Motus Holdings Limited (MTH) Earnings Call Transcript & Summary

Good morning everyone. And welcome to Investec. It's a bit of a different scenery for some of you. I know you used to go to the [ JC ] always, so welcome. Obviously, it's a new team that needs to present as well. So I suppose a new venue is just as good. We were joking outside, just saying that everyone tried to move all their results presentations into this week because last week was the budget presentation, which was, we could have done it then last week, I suppose. So In any case, let's start by welcoming everyone who's attending today. I'd like to welcome some members of the Board here. Welcome specifically to JJ our Chair. Also our Audit Committee Chair, Chair of our SES Committee. So welcome to all of them, also the execs, and, of course, all of you that's interested parties in our share, whether you're an investor or a banker or just like to take a keen interest in how this sector is doing. We have quite a busy schedule, but we'll try and fit it into the hour. So if you look at the agenda there, you can see there's quite a few things we will try and get through. And please feel free at the end to ask some questions. But I'm going to kick off with the economic environment. And I mean, this is known to most of you, so it's not that much to say, but at the same time, you do feel as if there's suddenly a little bit of a positive sentiment coming through in South Africa, and you will probably find it, as you go along with -- to a lot of these other presentations as well, that you can certainly see that something is starting to change. And you may say, but when did this all change? And if it's actually quite clear. When you look at these economic indicators, you can see roughly at about August, when you started seeing those interest rates coming down, inflation starting to turn. That subdued economic environment you had in that first quarter of our half year now, suddenly started to turn. And specifically, for durable goods, where people make a little bit more of a long-term decision, you certainly needed a bit of good news to come through and the sentiment to change. Quite a few elements in it. It wasn't just the interest rates. Obviously, inflation started coming down, 2 part system probably didn't impact as directly, but indirectly. It made the consumers feel a bit better in South Africa as well. But you can see interest rates overall in the rest of the world also coming down. And it's pleasing to see that, you know, the U.K. also reduced 75 basis points. And Australia suddenly woke up as well in February and did their first cut of 25. So all in all, I think, you know, at least the indicators seem to be pointing now more into the right direction. If you turn to the highlights of the last 6 months. I mean, quite a quite a few things had to happen. And I think the first point that I just want to reiterate is how bad that first quarter was. I think if you spoke to anyone, I mean, it was as if the GNU started but it couldn't get out of out of its starting blocks. From a consumer confidence, it wasn't quite there yet. And it was certainly a very tough quarter for us to get through. But the good news is that in quarter 2, a lot of good news stories started to come through. You could see the activity in vehicle sales. You could see it in our other services, tourism started picking up, and a lot of other adjacent services also benefited from this good sentiment. So certainly something had helped and that pushed us to be able to still have an operating profit of ZAR 2.5 billion. Else, this story might have looked a little bit different. We certainly hope that, that positive sentiment that we had in that last quarter will continue into this half. What it also resulted in is our net debt and finance cost, which actually came down quite a lot. You would have known that in the past, we already reiterated that we working hard at reducing inventory levels. We did share with you in June that we felt that it was now sort of at the right level. Maybe there's 1 or 2 pockets you always work at but at the same time, you never want to starve your business from inventory or working capital. That's how you make the money. So be careful. You don't overdo this. If you, however, look at this number, you'll see, on average, we were ZAR 1 billion less than in the prior year on debt. And that meant that our finance cost also came down by ZAR 100 million. So quite a good start there for this half year. Our ROIC sitting at 10.7%, maybe we would like it to be slightly higher. But at the same time, it still gave us a good enough return for you as shareholders. Obviously, we're going to continue with a dividend of ZAR 2.40. And if you look at that NAV currently is sitting at ZAR 107, which only if you start looking at the share price of where it's sitting today is hardly above the NAV. So all for you to work that one out for yourself, I suppose. On the ESG side, I mean, we still keep at with all our programs that we had in place. But I think the one point just to highlight here is how our focused talent management has actually helped us through this period. I mean this is the first time that you have seen as many moves within the EXCO team at Motus. And yet the succession pipeline just took care of it, itself. I mean it was just completely seamless. We carried on, and we have a new CEO, a new CFO. We have a new head of our Aftermarket Parts division. We have a new person at Kia. I mean it's actually remarkable how everything just kept on going despite people going on retirement. And it did give us the opportunity to also then push through a little bit on the specific ESG key metrics that we want to work on, which is maybe more female representation. So at least in that regard, we were able to also push a bit forward on that. On the diversification side, I suppose we put this out as a target for ourselves, and we're quite pleased that despite us driving all parts of the business, we can still say that our international makes up 35% of the business now. That was the target we set out. And people may say, do you want to push up this target, and we'll get to that later. I think you never want to make someone larger while making something else smaller. I think you want to make sure both sides of the equation still grows. And you will see that's pretty much the theme. And our EBITDA split between the vehicle, non-vehicle is certainly sitting at this 50-50 level. And some of you may actually be surprised we are making more money from the non-vehicle services and parts specifically. So quite a robust set of results. Our performance drivers, we obviously, like I said, just now, are playing in all fields of this business. It's not just around vehicles, around new vehicles, pre-owned. You've got the parts, the workshop is obviously a big impact for us there. We get the question continuously, why don't you immediately try and get more of these new entry sort of brands? Well, guess what, they don't have workshop activity. That's actually quite a big source of revenue for us. So you don't want to just jump out and get all of them at once. Vehicle rental, obviously, a big part of our business as well. And then all the other service offerings sitting in Mobility Solutions. If you look at the revenue stream and you try and analyze then exactly where did everything come from, you can immediately see there were one element that maybe didn't quite play its part. I think that sale of new vehicles going backwards, not the greatest reading when we sit there as a management team and we need to see what can we do about it, and I'll get to that just now. Very pleased that the sale of pre-owned vehicles overall, I mean, it's 5% additional revenue that we got there was driven largely by our international footprint as well. And then the sale of parts and then obviously, the running of services making up the balance. And you can see that at the bottom as well exactly how that split between SA and international is. Overall vehicle sales, so this is South Africa as well as our international operations. You can see that new vehicle sales overall did actually come under a bit of pressure. And it's -- so when I looked at the revenue slide just now, you can see the unit sales are probably a little bit to blame for that as the number of unit sales actually were less than it was a year ago. But on our pre-owned, we actually did very well. So on the pre-owned, you can see specifically the likes of Australia and the U.K. really coming through there, giving us the overall sales -- vehicle sales of 105,000 vehicles. And you can never really underestimate how big that is once you start adding other sources of revenue streams that can go with your vehicles. So a great source of business for us there. The South Africa, if I just look at South