Wrap Text
Unaudited condensed interim results and cash dividend declaration for the six months ended 31 December 2023
Motus Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 2017/451730/06
ISIN: ZAE000261913
Share code: MTH
("Motus" or "the Company" or "the Group")
Unaudited condensed interim results and cash dividend declaration for the six months ended
31 December 2023
Financial highlights
- Revenue up 11%, R57 167 million (2022: R51 414 million)1
- EBITDA2 up 13%, R4 203 million (2022: R3 706 million)
- Operating profit3 up 1%, R2 647 million (2022: R2 617 million)
- Profit before tax down 25%, R1 507 million (2022: R2 014 million)
- Attributable profit down 27%, R1 112 million (2022: R1 520 million)
- Net asset value up 14%, 9 957 cents per share (2022: 8 716 cents per share)
- Earnings per share down 27%, 666 cents per share (2022: 916 cents per share)
- Headline earnings per share down 27%, 662 cents per share (2022: 902 cents per share)
- Interim dividend per share down 22%, 235 cents per share (2022: 300 cents per share)
- Diluted earnings per share down 26%, 643 cents per share (2022: 874 cents per share)
- Diluted headline earnings per share down 26%, 639 cents per share (2022: 860 cents per share)
- Free cash flows generated from operations up in excess of 100%, R2 831 million
(2022: R425 million)
- Return on invested capital4 decreased to 11,8% (2022: 17,4%)
- Weighted average cost of capital4 decreased to 10,2% (2022: 11,0%)
- Equity to net debt structure of 52% equity: 48% net debt (2022: 57% equity:43% net debt)
- Net debt to EBITDA5 (debt covenant) 2,1 times (Required: to be less than 3 times) (2022: 1,6 times)
- EBITDA to net interest5 (debt covenant) 4,4 times (Required: to be greater than 3 times)
(2022: 12,3 times)
1
Revenue in the comparative period has been restated due to the adoption of IFRS 17.
2
Earnings before interest, taxation, depreciation and amortisation.
3
Operating profit before capital items and net foreign exchange (losses)/gains.
4
The return on invested capital and weighted average cost of capital is prepared on a 12-month rolling basis.
5
Calculated by applying the funders' covenant methodology.
Business overview
Motus is a multi-national provider of automotive mobility solutions and vehicle products and services,
with a leading market presence in South Africa (SA) as well as a selected international offering in the
United Kingdom (UK), Australia, Asia and Southern and East Africa.
Motus employs over 20 000 people globally and has a track record for steady growth and dependable
value creation that spans over 75 years. Motus is a diversified (non-manufacturing) business in the
automotive sector and is SA's leading automotive group, with unrivalled scale and scope across the
automotive value chain. Our international focus is selective and aimed at enhancing our offering and
contribution to Group performance.
Motus offers a differentiated value proposition to Original Equipment Manufacturers (OEMs), customers
and business partners with a business model that integrates our four business segments, Import and
Distribution, Retail and Rental, Mobility Solutions and Aftermarket Parts, to meet customers' mobility
needs across the vehicle's lifecycle.
Motus has long-standing importer, distribution and retail partnerships with leading OEMs, representing
some of the world's most recognisable brands. We provide automotive manufacturers with a highly
effective route-to-market and a vital link between the brand and the customer throughout the vehicle's
lifecycle. In addition, we provide accessories and aftermarket automotive parts for out-of-warranty
vehicles and the Mobility Solutions business sells value-added products and services to customers.
Environment
The automotive landscape is impacted by various factors, including higher-than-normal vehicle and parts
inflation, weakening of the South African Rand against major currencies, persistent power outages in SA,
ongoing high interest rates, and escalating fuel prices and energy costs. These challenges collectively
contribute to a strain on consumers' disposable income, posing a potential impact on their purchasing
power and spending behaviour, and also increase the cost of doing business.
Increased competition has entered the market through new derivatives, new entrants and competitive
pricing. These vehicle brands are selling attractive derivatives and offering appealing discounts and
"money on the bonnet". Motus will continue to innovate, improve efficiency, differentiate our products
and services and continue to provide a superior customer experience.
The global economic recovery from COVID-19, Russia's invasion of Ukraine, the cost-of-living crisis and
the Middle East conflict, is proving surprisingly resilient but slow. Global growth is estimated at 3,1% 1 in
2023 and projected at 3,1%1 in 2024 and 3,2%1 in 2025.
