Chief Financial Officer's review

Debt and liquidity

Net debt to equity is 36% (2021: 28%). Core debt (excluding floorplan and IFRS 16 debt) increased by R1,6 billion from June 2021 primarily due to the higher working capital and vehicles for hire levels, dividend payments (final in September 2021 and interim in March 2022), share repurchases, business and associate acquisitions, capital expenditure and tax payments. This was offset by profits generated for the 12-month period.

Net debt to EBITDA is 0,8 times (2021: 0,8 times) and EBITDA to net interest is 17,9 times (2021: 10,9 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 providers of below 3,0 times and above 3,0 times, respectively.

ROIC increased to 17,8% (2021: 14,8%) mainly due to improved profitability. WACC increased to 10,9% (2021: 9,5%) primarily due to increased average equity and the increase in cost of equity and debt.

Net asset value per share increased by 24% to 8 143 cents per share (2021: 6 586 cents per share).

We have secured two sustainability-linked facilities - one a £120 million Pound-denominated facility that was raised in FY2020 and has been extended to FY2025, and the other a R6,8 billion Rand-denominated syndicated facility co-ordinated by Standard Bank. The facilities have been acquired based on years of measuring our environmental performance and our ability to meet targets.

Gearing, facilities and debt covenants

We generated significant free cash flow of R4 835 million (2021: R5 904 million) from operating activities before capital expenditure for vehicles for hire. The free cash flow was primarily generated by strong operating profits, supported by decreased finance costs and increased income from profit sharing arrangements. This was offset by increased taxation paid as a result of increased profitability and increased investment in working capital.

The liquidity position is strong, and the Group has R11,7 billion in unutilised banking and floorplan facilities. A total of 64% of the Group funding is long-term in nature and 21% of the funding is at fixed interest rates. Excluding floorplan funding, 24% of the funding is at fixed interest rates.

Strategic acquisitions

We concluded select acquisitions during the year to support the delivery of the Group's longer-term strategy, for a total net of cash purchase consideration of R758 million. These businesses will accelerate innovation and enhance operational synergies across the Group's businesses.

• Acquired a 100% shareholding of FAI, based in the United Kingdom.
• An additional 11% shareholding in Synapt Proprietary Limited, which owns 100% of getWorth Proprietary Limited, increasing effective ownership to 60%.
• An additional 10% shareholding in SWT Group Proprietary Limited (Australia).
• Four passenger dealerships in South Africa.
• Acquired 25% shareholding in a technology company.

Good governance

The Group maintains a strong internal control environment that supports its agility due to robust systems and visible policy compliance across the Group. The overall design and effectiveness of the Group's internal financial controls is regularly assessed to ensure that internal financial controls operate as intended and that the required and appropriate level of reliance can be placed on them in producing the Group's financial information and disclosures. The Group's combined assurance activities, incorporating both internal and external audit, continue to confirm that the Group's financial controls are operating effectively and in line with their intended purpose.

The Group listed on A2X, a licensed stock exchange authorised to provide a secondary listing venue for companies in South Africa, from 1 April 2022. By listing on A2X, the Group has created an innovative way to add value to shareholders by allowing them to benefit from the lower costs and additional liquidity created by using the latest exchange technology at A2X. Motus retains its primary listing on the JSE Limited and its issued share capital is unaffected by this secondary listing on A2X.

During the year, the Group initiated a process to rotate its incumbent external auditor, Deloitte & Touche, in compliance with IRBA's 2017 ruling on mandatory audit firm rotation. PwC has been appointed as the Group's external auditors, replacing Deloitte & Touche, whose mandate will end after the 2023 financial year. The appointment of PwC as the Group's external auditors is subject to shareholder approval at the Group's AGM.

Prospects

The Group remains focused on deepening competitiveness and relevance across the automotive value chain, driving organic growth through optimisation and innovation, and leveraging existing capabilities and networks. Further selective expansion will focus on enhancing existing brands and businesses through bolt-on and complementary acquisitions locally and internationally, while exploring strategic acquisitions that enhance the supply chain and the technology capabilities of the Group, and we are investing in innovative initiatives that are being implemented to ensure that engaging with Motus is more convenient and faster to do across various customer touchpoints. We are also continuing work on streamlining processes, reducing operational requirements and leveraging automation, data accuracy and customer self-serve capabilities.

The strength of the Group lies in our integrated business model, diversification and scale. This allows us to be resilient and agile to navigate cyclical challenges and to capitalise on opportunities as they arise. We have sufficient cash available and a strong financial position to support the investment in strategic growth initiatives and acquisitions, and to pay dividends to shareholders. We will consider share re-purchases as the opportunities arise. We expect to deliver positive earnings growth, a solid financial position and strong cash generation from operations for FY2023.

My thanks once again go to our people, customers, suppliers, funders and stakeholders for their continued support of the Group. And importantly, my appreciation for the dedicated people in the financial management teams across the Group for their unwavering efforts in delivering a high standard of financial planning, monitoring, reporting and disclosure.