Extracts of summarised financial information

Group profit or loss (extract)

for the year ended 30 June 2021	2021 Rm	2020 Rm	% change
Revenue	87 205	73 417	19
Operating profit	3 795	2 136	78
Impairment of properties, net of profit/(losses) on sale	(7)	(60)	(88)
Net foreign exchange losses	(383)	(13)	>100
Net finance costs	(543)	(1 116)	(51)
Other net costs	(2)	(220)	(99)
Profit before tax and restructuring costs	2 860	727	>100
Once-off restructuring costs	–	(186)	(100)
Profit before tax	2 860	541	>100
Income tax expense	(718)	(356)	>100
Attributable profit for the year	2 142	185	>100
Attributable to non-controlling interests	(44)	121	(<100)
Attributable to shareholders of Motus Holdings	2 098	306	>100
Operating profit (%)	4,4	2,9
Effective taxation rate (%)	25,5	68,6

Revenue improved by 19% mainly due to improved performance in the Import and Distribution segment, the retail businesses (in South Africa, UK and Australia) and the Aftermarket Parts business segments. The increase was offset by decreased revenue contributions from the Car Rental and Financial Services business operations. The increase in revenue was supported by an increase in the sale of new and pre-owned vehicles, volume increases in the Aftermarket Parts business and price inflation.

Operating profit improved by 78% with all business segments improving operating profit contribution except for the Financial Services business, which was marginally lower than prior year.

The increased operating profit is mainly as a result of the faster recovery of the automotive industry, which positively impacted gross income, coupled with the benefits achieved through the implementation of various cost-cutting measures introduced in the prior year. The operations benefitted from increased volumes supported by good inventory availability of new and pre-owned vehicles, and parts and accessories in the Aftermarket Parts business, allowing us to service pent-up demand following the initial lockdowns.

Net operating expenses excluding cost of sales, depreciation and amortisation increased by 1% (well below inflationary increases) as a result of a number of cost containment initiatives. Staff costs remained stable, offset by inflationary increases implemented in April 2021 for all staff excluding executive management. In addition, higher variable commissions were paid as targets were exceeded.

Net foreign exchange losses increased to R383 million. Foreign currency exchange losses amounting to R99 million (2020: R13 million) relate to the revaluation of balances denominated in foreign currencies that do not qualify for cash flow hedge accounting in the normal course of business. These include FECs and options (through profit or loss), trade receivables, trade payables and CFC accounts. The severe volatility of the ZAR during the year negatively impacted mark-to-market measurements.

During the year we also experienced abnormal losses amounting to R284 million, due to the cancellation of FECs. As a consequence of erratic global inventory supply constraints due to the COVID-19 crisis, initial production orders that had been placed could not be fulfilled as scheduled, leading to the breakage of the hedge relationships. Subsequently, new orders were placed and new hedge instruments were entered into.

Net finance costs decreased by 51%. The decrease is mainly as a result of the decline in core debt and floor plan debt, as we aggressively reduced the car rental fleet and inventory levels. We generated a gain on unwinding of the interest rate swaps.

Effective tax rate is 25,5%. The prior year tax rate was significantly impacted by once-off capital items, restructuring costs and impairments of deferred tax assets. The current tax rate was lower than 28% mainly due to the improved performance of our UK business which is taxed at 19% and exempt dividend income received.

Reconciliation of earnings to headline earnings

for the year ended 30 June 2021	2021 Rm	2020 Rm	% change
Earnings	2 098	306	>100
Profit on disposal of assets	(63)	(42)	50
Impairment of goodwill and other assets	106	402	(74)
Profit on sale of businesses	(9)	(35)	(74)
Other	–	2	(100)
Taxation and non-controlling interests	13	(83)	>100
Headline earnings	2 145	550	>100
Weighted average number of ordinary shares (million)	182	186	(2)
Earnings and headline earnings per share
Basic EPS (cents)	1 153	165	>100
Headline EPS (cents)	1 179	296	>100

The Group repurchased 6,5 million shares during the year at an average price of R75 per share, which resulted in lower weighted average number of shares, of which 2 million shares were acquired as treasury shares for the share incentive scheme.