Africa by itself, I think tough time. I mean, initially, you can see overall, it didn't actually grow year-on-year, but it was also a large factor was that period over the elections, that the vehicle sales was quite subdued. It's starting coming through in this last quarter. And we actually had a record quarter in this last quarter of the financial year, we could see a lot of sales coming through. That positive sentiment still played out with more than 46,000 sold in January. So as a country, you're actually still on the front foot, and we'll see how the February numbers play out. As Motus, we always try and just put some narrative to the fact that we are selling 1 out of 5 vehicles. And you can see the calc there because 1 or 2 people tried to calculate it before and almost got to a different answer. So it's only passenger guys. So on passenger, we're selling 1 out of 5. So 38,000 out of 190,000 vehicles that we sold. So quite pleased with that overall result. Taking into account that -- remember, some of our importer brands came under a lot of pressure with new entrants. So it was actually at the back of that, still a very good number to get to. Now talking about the importers and now, where was this pressure. There was certainly a lot of pressure felt in the importer brand space, specifically around new entrants. I mean we saw the likes of numerous Chinese brands coming to our shores. Most of their product ranges started playing into that small SUV and middle SUV type of space, which obviously would have impacted some of our importer brands. At the same time, the rise of Suzuki being quite a strong banner these days. It looks like they're now strongly heading to become #2 and even surpass VW. You can see that those vehicles coming from India are very well priced and is coming into that entry-level market. So on both fronts, I mean, you will see that the importers are under pressure. And then it's all around, well, how are you going to respond to this? I think we shared a lot of what we have been doing for some time, but maybe you need to see the evidence. And I think the evidence only started coming through. You can clearly see there's a bit of a turning point when it got to September. And the realization there was suddenly I think our OEMs, specifically Hyundai, Kia woke up to the fact that they needed to reposition their products. They gave us great new products. So the launch of the Exter certainly helped Hyundai. The repositioning of the Sonet we'll get to just now, as well. And you can certainly feel as if they are on the path of trying to win back some of that market share. Now market share is a funny thing. You can count it, and it looks great on the slide. It doesn't necessarily mean profits immediately. That only comes down the line. But the reality is you need to just get the realization. And I think it's quite warming for us to see that our OEMs are backing this country so aggressively. Also, Hyundai and Kia are both now looking at their Indian plants to supply vehicles into South Africa, which is quite a big mind shift and to realize that you're actually getting most of your products now coming from India. And obviously, the Indian quality has actually now picked up tremendously over the last decade and it's actually now been something that you can really work with. So if you look at some of those launches that came through, maybe not so much in Renault yet, they're only starting with the Duster now in March. We had similar discussions with them. But I think on the Hyundai and Kia front, there's been a lot of activity. And then also Mitsubishi. Mitsubishi relaunched at Pajero Sport was a very good vehicle and then also the Triton soon thereafter. So also trying to get the excitement back there, maybe not such a big market player, but the niche that they're playing in is quite valuable to us because there's more margin in those type of more expensive products as well. So a lot of excitement coming through. And I think that's the key thing is that, that excitement that suddenly started building up. I think you can feel it when we go into our Board meetings that certainly the importer brands are suddenly coming to, to the fore again and being on the front foot. Now if you look at all of this, I mean, we obviously need to build on quite a few initiatives to enhance our business performance. I mean you saw where we were. Now we need to work on it. And a lot of these plans have been coming for and strategy have been coming for a number of months and even years. But the reality is you won't always see it immediately in the numbers. So I think you need to understand these initiatives and where they're taking you to. So the very first one is something that we've really been working on for a while. And I think a few of you have asked, well, when are we seeing another brand in Motus? Well, the good news is that, yes, we have actually landed one. We will be bringing Tata in this year. And that is actually quite a nice coup for us because I think there were a lot of other competition there as well, even themselves may be thinking they could do it themselves. And this is actually quite a key brand for us. Now why is it key? You need to understand who Tata is. You may remember that Tata's were here a few years ago, maybe the quality wasn't that great. The reality is that brand has changed completely its face. And if you see the next round of IPL games, in the cricket being played in April, please have a look out because they are the main sponsor there, and you'll see all the vehicles being displayed. But they are the third biggest brand in India. So who's the biggest? It's Suzuki. And as you know, Suzuki is bringing all those products into South Africa, and that's why they're the #2 player here. And the #2 player in India is Hyundai. So Tata is #3. So this will put us in a position that we effectively bring in the #2 and #3 brands in India into South Africa. So this is very exciting for us. And yes, there's still a bit of testing to be done, et cetera, before we really do the sales. But at least I think we landed a really big fish there. On our overall brand representation, this is more sitting in the rhino space when we look at our retail footprint, we will not remain as 1 out of 5 dealerships unless we actually change that on a continuous basis. You need to see who's the big players in the market, where is the volumes going and you need to make sure that you back the right ones. Obviously, a lot of brands arriving and you need to be a little bit circumspect the first day they arrive, are they really going to make it or not? I think we're all quite clear that there's going to be 1 or 2 casualties. But I think it's our job to really go and understand the product lineups they're bringing and what they can bring to the table as well. And yes, it's always difficult bringing in a new brand and a new one on dealership floor because on day 1, like I said earlier, there's no workshop, hardly any used cars, so it's reliant on that new car sales. And unless the OEM allows you to have a bit of margin in that quite difficult just to say, yes, I've got the brand and tick the box on volumes without any profits next to it. So we took it almost like one by one. And at the moment, we've now been able to get 8 Chinese brands that we now represent, 12 dealerships. So maybe it's still a slow start. But at the same time, I think it's important to go and multi-franchise those. Those are the only way you almost can make it work. And how does multi-franchising work? You're basically taking one of your more mature brands who is on a decline, but has got a massive workshop activity still you effectively split the showroom floor and you have the new brand selling next to it. So at least you have the new vehicles where you get a bit of a substitution with the new brand, while the older mature brand still gives you the workshop activity at the same time. And that's the way we've been playing it. It's not uncommon to do that in the rest of the world as well. We still do that the same way even in the U.K. and Australia, multi-franchise is actually quite a key topic even there. The third one on the list is also quite a coup that we've got because you really were struggling, you were knocking the door for a long time. And if you've been at this presentation before, we said in Australia, you need to grow slowly. It needs to be bolt-ons, et cetera, but there's one brand that you really want and it's Toyota. And you may say, well, why is Toyota so important for you? Well, if you look at the Australia numbers, Toyota controls more than 25% market share now for the last, I don't know, how many years. So if you don't have a Toyota, you are a little bit behind the game. And Toyotas are not up for sale anywhere either. So because they're such profitable dealerships, no one