Chairman's welcome

Demonstrating the Group's strategic agility

Motus' financial strength and flexibility emanate from its size and structure. As a multi-national provider of automotive mobility solutions and vehicle products and services, our scale and scope are unrivalled in South Africa and growing in key international markets. Our scale allows us to respond dynamically to the needs of OEMs, suppliers, customers and business partners in variable conditions; our scope means that whatever mobility need our customers have, one of our four segments can likely offer a solution.

Our importer and retail partnerships with leading OEMs representing some of the world's most recognised brands are long‑standing and have been proven over many market cycles. We provide these partners with a highly effective route-to-market supported by our deep understanding of OEM strategies, customer preferences, and mobility-related technologies. Our quality marketing, high levels of customer satisfaction, strategically located dealership network and culture of innovation, position us as the conduit between our OEM partners and our customers.

Our business model, which combines and integrates these solutions across the lifecycle of a vehicle – from sale to end of use – provides multiple customer touchpoints to deliver the differentiated Motus customer experience. This provides us with the flexibility to maximise the revenue and income opportunities for each vehicle sold. It also offers multiple access points to indirect vehicle-related revenue opportunities, such as parts, workshops and value-added mobility services, not directly dependent on the sale of new vehicles.

Maturity paves the way for growth and returns

Motus' ability to continually optimise its portfolio, improve through innovation, and grow through carefully selected acquisitions translate into growth opportunities that supports our shareholder return objective. We leverage best-in-class expertise to diversify and enhance our earnings over the long term to create shareholder value. The Group resumed dividend payments last year and has continued to generate healthy returns for our shareholders. We declared a final dividend of 435 cents per share, with full year dividends totalling 710 cents per share.

We can make acquisitions and pursue exciting growth opportunities, while still offering our shareholders competitive dividend yields, because Motus generates strong free cash flow. The maturity of our Import and Distribution and Retail and Rental business segments provides the Group not only the financial strength, but also the car parc to generate indirect vehicle-related income streams through Mobility Solutions and Aftermarket Parts; and the customer touchpoints to support the ability to pilot innovation ideas and concepts.

Besides our size and reach, it is how well we do in addressing our customers' needs, and our standard of service at any one of these contact opportunities, that secures their return to the Group for everything mobility related. Customer loyalty – bringing customers back, doing more for them, and finding better ways to solve their needs – enables us to make the cash to invest in growth and to generate attractive returns.

Delivering outstanding solutions and service vests in our people. The industry's dramatic and rapid shift online demands a competent workforce with the skills that the modern industry requires. We therefore match our investments in new technology with our spending on attracting, developing and retaining the skills our industry demands. Besides being skilled and motivated, our workforce is also diverse.

The management team have made good progress, especially in transforming middle and top management levels. Several black executives assumed senior leadership roles in the last year. Although some targets were marginally missed, the executive team is to be commended for following a pragmatic and measured approach to achieving the challenging transformation targets we set. Importantly, we give close attention and careful thought to succession planning at all executive levels and I am confident that the Group's emergency and longer-term leadership development pipeline is sound.

Ultimately, Motus' financial solidity and entrepreneurial agility – its ability to absorb shocks and capture opportunities even in the harshest conditions – is in the hands of this highly experienced, hands-on management team. The board is reassured by their deep knowledge of regional and global automotive markets, and years of collective experience in leveraging the full benefits of Motus' business model to optimise, improve and grow in volatile and uncertain times.

Positioning for market challenges and the direction of travel

The global vehicle market is going through a turbulent time. We were still recovering from the pandemic when the conflict in Ukraine began. The global cost-of-living crisis and the risk of an international recession are real threats. Supply, particularly of vehicles, parts and components, is likely to remain erratic before normalising in the middle of the 2023 calendar year. Yet, this has been a highly successful year for Motus, not just despite the market conditions, but because Motus' size, scope and structure allow it to succeed.

Whatever the prevailing economic conditions might be, some part of Motus will stand to benefit; whichever direction the market is pointing. The 12 million vehicles in the South African internal combustion engine (ICE) car parc are ageing, which signals demand for both new vehicles and parts and services to keep the existing fleet moving. The same holds for the UK and Australia with vast ICE car parcs of 35 million and 20 million, respectively. Across our territories, more vehicles need to be maintained, and the Group is well placed to help their owners do that with parts, services and solutions that respond to their needs at every stage of the vehicle's lifecycle.