Financial position (extract)

as at 30 June 2021	2021 Rm	2020 Rm	% change
Goodwill and intangible assets	1 546	1 671	(7)
Investments in associates and joint ventures	289	232	25
Property, plant and equipment	7 024	7 784	(10)
Right-of-use assets	2 132	2 279	(6)
Investments and other financial assets	414	445	(7)
Vehicles for hire	2 426	3 167	(23)
Net working capital¹	5 165	8 515	(39)
Tax assets	1 474	1 355	9
Assets classified as held-for-sale	649	146	>100
Contract liabilities	(2 828)	(2 797)	1
Lease liabilities	(2 449)	(2 658)	(8)
Core interest-bearing debt	(2 528)	(5 794)	(56)
Floorplans from financial institutions	(873)	(1 648)	(47)
Other liabilities	(275)	(224)	23
Liabilities classified as held-for-sale	–	(21)	(100)
Total shareholders' equity	12 166	12 452	(2)
Total assets	38 457	43 678	(12)
Total liabilities	(26 291)	(31 226)	(16)

¹	Net working capital includes floorplans from suppliers amounting to R4 479 million (2020: R6 511 million).

Factors impacting the financial position at June 2021 compared to June 2020

Goodwill and intangible assets

Decreased mainly due to currency adjustments and the impairment of goodwill, offset by acquisitions. The impairment of goodwill is in line with the Group policy, where any business acquisitions which results in goodwill below R10 million is immediately impaired on acquisition. Intangible assets decreased due to amortisation and currency adjustments.

Property, plant and equipment

Declined mainly due to depreciation, impairments, currency adjustments, reclassifications to assets held-for-sale and disposals. This was partially offset by additions and net acquisitions and disposal of businesses.

Right-of-use assets

Decreased mainly due to depreciation, currency adjustments and the derecognition of leases. This was offset by new leases entered into.

Vehicles for hire

The decrease for the year is primarily due to lower demand for vehicles by the car rental industry.

Net working capital reduced by R3,4 billion (39%)

The Import and Distribution segment's overall working capital declined by 51% mainly due to reduced inventory levels as a result of improved sales, coupled with OEM production constraints and lower car rental returns. This was offset by the increase in trade receivables due to improved sales and the reduction in creditors (OEM payments) coupled with lower utilisation of extended payment terms. The currency derivative movement as a result of the unwinding of the FECs and the strengthening of the ZAR against the major currencies to June 2021 further reduced working capital.

The Retail and Rental segment's working capital decreased by 31%. Inventory declined mainly due to improved sales, including the sale of de-fleeted vehicle rental stock (specifically related to abnormally high inventory levels at Auto Pedigree at 30 June 2020) and OEM production constraints. This was partially offset by the reduction in floorplan creditors due to settlements and reduced purchases. Trade receivables remained flat year-on-year.

The Financial Services segment's working capital decreased significantly mainly due to the decline in trade receivables relating to de-fleets outstanding at 30 June 2020 which were received post-year-end, an increase in trade payables and provisions due to additional fleet deals to rental companies in June 2021 by the Importers and an increase in inventory (demo and company cars) related to costing rate and volume increases.

The Aftermarket Parts segment's working capital reduced by 8%. Inventory declined in line with improved sales and improved stock management and trade creditors increased mainly due to a larger portion of inventory being covered by credit terms with suppliers. Partly offset by the increase in trade receivables due to improved revenue.

Overall, payroll-related accruals (mainly leave pay, incentives and commissions) and general accruals increased across all business segments.

Assets classified as held-for-sale

The current period assets held-for-sale relate to the non-strategic properties identified for sale, mainly retail properties in South Africa, Australia and the UK.

Contract liabilities

The increase of 1% was across all funds, except for monthly service and maintenance plans, which were negatively impacted by reduced levels of new business, due to the current economic conditions.

Lease liabilities

Decreased mainly due to lease payments, currency adjustments and derecognition of leases. This was partially offset by new leases entered into and finance costs.

Core debt (excluding floorplan and IFRS 16 debt)

Decreased by R3,3 billion primarily due to the lower working capital and vehicles for hire levels. This was further impacted by profits generated and no dividend paid in September 2020.