wants to really resell them. But I think through Jaco and Michael Clements, the team in Australia, they've really been working hard to try and find us one. They found us one close to our Wagga Wagga dealership that we've got in New South Wales. So this is in a town called Young, and we got the Toyota dealerships. And in fact, Jaco told me this morning, the deal is through. So it says March, but it looks like it's February. So well done Jaco. So that's on all the acquisition side. And you may say, well, that's very exciting and we keep on growing. And then I get to the fourth one, and it looks like a disposal. So what on earth are you doing? You're trying to grow international, but now you're disposing of something. Well, I think that's the rationale -- any time when you look at a business. And a large businesses as Motus, you always have to also make sure that you have proper strategic clarity and you need to reduce complexities as far as you can. We found it within the U.K., we've got 2 big commercial groups that we were backing. The one is DAF, DAF and the other one is Mercedes. DAF is #1 in the country. It got close to about 30% market share at the end of December now. Mercedes got about 10%. The only way that we could see ourselves being a more dominant player within the Mercedes space. So remember, they got 10% of the whole country. We only got a small fraction of that is to almost double up. That would have been massive capital injection into the U.K., into the commercial space. When we looked at it, we said, okay, the different option would be, let's dispose of that to another group who's also trying to expand because they were in the same similar position. It's a French group who's also got Merc commercial. We will dispose our commercial dealership to them and in effect, actually get a big cash inflow. That cash inflow will then be utilized into other areas within the U.K. market. So it doesn't mean I'm making the international smaller. It is actually a strategic decision to rebalance the portfolio. And we're very pleased that, that deal is about to go through also in March. We're still very big into DAF. So DAF has got 30% market share in the country. We've got 21% of that 30%. So we are, by far, the biggest DAF dealer group in actually in the world because there isn't anyone else will be bigger than that. So it's quite a key for us to keep DAF and see what else we can do in that. That was all on the vehicle side. And obviously, like I said earlier, we want to balance this. So you want to make sure you give enough attention to the one child, but also on the other one. So trying to make sure that we keep it as 50-50. It's a bit of a race, the one now at 54 and the other one at 46. So I have to give something to the vehicles. But I think the non-vehicles also need to deserve mention. And there's a lot of initiatives also on the go there. If I turn to the Mobility Solutions, there, we're certainly quite pleased with what happened with the vehicle asset finance side. We had a newly formed VAF alliance with ABSA. It started in May actually, but only obviously started kicking in, in this financial year. So it's a profit-sharing arrangement that will give you annuity income streams into the future. So this is on top of the relationships we already have with WesBank and with MFC Nedbank. So very good for us to have that extra relationship there for a bank who's really backing this side of the industry. Then within our insure and liquid capital side, we've been working quite hard there around developing new initiatives. So new innovation, I mean, we keep on talking about it. But the reality is we need to make sure that we reduce the dependency just on the dealer floors. And the one way of doing it is actually creating these digital channels. So a lot of effort has gone in there. A lot of our new product development is situated in that space. And this will certainly solve for that underserviced customer needs. On our Aftermarket Parts side, we're talking about out of warranty in the U.K. In the U.K., there's been a very big drive, and this is U.K. going into Europe eventually is around that FAI Pro. We discussed that before as well, where it's a new brand that we've developed. It's our own brand. We source it, we package it and we actually had to first test it into the market. There was great market acceptance of the products and so much so that we then had to go and solve the next problem and that is, okay, well, if there's going to be that much demand, you actually need to have your own warehouse space for this. So we had to go and find warehouse space. So Niall Lynch and the team in the U.K. went and find us a nice warehouse space in Milton Keynes. So it's exactly the right route you want to be in, in the U.K. We visited ourselves, myself and Brenda were there in November, also looking at the site, got it up and running and it's now fully functional from effectively the beginning of December. So that will actually give us the first throughput of that FAI Pro into the market. And that's a very exciting proposition for us. We believe that, that by itself can probably give you a growth factor as well. So very exciting. Yes, there was a lot of costs that need to be absorbed. So when you look at these numbers, those costs are already written off. Apart from the leases, obviously, which we still have, but a lot of initial costs around infrastructure needs to be built there. And then more importantly, also South Africa. I think South Africa last year, we were slightly disappointed about Aftermarket Parts, South Africa performance, felt it was slightly off the boil. One of the areas was around inventory availability. We solved for that and certainly believe as we sit here today that we are certainly a little bit ahead of the market and some of the other market players there. You have recently seen AutoZone being bought out by Meta, et cetera. Those guys are certainly not on the product availability level that we think that they need to be at, and we will take advantage of that in the meantime. So I think that is something that we also had to do to just improve the performance. And if you go and analyze, you will see there's actually been a good result from our South African business. So how do you see that? I mean, I like to have pictures. People love in my office, I always draw on the board and everything else. And I actually like to draw it. What happened in quarter 1 happened in quarter 2, measure it. If you don't measure it, it doesn't get done. When we measured quarter 1, this is what the arrows looked like, okay? Apart from the net finance cost, it came down a bit. I didn't actually want you to see the slide. And quarter 1 was certainly not pleasing. Quarter 2 changed dramatically, maybe not so much from the revenue side. I think there's still room to improve there. Like we said earlier, I think on the vehicle side, specifically because that's quite a bit that goes into revenue. But certainly, our operating profit came out at what we estimated at the beginning of the year. So we were slightly short, we made it up at least in the second quarter, and we are very pleased with the net financing cost. I think to really, like I say, break that camel's back and actually start getting into a downturn cycle is actually going to be great for us. So overall, what does the numbers look like? I mean, you've seen it. You've already seen the sense. I don't need to repeat it. But for those of you who haven't read properly. So the revenue, pretty stable. I mean, at 2% down, but it's ZAR 56 billion. So I suppose it's still a big number. Our operating profit, very pleased that we were managed to get over ZAR 2.5 billion. I think that was key for us to reach that mark. Yes, last year, we were slightly higher at ZAR 2.6 billion, but I think that we may be able to at least claw back a little bit of that. On the finance costs, 10% down. I think that is -- that was a big number for us that we were able to now prove to the market that we are actually reducing that finance cost. And that is despite, like I said, still investing into your working capital. Profit before tax, ZAR 1.5 billion. And then you can see the headline earnings per share up 3%, which is quite pleasing for us. And the interim dividend of ZAR 2.40 for those of you online. On the finance highlights on the other page, you can just see our equity to net debt structure. This is pretty close to where we believe we need to be at. I think we don't need to push it beyond maybe a 60-40 would be the outlier there. So you can see we're very close to the optimal levels there. Our free cash flow is still positive. And like I said earlier, a net asset value of ZAR 107. So that is it from my side, and then I'm going to hand over to Brenda to take you through some of the more detailed financial numbers.

