Motus Holdings Limited (MTH) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today for our pre-close call. With me today in attendance is Ockert Jacobus Van Rensburg, Motus CEO; Brenda Baijnath, Motus CFO; Sejal Joshi, IR specialist; and myself, Justine Oosthuizen. This session is an opportunity to share insights into how the group has performed operationally during the period heading up to our year-end close period. I'd like to remind you that the information we'll share today is directional and unaudited. Ockert will be taking us through a presentation, followed by a question-and-answer session. [Operator Instructions] With that, over to Ockert.

Good morning, everyone, and thanks for joining us. I think as we start the session, it would always be good, I think, just to take a little bit of a helicopter view to see how the business is performing in the 3 geographies. So if you look at the 3 geographies that we currently operate in, which is really South Africa, and I think the United Kingdom, probably second and then Australia. They're different, but also in some sense and shape or form almost a bit similar as well. I think we've obviously seen over the last year or so that there has been challenging economic conditions pretty much in all 3 of them. And maybe in different times, you see them bouncing back into a growth phase. If you stand still just on South Africa, I think in the last while, we certainly have seen some positive news with interest rates reducing by about 100 basis points in the last 12 months. And then also the inflationary pressure seems to have almost like stabilized a little bit at this 2.8%. This does bode well for the momentum for increasing new vehicle sales. It continued into calendar year 2025 from where it ended sort of in the last quarter of '24. And this was stimulated by quite a few things. I mean the one that most of you will be familiar with is, there's been quite a few new entrants. But at the same time, there's also been fresh model launches from traditional brands, including quite a lot of entry-level models. We've seen the interest rate cuts, as I said. And then I suppose we had limited selling price increases, which at the back of that pent-up demand that we had post-COVID has actually resulted in some growth in the passenger vehicle market. Not so much into the LCV and HCV markets. But overall, I suppose, a car parc of 13 million vehicles in South Africa. In the U.K. of the 3, that probably feels the one that's got the most constrained economic environment at the moment. And it's pretty much been at the back of these higher minimum wage pressures that's actually started to come through. From April, there's been new regulations that came into play there, and it has certainly put a little bit of pressure on to this last quarter of this financial year again. But in all accounts, I suppose, new vehicle sales, I mean it is gradually still recovering. We have also seen the growth in the passenger market in that particular space. They've certainly had a bit more of EVs in their market, so that has certainly helped them as well. And the overall car parc there, we're looking at 42 million vehicles. And obviously, they've also had the interest rate reductions of 100 basis points. Moving over to Australia. They've always been a little bit lagging when it comes to reducing the interest rates, and it's only reduced by 50 basis points there. But it does look as if they would still continue with that. They've obviously had the change in leadership there as well. They've had quite a few elections and so forth that it's come through. But at the same time, I think the inflationary pressure there remains pretty stable over the last period. There appears to be a slight contraction in the new vehicle sales, but it comes off a very high base. So nothing really to worry about. But we have seen consumers also opting for pre-owned vehicles in that market. Also a fairly large car parc of over 21 million vehicles. And I think that's a bit of a bird's eye view of what it looks like. If you then move more into the consumer trends that we're seeing in these markets. I think, with all these additional options suddenly available, both entry level and also these days also in the premium brands that you see a lot of new launches. That as well as the new automotive entrants in the market, we've certainly seen that there's a lot of options for consumers. Albeit I suppose the buying down trend to a lesser extent, but it is still there. I suppose it's more around affordability. But with vehicle pricing not really increasing, we've also seen people slightly moving up into other premium categories as well. On our vehicles and parts, we've actually seen over the last few years that people were buying less premium brands, more private label and also one of the reasons why we, for instance, in the aftermarket parts decided to launch the FAI PRO own private label. I suppose the one other area that you have seen also in other presentations, there has been an increase in the pre-owned vehicles offering. To a large extent, it is due to the replacement cycle taking place. So as you see new entrants coming into the market or people just trading in vehicles, you also see the pre-owned vehicles