Annual Report for Fiscal Year Ending February 28, 2026 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated annual financial statements and the notes thereto, included elsewhere in this annual report, as well as the information presented under "Presentation of Financial Information." The following discussion and analysis include forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed elsewhere in this annual report. See "Special Note Regarding Forward-Looking Statements" and "Risk Factors."

Overview

We are a leading provider of an operational intelligence platform. Through our cloud platform, we empower businesses to conquer operations including fleet and asset management, fuel management, workforce management, logistics, safety including AI-assisted video safety, compliance, risk and environmental impact. Our platform delivers operational intelligence that simplifies decision making in physical operations and enable businesses to reduce costs, increase efficiency, improve safety and strengthen workforce and customer satisfaction. Our business is vertically integrated, which affords us complete autonomy to develop the capabilities and features that differentiate our applications as well as the speed of our innovation. Since we own and control almost every aspect of our smart device design, platform innovation and software application development, customer acquisition and onboarding, customer service and the management of our back-end support, we are able to move quickly without any significant third-party dependencies and inefficiencies. We have strategically grown our business and are now a global provider of a leading operational intelligence platform.

Karooooo is headquartered in Singapore and owns 100% of Cartrack and 81 % of Karooooo Logistics.

We serve customers in more than 20 countries, supporting approximately 2.7 million subscribers as at February 28, 2026 and our highly scalable platform serves large multinational enterprises and individual consumers alike, enabling us to address a large, growing and underpenetrated global market. As at February 28, 2026, we served more than 125,000 commercial customers (FY2025: 125,000+).

For management reporting purposes, we have organized our operations into the following reportable segments, based on the nature of the products and services provided:

There are many components within Carzuka's platform that had been built and developed and will continue to provide value to the existing Cartrack fleet platform. With effect from financial year 2025, Carzuka has changed the focus of its operations such that the nature of the underlying services offered now aligns with Cartrack's broader operations and has been integrated into that segment accordingly.

Since our founding, we have gained vast expertise and enhanced our business in the following areas:

Our single user interface and fully integrated operational intelligence platform runs on internally developed and cost-effective smart IoT devices, enabling us to deliver a unified and comprehensive service to our customers while maintaining control of our cost structure. Our discrete, sophisticated smart devices stream data to the platform, facilitating informed decisions about optimal asset efficiency and productivity, including live tracking and location of assets. Customers utilize the platform through an easily accessible web-based portal or mobile application, which is designed to be easy to deploy across customers' entire mobile asset fleets. Our devices can be installed in a range of mobile assets independent of asset procurement, allowing our customers to integrate our solutions in existing or new vehicles. Our platform includes a wide range of reliable services to effectively serve the needs of a geographically diverse range of clients. Where appropriate, partnerships with third-party technology providers are established to create incremental value to customers in the markets we serve.

We believe that maintaining financial discipline and prudent investment of capital provide a strong foundation for growth. In recent years, our business has demonstrated meaningful scale, consistent growth, strong profitability, robust cash generation, and a healthy return on invested capital. For the financial year ended February 28, 2026, we increased our subscribers to 2,662,222 (FY 2025: 2,302,236). For the financial year ended February 28, 2026, we generated subscription revenues of ZAR 4,843.7 million compared to subscription revenues of ZAR 4,068.2 million for the financial year ended February 28, 2025, reflecting year-over-year growth of 19%. For the financial year ended February 28, 2026, we generated Adjusted Free Cash Flow (a non-IFRS measure) of ZAR 809.1 million compared to Adjusted Free Cash Flow (a non-IFRS measure) of ZAR 425.2 million for the financial year ended February 28, 2025, reflecting a year-over-year growth of 90%.

Karooooo's profit for the year was ZAR 1,011.1 million and ZAR 937.1 million, for the financial years ended February 28, 2026 and February 28, 2025, respectively, reflecting a year-over-year increase of 8%.

Karooooo's Adjusted EBITDA (a non-IFRS measure) for the year was ZAR 2,285.4 million and ZAR 1,973.5 million for the financial year ended February 28, 2026 and February 28, 2025, respectively, reflecting year-over-year growth of 16%.