Thank you, Ockert, for a fantastic overview of our results. So as Ockert was going through the results, there's probably 3 key messages that stood out. One is that Motus is a highly resilient company. If you look at our results in a tough trading environment, challenging economic environment, for headline earnings to be up 3%, that is phenomenal, especially if you look at the tough start that we had in quarter 1 and how the business was able to rebound in quarter 2. So as a management team, we are very proud that we've actually achieved a 3% higher headline earnings per share. And when one stands back and you look at but how did we achieve that resiliency, it really is kudos to the previous leadership that implemented the diversification strategy. 54% of our EBITDA came from non-vehicle sales. And why does that hold us in good stead? It's really because in periods such as now where we have low vehicle sales, the income that we get or the revenue from our non-vehicle sales is actually able to mitigate cyclicality and actually protect the bottom line. So really well done for the leadership team for having the foresight in implementing and driving the strategy around diversification. The next key message that I want to leave with you is Motus is a highly cash-generative business. I was surprised joining Motus when I looked at it for a period of 6 months for this company out of pure trading to generate almost ZAR 4 billion of cash before working capital and investment in vehicles for hire. That is -- that tells you that the stock that we have on our balance sheet is able to turn at quite a rapid rate. And 2 is our ability to generate cash does not cast any doubt over the operational efficiency of this organization. And lastly, the third message to leave with you is that Motus is an agile organization. When we stood here in front of you 6 months ago, we were worried about the Chinese competition. We were worried about the softer economy. But when we stand here in front of you today, you are able to see how quickly this organization was able to respond to that changing vehicle automotive landscape. We were able to call on the relationships that we have with our OEMs and quickly respond by introducing new vehicles into the market at a price point that was suddenly attractive to our customers. We were able to then also leverage on our strategic partnerships and through the innovation that lies within our Mobility Solutions division, start to introduce new products into the market. At yesterday's Board meeting, Kerry highlighted as well that suddenly, we were looking at the population that we were selling our Mobility Solutions products to only our existing customers where we sell vehicles to. But when you stand back and look at it, the population is much wider. Every single one of you that drives a car today should be able to buy, for example, a scratch and dent policy. You should be able to buy an extended warranty and why not? And that is what creates the excitement in our results of what the opportunity could be. So as we draw on those key messages and reflect on our financial performance for the first 6 months, we have an extract of the income statement that is presented on Slide 17. So unfortunately, we're disappointed that revenue is down 2%. But against the backdrop that Ockert has just shared with you as to why with new vehicle sales coming under pressure, you see that our revenue was down ZAR 1.9 billion out of new vehicle sales, and that was largely due to the performance within our retail sector. However, this was offset by about ZAR 600 million that came from the used car revenue as well as a stellar performance from our Aftermarket Parts business. So overall, our revenue was down ZAR 992 million, which is the 2% I referenced earlier. Operating profit was down 4%. And you're probably saying, well, 4% is a big number. But when you put it into rands and cents, it's ZAR 108 million. And what actually drove that was margin compression. We see the environment today where it is a much softer environment and consumers are actually buying down. They've moved from your premium brands and actually now looking at entry-level vehicles. Entry-level vehicles by its nature, carry a much lower margin and hence, the margin compression that I referred to. Second is we are seeing a lot more aggressiveness in the market in terms of being competitive. And our competitors are driving prices down. Suddenly, when you listen to the radio, you look at the media, you see that prices are now being messaged at ZAR 299,000 for a brand-new car. Historically, in the previous set of results, we were selling Mercedes, we were selling Audis, we were selling VWs at ZAR 700,000 and above. And all of that competitive pressure in the market is starting to impact on operating profit. Importantly as well within the South African context, the headwinds of foreign exchange is also starting to impact on operating profit. Particularly when you see messages coming out of the U.S. and you see the rand starting to fluctuate. And lastly, the other last factor that I want to talk to you about is we have seen an increase in prices of our vehicles that we are purchasing and the parts that we are purchasing. In most instances, we have not passed that increase on to our customers, and hence, we have absorbed it within the operating profit line. Now that all sounds negative, right? And I can blame the environment for as much as I can. But let's look at what did we do. When I joined Motus, one of the 100-day plan, so to speak, actions was about how are you going to get this interest rate charge down. So Corne and I have become very good friends recently because we said we have to do this together with Ockert, and we said, what is our plan? And every single month together with the finance team, we have been driving a sustainable working capital number. Looking at that inventory number and looking at how do we get to an optimal stock target within this business? But second to that was also challenging our net debt number. How do we look at the mix of funding? How do we look at how do we fund at the best interest rates. And hence, you'll see later in the presentation, we have moved from floor plans to sometimes using bank debt because bank debt rates were cheaper. But all these small little actions have culminated in our net finance cost reducing by 10% and really well done to the management team. I think you came to the party and you've helped us to be able to achieve a reasonable dent in our finance cost line. Net debt reduced by ZAR 1 billion compared to December '23 to December '24. And that is a big number. And for the mathematicians here in the room, ZAR 1 billion using an average interest rate of 10%, that gives you the ZAR 100 million delta that you're looking at on the screen. So really well done. Is there more that can be done? Absolutely. Corne and I are not going to stop here. We've got a full journey to ride ahead. So hopefully, you see some better news in the second half as well. That culminates in our profit before tax increasing by 1%. And it really shows you that if we can crack the nut on our net finance cost, and reduce net debt significantly that will result in an uplift of returns to our shareholders as well. So profit before tax, up 2% to ZAR 1.5 billion. That is a reasonable result, I think, for this company. And from an income tax perspective, you see as well is that we have maintained our effective tax rate at 25.5%. It's more or less in line with the previous year. And the delta to the South African rate of 27% is largely due to exempt income. Nothing funny in here. You see it's more or less consistent with the prior years as well. By putting all of that together, we then sit