being in quite a good space. Obviously, to try and navigate your way through this, I mean, we remain a chosen route to market for the entire automotive value chain. And we do it through the new vehicles, the pre-owned vehicles, the parts, workshops, vehicle rental and also the other service offerings. So not just one area of the business, but I think all of them is the way that we go to market with our product ranges. On our primary focus areas, and this is more for what happened in H2, I think, you were all familiar with what happened in H1. I think we set out to say we pretty much wanted to focus on 5 areas in particular. The one that quite a few have mentioned that you were concerned about was improving the importer margins. There, I think we're well on track to be close to that target of hitting our H2 margin, which we said should get back to about 3.5%. I know it's still a month to go, but the reality is it looks like it's on track there. And that comes off a base of only 3% margins in that first half. So it feels as if we're getting slightly better on to the front foot. And that has been as a result of OEM discussions, as you've heard already, very little on the price increases. So it's more around talking to OEMs, getting the pricing right from a purchase perspective and also taking a little bit of cost out of that business. On our rest of our retail business, I think there's been a deliberate shift to increase our Chinese brand representation. And maybe as a snapshot because we get this question quite a lot, how much representation do we have? Obviously, there are a multitude of brands in there. But in South Africa, if you take out the importer sites, so in the non-imported sites, we've got an 18% representation. We also participate, obviously, in the vehicle rental side with some of these Chinese brands. And also on the pre-owned, we've started seeing some of them being -- coming through as trade-ins these days. In the U.K., we've got about 19% representation. That's on passenger and LTV sites. In Australia, we only have passenger sites. And there, as you would have seen in the past, we've got a very strong brand representation across all brands. And in this particular case, we've got 29% representation of all passenger sites. We have focus to grow our South African pre-owned vehicle volumes. We felt we were slightly behind the curve there. As you would have seen in past presentations, we were weighted a lot more towards 0 to 3-year-old vehicles. I think we might have even said we were quite happy to buy up to 5 or 6, but you would have seen from the sales data that we have been selling a lot more in the 0 to 3 years. So there was a reformulation strategy that we've taken on board, where we leveraged our technology to make sure our valuation processes are better. We have restructured the way the incentive drivers are working, and we have broadened our appetite and extended focus in this area, not so much maybe in this year that you will see, but certainly going into the following year. On our improvement of Aftermarket Parts margins, not so much that we needed to do in SA. I think it came maybe off a lower base, and there were some one-off costs in the prior year. So you will see in this current year that the South African margins are increasing. In the U.K. side, break it down between the wholesale and the retail, I think on the wholesale, there's still a bit of work to be done there. We obviously started that new warehouse, and there's warehouse duplication in there and some one-off costs, but that lag in that vertical supply chain will probably work its way through the system in the next 6 months or so. In the U.K. retail margin side, that's the old MPD business, that is exceeding expectations and is actually delivering very good margins for us. Then the last focus area for us in these 6 months was really to try and see if we can reduce the net debt levels. There was an active focus around it. And we obviously also did discuss with you that we would look at refinancing maybe our book, which we have done. We successfully refinanced our SA funding facilities, which was oversubscribed, and we secured them at lower interest rates. So a very good outcome for us even in that particular regard. Moving a little bit more into detail around what we do with the portfolio, maybe in the last 6 months as well. We have discussed with you that we're launching the Tata passenger vehicles. We've managed to now complete that homologation process. And we are looking at launching this in September 2025. We've also finalized the vehicle lineup. It's now going to be specific. And we are going to compete in the entry level to small and medium SUV segments. And the 4 models that we're going to be launching is going to be the Punch, the Tiago, the Curvv and the Harrier. All of those, you can obviously go and see on the Tata website. We have showcased that also to the dealership network, which we've invited to see how much interest there would be. And I can tell you there's been overwhelming interest in this brand once I think the dealers also saw the products and the quality of them. And also the vehicle pricing is going to be competitive. So I think initially, we told you that we would try and launch