Finally, we believe strong net cash generated from operating activities is an important factor in supporting our robust business model and indicates our ability to provide the capital necessary to invest in subscriber growth, territorial expansion and scaling Karooooo Logistics. For the financial years ended February 28, 2026 and February 28, 2025, respectively, Karooooo generated net cash from operating activities of ZAR 1,967.1 million and ZAR 1,933.3 million, reflecting a year-over-year increase of 2%. The net cash generated from operating activities for financial year 2025 were affected by the reclassification of ZAR 485.7 million of bank fixed deposits matured in June and July 2024, from other receivables back to cash and cash equivalents.

These results were achieved notwithstanding the Group's strategic investment in product innovation, geographical expansion, brand building and customer acquisition for long-term, sustainable growth.

The following table sets forth the segment revenue, operating profit, operating profit margin, adjusted EBITDA (a non-IFRS measure) and adjusted EBITDA margin (a non-IFRS measure) for the periods presented.

Reconciliation of segment operating profit to segment adjusted EBITDA (a non-IFRS measure)

We define Segment adjusted EBITDA, a non-IFRS measure, as the adjusted EBITDA (definition noted above) allocated to the identified segments.

We define Segment adjusted EBITDA margin, a non-IFRS measure, as the adjusted EBITDA margin (definition noted above) allocated to the identified segments.

Factors Affecting Our Results of Operations

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this annual report titled "Risk Factors."

Subscriber Growth

We derive substantially all of our revenue from subscriptions to our operational intelligence platform. Our growth strategy is centered on increasing subscription revenue through the acquisition of new subscribers and the retention and expansion of existing subscriber relationships. We aim to drive this growth by continuously enhancing our platform with innovative features and offering value-added services that support customer adoption, engagement, and long-term retention.

We measure our success by our net subscriber base growth. We calculate net subscriber growth as the difference between gross subscriber additions and gross subscriber churn over a given period.

Customer Growth and Customer Retention

We rely on our proprietary internal systems and processes as well as our own sales teams to drive customer growth and minimize third-party risks in acquiring customers. Customer growth is a key driver of subscriber growth (mobile assets under subscription contracts).

We offer our operational intelligence platform to a broad range of customers seeking a variety of mobility solutions. Neither our ability to acquire nor retain customers is dependent on any specific industry, and we have not historically been materially exposed or vulnerable to cyclical or niche business sectors. Moreover, as a result of this industry agnostic approach, our customer mix has not materially affected our results of operations. We do, however, monitor our customer mix to ensure that our sales and marketing efforts continue to be effective and evaluate exposure to customer concentration or other material risks in our subscriber base.

We seek to capitalize on growth opportunities in numerous regional markets, with subscribers currently located in more than 20 countries worldwide. In addition to driving subscription revenue growth, we believe that our presence across multiple geographic markets and our exposure to multiple industry sectors mitigates risk during periods of changing economic conditions.

Foreign Currency Fluctuations

We conduct business in multiple countries and currencies, and as a result, the Group is exposed to currency risk to the extent that sales, purchases, and borrowings of the foreign operations are denominated in a currency other than the respective functional currencies of Group companies (comprising the company and its subsidiaries). The functional currencies of Group companies are primarily the ZAR, USD, Euro (EUR), the Singapore dollar (SGD) and Polish zloty (PLN).

(Refer to the Risk Factors note on foreign currencies on page 30 and Note 29.2 (c) on Currency Risk on page F-49)

Key Business Metrics

We review a number of operating and financial metrics, including the following key business metrics, to evaluate the performance of our business, identify trends, formulate business plans, make strategic decisions and assess operational efficiencies. Our calculation of the key business metrics and other measures discussed below may differ from other similarly titled metrics used by other companies, securities analysts or investors.

Number of Subscribers and Subscription Revenue

Our track record of subscriber growth reflects the strength of our proprietary operational intelligence platform, ongoing innovation in software features and functionality, customer-focused sales organization and our competitive pricing model. We believe that our ability to attract a range of new customers and increase our subscriber base is key to our business model.