Floorplans from financial institutions

Floorplan debt reduced as the Group used more of its bank debt facilities (utilising cash resources earned from improved profitability). The floorplans were also impacted in the Financial Services business due to reduced car rental activity, and reduced inventory levels across the business.

Shareholders' equity

Shareholders' equity was enhanced mainly by retained income of R2 142 million and reduced mainly by unfavourable hedging reserve adjustments amounting to R1 010 million (unwinding of the hedging reserve coupled with foreign currency movements against the ZAR impacted forward cover since the favourable 30 June 2020 position); the purchase of shares for share scheme hedges resulting in treasury shares amounting to R134 million and the repurchase and cancellation of shares amounting to R351 million; unfavourable currency translation reserve adjustments as a result of the strengthening of the ZAR amounting to R312 million; dividend payments to shareholders in March 2021 amounting to R294 million; and the reduction in the goodwill reserve as a result of minority interest shareholding buy-outs (R250 million related to Motus Vehicles Distributor and R38 million related to SWT Group Proprietary Limited).

Cash flow movements

for the year ended 30 June 2021	2021 Rm	2020 Rm
Cash generated from operations before movements in net working capital	5 335	3 788
Movements in net working capital	1 778	333
Cash generated by operations before interest, taxation paid and capital expenditure on vehicles for hire	7 113	4 121
Finance costs paid	(716)	(1 067)
Finance income received	59	59
Dividend income received	142	462
Taxation paid	(694)	(571)
Free cash flow generated from operations	5 904	3 004
Net replacement capital proceeds/(expenditure) – vehicles for hire	151	(795)
Cash generated from operations	6 055	2 209
Net cash outflow on the acquisition and disposal of businesses	(199)	(561)
Net capital expenditure (excluding vehicles for hire)	(325)	(324)
Net movement in investments and investments in associates and joint ventures	(10)	(39)
Advances of other financial assets	(34)	–
Cash received on finance lease receivables	44	53
Cash generated from operating and investing activities	5 531	1 338
Repurchase of own shares	(485)	(313)
Acquisition of non-controlling interests	(288)	–
Dividends paid	(312)	(490)
Other	4	2
Decrease in debt	4 450	537

The free cash flow was primarily generated by solid operating profits, decreased finance costs and reduced working capital.

Net working capital is an inflow of R1 778 million primarily due to lower inventory assisted by improved sales, the sale of excess inventory, lower stock returns from car rental units and, more recently, supply constraints on certain inventory models.

Cash inflow on vehicles for hire of R151 million was due to reduced car rental activity.

The net cash outflow on acquisition of businesses of R199 million relates to the acquisitions in the Aftermarket Parts business segment, six passenger dealerships in South Africa, one UK commercial operation and an additional payment for two passenger dealerships (BMW and Isuzu) in Ballarat, Australia.

As a result of the above, R5 531 million cash was generated from operating and investing activities.

The cash outflow on acquisition of non-controlling interests relates to the acquisition of the remaining 40% shareholding in Motus Vehicles Distributor Proprietary Limited (formerly Renault South Africa Proprietary Limited) and the additional 10% shareholding in SWT Group Proprietary Limited.

Repaid debt amounted to R4 450 million.