with maybe just a 20 dealership network. It looks like it's going to be bigger than that. So maybe 20 by ourselves and then some independents making up 30 to 40 in the dealership network. And like I said, we're looking at September as a launch date there. We don't expect a massive working capital impact. I think, obviously, launching the brand, we will obviously buy those vehicles. But by December, it should pretty much be in play already. And as it goes into the retail space and with the fact that we're going to have more independents as well would probably help. Within the Chinese brands in South Africa space, I already told you the percentage that we've got from our non-import OEM new vehicle sites. We've got 18% where we've got some of these Chinese brands. And the ones that we currently got is on the screen there, but it's BAIC, Chery, GWM, Haval, Jetour, Omoda & Jaecco, MG, and LDV. It looks like every month, there's another one coming. And we are participating quite well and having discussions on a broad range of new model launches are coming through there as well. In our aftermarket parts side, lots of work going into, obviously, the FAI PRO brand. As we said earlier, the whole market has sort of moved more into the private label space. So I believe that we are positioning ourselves well for the future. By positioning this already, you offer exclusivity and quality to your selling side, so your retail arm. And there's been good support for the product. We've also managed to land quite a large retail group in Scotland, and -- which we will -- there will be a distribution partner in that region. So we won't necessarily open the retail shops in that area, but actually distribute through an existing retail group. And that would be a new way of us also getting the FAI PRO product to other jurisdictions. The Milton Keynes warehouse that some of you have gone to visit, thank you very much for those of you who've taken the time and energy to go and have a look at it. It's a fantastic facility. It's now fully operational. It's dispatching over 250 orders daily, and that will probably bode well for us going forward. So going forward, I mean, the focus is still to optimize the supply chain processes and obviously minimize this unrealized profit that's actually trapped inside your financials. Moving on to some of the other, call it, more the M&A activities. We've had 1 disposal and 1 acquisition, which we have disclosed to you previously. The disposal of the Merc Commercials business in the U.K. has been concluded. The rationale for this, I mean, it was a loss-making operation. It probably was a good operation 10 years ago when it was acquired, really gave you good returns, but post-COVID, it hasn't really delivered. And the only way for us to really maximize was either to double up in this business or to effectively sell to another participant in this area. We decided on the latter. And in the end, we managed to get a nice cash inflow of GBP 24 million. We reduced debt with that. Unfortunately, we were not -- we were unable to recoup all the goodwill there, and you would see that there is a loss on the disposal of GBP 5.8 million. At the same time, the acquisition of the Toyota dealership in Australia took place, nice dealership in New South Wales. The rationale here was that we needed to also make sure that we represent all top 10 brands in Australia. And Toyota, which is the #1 brand was the one that was the outlier. So we eventually got the Toyota now, and it's a really good business. As soon as you acquired, it immediately gave you operating profits. It's got inventory staff, existing customer base. And because of the catchment area, it is really a well-positioned business. So quite happy with that acquisition. Then probably the slide that most of you dialed in for is what does the prospects then mean for the 30 June 2025 year? It's been some time maybe since we've last spoken. And I think the message here is really that the H2 has really made a strong recovery. We did have a challenging H1. And if you compare then the full year 30 June '25 to 30 June 2024, we expect our operating profit to be slightly down against the prior year. We did, however, make it up through the net financing cost, which has reduced by low double-digit percentages and our headline earnings to remain in line with prior year. The earnings number will be slightly down due to that loss that I've previously highlighted on the Mercedes U.K. business. Motus remains very cash generative with sufficient funding facilities. And I think the nice bit of news for you is that our net debt has come down considerably from where it was in December. At that stage, the net debt to EBITDA is at 2.1x. We expect it to be somewhere between 1.7 and 1.9x for the end of June. So overall, I think in a good space. Obviously, we still don't know exactly what's happening in the world, and it feels like from day-to-day, it does change. So that one caveat at the bottom, not knowing what can happen in 1 week to go with geopolitical tensions and the currency volatility, which has been quite strange in the last 2 weeks. But in any event, we feel confident going into the new year. With that, we will hand over to the question-and-answer session.