We define our number of subscribers at the end of any particular period as the total number of connected vehicles and equipment using our platform at the end of such period. As at financial years ended February 28, 2026, and February 28, 2025, Cartrack had 2,662,222 and 2,302,236 subscribers, respectively, which represents net subscriber growth of 359,986 or a 16% increase from period to period.

As at February 28, 2025, and February 29, 2024, Cartrack had 2,302,236 and 1,971,532 subscribers, respectively, which represents net subscriber growth of 330,704 or a 17% increase from period to period.

Subscription revenue is a key metric we use to evaluate our business as we derive substantially all our revenue from Cartrack's sale of subscriptions to its operational intelligence platform.

For the financial years ended February 28, 2026, February 28, 2025 and February 29, 2024, Karooooo's subscription revenue was ZAR 4,843.7 million, ZAR 4,068.2 million and ZAR 3,535.8 million, respectively, which represents a 19% and 15% increase, respectively, compared to the prior period.

Cartrack's subscription revenue increased 19% to ZAR 4,830.7 million for the financial year ended February 28, 2026, as compared to ZAR 4,055.4 million for the financial year ended February 28, 2025 driven primarily by subscriber growth. The number of Cartrack's subscribers on our platform directly drives our subscription revenue, which comprised 98% of Cartrack's total revenue for the financial year ended February 28, 2026. Subscription revenue growth was also supported by the sales of Video and Cartrack-Tag to our existing customers.

Annualized Recurring Revenue ("ARR") (a non-IFRS measure)

We use ARR, a non-IFRS measure, as a measure of our revenue trend and an indicator of our future revenue opportunity from existing recurring customer contracts, assuming zero cancellations. We define ARR as the annual run rate subscription revenue of subscription agreements from all customers at a point in time, calculated by taking the monthly subscription revenue for all customers during that month and multiplying by 12. ARR is not adjusted for the impact of any known or projected future customer cancellations, service upgrades or downgrades or price increases or decreases.

The amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to subsequent changes in our pricing, service cancellations, upgrades or downgrades and acquisitions or divestitures.

Our calculation of ARR may differ from similarly titled metrics presented by other companies. The following table shows Cartrack's ARR for each of the periods presented calculated using subscription revenue for the last month in each period:

For the financial years ended February 28, 2026 and February 28, 2025, ARR was ZAR 5,179.5 million and ZAR 4,383.9 million, respectively, which represents a 18% increase. We believe that ARR growth reflects the underlying momentum in our business.

For the financial years ended February 28, 2025 and February 29, 2024, ARR was ZAR 4,383.9 million and ZAR 3,769.4 million, respectively, which represents a 16% increase from period to period.

Average Revenue Per Subscriber ("ARPU") (a non-IFRS measure)

ARPU measures the monetization of our platform and is an indicator of pricing efficiency, competitiveness and market positioning. ARPU is calculated on a quarterly basis by dividing the cumulative subscription revenue for the quarter by the average of the opening subscriber balance at the beginning of the quarter and closing subscriber balance at the end of the quarter. The result is then divided by three to reflect monthly ARPU. On an annual basis, Cartrack's ARPU is calculated as the average of the four quarterly ARPUs in that year. Cartrack's ARPU has been fairly consistent since inception. Given our economies of scale and vertically integrated business model, the monthly ARPU of approximately ZAR 162.

The following table shows our historical ARPU for each of the periods presented:

Adjusted Earnings Before Interest Depreciation Taxation and Amortization ("Adjusted EBITDA") (a non-IFRS measure)

In addition to our results determined in accordance with IFRS, we believe Adjusted EBITDA, a non-IFRS measure, is useful in evaluating our operating performance.

We use Adjusted EBITDA in our operational and financial decision-making and believe Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability.

We define Adjusted EBITDA (a non-IFRS measure) as profit less finance income, plus finance costs, fair value changes to derivative assets, taxation, depreciation and amortization, impairment of goodwill, and offering costs, less gain on disposal of subsidiaries.

However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial measure and the reconciliation of Adjusted EBITDA to profit, its most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.

For the financial years ended February 28, 2026 and February 28, 2025, Karooooo's Adjusted EBITDA was ZAR 2,285.4 million and ZAR 1,973.5 million, respectively, which represents a 16% increase. Cartrack has had a strong track record of profitability while it grows at scale. Karooooo Logistics is contributing positively to Karooooo's Adjusted EBITDA while we continue to invest in the Karooooo Logistics business to drive scale.

