Motus Holdings Limited · JSE:MTH
Motus — Investor Day (June 2023)
65 slides from Motus's investor day presentation, Jun 14, 2023
Slide 1: Investor Day
Investor Day 14 June 2023
Slide 2: Agenda
Agenda 1 Introduction Osman Arbee, CEO 8:30 – 8:45 2 Automotive landscape Ockert Janse van Rensburg, CFO 8:45 – 9:45 3 Break 9:45 – 10:00 4 Malcolm Perrie, Aftermarket Parts CEO & Aftermarket Parts 10:00 – 11:30 Darren Wykes, MPD CEO 5 Q&A 11:30 – 12:00 6 Closing Osman Arbee, CEO 12:00 – 12:15 2
Slide 3: Introduction
Osman Arbee Introduction - Purpose of the session - Speakers: - Ockert Janse van Rensburg, CFO to cover the value chain across the business excluding Aftermarket Parts - Malcolm Perrie, Aftermarket Parts CEO to cover the value chain for Aftermarket Parts - Darren Wykes, Motor Parts Direct Holdings L
Slide 4: Challenges creating a fragile consumer
Osman Arbee Challenges creating a fragile consumer South Africa United Kingdom Australia - high inflation - high inflation which has started to - high inflation which has started to moderate moderate - increasing interest rates - higher interest rates with another - increasing interest rates - weake
Slide 5: What reduces our vulnerability in a volatile economy?
Osman Arbee What reduces our vulnerability in a volatile economy? Integrated business Understanding our model where businesses customers & their needs deliver different things at different times Offering a superior Comprehensive Maintain strong diversified offering relationships with key customer ex
Slide 6: Sustainability of the business: diversification and internationalisation
Osman Arbee Sustainability of the business To further enhance the sustainability of the Group, we are pursuing three key strategies: 1. Increased diversification to place less reliance on revenue & profits generated directly from vehicle sales. 2. Increased contributions from international operation
Slide 7: Free cashflow generation
Osman Arbee Free cashflow generation Cash generated from operations increased by 58% from June 2019 3 061 3 004 5 904 4 835 (R millions) June June June June 2019 2020 2021 2022 7
Slide 8: Overview of presentation
Osman Arbee Overview of presentation Ockert Janse van Rensburg will cover the value chain across the three business segments: - Import & Distribution - Retail & Rental - Mobility Solutions Malcom Perrie & Darren Wykes will cover the value chain for Aftermarket Parts & share a detailed understanding
Slide 9: Segments and value chain
Ockert Janse van Rensburg Value chain 0 0-6 1-6 >6 years years years years Pre-owned vehicle Pre-owned vehicle New vehicle market Life of new vehicle market & Trade-in market & Trade-in Importation, distribution Recurring touchpoints after Second sale of vehicle Further vehicle servicing and first s
Slide 10: Key business metrics
Ockert Janse van Rensburg Key business metrics − New vehicle sales Retail Service & maintenance plans − Number of product − Pre-owned vehicle sales − New vehicle sales − Number of customer derivatives − Parts & panel sales − Pre-owned vehicle sales contracts − Market share − Market share − Parts & p
Slide 11: Global vehicle sales
Ockert Janse van Rensburg Global vehicle sales At (million units) ~90% - 95% of 74,9 pre-Covid levels 71,1 70,8 67,2 66,7 63,8 1 2 2010 - 2019 2019 2020 2021 2022 2023 Global vehicle sales continue their recovery towards pre-Covid levels. The above further demonstrates the normalisation of vehicles
Slide 12: Car parcs & EV evolution
Ockert Janse van Rensburg Car parcs & EV evolution United Kingdom ICE car parc EV car parc 40 million ~1 million The growing concerns about global sustainability and climate change are fueling the shift towards new energy vehicles. EVs as a % of 2022 car sales SA 1% US 5% China 16% UK 19% Germany 26
Slide 13: International: Vehicle retail UK & Australia