Perfect. Thank you, Ockert. So far, we have 1 question verbally. Olwethu, can you please go ahead?

Okay. Perfect. Really I've got 3 questions on my side, 2 Import and Distribution, actually, all of them Import and Distribution. So with regards to the 18%, excluding the import and distribution businesses with regards to the sales. With regards to Chinese, if you were to include the Import and Distribution sales and the Retail sales, what percentage is it in total? I hope that makes sense because I think you guys spoke about 18%, but that's excluding the 80% of Import and Distribution vehicle sales that go through retail. Second question, given that most of the Import and Distribution vehicles that you guys are targeting are on the entry-level spec, do you see yourselves in terms of through the cycle going back to 4.5% operating margin? And then lastly, with regards to Tata, when do you see it having a significant impact in terms of your guys' financials? Is it 2026? Or I've got it in 2027. Is that fair? Or yes, any color on that would help greatly.

Okay. So first one is on the Chinese and their representation on the sites. What we tried to give you was just a bit more clarity on how many sites we've got that we obviously can put Chinese brands into. So we would typically not have too many multi-franchise sites where we would be able to put it next to our importers because they're already multi-franchised either with themselves or in the case of Hyundai, they were already as a stand-alone. So the opportunity to put Chinese in from a site perspective is limited. The overall sites that are available is, call it, roughly 70 to 80 sites where we could potentially put Chinese in. And in that particular case, we've got 18% in those sites already. So not that much more necessarily to go. I think you want to have it as a fair representation of the rest. And that's why it was put out in that particular regard just so that you understand. So that would be the same if you think about any of the other more traditional OEMs outside of the importers, we would have looked at it similarly. On the importer margins, I think it's always nice to have spreadsheets going out a few years, and you can put in whatever percentages you like. I think this call is more specific around giving guidance for this financial year. So I think the 3.5% is what we targeted. And that's why we're saying, yes, we have been able to achieve it. To make a 0.5% impact in a short space of time, obviously, it takes a bit of heavy lifting. So we're quite pleased to be able to say that we believe we will end with this 3.5% for the H2 going forward, and the 4%, I mean, as you know, in this market, the importers want to stretch by over 6%. It is a bit of a moving target. We've always targeted that we want to try and get back to over 4%, and that is probably still our mission to try and achieve over the next few years. So let's see how quickly we can get there. On the Tata and the impact you're going to have, obviously, Tata gives you another lever to pull from an entry-level perspective. I think it would be a little bit shortsighted to say you're going to have a massive impact in '26. It's obviously a launch year. So it may add up to a bit more on the volumes. But I think in our particular case, if the vehicles are being sold at a profit, we believe it's a bit more of a plug and play. So we don't need to go and invest heavily in infrastructure to actually get a new brand in play. So even if it's maybe at a smaller level in year 1. We believe in year 1, you would already see a small impact. But obviously, you're right, with 2027 being a full financial year and the impact would then be felt not just across new vehicles, but into other areas like the servicing, et cetera, we would then get a greater impact going forward. Hopefully, that answers your question.

Yes, it does. Just -- I hope you don't mind, Justine. Just to ask another question with regards to Tata. Are you guys primarily targeting Suzuki in terms of competitors or Chinese? Because when I look at the models that Tata has at its disposal, it's mostly at SUV kind of Chinese brands targeting instead of Suzuki, which is like the S-Presso, the more cheaper sedan-like vehicles.

Maybe you need to just go and have a look at the lineup again because the reality is, now it starts at a very competitive price below ZAR 200,000. That would be one of our models that we'll be launching. That would be sort of the Tiago side, then moving up into the Punch, which is still pretty much into the, call it, just above the entry level. And it would only be when you get into products like the Harrier where you would say that's maybe more against some of the other brands. I think as you would have seen, when you looked at the Tata lineup, it's quite a nice lineup. We were given the opportunity to launch 7. We decided on these 4 models, which we believe will give us the greatest immediate impact and penetration into the market. And we believe that we would be price competitive with these models.

Another question that's come through. I'm just going to jump on to it just because it relates to Tata as well is Tata passenger previously struggled in South Africa. Why are you expecting a better performance this time around, particularly given the increased competitive environment?

I think if you look at the Tata models and what they were able to supply to in the past versus now, it is not the same product. I mean the fact that it carries the same brand name is almost the only similarity. I think you would have seen even with other brands that were out of the market and coming back with new product, there's certainly a more than fair chance to launch it successfully. We believe the quality of these products are far superior to what they had before. And I think that's what you would have seen when we put it out to the dealer network, how quickly people were responding that they would want this as a dealership. Seeing the quality of the products and also understanding at what price range they're going to be playing, I think everyone is looking for volume and value for money, and this is really where this is probably going to play in. And the look and feel of the vehicles are certainly a lot different. So I don't believe we will have that much of a lag from the Tata brand that was here in the past and the products that were available. This is certainly a lot different. And when we showcase it after the launch, you will see that it is a really good quality product. So I don't see any concerns with that.

Roy Campbell, over to you to ask your question.

Apologies if I missed the actual performance of your new vehicle sales in the second half relative to the market. And kind of a question that I then just want to kind of back on to that is the performance then of your new China brands relative to is it still too early days to see whether that's something that could kind of start closing the gap in terms of the overall performance of the group relative to the market, given the market share that these China brands have kind of earned over the last 2 years?

Yes. I think if you look at the overall volume percentage and you look at market shares, it's always a bit simplistic to look at market shares because doesn't always result exactly in the same way to profitability. But in any event, we believe that we've been able to hold at least on the importer side. You must have seen in the last 2 years with some concerns that it was sliding a little bit. And in this last year, specifically on Hyundai, they've managed to claw back market share in a market where most traditional OEMs were actually losing market share. So I think just on the importer side, we've effectively been able to hold. On the other side of our equation, we've been able to replace some of these dealerships and the more traditional OEMs, which were not giving you a proper volume throughput with new entry-level sort of new entrants into the market being these Chinese brands. And the one there on that side sort of replaced the other one. Overall, we believe we would still be very close or in that segment of saying we would be at [ 15 ] new vehicle sales on the passenger side. And that was one way of mitigating it, replacing traditional OEMs with Chinese. The idea would never be to overall replace all your importer brand sites with Chinese, if that makes sense.

