Motus Holdings Limited (MTH) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining us this morning for Motus' results presentation for the 6 months ended December 31, 2021. I know it's a busy week. A lot of you will be preparing for budget speech to see what's happening there after the SONA we've had. So thank you for joining us and making the time to listen to us. We've got a special welcome to our nonexecutive directors. We've got our EXCO members' management and then we've got endless shareholders, consultants, bankers, and everyone else, thank you for joining us. I was hoping by now we would not at Bastion's premises, we'd be meeting you live somewhere at the JSE, but it doesn't look like COVID is giving us a chance. I'm hoping the next time we see you will be in an actual meeting, meeting you face-to-face and having coffee with each one of you. So hopefully, we can get into the next results presentation into a physical meeting instead of Bastion's offices where we look into a computer screen. Once again to Bastion and the team, thank you for hosting us. It's a great experience. And they do it very professionally. So it's easy to talk to you in this environment. If I move on, as usual, Justine has prepared a very comprehensive agenda. I'll be sharing this agenda with Ockert, where he'll cover the financial highlights and overviews, and I'll do the rest. So it gives us a good break in between. You don't listen to one person all the time. So it's quite a comprehensive agenda. And what we've done is we've included appendices as well. So for people that need more information, you've got the appendices to refer to. The first slide, obviously, you're familiar with, our diversified automotive business model. So I'm not going to go through each one of the businesses, you know the businesses. And you can see the advantage of having a diversified business model, not all the businesses, like I would say, operated at 8 cylinders all the time. Some will be at 4, some will be at 6 and some at 8, and that gives Motus a very fair results outcome because of the various businesses that we have. Okay. So let's start with the challenges and then I'll take you through our responses. So firstly, the economic outlook remains challenging. Some of them we score own goals in South Africa. Some of them are global goals that have been scored. And then on top of it, the remanence and the aftereffects of COVID. So I mean if we look at what's happening with -- what happened with COVID in November, December, with Omicron that set us back in South Africa, more than globally. And it set us back badly in the business from a car rental perspective, a tourism perspective and South Africa paid a price for that. So we're getting those ups and downs. Now we know what's happening in the Ukraine. So that's another challenge and that will impact us all globally and in South Africa. So the minute we think we're getting to a new normal, we get some interruption happening and we don't end up with a new normal. We're hoping that the Ukraine issue is not a major issue, and we can settle down and get into the new normal. And hopefully, this is becoming a way of life for us. So I know everyone's talking of another wave in May and June. But I think with the resilience we have and with the strength that people have, I think it may be a nonevent. We don't know, but we all hope for the best. Because of all these economic challenges that we have from time to time, obviously, the consumer confidence is low, remains fragile. And people are watching the space all the time. So there's no overspending taking place. People are not spending too much on luxuries. They're very measured in their spend because the confidence is not where it should be. Because of that, we land up with high unemployment. We've got rising poverty levels. And then in South Africa, like I said, we score our own goals with the political situation, the social challenges that, that is creating. And then we mustn't forget that in December, we've got the ANC's conference as well. So where the elections take place and there will be uncertainty during October, November till the conference takes place and that's something we need to deal with as well. So that's another challenge. And everyone would be unsure during that time. And as a result, no big decisions will be made. Over and above that, obviously, we've got the global supply chain disruptions that are taking place, creating erratic stop supplies in new vehicles and in parts. Then we've got the shortage of chips that are causing problems with availability of motor vehicles in different ways. And then with the shortages we have of ships and containers, our shipping costs and freight costs have increased somewhere between $3,000 to $12,000. So it just varies when we get on to a ship and at what price we get on. So it's going to be a challenge for this calendar year. And I think as far as shipping and logistics are concerned, it's going to take us right into 2023 before we start to seeing a new normal. And in South Africa, we have our ongoing problem, which is load shedding and that's impacting the growth as well. So over and above COVID, its problems, global supply chain problems, stock shortage problems. We do have our own problems, which is load shedding and we can't walk away from that, but that's the reality. Yes, we all prepared for it through generators, solar panels, things like that. But at the end of the day, not all your consumers are protected, and that's where the problem is. The COVID restrictions are being eased as we go along. However, we're not completely out of the woods. Our vaccination program as a country is slow. We've got 31.5 million people that have the first round of the vaccination. And in Motus, we're fortunate, we would have liked to have been at 90%, but we're at 70% plus. So we're making good strides slow, but we're getting there. And while all this is happening, we've still got the onerous regulatory requirements. Some of them you are visible. Some of them, you don't see but we manage them in the back office and make sure that we are complying with regulations and making sure that our paperwork and our IT systems are up to speed in terms of complying with all the regulations. And then being in a developing economy like South America and Turkey and Russia, we, in South Africa, have a volatile currency as well, and that doesn't help with certainty, doesn't help determining pricing. So we manage our currency as best as we can, and Ockert will talk a lot more detail about the forward cover we have and the rates we have. But it's something that we watch clearly with management in their divisions, especially in the imported division, in the Treasury Department and in the Aftermarket Parts business. So those businesses are very active in making sure that our exchange rates are well pegged into the future. So how does Motus respond to these challenges? And I think the one big plus we have in our businesses, like you saw in the earlier slide, is an integrated business model, where we've got the importer, we've got the retailer. We rent vehicles. We've got financial services, which now we now call mobility services, and you'll be hearing a lot more about that. And the reason we needed to change that name is that we're adding more services. Financial services can be confused with the bank. We don't lend money to customers. So as a result, the wording is becoming a bit confusing. So we've gone from mobility solutions. And then we've got our Aftermarket Parts business as well, which is doing quite nicely. So the business model helps. The margins are different. The working capital requirements are different and the investments are different. So that gives us a well-balanced motor business, not in the manufacturing sector. We're very fortunate in South Africa that financial institutions are continually funding our customers, buying vehicles. During the global financial crisis, that was a problem. When banks stopped lending, they adjusted their scorecards. But when it comes to the 2 years of COVID, the financial institutions, especially in South Africa, have been very supportive of our customers and making sure that they get vehicle funding. Scorecards have not been changed materially. So they're very much business as usual. And if you've got an application that's a reasonable application, there's a good chance of you getting finance approved. So our success is dependent on our customers and the financial institutions that are funding our customers. And thank God, that's working quite well. Our investment in digitization to support the changing customer behavior, it's not only what the customer sees it is what the customer doesn't see. What we mean by that is, obviously, there's people working in the background, making sure your finance application is as smooth. Goes to all the institutions. We're talking to customers regularly through whatever