Ockert Janse van Rensburg International: Vehicle retail I UK & Australia Represent 16 OEMs & 19 brands Represent 20 OEMs & 20 brands 80 commercial dealerships 36 passenger dealerships 33 passenger dealerships Located in Victoria & New South Wales Commercial: 2022 2021 Market share statistics (%) DAF
Slide 14: Source of South African vehicles imported
Ockert Janse van Rensburg Source of South African vehicles imported I Passenger & LCVs Top 5 countries supplying vehicles to the total % SA vehicle market India 51% Europe 16% China 11% Japan 9% South Korea 6% ~68% of Motus Importer vehicles are sourced from India 14
Slide 15: The South African vehicle market
Ockert Janse van Rensburg The South African vehicle market Motus sells one in five new vehicles in South Africa Actual Actual Projection Projection Motus sells 1 new Motus targets 464 493 528 963 520k-540k 520k-540k vehicle to 0,7 pre-owned vehicles new vehicles new vehicles new vehicles new vehicle
Slide 16: Brands in South Africa: Passenger
Ockert Janse van Rensburg Brands in South Africa I Passenger - Calendar year 2022 Motus Motus Brand representation Brand representation 1 Toyota 11 Ford Out of the top 2 Volkswagen 12 Chery 20 brands Motus 3 Suzuki 13 Audi represents 90% 4 Hyundai 14 Mazda 5 Renault 15 Mahindra 6
Slide 17: Vehicle category movements
Ockert Janse van Rensburg The South African vehicle market I Vehicle category movements 2021 Total 2022 Total Category Volume Volume Share Volume Share growth Hatch (3-dr) 812 0,2% 1 007 0,2% 24,0% Hatch (5-dr) 122 975 27,6% 135 036 26,6% 9,8% Sedan 29 232 6,6% 28 994 5,7% (0,8%) SUV & Crossover 138
Slide 18: Passenger market share
Ockert Janse van Rensburg The South African vehicle market I Passenger market share Market Market 12 months 12 months Unit % Share % Share % Brand December 2021 December 2022 variance Difference 2021 2022 Toyota 57 920 75 973 18 053 31,2% 19,0% 20,9% Volkswagen 62 062 59 715 (2 347) (3,8%) 20,4% 16,
Slide 19: New Model Launches: Importers 2023
Ockert Janse van Rensburg New Model Launches: Importers I 2023 Hyundai Kia Renault Mitsubishi January Eclipse Cross 1.5T Exceed3 February Palisade3 March Venue Cargo Captur3 April Sportage1 May Tucson N Line June Gi10 Sedan Outlander July - December Gi103 Sportage2 & Picanto3 NEV models IONIQ5 EV6 A
Slide 20: Foreign currency
Ockert Janse van Rensburg Foreign currency How do we manage foreign currency risk? Apply established hedging strategies, policies & governance Our approach provides Our current flexible structures. visibility for future guideline is to cover up costing which influences Review funding requirements, c
Slide 21: Vehicle Asset Finance
Ockert Janse van Rensburg Vehicle Asset Finance ~85% of Motus vehicle sales are financed The under R200k band is supplied by Suzuki, Toyota & Renault. 21 Source: TransUnion report_Q1 2023 Vehicle Pricing Index Vehicle Asset Finance (Figure 1.5)
Slide 22: Consumer affordability: Cost of ownership evolution
Ockert Janse van Rensburg Consumer affordability I Cost of ownership evolution The following table analyses & illustrates the total cost of vehicle ownership over the past five years from 2019 to May 2023. The figures indicate that a vehicle owner in May 2023 is now paying on average R3,776 more per
Slide 23: Retail considerations
Ockert Janse van Rensburg Retail considerations - Diversified portfolio - Geographical spread - Own ~80% of our new vehicle dealerships - Multi-franchise strategy & execution - Increased activity in workshops - Pre-owned vehicles contribution 23
Slide 24: Innovation & digitisation
Ockert Janse van Rensburg Innovation & digitisation - Customer behaviour moving towards omni-channel. - Digital Dealer Project: offers a digital sales channel through motus.cars, with a fully integrated finance application, trade-in onboarding & VAPs. - Align systems & processes with centralised Stoc
Slide 25: Car rental value chain