with a profit after tax or earnings attributable to shareholders of ZAR 1.1 billion, which is also 1% up year-on-year. As Ockert has alluded to, after quarter 1, we didn't think we could actually get here. So we are very proud of the result that we've achieved. And overall, with headline earnings being up 3% was no easy feat. In analyzing some of the other results announcements that we've seen coming out during the week, we can really say that we've done well. And I think 3% we're pleased with. But is there more to come? Absolutely. That were the end results in a dividend per share of ZAR 2.40. So as you're aware, our dividend policy is to pay 35% of headline earnings per share. That is exactly a mathematical calculation of 35% of the headline earnings per share number. So to put it into context and looking at the returns that this company is able to pay, in the appendices of your presentation, we have given you a history of dividends that we've paid since 2021, the reason being immediately after COVID. And you see including the ZAR 2.40 dividend that we have declared that gives you ZAR 25. And I'll leave it for you to be able to work out as an investor, if you invested ZAR 100 in 2021 and you've gotten cumulative dividends of ZAR 25 that has to be a superior return relative to other peers in the market. So this is to be to put it into context to actually look at where did the money actually come from. And when you look at this slide and this illustration here, you'll see that our biggest contributor to revenue is still our Retail and Rental business. And because of the softer economy that I spoke about, the lower demand and the reduction in new vehicle sales, you see that what dragged down the revenue number was that lower contribution from retail that comprises 70% of our business. However, due to the actions that Ockert spoke about earlier in our importer and distributor business, when I referenced Motus being an agile organization that was able to respond very quickly, you see that our importer business actually increased their sales by 7% period-on-period. I am super excited actually by the new Exter that has been launched. And hopefully, some of you have got to see it, at least test drive it. If you haven't, you've got this weekend to do so. So hopefully, you can attest to the excitement that gets created within our importer business as well. Just thought I'll throw in that selling point for our Hyundai colleagues in there as well. So when you look at our Aftermarket Parts business, I think what stands out for me as opportunity, when I say there's only good things to come from this company in the period that follows, is that the vehicle replacement cycle has extended. Our consumers no longer have that additional disposable income to be buying cars every 3 years, every 5 years and are actually keeping their cars for longer. What does that mean? It means that our Aftermarket Parts business now starts to see an opportunity. We can now sell parts, whether it's brake pads, whether it's air filters. This creates opportunity for this business. And hence, we should start to see how revenue from our non-vehicle sales starts to grow in tandem as the car park is starting to be extended. So then looking at operating profit, again, you can see the largest contributor to operating profit is still our Retail segment. And because of the 8% reduction, the margin compression that I spoke about earlier, the mix of vehicles when comparing period-to-period as well as the impact of FX and the higher pricing of vehicles that margin was actually pulled down. But again, the good news story that you see out of here is our Aftermarket Parts business provided the buffer with operating profit actually increasing by 5%. So let's go a bit deeper then into each of the segments and how do they actually perform. Within our importer and distribution business, as I said to you, revenue was up 7%, fantastic. And really testament to the strong relationships that we have with the OEMs and getting them to truly understand on the ground the challenges that we face, the new Chinese or other Asian models that are on the ground, the price points and how do we actually compete. However, I did indicate earlier that operating profit came under pressure due to the margin compression as well as the FX impact and the higher costing of parts and vehicles that we are procuring. But importantly, as I said as well, is from a foreign exchange volatility perspective, this business is fully exposed. Why? Because we're importing all of the product. Our risk management policies remain robust in this business. We have a very disciplined approach when it comes to hedging, and we hedge 7 months in advance. And that's because we want to get certainty on price. The only way we can make money in this business is if we know this is the guaranteed price because we've bought forward cover for 7 months out, we can then plan around the other drivers as to how do we get a profitable segment into play. So you'll see that for the euro, we are covered until August 2025 at ZAR 20.06. And given the volatility, it's really hard to be able to judge today is a good cover or bad cover. It could change equally as well tomorrow. But what we know is that we can plan for the next 7 months. And from a dollar perspective, we are pegged at ZAR 18.20, which I think is a healthy rate, right? ZAR 18.20 we can actually work with. The one key element to highlight on this slide is looking at the pie chart, when you look at our car rental business, right? And why is car rental such an important part of our portfolio is because we are able to sell the cars or provide the cars into car rental. We earn a revenue stream from renting out the cars, and I'll touch on that a bit later. And then we get a second round of profitability because we're able to sell it as a used car as well. So if you look at our rental fleet in December '23, there was 30% that went into that space. But when you look at December '24, it was 21%. We are able to read the market. We will not flood all of our cars into car rental. So we're able to look at the market, look at what is going to be the demand. And here, we sell more into the dealer channel, which means we recognize the revenue upfront. When it is sold into car rental, there's a bit of delay in terms of when you actually recognize that revenue number. Looking at our Retail and Rental business, I think I've touched on that quite extensively around why we've seen a lower revenue number. And Ockert has given you a good sense of our SA retail business in terms of the headwinds that they face. However, what we do have in here is the buffer around vehicle rentals. Our Europcar and Tempest business delivered a strong performance for the first 6 months, particularly in Cape Town, where we have tourists that are increasingly visiting that city. We found even on days that we had 100% utilization of our total car fleet. The waiting lines are now starting to increase at Europcar as more and more people are starting to rent our vehicles in. And I think it's really thanks to one being the school holidays last week, the number of conferences, as well as the number -- as well as it being an attractive city. So overall, our car rental business has done fantastic. It is a different narrative that you heard from some of our peers earlier in the year, but we are really very pleased with car rental. You'll see that their revenue was up 2% and their operating profit up 12%. You're probably going to say, well, how do you really make money out of this business? One is that we did increase our average daily rates because we believe in our brand. Two is that our average utilization rate was about 70%. If it is 70% and above, you actually