social media platform is available. We're talking to them. We're reducing the paper where we can. So the investment is multifaceted. So we're investing in every leg of the journey of keeping contact with the customers, selling the cars, customer complaints and addressing those as well. So it could even take you into the details of car rental as to how we're doing our reservations, how we improve the reservations, how do we become more efficient. And then on top of that, we mustn't forget, we still got to comply with the requirements of legislation, namely one of the key things would be POPIA. So we make sure that we're investing in IT all the time to make sure that we're up to speed and it keeps us compliant all the time. We mustn't forget the people that make all this happen are very entrepreneurial. We've got an agile management team, the EXCO members, their management team, the people running our dealerships, people running our workshops, running our stores, people in our call centers, managing our financial services. They're very entrepreneurial, very agile. And the hierarchy is very short in motors. Each one of the EXCO members who runs a big business has direct access to me, we can make decisions and Ockert and I sit next to each other, and we're making quick decisions and we can make it happen quickly, including our colleagues based in the U.K., Australia, China and certain parts of Africa as well. They can talk to us. We can make quick decisions. We don't take a week or 2 to make decisions, we make decisions within the day. Having an integrated business model helps, but then we need comprehensive offerings within those business models. And we're very fortunate that people who run business segments are very agile in terms of making services available in their segments. So that helps us a lot. For example, if you take our Aftermarket Parts business, you don't only get a premium product. For example, you would get an NGK spark plug, but you would get a premium product, you'll get a middle of the road product and then you'll get our homegrown brands, which will be a cheaper product. But remember, all our products are tested, quality is assured, and we make sure that they comply with certain standards that they have to comply with. So it doesn't mean it's a cheap and dirty. There is a customer for it, but we make sure the customer does have a reasonable product as well. And like that, if you look at our mobility services, you look at our dealerships, you look at the car rental businesses, they have a number of service offerings in their businesses that make sure we're looking after the customer comprehensively. We all know about the stock shortages that are taking place in South Africa and globally. We see it in Australia and the U.K. and in South Africa as well. But because we have an extensive range, different models, we represent different OEMs. And fortunately, that we have gained market share in our 4 importers, which we'll show you some numbers just now. And if we don't have what you're looking for maybe in a red vehicle, we'll give it to you in a black one or a white one. We have different models we can offer you. And we can offer you different combinations. So that's helped us gain market share and it's making sure that the customers are satisfied and we can deliver what the customer needs. All that happens with very good financial disciplines from Ockert and his team. The financial accountants in the businesses, very disciplined. They're conservative by nature. So if they're not sure of something, they're well provided. But there is no one actually becoming extravagant with our balance sheet or cash flows or being -- spending money unnecessarily. So the financial disciplines with Ockert and the team are very, very good. What does that all do? That ensures that we produce a good set of financial results, which we'll go through in a minute with Ockert. We've got a healthy balance sheet and we make sure that we generate significant cash in the business that allows us to do the things we want to do. So on the one side, we've got challenges. On the other side, we've got -- we're responding to these challenges with the team, with products and services, that gives us a great financial result that we've achieved for the 6 months. So all in all, a good package. Let's get to a bit of more detail. I mean that was a good strategy and people and things like that. So if we look at South Africa, and everyone is saying, where is the consumer? People are not traveling in Sandton, where are you selling cars to? The economy is vibrant despite all the own goals we score, despite the viruses and the impacts of the virus, the unemployment. If you look at in 2019, which was -- these numbers are calendar year numbers, so there was no virus in that year. This country sold 536,000 vehicles. In the midst of the virus where we had severe lockdowns, we had 380,000 vehicles sold. Remember, these are vehicles sold in South Africa that excludes what we export to other countries. Then in 2021, look at the jump, calendar 2021, we went to 464,000 vehicles. Now that's a great sign of economy recovering despite all the doom and gloom we read about. And then if we look at the 2022 calendar year, we're projecting 510,000 to 530,000 vehicles for this calendar year, and there are some people that are projecting 540,000. Some maybe 510,000, some are 540,000. So assuming we get to 520,000, 525,000. That's a fantastic number if we compare where we were before COVID, 2 years of COVID and where we're getting to. So we virtually could be at our pre-COVID levels in 2022 already. So I think we've got to understand that, yes, there's doom and gloom, but we've got a consumer, we've got the financial institutions and we've got an economy that's helping us grow. And for us to get in 2022 to pre-COVID levels, I think is a fantastic achievement as a country. Our financial year is different because we're in the junior end, and we're predicting 470,000 to 490,000 vehicles, which is also a great achievement if we can get to these numbers. All in all, if you look at Motus in South Africa, you look at your controllable market share of what we sell, we're selling 22.6% of the cars in this country. That was the December '21 numbers. Now if you compare that to June 2021 and to December 2020, we were 20%. So despite the declines, we've managed to get some market share and grow the market share to -- we're slightly above the 1 in 5 now of new cars that we're selling. And then if we come closer to home, and we look at the 4 brands that we import and that's gone up from 16.1% to 19.2%. And you can see with Hyundai leading the way at 7.6% market share. We talk controllable market share because that will take your passenger and your light commercials into consideration. We wouldn't consider the bigger vehicles because our importers don't play in that game, except for Hyundai in a very small way, with their 4-ton trucks and their 7-ton trucks. Kia's at 5.3%, Renault at 5.6% and Mitsubishi at 0.7%. So all in all, a great achievement from our 4 importers. What I thought I'll do for you this time around is to tell you that in the passenger market -- and we normally tell you this, but we don't have the numbers to support it. There has been a shift in the consumer buying patterns in South Africa. And it's been happening over the last 2 to 3 years. And you can see the 3 -- the 5-door hatch makes up 30% of the South African vehicle sales. There's 127,000 vehicles sold. You can see how big that market is. Then if you look at the SUVs and the crossovers, that's another 30% of our market. And then if you take the bakkie market, the way we understand it, your LCV market, that's another 26%. So you add those numbers up, and you get virtually 86% of your market in 3 categories of vehicles. Now why is that so important? Because we're fortunate that in the 2 out of the 3 categories we play well, which is in the hatch and the SUV and the crossover, you've got our 4 importers playing well in that game, very proactive, very good product, well priced. Then if you look at the other dealerships we have, the Toyotas, the VWs, the Hondas all play in that game as well and that helps our market and helps delivering a service to the consumer because that's what the consumer wants. That's what you need to deliver. On the LCV side, obviously, Toyota is #1 in that market. You've got Hyundai and Kia playing in that game with the bakkie. So we play in that game, but we don't have a comprehensive range of products that a Toyota, Isuzu would have and VW would have as well. We play in the game, but we have limited product. Despite that, you can see that South Africa is broken up into 3 key markets, which is the Hatch 5-door, SUV crossover and the LCV market. For the clever accountants that are going to do the -- don't try and reconcile these numbers to NAAMSA numbers because the source of this is Lightstone