Summarised segment financial position

	Group		Import and Distribution		Retail and Rental
as at 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Financial position
Assets
Goodwill and intangible assets	1 546	1 671	–	1	1 047	1 159
Carrying value of associates and joint ventures (excluding loans to associates)	200	145	25	16	52	26
Property, plant and equipment¹	6 872	7 625	462	555	5 951	6 448
Investment properties	152	159	138	148	14	11
Right-of-use assets	2 132	2 279	128	161	1 778	1 921
Investments and other financial instruments	374	345	4	4	–	–
Vehicles for hire	2 426	3 167	787	1 554	1 581	1 613
Net investment in lease receivables	40	100	40	100	–	–
Inventories	16 528	20 179	3 383	4 596	10 941	13 382
Trade and other receivables²	4 246	4 299	1 989	1 809	2 721	2 738
Operating assets	34 516	39 969	6 956	8 944	24 085	27 298
– South Africa	23 025	26 263	6 956	8 944	13 104	14 208
– International	11 491	13 706	–	–	10 981	13 090
Liabilities
Contract liabilities	2 828	2 797	–	–	136	123
Lease liabilities	2 449	2 658	192	274	2 006	2 156
Provisions	1 000	857	219	164	199	139
Trade and other payables²	14 609	15 106	4 260	4 425	10 550	11 735
Other financial liabilities	56	30	–	–	28	7
Operating liabilities	20 942	21 448	4 671	4 863	12 919	14 160
– South Africa	13 343	12 434	4 671	4 863	5 546	5 400
– International	7 599	9 014	–	–	7 373	8 760
Net working capital	5 165	8 515	893	1 816	2 913	4 246
– South Africa	4 114	7 387	893	1 816	2 043	3 347
– International	1 051	1 128	–	–	870	899
Net interest-bearing debt	3 401	7 442	1 075	1 330	3 953	7 065
– South Africa	2 278	5 024	1 075	1 330	2 871	4 720
– International	1 123	2 418	–	–	1 082	2 345
Net capital expenditure	(174)	(1 119)	580	(703)	(638)	(284)
– South Africa	(129)	(1 005)	580	(703)	(535)	(184)
– International	(45)	(114)	–	–	(103)	(100)
Non-current assets (including equity investment in associates, excluding investment, deferred tax and other financial instruments)	10 902	11 879	753	881	8 842	9 565
– South Africa	6 659	6 865	753	881	4 710	4 738
– International	4 243	5 014	–	–	4 132	4 827
Source of internationally based non-current assets	4 243	5 014	–	–	4 132	4 827
– United Kingdom	2 675	2 901	–	–	2 675	2 901
– Other regions (Australia and South East Asia)³	1 568	2 113	–	–	1 457	1 926

	Financial Services		Aftermarket Parts		Head Office and Eliminations
as at 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Financial position
Assets
Goodwill and intangible assets	21	23	470	474	8	14
Carrying value of associates and joint ventures (excluding loans to associates)	12	10	107	88	4	5
Property, plant and equipment¹	125	129	284	438	50	55
Investment properties	–	–	–	–	–	–
Right-of-use assets	1	1	225	196	–	–
Investments and other financial instruments	366	338	5	–	(1)	3
Vehicles for hire	883	1 628	–	–	(825)	(1 628)
Net investment in lease receivables	–	–	–	–	–	–
Inventories	341	261	1 899	1 976	(36)	(36)
Trade and other receivables²	255	477	725	627	(1 444)	(1 352)
Operating assets	2 004	2 867	3 715	3 799	(2 244)	(2 939)
– South Africa	2 004	2 867	3 205	3 183	(2 244)	(2 939)
– International	–	–	510	616	–	–
Liabilities
Contract liabilities	2 692	2 674	–	–	–	–
Lease liabilities	1	3	250	225	–	–
Provisions	285	268	3	3	294	283
Trade and other payables²	597	525	1 190	1 042	(1 988)	(2 621)
Other financial liabilities	–	–	21	22	7	1
Operating liabilities	3 575	3 470	1 464	1 292	(1 687)	(2 337)
– South Africa	3 575	3 470	1 238	1 038	(1 687)	(2 337)
– International	–	–	226	254	–	–
Net working capital	(286)	(55)	1 431	1 558	214	950
– South Africa	(286)	(55)	1 250	1 329	214	950
– International	–	–	181	229	–	–
Net interest-bearing debt	(3 597)	(2 105)	755	1 247	1 215	(95)
– South Africa	(3 597)	(2 105)	714	1 180	1 215	(101)
– International	–	–	41	67	–	6
Net capital expenditure	635	(508)	(73)	(82)	(678)	458
– South Africa	635	(508)	(83)	(68)	(726)	458
– International	–	–	10	(14)	48	–
Non-current assets (including equity investment in associates, excluding investment, deferred tax and other financial instruments)	159	163	1 086	1 196	62	74
– South Africa	159	163	975	1 011	62	72
– International	–	–	111	185	–	2
Source of internationally based non-current assets	–	–	111	185	–	2
– United Kingdom	–	–	–	–	–	–
– Other regions (Australia and South East Asia)³	–	–	111	185	–	2

¹	During the year, a property to the value of R196 million was transferred from Aftermarket Parts to Head Office and Eliminations and included in assets classified as held-for-sale.
²	Includes amounts pertaining to derivative financial instruments.
³	Retail and Rental operates in Australia and Aftermarket Parts operates in South East Asia.