Yes. And so I get that you don't want to kind of talk about next year yet, but just in terms of then given the, I guess, the proportion or the size of -- you're talking about the 18% of non-import OEMs over here and still a...

Sorry, Roy, we've lost you a little bit. If you can just please repeat your question. Roy? Okay. Maybe we can come back to Roy when he is back with his connectivity. [ Tanaji ], we'll unmute you and over to you, please.

My question is for Brenda. So Ockert mentioned that the balance sheet will be stronger. I think he mentioned the range of 1.7 to 1.9x plus double-digit decrease in finance costs. Just following up on what happened in the first half. Can you give us an idea for that de-gearing that you guys are seeing or improvement in debt metrics? Is it coming from improvement in net working capital? Or is it normalization in the fleet for vehicles were higher? Can you give us an idea of exactly what's changed from what we saw in the first half to the close of the year? Yes.

Yes. Perfect. So during the results presentation, I shed some color on what our deleveraging cycle would look like. The first was the vehicles were higher and the defleeting thereof, and then we've made really good progress. And it was almost deliberate to make sure that the defleeting was going to happen in accordance with the plan. The second was then around net working capital. When we released our results in September, you'll be able to see that we really have made inroads in getting to an optimal inventory level. And this is despite having to ensure that our Milton Keynes warehouse in the U.K. is adequately stocked to be able to service demand. So we have now improved our processes around stock management and really making sure we keep that discipline within the business. And the third element of it has been around portfolio optimization. So you heard Ockert talk about the release of capital that came in from the Mercedes disposal. That money went in immediately to be able to reduce debt. What you also would see that we will share and reemphasize with the results as well is the deleveraging cycle, we plan to continue at least for the next 12 to 18 months, which means that there are no significant acquisitions that have been planned and all the cash that's been generated from operations will either go into pay debt and then return money back to shareholders in the form of dividends and considering share repurchases at the appropriate time. So as a management team, we are focused on the debt reduction number, and we feel that in the past 6 months, we've really netted the engines and significant inroads into that.

There are no more hands raised. I'm going to jump into the written Q&A that's come through. Brenda, another question back to you. Please can you remind us of the forward cover profile and how you look at managing your FX policy?

Yes. So we employ quite a conservative risk management program. We do have a hedging policy that looks at 7 months in advance where we do take out cover. As you're aware, that a significant component of our purchases are actually in U.S. dollars, and that program is quite comprehensive and robust. And to that point, we've also taken out cover for our Tata vehicles that will be coming in, in September. During our results presentation, we will also give you some light in terms of the cover that we've taken out and the rand-dollar values as well. But for now, we maintain a 7-month cover ahead of time to give us certainty on the gross margin.

Thanks, Brenda. The next question is related to the pre-owned vehicle activity. One of the participants is asking whether there's any interest in increasing the share in getWorth.

Yes. So in getWorth itself, we -- when we just bought the business, we only bought 60% of the business. We had a 40% minority shareholder. Last year, we did, in fact, purchased the balance of the 40%, so we now own 100% of getWorth. And that was to just give us time to make sure we bet down the technology and the development is still needed to take place. Some of the members of the existing business remain in the company and is now sort of forming part of Motus. And we're still developing that technology, but has made it more in-house and available to the whole group. So it's not the technology arm that only sits in the getWorth arm any longer. It's now actually rolled out to all our sites within Motus, and that's on the valuation side. On the warehouse side, there's only 1 warehouse, and that is the one in Cape Town.

The next question is actually around Hyundai and Kia. They've asked to provide an update on how Hyundai and Kia are trying to be more competitive in the SA environment?

Yes. I think the one that's really stood out there was Hyundai in the way that they approached the market, and this goes back to probably May last year already when they relooked at the market and how they want to compete. I think they were quite deliberate in their statements that they wish to fight back as they called it and don't want to lose any further market share. And they then, at that stage, repositioned 2 or 3 of their products where they actually gave a different spec product to us. We worked quite hard with the Indian factory to look at those. The second level that then came through was, the second wave was really around product launches. And the 2 particular products that was launched, which has made a real impact on volumes. The one was the Hyundai Exter and the other one that was launched more recently is the Alcazar. Both of those come from the Indian factory now and has given us really good pricing and has been able to keep the volumes also nice and tight for Hyundai. On the Kia side, we had similar discussions with them. They were slightly -- took the time a little bit longer to really get to the same point. And maybe we've only seen some evidence more in the, call it, the second half of this financial year. But Kia themselves also where the market shares were dropping well below 4% at one stage has been able to claw back there as well. So on both of those, the OEM, in fact, has been able to reposition their product ranges to such an extent to assist us with pricing and the products itself.