which is different to what NAAMSA does. So the purpose of the slide is to illustrate by point where the market is. So don't try and reconcile it, you'll come with 2 pages of e-mails with queries, we're not going to answer those queries because they come from different sources. And this is based on actual registration rather than NAAMSA reporting its numbers. Then if we take that market share closer to home now, and you look at what's happening in with 3 big importer brands, we import 4, but we've got 3 brands that import a lot of vehicles. So you look at Hyundai, for example, you can see for the 12 months to December, they've grown by 4,900 vehicles. So 24,900 become 29.8%. And you can see their market share at virtually 10%. Renault doing quite nicely at market share of 7%, but grown quite nicely by 4,300 vehicles. And then Kia, grown by 7,000 vehicles, there's a fantastic range of new vehicles, new models coming in, and they've captured a good part of where the consumer wants to be and they've had some car rental deals as well. So all in all, our big importers have done well for ourselves -- for our business. And you can see the market shares are very strong in those businesses. If you bring those numbers closer to home to say, what are we selling? You can see that our new vehicles have grown by 16%, South Africa 26%. We sold 51,700 vehicles. That's a 26% increase. Now this is all happening when COVID is alive and well, when the stock shortages are alive in well, interest rates are starting to rise as well. So we can all look at these numbers in saying, how does this economy pump? All we can tell you is there are buyers out there, there are bankers out there funding our customers and it's happening. And you can see that for the 6 months, our new car growth in South Africa has grown by 26%, that's Motus' units that have been sold. In the U.K., we're slightly down. Remember, they are big into trucks. We've got 90 commercial dealerships and there has been some shortages there that they're experiencing because remember, the truck market was impacted by production not only the chips, but the production because people couldn't get to the factories, so that impacted us there. And then obviously, we've got some passenger vehicles, so that was impacted there as well. And remember, in certain parts of the globe, the lockdowns were more severe like in the U.K., in our H1, we were in lockdowns. And then in Australia, Australia had significant lockdowns in September, October and November. Despite that, that business sold 2% more cars that they sold in the first 6 months of the previous year. The preowned market. We all know that because the car rental companies did not buy and could not de-fleet that hurt this market. And that's why we were slightly down on our preowned market sales. The U.K. and Australia are the same as well because people are holding on to their cars, there aren't new cars available. And as a result, they're using their pre-owned cars longer and keeping them slightly longer. So -- and in South Africa, the de-fleets in the car rental business hurt us as well. So despite all of that, you can see our units were flat virtually from -- for 6 months on 6 months. When we spoke to you with our June results last year, we sold 1 new vehicle for virtually 0.95 pre-owned. You can see we're getting back to normality, which is one new for 0.7 pre-owned vehicles. So that's where we are normally at. I've told you this previously, our pre-owned vehicles that we sell in our dealerships are generally less than 6 years old. So we don't sell your 8-year-old and 10-year-old and 12-year-old cars. We have a market that we look after, which is younger than 6 years old. Okay. So if you look at the revenue streams, you can see the new vehicles are 4% up. Now you would have expected that to be higher because we sold a lot more units. But you can see there's down buying taking place. Instead of buying the ZAR 1 million vehicle, people are buying a ZAR 750,000 vehicles instead of buying a ZAR 750,000, they go to ZAR 500,000. So there has been that adjustment Remember, there has been inflation, units have gone up, but the rands haven't gone up significantly, but that's a change in mix. And we're very fortunate that we've had the vehicles to sell to customers in the change of behavior when they're buying cheaper vehicles. Pre-owned, we talked about the units, but that's -- you see a decline in 8% in revenue. Parts are doing -- going quite nicely, and our workshops are quite busy as well because we've got a 4% increase in turnover in the workshops as well. There's no major change in our South African international operations in terms of revenue. I mean South Africa was at 64%, it is at 66% [indiscernible] and profitability, South Africa was at 83%, it's now at 82%. So very stable business from South Africa and the rest of the world. Hopefully, this is the last time I can show you this slide. I think everyone is getting to pre-COVID levels now in terms of our trading activity not in terms of profitability. So you can see import and distribution well past pre-COVID levels. Retail South Africa at about 80%. Part of the problem is availability of stock as well. It's not like we didn't have the customers. We didn't have stock at every level when the customer wanted. The Retail International surpassed COVID levels. The rental business, that's suffering because of lack of international tourism in our country. The corporates and the government doing a lot more Teams and Zoom meetings are not traveling as they used to travel in the past. So that business will remain at the 70%. We think we'll get to 80% later in the year, but it will take a bit of time to get to the 100%. And we're hoping by December 2022, we can get this business back to 100% of pre-COVID levels. After mobility solutions at 90%. So there, by June, December, they'll be back in Aftermarket Parts. I mean, they've had a good time getting to pre-COVID levels. Okay. So Ockert is going to get into a lot more detail about these numbers. Suffice to say that turnover has been flat but we're very pleased with the way people are trading. South Africa and globally, our operating profit is 23% up. So that is pure trading. And you can see people are selling less cars pre-owned, used cars, we're slightly selling more, but our traders are very precious about their margin, and that's why you can see the operating margin, which has got no funnies in it in terms of interest bills and depreciation. The trading market is at 23% growth in operating profit. I think that's a very good reflection of where Motus is heading to. The profit before tax gets impacted by the interest, but again, 46% growth. At the end of the day, what do our shareholders take hold, you can see our earnings per share, 55% up and that's at ZAR 0.785 per share. Then we got the uncommunicated adjustments between the EPS and the HEPS and the HEPS also a nice 51% growth and the net asset value has grown quite nicely by 19%. Because we had all those numbers and the cash we've -- the Board approved a dividend yesterday of ZAR 0.275 per share. A very nice figure to talk to, when last year was ZAR 0.160 per share, and we're quite pleased that if the business continues on this basis, then we will continue with the dividend declarations that we've started. Looking at our free cash flow generation, quite a healthy ZAR 2.9 billion. Last year had some windfall cash where we de-fleeted the car rental vehicles in H1 of 2021, we generated ZAR 4.7 billion worth of cash in that period, but there's nothing shabby about our ZAR 2.9 billion that we generated in this half. Shareholders will be very pleased that the return on invested capital is a handsome 16% you can talk of from the 13%, so there will be -- you should be very pleased as a shareholder. The weighted average cost of capital went up slightly, but that's not because we are negligent. We've just got a bit more capital. We haven't got to normal levels of working capital in car rental fleet so we're a bit precious of our cash and a bit of a lazy balance sheet. But in this economic climate, I think no one will be distressed when we have a bit of a lazy balance sheet. Net debt to equity 30%, a great number. When we spoke to you guys the last time in August, we thought that will be higher. It would be close to between 40% and 50%. But I think with what's happened with stock shortages, car rental, not fleeting up as fast as we thought it would, a very respectable debt to equity. And the banks would be happy with our net debt-to-EBITDA at 0.9%, where we should be less than 3%. And then the EBITDA to net interest, which is we should be at -- required to be above 3%, we are at 16.5%. So I'm sure the bankers listening in, we'll be quite pleased with where we are with our liquidity. Ockert, I'll hand over to you to take us through the details on the income statement, balance sheet and the cash flow statement.

