game. Because there are a lot of close periods, so we can't deal with them. But when we can, we bought 13 million shares back. And then obviously, most importantly, for the funds and the widows, and the orphans, we try and maintain a reliable dividend payout as well. Okay. So this is one of the most difficult slides to write, especially in the current economic environment because there's too many unknowns. We know our business, but we don't know what's happening in the market. So we're pleased with what's happened so far with stable performance given the uncertainties, but the weak economic environment and the virus that's taking place at the moment, there's just too much uncertainty. So we're cautious for the short to medium term. Again, the budget speech, the downgrading that could happen, that may happen. And then obviously, we've been -- remain committed to delivering stable profit, operating and financial results to June 2020, which is within a touching distance, but it's not because we don't know the impact of what's happening, the virus, the budget speech, the downgrading. So as much as I'd like to tell you more, that you can do a lot more, but the uncertainties are just too big for our liking. We can't help that. The one thing we haven't talked about, and I've mentioned it briefly, is the right to repair. Please understand its guidelines. There's still a lot of water that's going to flow under that bridge. Why? You're dealing with the biggest OEMs in the world. You're dealing with [ Merc ], BMW, Toyota, VW, Hyundai, Kia, Renault. They spoke a lot of input, they gave input, it was discounted, and despite that, you still have this. But bear in mind, South Africa has 12.5 million cars on the road. What do you think the OEMs are servicing? Only about 3 million. So what's this big fight about? Out of the 12.5 million, 3 million are only being looked after this side. And why are they really being looked after is the warranty plans and services, right? But these people that are -- [ bring ] their cars to us, I don't believe that they like me or they like Niall or Gary or whoever. They're buying peace of mind. They know who they're dealing with if there's a warranty problem. For example, Hyundai has a 7-year warranty. What a pleasure, I can sleep well knowing that gearbox blows up, I've got somewhere to go to. Then I can go to a dealership who would stand behind the warranty. An owner-managed business, can he stand behind a 7-year warranty? He can't. So please understand what this fight's about. 12.5 million cars in the market are already being serviced by non-OEM workshops. In fact, you've got a 9.5 million are being serviced, 3 million by the OEM workshops. That's the one point. The other point is the peace of mind that you as a consumer buy. Thirdly, the protection of the residual value, don't underestimate that, because you're protecting the value. And most of the people in South Africa, 85% to 90% buy their cars with banking loans. So you got that being protected as well because when you -- at the end of the period, you've got that facility in play. The other big problem that you have, if the OEMs stop supporting those, the likes of [ Malcolm ] in Midas and in [ Evaton ] parts don't have the parts because the OEMs had the parts. So where you're going to get the Kia Picanto 1-year-old parts? Where are you going to find that? Or a Hyundai or a Renault or a Merc, where you're going to find those? The aftermarket parts don't have them. They're going to buy them from the OEM because, guys, we've got 4,000 variations of our vehicles. What must these guys stock? You can't. But individually, the OEMs can stock it, so it's okay for them. They've given you a 7-year warranty or a 5-year warranty, so they've got no option but to have parts. But can the likes of the [ Midas ] of the world carry it? No, they can't. So where do you -- where is that guy that you think is going to put a part in? It doesn't get so much as he's going to put a part in that you may -- don't know where that part comes from, then there's an engine failure. Where is your comeback? No comeback. So I think please be careful when we're reading these things and saying, doomsday has come and aftermarket parts are gone. Our service workshop, please close it down tomorrow. It can't. The other thing is that remember, all these products are sold over plenty years. There's a lot of them that have to come through them -- the process. And most importantly, the people need peace of mind. We can't get stuck all over the show with vehicles. Our current -- political current violent economy doesn't allow all that. We want peace of mind. You can -- each of you that have a car, you have a number that you can phone. Someone's going to -- will give you a call. BMW, Hyundai will give you a call and come you pick up. So don't underestimate the peace of mind that you guys have in the right to repair. So that's just on the right to repair. So first, I'm trying to thank Nicole, who was quite instrumental in getting this presentation. Her last day will be in the next 2 weeks. She's on maternity leave. So we do allow leisure time as well in Motus. So that's why she's going on maternity leave. Nicole, thanks for all your inputs, and she's going to go on maternity leave, and Justin will help in -- will stand in for her. You've heard me talking about my ExCo members. Kerry, Gary, Jaco, Corne, we got Niall Lynch, we've got Michele here. So -- and I've got some of the accounting department here. So thanks to each one of you for allowing me to stand up and talk about your results. Because this is not a one-man show, this is a team. And the point I made to the Board yesterday, and I said, what we mustn't underestimate, it's something that we all grew up, with [ Paul Lynch, Hafeez, Manny and Philip ] in the motor side of the business I'm talking about, is the DNA of this group. This group is not about centralization, where we do everything in the center and we give you instructions. No, we don't. The DNA of this group is a decentralized model. That means Hyundai, you're empowered, don't abuse the power but make money and make the good decisions. Kia, Renault, aftermarket parts, the retail/rental and financial services, very decentralized. We don't centralize. You could argue with me that if you did an MBA at Harvard, it will tell you centralize, you get better results. It's good for Harvard, not good for Motus because it has -- this model has worked for the last 20 years, and it will continue working, provided we don't abdicate our responsibilities as leaders. As long as we empower them with responsibility, it will work. And this model will continue working for us in the business, provided we do those things. So it's difficult for people like Michelle to hear, where they come from centralized HR, all of a sudden, people are making these decisions, difficult to control. But that's the formula for making money, is the decentralized model. So I think it's a DNA that everyone needs to understand that this business does not hang on 1 or 2 people. It didn't hang on [ Manny ] only or me only or [ Philip ] only, it hangs on the team that's around it. We'll come and go, but the team will carry this business forward. And that's an important distinction that we make in Motus, is the DNA of a decentralized model. Thank you, everyone. Hopefully, we've -- you're pleased with the results. And all I can say the team gives it its best shot. Thank you. We've run a bit over time, but if there's any questions, we'll take some questions. I don't know if there's any on the webcast.