For the financial years ended February 28, 2025 and February 29, 2024, Karooooo's Adjusted EBITDA was ZAR1,973.5 million and ZAR1,690.6 million, respectively, which represents a 17% increase compared to the prior period, primarily due to Cartrack's consistent profitability as a result of robust subscriber and subscription revenue growth offset by investment for growth. This result includes Carzuka's losses of ZAR 43.3 million incurred in FY 2024.

Free Cash Flow or Adjusted Free Cash Flow (a non-IFRS measure)

In addition to our results determined in accordance with IFRS, we believe Free Cash Flow or Adjusted Free Cash Flow, which are non-IFRS measures, are useful in evaluating our operating performance. Free cash flow is a non-IFRS financial measure that we calculate as net cash generated from operating activities less purchases of property, plant and equipment. Adjusted Free Cash Flow is a non-IFRS financial measure that adjusts Free Cash Flow to exclude the effect of the fixed deposits with maturity dates exceeding three months that were classified under trade and other receivables.

We believe that Free Cash Flow and Adjusted Free Cash Flow are useful indicators of liquidity and the ability of the Group to turn revenues into Free Cash Flow, respectively, that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property and equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business and strengthening our financial position.

However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. In particular, Free Cash Flow or Adjusted Free Cash Flow does not reflect any restrictions on the transfer of cash and cash equivalents within the Group or any requirement to repay the Group's borrowings and does not take into account cash flows that are available from disposals or the issue of shares.

Management therefore takes such factors into account in addition to Free Cash Flow or Adjusted Free Cash Flow when determining the resources available for acquisitions and for distribution to shareholders. Investors are encouraged to review the related IFRS financial measure and the reconciliation of these non-IFRS financial measures to their most directly comparable IFRS financial measures, and not to rely on any single financial measure to evaluate our business.

For the financial years ended February 28, 2026 and February 28, 2025, Karooooo's Free Cash Flow was ZAR 809.0 million and ZAR910.9 million, respectively. As at February 29, 2024, included in the other receivables were fixed deposits of ZAR 485.7 million which matured in June and July 2024. Excluding the effect of these bank fixed deposits as at financial years ended February 28, 2025 and February 29, 2024, Adjusted Free Cash Flow (a non-IFRS measure) for the financial year ended February 28, 2025 would have been ZAR 425.2 million. Adjusted Free Cash Flow (a non-IFRS measure) for the financial year ended February 28, 2026, amounted to ZAR 809.0 million, an increase of ZAR 383.8 million, or 90%.

The increase in Adjusted Free Cash Flow (a non-IFRS measure) in financial year 2026 was primarily driven by a ZAR 76.7 million improvements in debtors' book in February 2026. Improved supplier terms and the timing of tax payments also contributed positively to adjusted free cash flow. Our uninstalled IoT devices levels were well managed in the financial year 2026, following a deliberate build-up in the prior year to support accelerated growth in financial year 2026. Adjusted free cash flow also improved as payments related to the construction of the South African head office building decreased significantly following the completion of the building in the prior year.

Compared to financial year 2025, as Cartrack accelerates customer acquisition, we made significant investment of ZAR 818.5 million for in-vehicle IoT devices and ZAR 73.6 million for future use IoT devices. Prepayments amounting to ZAR 24.8 million were made to purchase IoT components. The investment in IoT equipment for current and future growth contributed to the decrease in Free Cash Flow.

The Free Cash Flow (a non-IFRS measure) generated is in line with Karooooo's disciplined capital allocation strategy and support the Group's growth objectives.