Thank you very much, Osman. Yes, it's obviously a pleasure to present these pleasing set of results with you. Osman spoke a lot around the revenue and how the change in mix has taken place in the last 6 months compared to the previous year. But as you can see, the operating margin at 4.8%. I mean we've certainly taken note of what was available and we obviously maximized as much as we could on our margin realizations. So that has been the kicker to really produce this thrilling set of results. If you look a little bit further down in the income statement, we also had an additional positive number there on our finance costs being a lot lower than in the previous year. Obviously, the erratic stock supply did play its part. We have already started up-fleeting a little bit on our vehicles for hire so that car rental fleet has gone up. But despite that, our net financing costs still remain a lot lower than what we initially expected, and you could see it is also lower than the prior year. On the foreign exchange losses, obviously, a very small number going around these days, as all of our businesses are now using effective hedge accounting. In the prior year, we still at Renault was not using that, and that's why we're at such a high number at ZAR 82% million. On our earnings and our headline earnings. You can see just on the pure earnings side, we obviously did increase, and we increased with 50% and 46%. But once you go down to the earnings per share, you can see the additional benefit we did receive by our repurchase of our share program that we've obviously embarked on in the previous financial year, and you do get it all on a weighted average. So if you bought it already in the previous year, we now get the full benefit. Obviously, the shares that we bought in this last 6 months, we haven't got the full benefit of that yet. And that will still be a bit of an additional positive that will come through in the next 6 months. Based on all of this, we have obviously now declared that dividend, as Osman said, at ZAR 0.275 per share and that is 72% up on the previous year. If you now go back in history and you try and see exactly where we are and where we came from. You can see that we've now certainly surpassed that pre-COVID levels in 2019. So whether you look at half year or full year, and even on the last 12-month results, you will see our operating profit is now getting to almost ZAR 4.3 billion. So a very good number to talk to. Profit before tax, obviously, the same sitting with an additional kicker even on the interest line and our attributable profit up to ZAR 1.4 billion for the 6-month period. Looking a little bit more in the detail of how this business has performed. I can tell you at the outset, all 4 segments performed exceptionally well. We start off with the importer business. Obviously, they benefited from getting the availability of stock when stock was at a premium in this market. They launched new models. So all 4 of the importer brands have launched new models. Were able to successfully also convert that into operating profit. And you can see we had an increase of 44% in this division or this segment. Obviously, a very good and healthy operating profit margin of over 5%. I think guidance we've always given you is that 5% was sort of at the high side. But as you can see, these importers like to surprise us on the up and that gave us a 5.4% operating profit margin. Obviously, one of the factors impacted them is around the cover that they've been able to take. We've got such a volatile currency, but I must say we've got also a very agile treasury team with the respective financial directors of all of these importer business sit together and on a regular basis, we take the opportunity if there is sudden rand strength or dollar weakness, whichever way you want to see it. And we've been able to already have covered till the end of August for both the euro and the dollar. And in fact, in the last week or so when there was additional strength, we were even able to take a little bit of additional cover. So we probably covered till the end of September already. And this will set us well for the next while because obviously, if you got cover all the way out to September, those vehicles will then arrive and we'll only sell it in the next 3 months. So by definition, you've actually got cover for the remainder of this calendar year already. And I think with all the volatility, as Osman spoke about, social political that you could potentially see still in the globe as well as in the local market. We believe that being slightly longer on the cover is certainly where we want to be at the moment. Moving over to our Retail & Rental segment also performed very well. If you compare that to the previous year, there has been a 20% increase in our operating margin. We normally see a slightly better second half. So hopefully, we can see that again. Obviously, impacted by the availability of stock. There's now both local as well as international because even internationally, we have seen that the vehicle stock was very erratic. In the retail side, I think not much more to really say there, apart from the fact that we've also seen that improvement in that after sales contribution. And on the rental side, we have at least seen a bit of a recovery, not to its full extent yet. You could see that we moved our park up there or that vehicle fleet. We moved it up to about 17,000 units at the end of December. In the pre-COVID era, that would have been at about 24,000. So you can see we're not quite there yet. It was impacted right at the end there but we really expected a lot more from the foreign tourism sector. But obviously, with Omicron hitting us right at the beginning of December that didn't quite realize. However, I think vehicle utilization levels are getting to 72%. So you can see that team has really worked hard to get fit into the doors of those vehicles and make sure that we were able to utilize our fleet effectively. On the international side, apart from the fact that you had inventory shortages from the OEMs, both these businesses in the U.K. as well as in Australia performed exceptionally well on the margin side. And you can see that, that profit increased by 8% in the U.K. and by 32% in Australia. In Australia, it was a bit of a different story than the rest of the world where they went in and out of lockdown a lot more. But certainly, our digital platforms have assisted us there in still being able to realize the sales even though we couldn't get too many feet coming to our dealership floors by itself. So the whole Click and Collect has certainly assisted us there. Our Mobility Solutions performing exceptionally well. I think it's the first time they've hit ZAR 500 million on the operating profit side. I think even last time when we spoke to the market, we indicated that it's -- obviously, this is a business that gets impacted over longer periods by COVID and all the impacts you have seen in 2020 has only actually come through in 2021. So now in 2022, you can see where the additional profits are now coming from. It's now the bank JV alliance is suddenly getting into profitable positions again. We can see the cell captives performing well. And certainly, the high interest income that they receive, obviously, they're on the other side of the coin, so if interest rates go up, they do get a slightly better return as well. So over ZAR 500 million for the half year, a really good performance. Aftermarket Parts, obviously, one that I get excited about quite often. It's also where we had one of the larger acquisitions in the last while. It was only in for 3 months, so it hasn't really impacted the numbers yet. But suddenly, you can see that this business is now becoming a strength by itself. It's got over the ZAR 300 million for the half year. And if you take that plus our H2 number, you can see a last 12-month number, we're over ZAR 600 million for this business. And that's certainly the new norm going forward. We do see this business still going from strength to strength. And the last few strategic acquisitions as well as that [ deal ] we set up in China are really starting to assist us in this business. Moving over to the balance sheet or the statement of financial position as we like to call it these days. Not too many movements on too many lines. You would have seen that our goodwill increased, obviously, with the latest acquisition. Our vehicles for hire has started to increase, so up 50% from the prior year, and that was speaking to that fleet size on the car rental side that we spoke about earlier. We did, at this stage, expect our working capital to have increased a lot more. But as you see on this slide, it hasn't really had the kick on the inventory yet as the inventory was hard to come by. The big movement in year was, in fact, on the derivative line, so the derivative has moved from a liability in the previous year to -- or end of our last financial year into an asset in the December period. And that is a function of the fair value that you take. Obviously, the other leg of this is sitting in equity. And you'll also see on the balance of equity that we have had a ZAR 900 million movement there. Our core debt position has increased slightly. We expected it to be higher. And obviously, that would have been a factor of receiving more inventory. So as inventory levels increase, we would expect that core interest line to go up a little bit. And we will make more years also our floor plans from OEMs also in the same regard. And then that contract liabilities, you can see still quite a conservative number. So on a service and maintenance plans, those funds have, in fact, still increased. So you could see as the new vehicles were being sold, we put more into that liability line. And those service and maintenance plans, obviously, that unwinds itself over a 3- or 5-year period depending on the plans that were written. Cash, I think, once again, has become the norm, I think cash is in the reality what we see and what we can do with that. Obviously, we very -- healthy cash position already, and it bodes well for any additional acquisitions or expansions we want to embark on, still got enough petrol left in that tank, as you can see, ZAR 2.9 billion that we generated in the 6 months. We'd like to give you this slide. I know it's something that always gets asked by some of the analysts just to try and reconcile the cash to the debt positions. This gives you a nice summary of exactly how the data has moved. You see you can see the cash generated from the trading activities. Obviously, that's been the big inflow that we've had. And then on the outflow side, it would really be around our vehicles for hire and as well as the net finance cost paid. And then, of course, we did repurchase some shares. We paid some dividends and that would be the balance of your debt to take it to the December position. Obviously, this all bodes well for our gearing. It looks like quite a weird slide initially to look at. I mean the blue bars gives you the indication of where our net debt position is. You can see how high it was up there in December 2019. And obviously, we tried to bring that down in June 2020 as COVID hit. The reality is the whole business has been turned around on its head after that, and we've been able to liquidate most of that stock. Well, I should rather say, realize profits and cash through that period. And you can see we are on a very low level at the moment. This, of course, means that all your ratios is now on a complete opposite side from where you normally have seen it. And the bank certainly would be not worried if you look at the 16.5x interest to EBITDA. Obviously, we do have a lot of funding available to us, and we will certainly look at further acquisitions in the near term. Osman, over to you.