"Please, can you explain the vehicle for hire change from leased to owned, who leased these cars and which division now owns these vehicles?"

Okay. It's a loaded question, so I can answer it in 2 ways. Here's my CFO sitting here, we know that's his job, but I think I know the answer. So firstly, on the car rental, what happened? That's in Corne's business, Europcar and Tempest. Last year, we had a good deal from a financial institution, where we leased a number of our vehicles. So that means we'd go to Toyota, VW, they'll provide us with the vehicles, but we lease them. So the vehicles were not on our balance sheet. The financial institution came to us and said, hold on, guys, this is not our focus. We prefer to be in retail. Can you please buy these cars back? So that's when our leases converted to assets on our balance sheet, and that happened in November, and it's going to happen in February, March and April as well. There's another ZAR 300 million coming, but by that time, we said. So that's the one -- a lot of vehicles that were leased about ZAR 380 million came on to our balance sheet. Leasing converted into assets in our balance sheet through Europcar and Tempest. So that's the one argument. The other thing that's happened with our 3 importers, in the 2019, half of 2018 financial year, they slowed down on car rental deals because they didn't have enough stock. Now in this first half and in the second half and going forward, they've got enough cars. So they're selling more cars to the car rental companies. So they would sell more to Europcar and Tempest as well, but they would sell more to Avis and Budget and everybody else. So there is a bit of growth in that as well. And that's why we're talking about the one side, which is outside the group. But remember, if they do a deal, you count the number in the importers, but money normally comes from financial services and some of it will get eliminated because within the division. So you don't double count them. But it's 2 legs. It's one -- it's in our business, which is the leasing that we bought into Tempest and Europcar and the other side was the importer side of the business. As a rule of thumb, the OEMs have to do about 20%, maximum 25% of their volumes into car rental. If they don't do that, they don't achieve the targets they want to achieve.

From [ Monet ] who's at [ RMB. ] "Well done on the sound set of results. Do you see virtual dealerships expanding in the near future?"

So it's a difficult one. I mean Niall's tried a virtual dealership in the malls. It worked initially, created awareness, but the selling of the car is still done on the dealership floor. So people do their homework. And Niall, if I'm wrong, you'll just help here, that it's worked to a point, but you're not selling it there. You're still selling at the dealership floor. So people do a lot of homework about a car in the type of car, the color, the mags you want, the ABS and the airbags, but they're still coming to the floor to do a deal. So maybe I'm naive and I'm old-fashioned, like many, I don't want to accept that it's going to change. But so far, we're not seeing that change. A lot of the deals are done on our floor. Any other questions? We've -- Munira. Is there a speaker -- mic for Munira? Munira, we'll come back to you in a second.

Mr. Arbee, I took note of your statement that the second half is inevitably better than the first, and it's more cash generative. The issue that I have is to what extent it will be better given that you start the second half with substantially increased levels of interest-bearing debt. Your debt at the end of December has increased by ZAR 1.8 billion. And using the same percentages for the 6 months past, this will involve an approximate ZAR 130 million extra interest expense. And again, using the same percentages that would require approximately ZAR 2.5 billion to ZAR 3 billion extra revenue just to pay that ZAR 130 million. Do you foresee doing that extra revenue to pay down the debt in the second half?

Firstly, we're not a business where the first half mirrors the second half. We're a cyclical business. Generally, in the first half, your working capital and your car rental fleets are higher. In the second half, you're in de-fleeting mode. The car rental business is not a 12-month business in Europcar and Tempest. After Easter weekend, we start de-fleeting, big time. So all those de-fleets, you start selling in April, May and June. So the car rental fleet comes down back to normal. High in December, come back to June levels. So it will balance those [ books. ] The other thing is that in December, generally, working capital is higher because either the ships have landed, the OEMs have the year-end, they need to offload stock. It's not our year-end, but it's the OEMs' year-end. So stocks are generally high. And obviously, in the aftermarket parts business, because of the Chinese New Year, we carry more stock because the factory is closed in China. This year, they closed for longer for other reasons, but generally, we carry more stock. Come June, car rental fleet is lower. Working capital is in a better position and the aftermarket parts then stabilizing. So you can't take the interest build in H1 and double that and come to the -- it's not going to happen, A. B, because of the cash we generate in H2, your debt will come down. Could be ZAR 800 million, could be ZAR 1 billion, that's the kind of number we're looking at to bring the debt down. So it's not -- this is not first half, second half, you add the 2 and give you full, no. There are certain adjustments in the second half, which is the cash generation that we make. Munira had a point. Let's get Munira first.

So just on the OEMS, the discussion with the OEMS, so Kia and Hyundai, Korea, China under pressure, is any of that feed into in your discussions with them on rebates?