Components of Our Results of Operations

Revenue

Our revenue is substantially derived from the provision of mobility data analytics solutions on a subscription-based model typically under monthly subscription contracts. Our revenue is driven primarily by the number of assets subscribed to our operational intelligence platform and the price per asset under these subscription contracts. Hardware sales, including sales to our licensees, and installation revenue and royalties we receive from our licensees, make up a minimal component of total revenue. Our initial per subscriber (or mobile asset) contract terms are generally 36 months with automatic monthly renewals thereafter and may not be cancelled without penalty prior to the completion of the initial term. The expected life cycle of our subscription contracts is over 60 months. In some instances, we charge our customers for a ratable portion of the contract on a periodic basis, generally in advance on a monthly basis, and in certain regions we apply annual escalations to the contract pricing. Customers may prepay all or part of their contractual obligations for the full initial contract term. Our revenue also includes Delivery-as-a-service ("DaaS") revenue generated from last-mile delivery services, including subscription-based revenue associated with these delivery services. Prior to FY 2025, our revenue also included revenue from selling second-hand vehicles via the Carzuka platform.

Cost of Revenue

Cost of revenue consists primarily of costs related to the depreciation and amortization of capitalized subscriber acquisition costs, which includes the telematics device, the cost of the installation and direct commissions paid to our sales staff. Other components of cost of revenue include non-capitalized automotive technician costs, machine to machine ("M2M") network communications costs and the costs of delivering safety and asset recovery services to our customers, including such costs incurred by our licensees. We capitalize the cost of installed telematics devices and direct sales commissions and depreciate these costs over the expected useful life of the subscriber, which is currently over 60 months. We pay commissions to our sales teams only once a telematics device is installed and activated. If a customer subscription agreement is cancelled prior to the end of the expected useful life of the subscriber, the depreciation period is accelerated, resulting in the carrying capitalized value being expensed in the then-current period. If an installed telematics device requires replacement for defect, the cost is taken as an expense in the replacement period. Less significant cost of revenue items includes mapping costs. Our cost of revenue is generally driven by the number of assets under subscription and solutions provided. We expect the cost of revenue in absolute terms to increase with subscriber growth. Cost of revenue also includes cost of last-mile delivery services, and, prior to FY 2025, also included the cost of vehicles bought for and sold via the Carzuka platform.

Other Income

Other income substantially consists of the government grants and gain on sale of property, plant and equipment and other less significant items.

Operating Expenses

Other operating expenses consist of sales and marketing, research and development, general and administration and expected credit losses on financial assets.

Sales and Marketing

Sales and marketing expenses consist primarily of wages and benefits for sales and marketing employees, and other marketing, advertising and promotional costs. Advertising costs consist primarily of pay-per-click advertising with search engines, social media advertising and other online advertising platforms, as well as the costs to create and produce these advertisements.

Our strategic investment in brand-building positions us well for growth. Sales and marketing expenses are expensed upfront, while the lifetime value of a customer is recognized over a prolonged period. Sales and marketing expenses may fluctuate as a percentage of subscription revenue and will continue to remain one of the largest components of our operating expenses.

General and Administration

General and administration expenses consist primarily of wages and benefits for administrative services, human resources, internal information technology support, executive, legal, finance and accounting employees; professional fees; expenses for business application software licenses; non-income related taxes; other corporate expenses, such as insurance and general office related expenses, such as rent and utilities.

In addition to the above, general and administration expenses consist of depreciation relating to other property, plant and equipment, excluding those related to subscriber acquisition costs, which are included in cost of revenue, and the amortization of intangible assets relating to purchased computer software infrastructure.

We expect that general and administration expenses will increase as we continue to scale. However, our long-term target is to reduce general and administration expenses as a percentage of subscription revenue.

Research and Development

Research and development expenses consist of wages and benefits for hardware engineers, product management and software development employees, technology experimental costs and the amortization of intangible assets relating to capitalized development costs. We have focused our research and development efforts on expanding and developing new offerings, improving customer experience and functionality and scalability of our platform. The majority of our research and development employees are located in Singapore, South Africa and Portugal. Research and development costs that qualify for capitalization, such as costs related to new generation smart devices and new stacks for our platform, are capitalized and amortized over 3 years.

Expected Credit Losses on Financial Assets

Expected credit losses on financial assets consist of bad debts expensed, the movement on the expected credit loss provision and any reversals.

Offering costs

For the financial year ended February 28, 2026, costs relating directly to the completed secondary public offering, which was announced on June 11, 2025 and successfully closed on June 13,2025. For the financial year ended February 28, 2025, costs relating directly to the proposed secondary public offering announced on July 24, 2024, and cancelled on July 26, 2024.