Thanks, Ockert. Like you said, it's always easier to present results when you've got good profit growth, good cash flows and a good story to tell. So building on that, the business model supporting these strategic objectives, you can see the OEMs we represent in South Africa 23, 19 in the U.K. and 20 in Australia. In terms of scale, and this is an important part of the Motus business is that we have unrivaled scale. I mean, in South Africa, we have 345 dealerships. The new ones would be about 260, 270, and the balance will be pre-owned. In the U.K., we have 115 dealerships, 90 of them would be trucks in the passenger and 36 in Australia, all passenger. Car rental outlets, we've got 105 that are well utilized. Whatever we needed to close, we have closed during COVID, so this is our lot. The Aftermarket Parts business, you can see because of the franchise model, we've got 564 outlets out there with 102 owned by Motus itself. So we've got a good mixture of owned and franchise because we can't be everywhere, but by the same token in the key areas we need to be in, we are there that helps, obviously, the wholesale business and your procurement. In terms of Mobility Services, you can see they're touching the lives of 730 vehicle users with their own products, third-party products that they manage. So again, it's a nice base that they're working off. And ultimately, in the next 3, 4 years, if we can get to 1 million vehicles, that will be fantastic. The retail market share we've talked about, Ockert has been through all the financial performance. And you can see all our businesses, the business offerings we have, have done a great job. And I've talked about innovation and our IT and our investments that are taking place, that's producing good results for us. They don't happen by mistake. So they're all doing the right things in innovating the right products and services. Ultimately, all this happens with people. We've got 17,000 people across Motus in South Africa, the U.K., Australia, China and in pockets of Rest of Africa, and 73% of our people are black. So our transformation initiatives are doing very well. We've got our training programs kicking in again, and we're starting with that very vigorously from -- we started that in August already getting 20 programs going. Some are still virtual, but most of them will be interactive live sessions now. So we're getting back to the new normal. We don't forget our environmental responsibility that Motus has to play its rightful role wherever possible where we're doing refurbishments. Our buildings are getting greener. What do I mean by that? They put solar panels on water usage should be more effective. We look at our light fittings. We make sure they're all effective, and we're embarking on that journey. It will take us 2 to 3 years. And hopefully, we'll be in a much better space in terms of all the environmental issues. And the key thing we do as well is our waste disposal is done very responsibly. On our journey with our OEMs from ICE engines to either hybrids or electrical engines, I mean we're walking the journey with them wherever we have to invest in terms of charging points, we're doing that. And whenever the models are available, we're selling them. The subsidies in the U.K. have dropped as well. So consumers will be spending more on EV vehicles because where the subsidy was GBP 3,500, it's dropped at GBP 2,000. Australia will start with some sort of program. South Africa doesn't have any subsidies at the moment. The complete electric vehicle is still very expensive, starting from ZAR 1.6 million, ZAR 1.7 million upwards. As technology becomes cheaper as we get our infrastructure sorted out, we're on a long journey in South Africa before we get there. But we will play our rightful role when that need arises because then we'll have better infrastructure, our dealerships will be geared up, and there'll be electricity in our country to help that as well. So it's a journey we work on, but it's not a journey that we're running to. It's a journey that will happen slowly. And most importantly, because of the strong balance sheet we have and cash flows, our strategic acquisitions in South Africa, Australia, Asia and South Africa will continue at the right pace. Just briefly, Ockert has talked about acquisitions. The big acquisition was in the U.K. in the Aftermarket Parts business. In South Africa, we did 4 dealerships. We bought our remaining 10% in Australia from the SWT Group and GetWorth, we've moved that up from being an associate to a subsidiary that will allow us to grow that brand and that business quite aggressively as well. And our acquisitions in dealerships will always be bolt-on. We're not going to buy 150 dealerships in the U.K., Australia. We bolt acquisitions on where the infrastructure is. And we do that in South Africa as well. The key areas of acquisitions that will be stand-alone would be the Aftermarket Parts type of businesses and IT businesses that are related to the motor business. So we will continue with that. And that's that FAI business that we bought in the U.K. So you can see that's their distribution center. And you can see the get worth premises that we have in Cape Town, that's the new premise that only opened up in November, December. And you can see it's a beautiful building that will be the future of GetWorth. Where do we want to use our money in the short term? Short term could be from now to June and December, I would talk more to December. We'll continue with bolt-on acquisitions. We're looking at an IT business. We've got other businesses, so we could use about ZAR 400 million for that working capital. We know when the stock levels become normal, we think we'll need about ZAR 1 billion worth of stock when cars are available and trucks are available. The car rental fleet, we hope to spend another ZAR 500 million, ZAR 600 million to get more vehicles into the rental fleet. The numbers in June will be slightly lower than the numbers that are at the moment because we'll be in a depleting cycle from after Easter weekend right up to the end of June. And then the fleet will pick up after that in July, August, September, when we start fleeting up for the tourism industry as well. We all know the car rental industry is not a 12-month industry, it's a 9-month industry. So it's got peaks and valleys as well. Capital expenditure is growing as normal. And because of the cash we have, obviously, repurchases will be considered, and the dividends we're hoping if all goes well will continue. And whenever you have cash, obviously, we reduce our debt. So what are the top of mind issues that we, as management, make sure that be our top of mind all the time? So I think as you will see from the turnover that we've discussed the units that's not always in your control, but the earnings are in our control. So we may sell slightly less, but we do them at the right profitability and make sure we treasure our margins. And you can see that's been Motus' mantra to make sure that whatever we sell, we sell at the right profitability. So market shares sometimes can be vanity, turnover can be vanity, but the reality is earnings and margins, and that's what we're precious about. So yes, we're enjoying the market share, but the market share fell back to 20%, that's fine, provided the quality of the earnings are well maintained. So that's quite key in our business. The stock shortages, we're hoping, and I'm telling you