Ockert Janse van Rensburg Car rental value chain Four OEM brands Four OEM Hyundai, Kia, brands Renault, Motus dealerships Mitsubishi Car Rental Europcar & Tempest Auto Other Pedigree brands Operating at dealerships ~75% to 80% of Pre-Covid levels Hold fleet for average period of 9 to 15 months Upfle
Slide 26: Mobility Solutions: Sustainable growth
Ockert Janse van Rensburg Mobility Solutions I Sustainable growth Drive sales through Leader of the Provides annuity Value-added >730 000 call centres Group Innovation income streams in products & customers employing 265 Centre with ~4,000 the future services individuals mx members Sustainable growt
Slide 27: Resilient business model
Ockert Janse van Rensburg Resilient business model 1 2 3 4 5 6 7 Diversified Integrated Unrivalled High free Varied Organic Highly automotive business scale in cash flow income growth experienced business model South Africa generation streams trajectory team 1. Diversified (non-manufacturing) busine
Slide 28: Overview of Motus Aftermarket Parts segment (MAP)
Overview of Motus Aftermarket Parts segment (MAP) Malcolm Perrie
Slide 29: What I will cover
What I will cover 1. What is the Aftermarket a) The Overall Aftermarket b) The Independent Aftermarket 2. What drives the Independent Aftermarket 3. Where do we fit in the Independent Aftermarket 4. How do we extract value and operating margin through the value chain 5. Why the UK, Europe and China
Slide 30: The Replacement Parts market segments
The Replacement Parts market segments The “Sweet” Spot Independent Aftermarket (Motus Aftermarket Parts) Dealerships (MAP) “Entry Level” (OES) (MAP) Used Parts 30
Slide 31: Each car has ± 30,000 parts
Our market Part Categories • Wear parts (service) • Mechanical failure • Crash parts Each car has ± 30,000 parts Translates to ± 2,000 moving parts 31
Slide 32: A numbers game
Statistics – South African market A numbers game 12 million vehicles 3,000 model variants 30,000 parts per vehicle 90 million different parts Our offering: 135,000 parts (sku’s) of 2,000 wear parts per vehicle which 60,000 are fast moving • + Oils, Chemicals, Tools and 6 million wear parts Accessori
Slide 33: Key drivers of the Aftermarket in SA
Key drivers of the Aftermarket – in SA • An increasing installed base – a growing Vehicle “Parc” • New vehicle sales • Longer vehicle retention • Importation of 2nd hand vehicles into neighbouring territories • Vehicle Mobility – usage • Inferior public transport • Poor infrastructure • Inferior rep
Slide 34: Revenue and profit streams
Revenue and profit streams Stream One Stream 2 Stream 3 – Aggregate product – Wholesale distribution – Retail Motus Owned Franchise 50 8 245 19 8 27 Annualized Sales (R2.4bn) Annualized Sales (R6.3bn) Annualized Sales (R7.2bn) To Group 51% To Group 19% To Group 0% To Independents 49% To Independents
Slide 35: Where we operate and extract value
Where we operate and extract value OE Dealer Price Level: R900 R100 Independent Aftermarket Price Price Level: R550 Cost + Gross Margin Factory Motorist Parts Factory Wholesale (W) Retail (R) Fitment Motorist Aggregator R100 R167 R232 R356 R550 Channel Gross Margin R67 (40%) R65 (28%) R124 (35%) Tot
Slide 36: Market expansion - global
Market expansion - global • The SA situation • Limited growth for MAP in Southern Africa – have a dominant position • Competition Commission hurdles • We have capacity within existing supply chain and procurement • We can further leverage efficiencies • The Global Aftermarket landscape is consolidat
Slide 37: Total global vehicles in operation
Global vehicles – Market opportunities Total global vehicles in operation ± 1 500 million 351m 405m 506m • 40m; UK • 242m; EU • 123m; Non-EU 49m 30m 83m • 12m; RSA 23m 37
Slide 38: Supply chain optimisation