South Africa
During 2023, the South African economy is estimated to have grown by 0,6% 1 and is expected to grow
by 1,0%1 in 2024 and further by 1,3%1 in 2025. The automotive industry plays a critical role in
contributing to SA's longer-term economic sustainability, with the industry contributing 4,9% to GDP
(2,9% manufacturing and 2,0% retail)3. Inflation has declined to 5,1%2 in December 2023, from 7,2%2
in December 2022.
Factors impeding economic growth include highly indebted consumers, ongoing high interest rates,
persistent power outages, weak currency, logistical constraints, emigration and slow real wage increases.
Looking ahead, the approaching National election is contributing to uncertainty.
According to naamsa3, SA retailed 266 274 vehicles for the six months to 31 December 2023 (3,5%
below the prior period of 276 016 vehicles). At December 2023, our retail market share for the six-month
period was ~18,1%. Management's forecast for vehicle sales for the 12 months to 30 June 2024 is
between 520 000 to 540 000 vehicles, with naamsa forecasting an increase of around 5% 3 for calendar
year 2024.
As a result of higher interest rates, fuel costs, inflation and job uncertainty, consumers are facing
heightened strain on their disposable income. The current economic downturn has dampened consumers'
interest in purchasing high-value assets, and has led consumers to be very cost conscious when replacing
vehicles (new versus pre-owned, category of vehicle, brand of vehicle, timing of replacement).
The industry is returning to pre-COVID-19 levels of new vehicle sales, shifting to smaller and cheaper
vehicles. While the prospect of interest rate cuts in the latter part of 2024 should assist, the stagnant
economic backdrop does not point to a meaningful economic rebound in the near-term.
The vehicle rental industry, which was heavily impacted by COVID-19, continues to recover, aided by
increased travel for corporate, leisure and international channels.
Parts and workshop activity continue to increase as a result of the extension of vehicle replacement
cycles, however the buying-down trend continues.
United Kingdom
During 2023, the UK economy is estimated to have grown by 0,5% 1 and is expected to grow by 0,6%1
in 2024 and further by 1,6%1 in 2025. While the economy is expected to grow in the coming years,
growth will remain below pre-COVID-19 rates. At the latter end of 2023, tax cuts for households and a
higher minimum wage were announced, and it is anticipated that inflation and interest rates are likely
to come down in the coming years after surging in 2022 and 2023. These measures will provide a much
needed boost to consumer spending. Inflation continues to decline and reached 4,0% 4 in December
2023, from 10,5%4 in December 2022.
The UK new vehicle market grew by 18,3% for the six-month period to 31 December 2023, with the
passenger market growing by 17,4%5, the LCVs market growing by 25,0%5 and the heavy commercial
vehicles (HCVs) market growing by 10,3%. New vehicle sales for the six-month period to
31 December 2023 amounted to 1 151 730 vehicles, compared to 973 250 vehicles in the comparative
period. Motus remains well positioned and maintained its retail market share, with ~70% of our
dealerships being in the van and commercial business.
Prices of pre-owned vehicles fell significantly in October and November 2023, and this has created the
need for additional net realisable value provisions for the six-month period.
Parts and workshop activity continue to increase due to increased demand, supported by the steady flow
of HCVs that are required to undergo their routine roadworthiness inspections.
Despite pressure on consumers as a result of high inflation, revenue in the aftermarket parts sector
remains steady due to selling price increases in an active market. Margins have been impacted and will
remain under pressure as a result of the inflationary impact on costs such as delivery and energy costs
that are significant in these businesses.
Australia
The Australian economy has recovered largely in line with expectations. GDP growth has slowed, there
has been a slight easing in labour market conditions and headline inflation continues to decline to 4,1% 6
in December 2023, from 7,8%6 in December 2022.
The Australian automotive market achieved a milestone for calendar year 2023, setting an all-time record
for new vehicle sales of 1 216 7807. Increased customer demand for new and more energy-efficient
vehicles is evident, as well as larger vehicles, with SUV and LCV sales at an all-time high. The market
grew by 16,8%7 for the six-month period to 31 December 2023, with Motus maintaining its retail market
share. New vehicle sales for the six-month period to 31 December 2023 amounted to 635 021 vehicles 7,
compared to 543 571 vehicles7 in the comparative period. With the growth in the vehicle market sales,
inventory levels have increased.