only what I know is that our OEMs telling us that after July, things will start normalizing and we'll get more stock available. We hope that happens. Despite the shortages, you all know we've been doing a great job in selling what we have, and our importers are doing a great job of selling what they have. So I think all in all, we can complain, but our results tell us that we're doing a great job on selling what we have. We try and leverage our scale wherever we can. And what I mean by that is that when we have one address now, you could land up with 6 dealerships in one address. The multi franchise models helping. Whenever we beef up our dealerships, financial services will kick in, our workshops and parts will kick in. So the scale does help. I talked about digital engagement and what we're doing in that area. We always have opportunity to reduce complexity. So we always do that. We're agile. We reduce the number of touch points. We reduced the amount of paper we have and processes we have to be more efficient. I mean that's always top of mind for all our operators. Transformation and sustainability. We don't give that challenge up. It's not something we take the foot after accelerator. We work on that. Whether it's COVID, no COVID, whether the shortage of cars, transformation and sustainability is top of mind. And we always focusing on that. What COVID did for us as well, obviously, we had to change our behaviors. We have to manage our IT, but customer insights are critical in helping us making our future decisions as well. So we always focus on that. And like Ockert said, we're very prudent capital management team. So we will make sure that we deliver good results to our shareholders, and we're very focused on our profitability. As far as our prospects are concerned, the trading environment is challenging. We all accept that. but it's how the management team is operating in these environments. So from what we've delivered, you can see despite all the challenges, the management team in South Africa the U.K., Australia and China have done a great job, and the people that in rest of Africa are managing with what they have, and they're doing a great job. Now if we continue on this way, and there's always caveats. That's life. As long as I'm breathing. I'm going to have a caveat. What are the caveats for the next year? Assuming we don't have stringent lockdowns, we don't have severe inventory shortages, not shortages, severe inventory shortages, but shortages we always have. And we don't have social unrest like we've had in July last year. By the way, that July unrest impacted the aftermarket parts business in some areas, we still haven't recovered. The shops in Soweto haven't recovered. Out of the 7, only 2 are backup. Umlazi not opening up, Durban, a lot of the shops been open after that. So the unrest was there, but the impact was much longer. Assuming we don't have these things, what are we saying to you that we can get to, if all goes well, to June 30, 2022, we want to deliver double-digit earnings growth, continue managing a healthy balance sheet and generate strong cash flows and continue doing the strategic acquisitions that we've been telling you about. And these -- what's it like in an acquisition. You look at 10, we're hoping one materializes and one carryforward. So they take time, but that's nothing wrong with that. We do them properly and make sure they happen and they -- acquisitions are value adding to our people and to our shareholders. Because we have the cash, we'll continue with all the initiatives. And like I said, we'll maintain a strong focus on transformation and empowering our employees and our unwavering commitment to ESGs, and please understand that we focus on ESG within what's our sphere of control. I can't control what I have what I don't manufacture. So that will rely on the OEMs to do. But what's in my control, we continue focusing on that, and that's our cornerstone of our business operations. Now some of you -- before I get into the final slide, all this has produced a great result, and you could see that. I know some of you are concerned that the emerging markets vehicles are doing quite nicely. Please understand that everyone has a place under the sun. If we open another 10 dealerships in the emerging market brands, what will they give me, another ZAR 10 million or ZAR 20 million because in the emerging markets, there's no car park. So your workshops are quite slow because the car parks are not been big enough, cars come in very slowly. Parts businesses are small, because of the newer car park. Margins are much tighter than the mature brands because those vehicles are very competitively priced, leaving very little margins at a retail level, a little room to maneuver. So the point I'm making to you that if I opened another 10 or 15 dealerships in the emerging markets, what will I get, another ZAR 20 million, ZAR 25 million? What is more critical is we do another acquisition in the aftermarket space because if we do a kind of thing like the FAI or we buy more stores in Midas, we invested in IT business, the opportunities for margins are much greater in those kind of businesses. In the Aftermarkets Part on average that your returns could -- your margins could be between 7.5% and 10%. So those businesses can give you ZAR 100 million, ZAR 150 million, much quicker, faster signal investment than having another 10 dealerships on the site. So we will take the opportunities. We do have emerging market -- emerging brands in our dealership footprint. But please understand that our focus will be on maximizing our returns to our shareholders, looking at margins and looking at our ability to make sure that we invest in businesses that are sustainable into the future with strong cash generation and margins of between 7.5% and 10%. That's what we like because that gives me good sustainability across the value chain in the motor business. All Ockert and I can tell you is what our people produce. So firstly, a big thank you to all our staff members, whether you're in South Africa, the rest of Africa, U.K., Australia, we appreciate what you do all the time in making sure that you're delivering great client service and you're maximizing our margins as well. To our customers, we don't exist without you. But again, we mustn't forget that we exist because of our customers, our suppliers and not forgetting the financial institution will provide funding to our customers. And because of them, we sell cars, we've got some great respect with our funders who will see us regularly to make sure that we're managing their money in terms of the borrowings, the liquidity and the gearing. So we appreciate the support we get from our funders. And most importantly, we thank our shareholders and our investment analyst will follow our business very closely. A big thank you to the EXCO members for doing the things that they do and allowing us to present these results to you and not forgetting the Board members, both the nonexecutives and the executives for your support in these challenging times. I know nothing is easy, but we all have an objective. And as long as we have the common objective to maximize shareholder return, Motus will be a great place to be a business to follow. So thank you to each 1 of them. Before we close, I'm sure we normally have questions either on the telecast or we have some on the Teams and Zoom. So Justine, have you got any questions for us?