make money. So on average, we ended the year at 70%. And thirdly, we drove an improved cost management strategy. We looked at our business and we said it's not good enough. It's about how do we get more efficient? How do we implement innovative solutions and how do we drive the bottom line. And it is with that mindset that we were able to generate an operating profit of 12% within this segment. That helped to offset some of the less attractive results that we had seen in retail. Looking at our U.K. environment, and one of the analysts had said to us just before the close period, how do you see the U.K.? What is your view on the U.K.? The problem that we have is that the cost of living has increased substantially within the U.K. The environment is softer. And as much as the local government is trying to reduce interest rates and trying to stimulate the economy, you still feel the pressure with lower disposable income amongst our consumers. So when we look at our passenger vehicle segment, particularly, we do see a lot of strain, right? Our customers are just not buying sufficient cars. The vehicle replacement cycle is being extended. But what gives us comfort is our exposure to passenger in the U.K. is quite limited. As Ockert indicated earlier, our concentration is rather on the commercial side of the business. So we're continuously looking at the brand representation in the U.K. We're looking at cost optimization and also trying to work with consumers on how can we get to a better installment and be able to stimulate vehicle sales within that space. However, the positive story is actually on the commercial side of the business. Quarter 1 was a bit soft. And what we've seen is customers starting to move away from having a focus on availability to now looking at cost as well. However, we were encouraged that at the end of December, the DAF market share actually increased back up to 30%. We are, therefore, hopeful that we should see a much stronger performance out of the commercial side of our business in the second half. And I think what also holds in our favor is that part of the regulatory requirement in the U.K. is to actually have your trucks or HCVs being serviced at regular intervals. So that creates a steady income for us. Australia still remains as a business that is a stable contributor to the top line and the bottom line. You'll see that our revenue increased by 1%. And this market is still holding at 1.2 million vehicles per year, right? So that is a huge car market in terms of annual sales. It was a second year where they achieved record sales in terms of the numbers starting to increase. But I think at a point, it's going to start to saturate. But at the same time, we still make good money out of them. The slight reduction in operating profit was due to margin pressure as well as the mix of vehicles. From what Ockert shared with you earlier, you saw that in the Australian market, we sold many more used vehicles. So slight margin pressure, but nothing to be concerned about. At this point, they met the overall forecast in their local currency. Mobility Solutions, when I looked at this number, I was amazed because this is ZAR 1.3 billion to the revenue line, right? And this is purely through innovation, digitalization as well as selling new products to customers. This is a serious contribution to our revenue number and something that we need to protect and grow over the years to come. You'll see that our operating profit grew by 6% and tipped in over the ZAR 650 million market, ZAR 650 million to operating profit. Now many of the analysts say, but we don't really know how to model the Mobility Solutions segment. Is it an annuity business? It is an annuity business. And when you look at the balance sheet under contractual liabilities, you see we have about ZAR 3 billion that's still sitting in there. And that will be money that will be released into the income statement over the periods to come. But importantly is as that money is being released, we are topping up as we are selling more vehicles and selling more products now to customers as well. So we're very pleased in terms of the AI that has been deployed in terms of engaging with different strategic partners to create new products and actually now trying to touch the lives of many more people than we have been historically. Our Aftermarket Parts still remains probably as the star performer in this set of results with revenue up 5% and operating profit up 5%. In our South African business, as Ockert has indicated, revenue is up 7%. But look at operating profit, up 20%. This is comparing December '23 to December '24. And the large reason for this is, one, there has been a change in the competitive environment. But 2, it's also been around the improved availability. It remains as a fact that if you have the stock available, particularly on your parts. And if your customer comes to you and you're able to service them, you will get that rand and you will get that dollar. So this remains something that we're going to continue to watch and look at how do we take advantage of the current competitive environment, but definitely well done to the South African team on a great performance for the first half of the financial year. Looking at our international business, and you'll see here, many investors have also asked us, do you regret buying MPD, which is the retail arm of our U.K. business? Judging from these results, absolutely not. They've delivered over and above our expectation. And looking at it all together, you see that revenue from our international business increased by 15% and operating profit by 11%. We continue to still make money out of FAI and ADC, which is within the wholesale business, and there is still more to come. We only operationalized our new warehouse in the U.K. being Milton Keynes in December. These results don't reflect that full benefit of having to fully, fully market and supply our private label product being FAI Pro. As Ockert has indicated, the acceptance in the market has been phenomenal. He and I both when we visited the U.K., actually went to each of the retail centers. It looks very much like a MyDesk, except it's on a smaller scale. But the revenue that is being pushed through those little shops is amazing, right? You see these little MPD trucks driving around on a constant basis. But what has been a bit of an eye-opener is how well the FAI Pro private label brand has been accepted. And therefore, there has to be opportunity that is not yet reflected in the numbers that you see on the screen. So you can hear the excitement in my voice. I think MPD is going to be a future star. I think our Aftermarket Parts in the U.K. is being undervalued, and there is definitely a value unlock that's sitting in there. But what is the key value unlock nuggets in here? It's actually our Asia business. If you look at Asia, you'll see that their revenue is up 63% and operating profit up 8%. We have now managed to get an Asian person on the ground situated in Shanghai that is now engaging directly with the supplier to be able to buy the product. And now we use our Asian presence to actually be able to supply into South Africa as well as into the U.K. We are maximizing the value that can be extracted out of the integrated value chain by now basically having control from Asia all the way into South Africa or into the U.K. That has enabled us to have better availability in South Africa, resulting in higher sales and likewise into the U.K. as well. So when you look at the operating margin and you say about 8.4%, it's the same as last year. The reason why the margin is exactly the same is because of the once-off costs that we incurred in December to operationalize our Milton Keynes