Parts and workshop activity continue to increase due to increased demand.
Motus is exposed to a number of foreign currencies in the jurisdictions in which we operate, as well as
the source of its products. There has been currency volatility experienced over a number of years.
1 International Monetary Fund | World Economic Outlook January 2024 update.
2 Econometrix l Releases.
3 naamsa | The Automotive Business Council | Press releases.
4 Bank of England l Monetary Policy Report – February 2023 and February 2024.
5 The Society of Motor Manufacturers and Traders | Press release.
6 Reserve Bank of Australia l Statement on Monetary Policy – February 2023 and February 2024.
7 Federal Chamber of Automotive Industries (fcai.com.au).
Performance
The results for the period ended 31 December 2023 demonstrate the resilience of the Group in a very
tough trading environment. The two key Motus strategies of internationalisation and diversification away
from reliance on vehicle sale profitability are providing support for the areas of the business that are
more severely impacted by the constrained consumer.
The South African operations contributed 55% to revenue and 66% to EBITDA for the period
(2022: 65% and 77%, respectively), with the remainder being contributed by the UK, Australia and Asia.
The Group's passenger and commercial vehicle businesses, including the UK and Australia, retailed
64 076 new units (2022: 66 147), and 43 747 pre-owned units (2022: 43 422) during the period.
During the six-month period, we completed two significant bolt-on acquisitions aligned with Motus'
international growth strategy. On 3 July 2023, we completed the acquisition of Solway Vehicles
Distribution Limited (Solway) in the UK, where we acquired four DAF commercial vehicle dealerships that
operate in North West England and Southern Scotland. On 10 October 2023, we completed the
acquisition of Wagga Wagga in Australia, where we acquired multifranchise dealerships representing nine
brands across two sites, with a predominant focus on the Ford, Kia, VW and Nissan brands. These
dealerships operate in New South Wales. The acquisitions were funded using available cash and banking
facilities, amounting to a combined net cash purchase consideration of R553 million. Since acquisition,
both businesses have delivered on expectations.
Revenue increased by 11% driven by the Retail and Rental segment, contributing an increase of 13%,
and the Aftermarket Parts segment contributing an increase of 33%. This was partially offset by the
Import and Distribution segment which saw a decrease of 21%, and the Mobility Solutions segment
which decreased by 2%.
The revenue increase was as a result of increased contributions from parts sales of R2 705 million (26%),
new vehicle sales of R2 196 million (9%), rendering of services of R599 million (12%) and pre-owned
vehicle sales of R274 million (2%), offset by insurance revenue which decreased by R21 million (7%).
The increased parts revenue is mainly as a result of the additional contribution from the Motor Parts
Direct (Holdings) Limited (MPD) acquisition (included for the full six months in the current period, and
only three months in the prior period). The increase in revenue was supported by inflationary price
increases.
EBITDA increased by 13% to R4 203 million.
Operating profit increased by R30 million (1%) with the following business segments improving their
contribution: Aftermarket Parts R199 million (49%), Retail and Rental R98 million (8%), and Mobility
Solutions R47 million (8%). This was offset by the reduced contribution from the Import and Distribution
segment of R309 million (45%).
The increased EBITDA and operating profit is mainly as a result of the contribution from the MPD
acquisition and the continued recovery of the vehicle rental sector, which positively impacted gross
income for the Vehicle Rental division. Further supported by the strong performance from the
international retail businesses, the Asian Aftermarket Parts business and Mobility Solutions.
The increased EBITDA and operating profit was mainly offset by margin pressure, strong competition
and reduced demand experienced by the Import and Distribution, SA Retail and SA Aftermarket Parts
businesses.
Net foreign currency exchange losses of R24 million (2022: R148 million) are mainly due to the
translation differences arising from foreign currency denominated balances such as trade receivables,
trade payables, Customer Foreign Currency (CFC) accounts and interest-bearing debt, and changes in
the fair value of derivative instruments that are not formally designated in a hedge relationship.
Net finance costs increased by R639 million to R1,1 billion mainly due to higher average working capital
and vehicles for hire levels, the financing of acquisitions, additions to fixed assets, increased interest
rates across all the geographies we operate in and increased finance cost on lease liabilities.