Yes, Osman a few questions have come through. First one, I'll pose to you, Osman. When do you expect inventory levels to normalize across all the geographies, South Africa, U.K. and Australia?

Thanks, Justine. So when we were speaking to the OEMs last year, we thought it will be by end of December 2021. Unfortunately, it hasn't happened. Because remember, the computer chip market is not only challenging for the motor industry, it's challenging for the IT industry, for white goods, it impacts all our industries. Everything that has electronics in it uses a chip to tell you what to do. So we're competing with other people in the business. So from the discussions we're having, they're talking of July, August. But I think more realistically, it will be more like early part of 2023 when we'll get our stock levels in a better space. June will be tight, but from July onwards, it will pick up. So we'll have better stock hopefully in December. And I'm hoping if all goes well from January 2023, this thing becomes a thing of the past, and we can sell to you what you want and not what I have on the floor. Justine?

Next question goes to Ockert. Ockert, will finance costs remain at these low levels?

Yes, I think if you look at that slide that Osman just presented on the where you think working capital is probably too low with about 1 billion car rental, probably that fleet still lower at about 500 million. And then, of course, you're going to have some acquisitions in between. So you can easily have another, let's say, ZAR 2 billion of debt. If you convert that into a 6-month results, we've seen now, you're probably looking at about ZAR 60 million. I think the opposite of that is, of course, you also need to remember, if you then add the inventory, I would hope that our dealerships don't look at the inventory, but in fact, sell them. So you also need to factor in that you will then probably have higher profitability on the top line as well. So yes, there is maybe a little bit at the low side, but then I think we have lost out on a few sales at the top.