I see we've got 2 new hands raised. Brent Madel, please go ahead. Brent, if you could unmute yourself and then -- there we go. I think you'll be able to speak. Sorry, Brent, can you try one more time? Okay. Brent, we'll come back to you. I see Olwethu has raised his hand again. Olwethu, over to you.

Any update on Renault? I know you guys provided some update with regards to what you guys expect in H2. But going forward, any updates on Dacia, Renault, are they starting to come to the room more in terms of being able to offer more products because it seems like with time, they're becoming more uncompetitive with less models coming through.

Yes. I think with Renault, I mean, it's always -- you have to work with the OEM. I think in that regard, maybe 3 things happened there. The first is, I think, you always want to see some of the more senior executives from the Renault stable visiting you. We did have the head of the whole international business from Paris who came to our dealer conference, which was nice to have open discussions with them in the future of the brand and where they position themselves. And it certainly feels if they needed to find their feet a little bit after the whole Carlos Ghosn sort of era. And what you would have seen in recent times that they have really showcased a lot of new products specifically into the European market. Those products are not always necessarily the ones that we require for South Africa. And that's where the second part came in. And the second part was really around the fact that we were able to -- or that Renault was able to buy the plant, the manufacturing plant in India from Nissan. Now that is quite instrumental for us because if you look at where our products from Renault normally comes from, the ones that we sell normally in the South African space is coming from India. And now that Renault owns that plant, which will mean that a lot of the R&D that they've been spending would also be able to be utilized in that plant. But previously, you were effectively the second child on that one as Nissan owned the plant. So that's actually boding well for us going forward. And then maybe just lastly, I think on the Duster, that was launched. It was a very successful launch even in this period. Yes, it was maybe as a Dacia product, it's got a Renault badge, also now manufactured -- going to be manufactured in India for our market. So it feels as if that brand still has some way to go. Obviously, got a very good following, very strong aftermarket parts and workshop activity that still remains. So a strong brand to have in our stable. And yes, they seem to be still holding their own if you look at the market shares they've been able to keep.

And lastly, with regards to Aftermarket Parts South Africa, how is the trading environment been given that you've got Metair coming into the fold with the likes of AutoZone? Are we still seeing aggressive discounting that's taking place in the market?

I think as we said before, we always welcome responsible competition in the market, so I think it was probably better for us. As you would have seen when we do the full year results presentation, the margins in our South African business has, in fact, improved, as I said earlier. So it does feel as if the competition is strong, but we also have a strong offering and our network is very well positioned to take advantage of it. So overall, I think the South African Aftermarket Parts business is doing very well.

Brent, back to you. Let's see if we can connect. Brent, would you like to go ahead?

So a key question I've actually had for a while, if I may. I mean, obviously, on your distribution brands, particularly Kia and Hyundai, still make up a significant portion of your retail exposure. And effectively, Motus has a double bite at the cherry. You obviously benefit at the distribution level and you benefit at the retail level. So when you engage with new OEMs that are looking for exposure in South Africa, particularly Chinese OEMs, are they concerned about the fact that your priority would be on your distribution brands? In other words, do you guys see it as a bit of a headwind for them that you would put greater focus on your key distribution brands as opposed to some of these Chinese OEMs that are looking for exposure?

Yes. So I think it's always a little bit tricky, but I think the way we approach it is we've got a solution as a route to market. So route to market can be in different ways. I think in the areas where we are the distributor, that is a conscious decision by the OEM not to actually try and also be the distributor in a country where even though we think South Africa is quite large, we're actually not that large in the global scheme of things. And for most OEMs, they would almost struggle to make any real meaningful profits as an import and distribution business. Obviously, we've set that up over time, and that is why it's such an easy plug and play for us and why we believe even with Tata just bring it in, you would immediately be able to get some traction. When you engage with other OEMs and whether it's more traditional ones, whether it is the new Chinese entrants, for them, it is still also a solution as a route to market. They would never be able to give you a high enough percentage if you -- our numbers, I mean, we sell 1 in 5 vehicles, which means 20%, an OEM wouldn't necessarily give you 20% of their dealer network. So you would never have that higher percentage if you were only in the dealership space. That's why the importer space helps us. But if you have the engagements with anyone else, we still sit with primary sites, but it's in good locations, and that is the route to market for OEMs. And because you sit with those sites, which you can -- in our specific guidance that we gave, we can also multi-franchise, which means that even for a new entrant, we can give them a primary site in an area, which is desirable and they can immediately get traction for their product. And that's how you distinguish. In our own business, it is quite specifically split into different areas. So the area of the import and distribution side is completely separated from the other retail and OEM side. We have different management teams looking at it. And also when we engage with those OEMs, it is separate engagements. So that's the way we obviously participate next to each other and has been doing for, I suppose, the last must be more than 20 years.