Profit before tax decreased by 25% to R1 507 million.
An interim dividend of 235 cents per ordinary share has been declared (2022: 300 cents per share).
Movements in net working capital generated an inflow of R345 million from an outflow of R2,1 billion in
the prior period. The decreased cash investment in net working capital is mainly as a result of the
proceeds received from the reduction in inventory and the utilisation of extended payment terms for
floorplan payables. Offset by decreased trade and other payables and increased trade and other
receivables mainly due to increased sales.
Equity to net debt structure of 52% equity:48% net debt (2022: 57% equity:43% net debt). Core debt
increased by R699 million primarily due to increased vehicles for hire to vehicle rental companies, the
debt funding of the bolt-on acquisitions in Australia and the UK, and additions to fixed assets. The
increase was partly offset by profitability for the period.
Net debt to EBITDA is 2,1 times (2022: 1,6 times) and EBITDA to net interest is 4,4 times
(2022: 12,3 times). Both ratios have been calculated by applying the funders' covenant methodology
and we remain well within the bank covenant levels as set by debt funders of below 3,0 times and above
3,0 times, respectively.
Return on invested capital decreased to 11,8% (2022: 17,4%) mainly due to increased average invested
capital (debt and equity). Weighted average cost of capital decreased to 10,2% (2022: 11,0%) mainly
due to increased average debt levels which carry a lower cost than equity, offset by the higher global
interest rates.
Net asset value per share increased by 14% to 9 957 cents per share (2022: 8 716 cents per share).
Cash generated from operations before movements in net working capital amounted to R3,9 billion
(2022: R3,4 billion) and free cash flows generated from operations amounted to R2,8 billion
(2022: R425 million).
Liquidity
The liquidity position is strong with unutilised banking and floorplan facilities of R9,4 billion. Owing to
restrictions imposed by debt covenants, R5,0 billion is readily accessible with a further R2,1 billion linked
to specific asset funding lines available. A total of 57% of Group funding, excluding floorplans, is
long-term in nature, with 7% of Group funding, excluding floorplans, being at fixed interest rates.
Dividend
An interim dividend of 235 cents per ordinary share has been declared and will be paid in April 2024.
Board changes
Motus is led by a diverse Board of directors, the majority of whom are independent, with extensive
industry knowledge and expertise. The Board subscribes to high standards of corporate governance,
ethical leadership, sustainability and stakeholder inclusivity.
The Board is committed to good corporate governance and as the custodian thereof, it ensures that
Motus adheres to the highest standard of accountability, fairness and ethics, which are essential in
building and maintaining trust, and delivering value creation.
Changes to the Board composition and committees during the six-month period:
- Mr. MJN Njeke was appointed as Chairman of the Board, Chairman of the Nomination Committee
(NomCo) and resigned as Chairman and as a member of the Social, Ethics & Sustainability
Committee (SES) with effect from 22 August 2023. He resigned as Chairman of the Remuneration
Committee (RemCo), and remains a member of this Committee, with effect from 29 August 2023.
- Ms. F Roji was appointed as Chairman of the SES Committee with effect from 22 August 2023.
- Mr. JN Potgieter joined the Board as an independent non-executive director with effect from
22 August 2023, and was appointed as Chairman of the Assets and Liabilities Committee (ALCO)
and a member of the Audit and Risk Committee (ARC).
- Mr. R van Wyk joined the Board as an independent non-executive director with effect from 29 August
2023, and was appointed as Chairman of the RemCo, and a member of the NomCo and the ALCO
Committees.
- Ms. MG Mokoka joined the Board as an independent non-executive director with effect from
29 August 2023, and was appointed as a member of the ARC and the SES Committees. However,
she did not make herself available for re-election at the Annual General Meeting following her
retirement by rotation on 8 November 2023.
Strategy
Grow and expand our participation in all aspects of the automotive value chain, offering competitive
products and services that maximise our share of a customer's vehicle investment and engender loyalty.
Our strategic initiatives underpin the delivery of our aspirations and support our ambition to achieve
mobility for good while enhancing shareholder value.
Our overall approach is to be proactive and adaptable in responding to volatile and uncertain markets,
while remaining focused on building long-term value rather than making short-term gains.