Next question for Osman. Given car rentals are up fleeting again, inventory shortages supporting price and there are low interest rates. Do you expect that your current base is sustainable? And how do you think about volume versus price mix?

It's always a difficult call. Generally, the car rental industry has lagged in price increases. And during COVID, that's helped. And we've managed to put price increases. So the things we manage in the car rental business is the ADR is the average daily rate that's managed in a lot of detail. The fleet size, we weigh that up against utilization. Now some of you would have complained in December that Cape Town had no cars, but you're talking of 71% utilization or 72% utilization. Remember, I don't have all my cars in Cape Town. I've got some in Durban, I've got Johannesburg and Bloemfontein, and the utilization was for 6 months, not for 1 month. So we manage our ADR, which we call, we manage accident costs. We manage reservations from customers. And based on that, we get the fleet. So when there's a shortage of new cars that we can't get from the OEMs, we extend the life of our cars, and we don't fleet too quickly. So that gives us another source of vehicles. And because there are so many OEMs that we have, there's always some availability but we're very conscious that we don't de-fleet too quickly, and we keep our -- some of our cars slightly longer to help us with the fleeting process. So if we look at our current fleet, we had about 17,000 vehicles, which is adequate for where the market is. Like I said, it's not a 12-month business, it's a 9-month business. We'll drop to about 15,600, 15,700 by June. And then we've got plans together with OEMs to get our vehicles back to the 19,000, 20,000 kind of fleet number by December. And the OEMs are aware that we will require cars. So they're hoping that they'll catch up their deliveries to us. in July, August and September to prepare us for the 2023 financial year. So it's a juggling act, but we're used to it. We manage all the time, and we do the best we can. Justine?

Ockert, next question over to you. Workshop revenue was down. Is this due to lower mileage, so less services required? Or is it linked to the right to repairable?

No, we haven't really seen much impact on the right repairable. So this was definitely linked to the mileage side of things. So we have embarked in some programs to entice people to actually bring their vehicles, especially for the annual service. But I think a lot of customers have seen is that they're not necessarily doing the mileage and then misunderstand exactly at what time frames they need to bring back their vehicles. So that has certainly been a bit of an impact. But we have seen it now recovering. I mean I could tell you this morning, just driving to Sandton, I can tell you that people are back on the road, a lot different from what it looked like 6 months ago when we were traveling here for this presentation. So I would expect the workshops to that activity to start picking up as well. And one specific factor we had there was in the other 2 jurisdictions, mainly the Australia where that lockdown and the workshop activity completely dropped off as those people were not able to drive around. So the workshop activity in Australia was, in particular, very low.

Osman, there's a question around pricing. So it's based around how do we approach pricing for both new and preowned vehicles? And when do we expect that the selling prices will normalize?

As far as new vehicles are concerned, we are price taker, not a price maker. What do I mean by that, is that when you get a particular model in Hyundai or Kia or Renault, you look at what that comparative model does in Toyota, VW, Honda, Suzuki, Haval, you take all those and you match them and then you set your pricing. So unfortunately, our currency is our currency, and I don't think that new vehicle prices will come down. Generally, as a rule of thumb, new car prices will grow between 6% to 7% a year, and that's going to continue happening as long as we have an emerging market currency to support and -- because we have long buying cycles, we've already secured, like Ockert already mentioned, we've already secured our payments on our vehicles right up to the end of September. So there's no need to do anything silly. There is enough pricing power with inflationary increases that we need together with the forward cover. So that's on the new vehicle pricing. On the pre-owned pricing, I agree they're artificially high. just so that you guys understand what generally happens is a rule of thumb. There's a trade price, which we normally buy your car at and there's a retail price, which we normally sell it at. At the moment, because there's a shortage, we're paying retail and sometimes retail plus and then the consumer is paying higher for that. So I think for this calendar year, it will continue as is because new car prices are not going to be an abundant supply. The car rental business not be de-fleeting abundantly this year because of the last 2 years of COVID, they bought less, they de-fleets, pre-owned cars will start normalizing only in our -- in the calendar year 2023, not before that, unfortunately. Justine, we'll take 1 more question, and then we'll call it today.

Okay, the last question I'll direct towards Ockert. The tax rate was lower in H1. Can you provide full year guidance and any guidance into financial year '23?

The tax rate at 25% does look a little bit on the low side, if you initially look at it. But I think if you've been following us for a while, you would have seen that we've normally given the guidance between 25% to 27%. while it's sitting at a slightly lower rate at the moment is we are utilizing some of the assessed losses we had in the Renault business in the past. So that certainly assisted us going to the lower level. Our U.K. business is performing well, and they're only at 19% tax rate at the moment. And then we have received a little bit more from our cell captives and joint venture prefers. So all of those, obviously, also a dividend exempt takes exempt. So it does give you closer to the 25%, and that's how we expect it for the full year as well.

Perfect, that's the end of us. So thank you to each one of you for spending your time with us. We will see a number of you over the next couple of days, some we will see in Cape Town, some in Johannesburg some on Teams. So thanks for your time this morning. All the luck with the budget speech for tomorrow. Thank you to all the unsung heroes, which are the accountants producing the numbers. Thank you to as well to Ockert and the accounting team well done to Justine. Thank you. And last but not least, to the Bastion team. Thank you, and goodbye.