Supply chain optimisation • Shanghai distribution centre • Sourcing from Far East and consolidate – containers with mixed product • Better manages pipeline inventory • Can support UK and Europe demand (WIP). Already supporting SA. • Can support new, untapped markets • Extracting margin from the supp
Slide 39: Our local owned footprint
Our local “owned” footprint Key footprint strategy to “own” the full channel • RDC network (8 locations) supported by direct shipment from RDC Retail • China (MTS) CDC • Rest of World (RoW) CDC (Joburg) • Local suppliers • Retail footprint (76 locations) • Serviced by RDC network • Support workshop
Slide 40: The EV challenge
The EV challenge Impact of EV sales on Vehicle Parc Exponential Curve Probability 15,0 14,4 50,0 Millions 13,5 45,0 14,0 40,0 12,7 13,2 13,0 12,0 13,2 35,0 South African Vehicle Parc EV Sales as % of Total 12,0 12,6 30,0 11,0 25,0 20,0 10,0 17,8 15,0 9,0 6,6 10,0 8,0 2,4 5,0 7,0 - 2020 2025 2030 203
Slide 41: The FAI acquisition
The FAI acquisition • Bought 100% of FAI Automotive plc in the UK • Effective 1 October 2021 • Aftermarket automotive parts business specializing in distributing passenger and light commercial vehicle parts throughout the UK and Europe • Projected annual Revenue of R750m • Purchase consideration was
Slide 42: The MPD acquisition
The MPD acquisition • Bought 100% of Motor Parts Direct Holdings Limited (MPD) in the UK • Effective 3 October 2022 • A business-to-business parts distributor (Motor Factor) • Comprised of a branch network of 175 outlets across England and Wales • 4th biggest Motor Factor Group in the UK servicing a
Slide 43: Why MPD?
Why MPD? • Aligned to Motus’ international growth strategy for the Aftermarket Parts business • Reduces the Group’s dependency on vehicle sales • Non-cyclical business • Provides economies of scale, procurement benefits and synergies • Cash generative, asset light and not capital intensive • Profess
Slide 44: Darren Wykes
Motus AFTERMARKET PARTS Darren Wykes
Slide 45: Brief history overview
Brief history overview • Company formed late 1999. • Four founding members: Mukesh Shah (ex CEO/owner), Darren Wykes (current MD) and two since retired. This team had over 150 years collective motor factor experience at all levels within both independently owned businesses and large PLC’s. • This ex
Slide 46: MPD Business model
MPD Business model • Supply of passenger vehicle components and accessories, mainly to independent workshops and service centres within 16 km radius. • Consistent, demand-driven, well-stocked product offering across branches. • Twice daily stock replenishment from central service depots (CSDs), and
Slide 47: MPD Vision & Mission statement
MPD Vision & Mission statement To achieve sales in excess of £250 million in the medium-term via a national network of branches To be the “natural” To secure business To deliver quality To ensure loyalty To develop all staff To invest and train first choice for our with 80% of the products in record
Slide 48: Key statistics
Key statistics Motor Parts Direct (MPD) Automotive Distribution Centre (ADC) − 175 motor factor branches, average 10 Single site wholesale distributor, now with multi-tasking staff. over 650 customers and growing. − 15 CSD’s based at branches. − 1,828 dedicated staff. − 925 delivery vans offering ho
Slide 49: Why customers choose MPD
Why customers choose MPD A truly dedicated, Competitive pricing Excellent customer Full range of quality Strong trading motivated, and structure across all service levels products with both relationships with professional products to suit helping improve OE Branded suppliers enabling customer focuse
Slide 50: Company info
Company info • 15 experienced regional managers focused on day-to-day management of a 12-branch network. • Highly motivated head office branch-support team across all aspects including sales, purchasing, marketing, IT, accounting and distribution. • Branches managed as autonomous profit centres by m
Slide 51: UK Aftermarket market stats