In the past year, several regulations came into effect that directly affect the automotive industry. The Group took the necessary steps to understand the requirements, identify the impact and implement the required controls into the business in response. They are well-positioned to respond to potential emerging regulations and have the flexibility and experience that will allow them to meet future requirements as they arise.

Motus' structural resilience will be increasingly important in this evolving environment. While it is possible to foresee an end to the severe impact of COVID‑19, the long‑term challenges associated with climate change and geo‑political tensions remain unquantifiable. Carbon emissions from road transportation are significant contributors to climate change, and we depend on OEMs to develop and supply NEVs and more efficient vehicles relevant for the markets in which we operate. In the interim, we will consider and take all measures within our control to minimise the Group's environmental footprint, while also advocating for the changes that will facilitate the transport sector's inevitable transition to a low‑carbon future.

I encourage you to read the environment report for more perspective on this critical topic.

The Group's sense of social responsibility extends to long‑standing relationships in our local communities through CSI partner programmes, investing R30 million in FY2022. We choose to focus on education and skills development, road safety and primary healthcare. By consistently supporting our partners, we can make a long‑lasting positive difference to the economies and in the communities in which we work and live. We also support NGOs as need arises; for instance, the Group, together with Hyundai Motor Company of South Korea, donated R3 million to Gift of the Givers to support communities affected by the recent floods in KwaZulu-Natal.

There is more information about how we support our communities in the social report.

Board matters

Commitment to strong governance and unwavering integrity are the foundation of the dependability and trustworthiness that underpins every effort to nurture lasting relationships with all our stakeholders. The Motus board is the custodian of this commitment and, by ensuring that the board is strong, diverse and effective, the Group entrenches this strong moral compass at all levels of the business. After welcoming three new board members last year, the membership of the board has been stable, with the relevant mix of skills and experience to ensure that it discharges its duties effectively and responsibly.

The board regularly assesses its performance and that of its sub-committees. From the last assessment, and considering the increasing focus on ESG matters, we re-constituted the SES Committee to ensure that it incorporated the appropriate level of focus and skills to meet our ESG commitments.

In keeping with the requirements of King IV to have an independent non-executive director as the Remuneration Committee (RemCo) chair, Mr. A Tugendhaft stepped down as the Chairman at the Group's annual general meeting (AGM) in November 2021, while remaining a member of the committee. We thank Oshy Tugendhaft for the impeccable and professional manner in which he oversaw the complex transition of the Motus remuneration policy during the unbundling. Mr. MJN Njeke was appointed as Chairman of RemCo at the same time. This, and other steps were taken to update the Group's remuneration policy and implementation in response to shareholder feedback in the prior year. The remuneration policy and implementation reports were well received by shareholders at the 2021 AGM, endorsed by 97,83% and 97,71% of shareholders respectively.

PwC has been appointed as the Group's external auditors, replacing Deloitte & Touche, whose mandate will end after the 2023 financial year. The appointment is subject to shareholder approval at the Group's 2022 AGM. The Group initiated it to comply with the Independent Regulatory Board for Auditors' (IRBA) 2017 ruling on mandatory audit firm rotation, which requires a company to rotate its external auditor where it has held such appointment for more than 10 consecutive financial years.

In closing

The resilience that the Group showed during the height of the pandemic, and which has been sustained since, speaks to the agility of its business model and the entrepreneurial mindset of our leaders and the passion and skill of our people. Alongside the enduring support of all our stakeholders, including our customers and staff, for which we are deeply grateful, their ability to respond quickly and effectively to both threats and opportunities as they emerge will secure Motus' future. Our thanks to all our people ably led by our CEO, Osman Arbee, and his executive team for an exceptional set of results and for the substantive strategic progress made in the last year. At this highly uncertain time in the world, and as the Group turns 75, it is most pleasing to say with confidence that the road ahead is exciting for Motus.

GW Dempster

Chairman

26 September 2022