warehouse. So that cost will not repeat itself, and we should see improved margins coming out of this business into the second half and the periods to follow. So that's the overall income statement picture that I've shared with you. As you can see, probably a soft quarter 1 recovery into quarter 2 with that momentum hopefully continuing into quarter 3 and quarter 4 with a lot of value unlock initiatives sitting in the back end of this calendar year. So looking at the balance sheet, I'm not going to go line by line, but probably draw your attention to a few line items. As Ockert mentioned, as part of the portfolio optimization and our intent to dispose of the Mercedes truck and van business, all of the assets and liabilities relating to Mercedes Truck and Van has been classified as assets held for sale on the face of the balance sheet. So hence, when you look at your right-of-use assets, the reduction of 9% that you see compared to the June number is purely due to that reclassification with the remaining delta relating to the normal amortization that you see as well. Our vehicles for hire. Now it's never a good representation to look at June to December on vehicles for hire because of the rental season that we have. So when you look at a 19% increase in vehicles for hire, please be wary that this is purely due to the upfleeting to, to cater for our car rental. These cars go into the car rental for other competitors as well. And this should get back to its normal levels by the time we get to June as well. In terms of our net working capital, you'll see that our net working capital was actually 8% up compared to June. A large component of this was due to inventory. Now we spoke around the availability of parts for South Africa, leading to higher sales. We spoke about the operationalization of Milton Keynes. So when you look at a 4% increase compared to June, a significant portion of this increase was to just get our stock levels at the appropriate level for our parts business. But second to that, we also had a few late shipments. For some reason, the port at Durbin became very efficient during December, and we had shipments that arrived in the last week of December. So this was more of a timing issue, a point of time delta that you're seeing in here. So it's an importer stock as well as parts. Are there pockets in the business that still require some attention to get an optimal inventory level? Absolutely. And if you look at our CEOs around the table that's looking at me thinking, here comes tomorrow, you're going to ask us to reduce our stock. There still are some pockets that we need to be able to get to an optimal number. But there and thereabouts, I think we should be slightly better than the June number that you are seeing when we get to the final year results. Trade and other receivables is up 13%. Again, it looks like a double-digit increase. The reason for that is in the U.K., we get incentives and rebates that we accrue for in December and usually only receive it in January, which we did. So that's a timing issue again. And your trade and other payables are up purely due to the higher inventory numbers that you are seeing. Again, as a recap, your contract liabilities relate purely to Mobility Solutions. This will come through as an annuity into our earnings numbers in the periods that follow. Our core interest-bearing and floor plans that we see from financial institutions. So when Ockert and I say to you that net debt has reduced by ZAR 1 billion from December '23 to December '24, here's a comparison. The reason why we don't compare to June is because of the rental season, right? In any December, you will always see Motus will have a much higher number purely because of the financing of those vehicles that go into car rental. At June, it gets back to its more normalized level due to the de-fleeting that happens thereafter. As I also said to you, in managing our net interest cost, we also have to look at could we settle some of our floor plans that carry a more expensive interest rate and actually use some of our bank funding debt that is at a lower interest rate to be able to minimize the interest bill, and you see the effect also on this slide as well. So looking at our cash flows, when I say to you that I was super impressed when I joined Motus and looked at the cash that we actually get into the bank from pure trading, there's a ZAR 3.9 billion in here, and that is before the allocation to working capital and vehicles for hire. So I'm going to skip through this slide and actually go to more to a graphic that illustrates it a bit better. And you can see that out of that ZAR 3.9 billion that got generated, as Ockert has indicated, is we will never starve our business of working capital and vehicles for hire. We see our vehicles for hire as an investment. And you can see that, that is where the cash was mainly allocated to and then the net finance costs that were minimized to just ZAR 1 billion for the period. So a big question in the previous roadshow was around what is your capital allocation framework. What I can share with you is that we do follow a very disciplined capital allocation framework, even to the sense -- to the point where Hyundai came to us and said, please, can we have ZAR 7 million to paint the building? And the answer was no, your building was good enough because it may sound frugal, but the point is that we look at every single rand that we are spending to make sure it's going to give us the best return. So how do we actually apply this disciplined capital allocation framework? The first order of allocation is to working capital and our vehicles for hire. Why? We know it is going to translate into cash. And I did talk to you about the cycle in which the cash is released as well. The second is around capital expenditure and our investment in innovation and digitization. We see these 2 as being enablers to the value unlock in the future. And to be able to put it into context, for the size of this business, as Ockert indicated to you, when we generate ZAR 56 billion of revenue, we only spend between ZAR 400 million to ZAR 800 million in a year when it comes to capital expenditure. We're not a capital-intensive business at all. The third allocation is dividends. And you can see consistently, we've maintained a 35% dividend policy based on headline earnings per share. Fourth order, we will look at acquisitions, but it has to be strategically aligned. Bolt-on acquisitions, meaning it's a lot smaller. And then we will look also in terms of our diversification strategy and internationalization. But it's all considered with a value lens. We will look at WACC plus 2% as being an absolute minimum, making sure that the quality of the earnings of the portfolio does not deteriorate. And last but not least is share repurchases. This is something we look at opportunistically. And when there's additional cash on the balance sheet or looking at the share price, we may decide to pull on this lever. So overall, that is our capital allocation framework. You can see very methodical, systematic in how we apply it within the business. But what we were positively encouraged by was our first maiden credit rating that we achieved for Motus. So we went out and we got this credit rating. And with an AA minus rating, we were super surprised, but also very proud of this company and how we are perceived by debt investors in this particular instance. We believe that now that we have a credit rating, we can now look at debt management from a different angle and now bring some flexibility into that. So hopefully, you are excited as I am. And when we sit here in the next 6 months, we'll have a slightly different story to tell you. So on that note, back to Ockert.