And if I could just quickly have a follow-up, if you don't mind. Can you just give us an idea and if it's 2 or 3 emerging OEMs, it seems like some of these newer OEMs are restricting the number of dealerships per group. Can you give us an update on that, so have you come across where an OEM, particularly on the emerging side will go like you're limited to maybe 2 dealerships for a Volvo or a Chery or whatever the case may be, is that what you're picking up in the market as well? Is that reality?

No, it's more around the sites that you've got available. Remember, a new entrant is looking for open points and you wouldn't necessarily have a multitude of open points because you're running a business that's currently profitable and you want to continue with it. So to give them new points is normally the tricky situation because you need to make space available. The space has been made available currently is actually from the OEMs that hasn't been performing because no one is really building new dealerships. I think that's where the trickiness in all of this lies is the fact that there's no new dealerships. So the dealerships that's there needs to be repurposed. And you would have found that we maybe started with it a little bit, but I think every dealer group at the moment is following this multi-franchise approach, which is difficult to give enough space to even a new OEM. And because of that limitation in space, that's more where it comes in that you maybe only get 2 or 3 of a particular brand. We haven't seen too many big restrictions, although an OEM generally don't want to give a group maybe more than 10%. I don't think anyone would have like 20%. But the reality is they haven't really restricted us that much. There's more restriction on space. And I suppose in every distribution site, if you own that brand, you don't want all the eggs in one basket, and that would be a diversification strategy. So you wouldn't give everything to one group. But in the case of, well, I know the biggest group has got 11%, so it's not like they are restricting you.

Great. Let's tackle a few from the webcast Q&A. Just in regards to the Tata models that are being brought into the country, it's just a question around whether they are going to be ICE or EV variants and the future lineup?

Yes. So in this the first round that we're going, they obviously do have quite a lot of EVs and our distribution agreement allows us to have the access to the ICE and the EV passenger vehicles, not the commercial ones. Commercial is, in fact, sitting in a separate arm within Tata. So the ones that we're going to be bringing in is all going to be ICE engines. So all 4 of those, the Punch, Tiago, the Curvv and Harrier are all going to be ICE engines for now. And we'll see going forward whether or not we want to bring in any EVs. We always said that your adoption rate is quite slow in SA, but you never know it may change over time.

And then the next question is around HEPS for H1 versus HY2. So HEPS for HY1 was up 3%. You paint a picture of H2 recovering, but HEPS for financial year full year is flat, suggesting H2 is weaker against the comparative, which areas are causing this weakness? I think it's just that region of the -- Maybe, Brenda, you can handle this one.

Yes. So when we look at H2 of this year of FY '25 versus H2 of FY '24, I think, the one area that we've highlighted quite significantly is the tough quarter 1, and it was really difficult to be able to get out of quarter 1. And hence, when you look at the second half of this financial year as well, we did see some pressure starting to feed through. So when we are putting the 2 together, I think -- and we stand back is H2 of last year was really strong. And although we have tried our best, we will probably get close enough, but just not matching the number in there. But it really is a contributing factor across the changing environment and the new brands being added in as well.

But I think also just the flow down of that loss on the sale [indiscernible]. It was just a stronger year last year. Perfect. Then the next question is around the vehicle sales for our importer brands. Vehicle sales for your importer brands have had a really good H2, looking at the NAAMSA numbers. Have you had to sacrifice margins in order to get these sales numbers ticking up?

Yes, we probably have sacrificed some margin, although the margin uptick has been there as well, as we mentioned earlier. But if you compare against the prior year, which normally is what you see in NAAMSA, you obviously had to be price competitive. And it hasn't been a discounting. Like we said, there was rather not really a selling price increase. And I think that has been the fact that it's played itself out there as well. And that's almost linking to that previous question about the H2 versus prior year H2. There hasn't been really selling price increases in this market.

Then if we can jump back on to the verbal Q&A. [indiscernible] you can please go ahead.

Just a question. I mean if you sort of consider the current run rate in vehicle sales, specifically in South Africa, are you still happy with your forecast of, I think you said up to 540,000 units by calendar year '25?

Yes, we have recently looked at the forecast, and we actually believe it could be up to 550,000. So maybe our guidance around 530,000 to 550,000 is probably holding more true. But obviously, only a few months has passed and there's still 7 months in the making. But it does feel as if we will sell more vehicles than the prior year. It's just how far it would be further up. And I think that's similar to the views that NAAMSA is holding as well.