Summarised segment profit or loss

	Group		Import and Distribution		Retail and Rental
for the year ended 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Profit or loss
Total revenue	87 205	73 417	19 683	17 411	70 962	59 898
– South Africa	56 091	48 351	19 683	17 411	40 124	35 099
– International (see next page)	31 680	25 451	–	–	30 838	24 799
– Eliminations between geographic regions	(566)	(385)	–	–	–	–
Operating profit	3 795	2 136	912	827	1 757	332
– South Africa	3 043	2 112	912	827	1 054	370
– International	752	24	–	–	703	(38)
Depreciation, amortisation and impairments net of recoupments	(1 526)	(2 018)	(226)	(419)	(1 118)	(1 355)
– South Africa	(1 127)	(1 653)	(226)	(419)	(729)	(1 015)
– International	(399)	(365)	–	–	(389)	(340)
Finance costs¹	(666)	(1 175)	(139)	(346)	(681)	(795)
– South Africa	(469)	(942)	(139)	(346)	(487)	(567)
– International	(197)	(233)	–	–	(194)	(228)
Finance income¹	123	59	50	36	18	23
– South Africa	123	59	50	36	18	23
– International	–	–	–	–	–	–
Profit/(loss) before tax and capital items	2 893	773	458	487	1 091	(656)
– South Africa	2 306	1 048	458	487	557	(340)
– International	587	(275)	–	–	534	(316)
Capital items	(33)	(232)	–	(102)	(26)	(169)
– South Africa	(22)	(58)	–	(102)	(15)	5
– International	(11)	(174)	–	–	(11)	(174)
Profit/(loss) before tax	2 860	541	458	385	1 065	(825)
– South Africa	2 284	990	458	385	542	(335)
– International	576	(449)	–	–	523	(490)
Income tax expense	(718)	(356)	(122)	(257)	(296)	115

	Financial Services		Aftermarket Parts		Head Office and Eliminations
for the year ended 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Profit or loss
Total revenue	2 019	2 173	7 295	6 050	(12 754)	(12 115)
– South Africa	2 019	2 173	7 019	5 783	(12 754)	(12 115)
– International (see next page)	–	–	842	652	–	–
– Eliminations between geographic regions	–	–	(566)	(385)	–	–
Operating profit	904	931	559	322	(337)	(276)
– South Africa	904	931	508	260	(335)	(276)
– International	–	–	51	62	(2)	–
Depreciation, amortisation and impairments net of recoupments	(118)	(161)	(139)	(189)	75	106
– South Africa	(118)	(161)	(122)	(164)	68	106
– International	–	–	(17)	(25)	7	–
Finance costs¹	(67)	(67)	(95)	(143)	316	176
– South Africa	(67)	(67)	(92)	(139)	316	177
– International	–	–	(3)	(4)	–	(1)
Finance income¹	–	–	1	18	54	(18)
– South Africa	–	–	1	18	54	(18)
– International	–	–	–	–	–	–
Profit/(loss) before tax and capital items	845	866	466	117	33	(41)
– South Africa	845	866	420	76	26	(41)
– International	–	–	46	41	7	–
Capital items	10	16	(17)	23	–	–
– South Africa	10	16	(17)	23	–	–
– International	–	–	–	–	–	–
Profit/(loss) before tax	855	882	449	140	33	(41)
– South Africa	855	882	403	99	26	(41)
– International	–	–	46	41	7	–
Income tax expense	(198)	(172)	(94)	(59)	(8)	17

¹	Finance costs and finance income has been disclosed separately to enhance disclosure.