Brenda, when you speak, it sounds like you've been here for years. So well done. So now that we've heard all of that, I mean, all that's left is how we're actually going to grow this business. You can hear there's a lot of great initiatives. We certainly feel as if we still believe that we need to focus on these 3 things overall. The focus areas is still to have that 65%, 35% split between international and South Africa. The 50-50, as you heard earlier, we're going to spend enough time and energy and attention to both sides of that equation to make sure that we actually derive enough operating profit from both of those sides. And then we obviously spend a lot of time and energy on innovation. I think we've taken you through even at our last Capital Markets Day, we've showcased quite a lot of what we were doing in that space. I think on the innovation side, like I said, I mean, you saw most of that. But you also sometimes just need to stand back and say, well, are these things really tangible? You keep on talking about it. And here's just 3 examples, and I thought I'll just share those with you just a little tidbit so you actually at least understand this is not just talk, is we're consistently trying to innovate and also have driven programs with other parties. So in this instance, that first example is just a key project that we're currently doing with the Discovery Insure. This is something that we would be sitting with between 2 of our segments. So it was driven on the one side by our Mobility Solutions on the other side, obviously, on our retail. And that is where we launched the Vitality car rating. So with Discovery Insure, they're actually doing it on their platform, and we can share in the benefits of that. The second example there is around Klutch. That is something that some of you might have seen also already at our Capital Markets Day. And that is where we're actually going into the informal areas of the underserved part of this aftermarket part cycle. We started the pilot last year, got some learnings, had to rejig a few areas within the final plans, and it's now ready to pretty much go to market in the next few months as well. And then lastly, we have already started at EasyGo at Europcar to actually have this ready-to-go type of an environment, and we're now rolling it out also within our Tempest stable as well. So really great initiatives that we've actually started to employ. So overall, just as a summary on the growth strategy, I mean, we've pretty much highlighted all of these already. You've heard about Tata. I think there's more that we can do within the optimization of our dealership footprint. We certainly think that we're not getting our fair share of the pre-owned vehicle market, and there's a lot of plans in place to reformulate that a little bit. And the rest are really around Mobility Solutions and on FAI Pro that we already spoke about. Of course, to really enable all of this, you have to rely on your people. I don't think we -- just as EXCO team sit there at the top and decide, well, this is how it's going to work. I think our people are really the enablers of this. And that's the key ingredient when you start talking innovation, et cetera. There's 4,000 people doing innovation. It's not 1 or 2. And I think that's really the key enablers to actually drive the success. And obviously, these key relationships we have with other parties as well. On the ESG side, I think we have shared this with you in the past. You know all these initiatives that we're busy with. And we certainly also challenged ourselves saying, well, if we need to really drive ESG, make it part and parcel of what you need to drive every day. And I think our Chair of the SES Committee were quite instrumental in making sure it's also included in our room for executives. And these are really the 4 key areas. And we use the same ones that we use for our international debt funding. And these are the 4 criteria we also have inside our own KPIs for even the execs. And this is around electricity usage, around fuel consumption, diversity and inclusion, which is specifically aimed at female representation and then also our community development. So I think just evidence as well is that we live and breathe around the ESG side of things. Well, to put together a prospect when everything sounds so rosy standing in front of you, I can tell you all the growth stories -- and then I almost start the slide and you first think, well, I need to give you a caveat and a bit of a disclaimer at the top. And it sounds a little bit like my children, when I ask them, where did they -- how is their school report. But in any case, they first tell me how bad it could potentially be and then they will give me the number. But I think we are in a constant changing environment. I think you have to see the backdrop of that. We're still confident as we stand here that our operating profit is going to be maybe marginally below the prior year. As you can see, we were 4% down, trying to make that up between now and the end of the year. Low double-digit decline on finance costs, quite confident about that one. And included in that is also, of course, as Brenda pointed out, we've got that rating now as well that can give us another area to go and look at maybe at additional funding and maybe trying to even reduce costs even further there. And we believe that our headline earnings would be at least in line with the prior year. So Motus remains cash generative. I think there's sufficient funding facilities in place and I think to really drive this business. So I'm really excited about what lies ahead. I think the 6 months is going to be telling. I need to thank at least the executive team around the table. I think they've done a fantastic job. I think the seamless transition that we had within the top management team, I have to take my hat off to Brenda to try and understand this group in a very short space of time. The team obviously is supporting her with the likes of Uvasha, our Group Finance Executive, Corve from the Treasury side, all, of course, needing to play their part. So I think we -- all in all, a fantastic team that drive together. And then great facility, everything worked well. I know we had a few hiccups to try and just make sure everything works today, but I think to Justine and her team as well, I think well done. I think you've done very well, and thanks to the Investec team for hosting us today. So on that note, I think I'll open up for some questions.

Do you want to start? I don't know, are there any on the -- okay. Anyone on the floor question? Okay, on the webcast.

Okay. So the first one is around the Tata distributorship. So please, can you shed some light on timing and model range as well as your views on the brand reentering the SA market?

Yes. I think we touched on it earlier. I think timing is the key one. We're busy amalgamating some of those units at the moment. It obviously takes a little bit of time. And then we would need to put in a proper product range. So the range is very wide. We have to be quite specific which ones we want to bring in. They obviously have a host of products on that side, which is great. We managed to drive them on the test circuit. So I can tell you they're all good-looking vehicles and good quality, myself and [ Ray and Todd ] had lots of fun there. But at the same time, I think we will be quite specific. It’s probably in the entry level first. So entry level to small SUV is probably where we believe the sweet spot is going to be, very competitive priced in India, and we believe we would be able to do the same in South Africa. Timing, probably looking beyond June.

The next question is around vehicle rental. Vehicle rental had a great year. What is the trajectory going forward?

I think everyone always wants me to at least tell them exactly what the profit number is. Like I said before, we combine it with [indiscernible] it is a bit more difficult, and that's why it's inside the Retail and Rental segment. But we're certainly currently on the front foot. I think as you've seen there on the slide, our utilization is fantastic. I think we need to make sure our service delivery stays with that so that we can actually drive this for the next wireless -- in the next 6 months. It is -- at the moment, it feels as if we're slightly on the front foot when it comes to the local and international travel as well. And you would have seen if you visited those airports, specifically, I know my wife keeps on sending me pictures and that they are quite busy, and that's always a good sign. And it feels as if we're currently getting a little bit ahead of the competition maybe there. So utilization stays up. Average daily rentals looks like it's still staying intact as well.

Then the last question that came through on the webcast that we haven't addressed through the presentation is just a bit more clarity on the prospects. You mentioned that H1 was a tale of 2 quarters. It sounds like Q2 was probably ahead of expectations. If Q2 conditions persist, why is the outlook for the full year muted with headline earnings in line with prior year?

I think the prior year also had a good second half, and I think you need to see it with that lens on. This would mean if we're putting headline earnings in line with prior year that would mean it's 14% up H2 versus H1. So we do believe that we do still have the momentum from quarter 2 still holding on. So that would probably answer that question. I think you just need to dig a bit deeper into the numbers itself.

And then if we can just check if there are any questions on the conference call.

At this stage, there are no questions on the conference.

Okay.

Good. There's no more questions. Thank you very much for joining. We maybe ran a little bit over, but we said 10:00, so it's close enough. And thank you very much for attending for today. Thanks.