[ Stei Erasmus, ] over to you to ask your question. We'll unmute you and you can go ahead.

Maybe just to touch on the headline earnings guidance to remain in line with prior year again. I just want to try and understand, so the net finance costs are guided to reduce by low double digits, but you've got headline earnings flat. So on a normalized operating profit level, where is that pressure coming from?

So let me try to answer that a bit better. So when Ockert spoke around the environment a bit earlier, he did tell you that within the U.K. and Australia, we did see a much softer passenger market. And particularly within the U.K. business, we have seen a softer demand for the commercial side of the business as well. As we also indicated is that the Mercedes business has been loss-making, so when we stand back and we look at H2 for FY '25 and H2 for FY '24, a significant component in the drop in HEPS has really come out of those 2 international businesses. But I think also when one stands back is Australia is really coming from a high base. So they had a fantastic year when we look at FY '24, and we're now starting to see a more normalized number starting to come through. As we've highlighted as well, we've also seen a shift in consumer demand now moving from new cars into preowned, particularly when we're looking at Australia and the U.K. So we're almost seeing that normalization coming through in Australia with a slightly softer demand in the U.K. What we are optimistic around though, is that now that we've disposed of the Mercedes business, the bleed, so to speak, has now stopped, and we should start to see a much better and more attractive operating profit starting to come out from the U.K. as we get into FY '26.

Then I think we've got time for one more question that's come through on the written Q&A. It's just around the car rental. They're asking just for more color around the state of the car rental market, including touching on utilization and ADRs and then also the impact on how the secondhand vehicle prices are holding up for the rental fleet?

Yes. So I think the car rental, we were quite fortunate. I think this year, we've had quite a good year. As we said in the past, it's not -- we're not really just trying to use it as a car rental out there, but also following through on the pre-owned strategy there. So it is a nice form of getting new preowned vehicles into that space as well, so we see it as a bit more of an integrated model. On the utilization rates, we've been able to keep our utilization rates above that 70%, which we've always highlighted as a good number. So the overall profitability of car rental was strong for the period. Our ADRs have been holding, although there has been pressure in the market, we did not necessarily chase the market to try and get market share necessarily. And at the same time, you were holding your ADRs, you were getting utilization, it gave you a good outcome. And we've been able to sell our pre-owned at very good pricing because we were never really overstocked in that space. So it's maybe slightly different from what you're seeing from other competitors in the market. Our car rental business is actually performing quite well.

That's all we've got time for in terms of the Q&A session. If there are any questions you feel you would still like an answer, that we haven't had an opportunity to raise, I think we have covered most of them though. But if there is something that you would still like to raise, please can you send myself a mail or you can send it to [email protected], and we'll come back to you. And with that, over to Brenda.

Yes. So thank you very much, Justine, and also to Sajal for getting the process in place for us to host our first pre-close call. So this has been a first for Motus and, hopefully, it demonstrates our commitment as an executive team to communicate with you more transparently, but also more frequently as well. So let me conclude by thanking you for joining us. We remain excited about Motus' growth prospects. And hopefully, you'll be able to see that over the past 6 months, we have delivered on our commitments. There are 5 things that we said to you when we engaged with you the last time. One is, we have to look at how do we reduce our net debt. And we have made inroads and we've demonstrated to you that we can do it and that it is going to be a sustainable path for you. That will result in additional free cash flow being generated and being released into the business as well. The second thing that we've said to you is that we were not happy with the importer margin that we delivered in the first half. And as Ockert said to you, 0.5% is quite a huge stretch, but we went out and we've delivered it and we've actually turned the importer business around. And by adding Tata into that particular segment, it is going to give us a competitive edge to be able to improve our lower-end vehicle offerings, but also at more attractive pricing. So we are excited that, that is going to bring growth into the portfolio as well. The third element that Ockert spoke to you about is on the used cars and now being able to leverage on the technology that we have and extending the time period of those used cars now to beyond the 6 years. And the next component of it was around the Chinese brands. And by us now deliberately increasing our Chinese representations amongst our already invested capital does give us an opportunity. As you can see, the plug-and-play model really sets us and differentiates us and hence we are excited about the growth path that lies ahead for us. So as Justine has said, we hope that we've shared a lot with you in terms of where we see the past 6 months, where it has ended up. And as we release results on the 2nd of September, we look forward to engaging with you and sharing a lot more openly in terms of where we see this business and what lies ahead as well for the next 12 months ahead. So thank you so much, and thank you again for your time.

Great. Thank you.

Thank you.