Summarised segment profit or loss (continued)

	Group		Import and Distribution		Retail and Rental
for the year ended 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Additional segment information
Revenue by nature
New motor vehicle sales	40 167	32 979	15 282	13 393	34 045	28 448
Pre-owned motor vehicle sales	22 266	17 751	2 294	2 122	21 615	17 172
Parts and other goods sales	16 002	13 617	1 983	1 772	8 172	7 016
Sale of goods	78 435	64 347	19 559	17 287	63 832	52 636
Vehicle workshops, maintenance, service and warranty	5 555	5 166	61	72	4 249	3 719
Motor vehicle rental	1 339	2 139	–	2	1 128	1 885
Fees on vehicles, parts and services sold	1 876	1 765	63	50	1 753	1 658
Rendering of services	8 770	9 070	124	124	7 130	7 262
Total revenue	87 205	73 417	19 683	17 411	70 962	59 898
Inter-group revenue	–	–	(11 964)	(11 458)	(440)	(248)
Total external revenue	87 205	73 417	7 719	5 953	70 522	59 650
Source of internationally derived revenue	31 680	25 451	–	–	30 838	24 799
- United Kingdom	23 854	19 172	–	–	23 854	19 172
- Other regions (Australia and South East Asia)1	7 826	6 279	–	–	6 984	5 627
Analysis of depreciation, amortisation, impairments and recoupments	(1 526)	(2 018)	(226)	(419)	(1 118)	(1 355)
Depreciation and amortisation	(1 513)	(1 947)	(222)	(457)	(1 108)	(1 309)
(Losses)/profits on disposals and impairments	(1)	(59)	(4)	38	(10)	(46)
Amortisation of intangible asset arising on business combinations	(12)	(12)	–	–	–	–
(Costs)/income included in profit before tax
Total employee costs	(6 606)	(6 633)	(410)	(447)	(4 719)	(4 539)
Operating lease charges	(95)	(106)	(15)	(10)	(74)	(82)
Once-off restructuring costs	–	(186)	–	(8)	–	(159)
Net foreign exchange (losses)/gains	(383)	(13)	(370)	(70)	3	(4)
Associate income included in pre-tax profits	43	22	10	–	4	3
Operating margin (%)	4,4	2,9	4,6	4,7	2,5	0,6

	Financial Services		Aftermarket Parts		Head Office and Eliminations
for the year ended 30 June 2021	2021 Rm	2020 Rm	2021 Rm	2020 Rm	2021 Rm	2020 Rm
Additional segment information
Revenue by nature
New motor vehicle sales	–	–	–	–	(9 160)	(8 862)
Pre-owned motor vehicle sales	–	–	–	–	(1 643)	(1 543)
Parts and other goods sales	–	–	7 225	5 985	(1 378)	(1 156)
Sale of goods	–	–	7 225	5 985	(12 181)	(11 561)
Vehicle workshops, maintenance, service and warranty	1 481	1 534	–	2	(236)	(161)
Motor vehicle rental	373	481	–	–	(162)	(229)
Fees on vehicles, parts and services sold	165	158	70	63	(175)	(164)
Rendering of services	2 019	2 173	70	65	(573)	(554)
Total revenue	2 019	2 173	7 295	6 050	(12 754)	(12 115)
Inter-group revenue	(326)	(388)	(24)	(21)	12 754	12 115
Total external revenue	1 693	1 785	7 271	6 029	–	–
Source of internationally derived revenue	–	–	842	652	–	–
– United Kingdom	–	–	–	–	–	–
– Other regions (Australia and South East Asia)1	–	–	842	652	–	–
Analysis of depreciation, amortisation, impairments and recoupments	(118)	(161)	(139)	(189)	75	106
Depreciation and amortisation	(118)	(161)	(130)	(128)	65	108
(Losses)/profits on disposals and impairments	–	–	3	(49)	10	(2)
Amortisation of intangible asset arising on business combinations	–	–	(12)	(12)	–	–
(Costs)/income included in profit before tax
Total employee costs	(490)	(516)	(885)	(820)	(102)	(311)
Operating lease charges	(2)	(2)	(28)	(16)	24	4
Once-off restructuring costs	–	(3)	–	(8)	–	(8)
Net foreign exchange (losses)/gains	–	–	(7)	(21)	(9)	82
Associate income included in pre-tax profits	8	6	19	12	2	1
Operating margin (%)	44,8	42,8	7,7	5,3

¹	Retail and Rental operates in Australia and Aftermarket Parts operates in South East Asia.