Prospects
The economic environment and consumer confidence will remain challenging for the short-term in SA
and the UK, while the Australian business will continue to benefit from the normalised supply and demand
for vehicles. Motus will continue to navigate the volatile market environment responsibly and is
committed to financial stability and long-term value creation.
We anticipate delivering positive revenue and EBITDA growth for the 12 months to 30 June 2024,
reflecting our operational efficiencies and commitment to maximise value. Net finance costs will remain
high for the short-term as the supply chain cycle and the OEM commitments do not allow for quick and
rapid de-stocking. With support from the OEMs and suppliers, initiatives have been put in place to reduce
inventory, and management has a structured plan to reduce vehicles for hire in line with seasonal
demand. These initiatives, together with cash generation from the trading operations, will improve free
cash flows and reduce net debt accordingly.
Our on-going strategic initiatives of internationalisation and diversification, together with organic
business initiatives and selective bolt-on acquisitions, will support earnings growth and value creation
for stakeholders, beyond June 2024.
Appreciation
We would like to thank all employees, customers, suppliers, funders, stakeholders and the Board for
their support during these challenging times.
OS Arbee
Chief Executive Officer
OJ Janse van Rensburg
Chief Financial Officer
26 February 2024
The forecast and prospects information herein has not been audited or reported on by Motus' auditors.
Declaration of interim ordinary dividend
for the six months ended 31 December 2023
Notice is hereby given that a gross interim ordinary dividend in the amount of 235 cents per ordinary
share has been declared by the Board, payable to the holders of the 178 300 509 ordinary shares. The
dividend will be paid out of income reserves.
The ordinary dividend will be subject to a local dividend tax rate of 20%. The net ordinary dividend, to
those shareholders who are not exempt from paying dividend tax, is therefore 188 cents per ordinary
share.
The Company has determined the following salient dates for the payment of the ordinary dividend:
2024
Last day for ordinary shares to trade cum ordinary dividend Monday, 25 March
Ordinary shares commence trading ex-ordinary dividend Tuesday, 26 March
Record date Thursday, 28 March
Payment date Tuesday, 2 April
The Company's income tax number is 983 671 2167.
Share certificates may not be dematerialised/rematerialised between Tuesday, 26 March 2024 and
Thursday, 28 March 2024, both days inclusive.
On Tuesday, 2 April 2024, amounts due in respect of the ordinary dividend will be electronically
transferred to the bank accounts of certified shareholders. Shareholders who have dematerialised their
shares will also have their accounts held at their central securities depository participant or broker,
credited on Tuesday, 2 April 2024.
On behalf of the Board
NE Simelane
Company Secretary
26 February 2024
Corporate information
Directors
MJN Njeke (Chairman)*
A Tugendhaft (Deputy Chairman)**
OS Arbee (CEO)#
OJ Janse van Rensburg (CFO)#
KA Cassel#
S Mayet*
JN Potgieter*
F Roji*
R van Wyk*
*
Independent non-executive
**
Non-executive
#
Executive
Company Secretary
NE Simelane
nsimelane@motus.co.za
Group Investor Relations Manager
J Oosthuizen
motusIR@motus.co.za
Business address and registered office
1 Van Buuren Road
Corner Geldenhuis and Van Dort Streets
Bedfordview, 2008
(PO Box 1719, Edenvale, 1610)
Share transfer secretaries
Computershare Investor Services Proprietary Limited
1st Floor Rosebank Towers
15 Biermann Avenue, Rosebank, Johannesburg, 2196
Auditor
PricewaterhouseCoopers Inc.
4 Lisbon Lane
Waterfall City
Jukskei View
2090
Sponsor
Merchantec Capital
13th Floor, Illovo Point
68 Melville Road
Illovo, Sandton
(PO Box 41480, Craighall, 2024)
Release date 27 February 2024
Full announcement
The content of this announcement is the responsibility of the directors of Motus. It is only a summary of
the information contained in the full SENS announcement and does not contain full or completed details.
Any investment decisions by investors should be based on the consideration of the full announcement
which was released on SENS and can be viewed on the JSE link:
https://senspdf.jse.co.za/documents/2024/jse/isse/mthe/interims24.pdf and on Motus' website at.
https://www.motus.co.za/investors/results/interim-results/ .
The full announcement is also available for inspection at the registered office of Motus and the office of
the Sponsor, at no charge, on weekdays between 09:00 and 16:00.
Date: 27-02-2024 07:05:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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