UK Aftermarket market stats • UK Aftermarket Parts market is 4th largest in Europe with turnover circa £48.5 billion, breakdown is: Service and Repair £26.5 billion Wholesale parts total business £16 billion Retail parts £6 billion • UK Car parc including LCV over 3 years old (target market) i
Slide 52: Competitor stats
Competitor stats • Alliance 250 branches, total £1.6 billion including all owned i.e. FPS, APEC, Platinum, BTN • LKQ 330 branches, £1.38 billion (including all elements of business) • GSF 185 branches, £287 million • Rapid Group, £205 million • IFA Group, £194 million MPD is currently the 4th larges
Slide 53: Revenue lines
Revenue lines UK Aftermarket Motor Parts Direct 17% 18% 31% 36% 12% 9% 8% 4% 10% 5% 5% 5% 11% 6% 10% 6% 3% 4% Brake friction (17%) Oil/lubricants (12%) Brake friction (18%) Oil/lubricants (9%) Filters (10%) Steering & suspension (10%) Filters (8%) Steering & suspension (11%) Batteries (6%) Cooling &
Slide 54: Average spend per customer
Average spend per customer 0% 0% Average spend Number of 1% category bracket customers 2% 6% Up to £499 13,966 9% £500 to £1,000 2,444 £1,001 to £2,000 1,900 12% £2,001 to £4,000 1,252 £4,001 to £6,000 391 69% £6,001 to £8,000 145 £8,001 to £10,000 77 £10,001 + 63 Total 20,238 Up to £499 £500 to £1,
Slide 55: Short-term Strategic objectives
Short-term Strategic objectives • Open five new branches annually. • Open two additional Warehouse Distribution (WD) sites. • Launch customer loyalty programme to drive growth and retention. • Continue with margin improvement programme. • Raise company profile via all social media and brand marketin
Slide 56: Growth planning strategy
Growth planning strategy • Continue to benefit from buoyant market conditions enhanced by extended vehicle replacement cycle. • Maturing branches – support new sites to reach their full potential. • Online sales – launch of new website to capture more retail type business. • Margin improvement progr
Slide 57: Motus Aftermarket Parts Division (MAP) Some concluding remarks
Motus Aftermarket Parts Division (MAP) Some concluding remarks Malcolm Perrie
Slide 58: Key focus areas
Key focus areas • Driving operational efficiencies • Converting efficiency into operating profit • “Doing more with less” • Consolidation of “owned brands” • Leveraging off the integrated supply chain • Extracting more margin • Lowering relative investment in inventory • Increasing availability at p
Slide 59: Thank you!
Thank you!
Slide 60: Closing
Closing
Slide 61: Desired outcomes
Osman Arbee Desired outcomes – Increase sustainable revenue & operating profit. – Achieve long-term resilience by diversification across segments & spread across different geographies. – Grow the international businesses. – Improve working capital efficiency, increase cash generation & reduce debt.
Slide 62: How do we achieve our desired outcomes?
Osman Arbee How do we achieve our desired outcomes? Optimise our Invest in human portfolio through Improve capital & change selective Enhance overall technology management in investment, financial solutions by order to develop & entering into performance Optimal & upgrading empower strategically sup
Slide 63: Guidance affirmation
Osman Arbee Guidance affirmation Guidance for the 12-month period ending 30 June 2023, we expect to deliver stable earnings: Deliver operating profit Elevated finance costs Solid Strong growth: as a result of: financial position cash flow generation - Organic - Acquisitions from operations will redu
Slide 64: Thank you!
inten. You Za ZA “GE.
Slide 65: Disclaimer
Disclaimer This presentation is confidential and is being provided for information purposes only to existing and prospective investors in Motus Holdings Limited (“Motus”). No representation or warranty, expressed or implied, is made as to the accuracy or completeness of the information contained her