Finance Income

Finance income consists of interest earned on positive bank balances.

Finance Costs

Finance costs consist of interest on bank overdraft facilities, interest-bearing loans and lease obligations.

Taxation

Taxation consists primarily of current and deferred income tax and a minimal component of withholding tax.

Non-Controlling Interest

Profit attributable to non-controlling interest, which represents the share of profit belonging to holders of equity in Karooooo's subsidiaries that are not wholly owned by the parent company.

Results of Operations

The following table sets forth our results of operations for the periods presented.

Comparison of Results for the Year Ended February 28, 2026 and February 28, 2025

Revenue

Karooooo's total revenue increased 20% to ZAR5,479.1 million.

Cartrack's subscription revenue increased by ZAR 775.3 million, or 19%, to ZAR4,830.7 million for the financial year ended February 28, 2026 from ZAR4,055.4 million for the financial year ended February 28, 2025. Subscription revenue growth was driven by the acquisition of new customers and the sales of Video and Cartrack-Tag to our existing customers. Cartrack's net subscriber addition growth increased 9% to 359,986 for the financial year ended February 28, 2026 from 330,704 for the financial year ended February 28, 2025.

Karooooo Logistics's revenue increased 29% to ZAR540.3 million (2025: ZAR420.3 million). Karooooo Logistics focuses on delivery-as-a-service ("DaaS") through selected third-party sourced drivers and logistics companies, and charges per delivery. The business model is highly scalable and is delivering attractive growth.

Cost of Revenue

Karooooo's cost of revenue increased ZAR390.5 million, or 29%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025.

Cartrack's cost of revenue increased by ZAR302.9 million or 28% and Karooooo Logistics's increased cost of revenue of ZAR87.7 million or 31% for the financial year ended February 28, 2026 is in line with the increase in revenue.

Other Income

Other income increased ZAR4.6 million, or 44%, for the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. Other income consists of the government grants and gain on disposal of property, plant and equipment.

Operating Expenses

Operating expenses increased ZAR423.3 million, or 22%, for the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. Cartrack's operating expenses increased ZAR396.5 million, or 22%, for the financial year ended February 28, 2026 as compared to the financial year ended February 28, 2025 driven primarily by investments in infrastructure and sales headcount to support territorial expansion and distribution capacity.

Karooooo Logistics's operating expenses increased by 28% to ZAR122.1 million incurred for the financial year ended February 28, 2026, compared to ZAR95.3 million for the financial year ended February 28, 2025 as we continued disciplined, strategic investment to drive the scalable growth of Karooooo Logistics.

The increase in operating expenses is set forth in more detail below:

Sales and Marketing

Karooooo's sales and marketing operating expenses increased by ZAR226.7 million or 37% for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025, primarily driven by Cartrack.

Cartrack's sales and marketing operating expenses increased 37% to ZAR839.6 million for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025 as we invested in sales capacity to accelerate growth. We are encouraged by the early returns on our strategic investment in customer acquisition which are delivering intended outcomes and positioning us well for continued strong growth. Customer acquisition costs are a major component of the cost of acquiring new customers and are not expensed over the expected life span of a customer, but rather when incurred. This component increased ZAR89.4 million, or 19%, for the financial year ended February 28, 2026.

Investment in sales and marketing generally takes approximately 6 months to translate into customer acquisition. We believe that our strategic investment in sales capacity positions us well for long term growth. Our customer lifetime value (LTV) to customer acquisition costs ("CAC") ratio, a non-IFRS measure, continues to exceed 9 times and underpins our disciplined approach to growth and customer acquisition.

Karooooo Logistics's sales and marketing operating expenses were ZAR1.9 million for the financial year ended February 28, 2026, compared to ZAR1.6 million for the financial year ended February 28, 2025.

Lifetime value (LTV of a Customer) of customer relationships to customer acquisition costs (CAC) (a non-IFRS measure)

We calculate the LTV of our customer relationships as of a measurement date by dividing (i) the product of our subscription revenue gross margin measured over the past twelve months, and the difference between our current period ARR (a non-IFRS measure) and prior comparative period (twelve months) ARR by (ii) the percentage of ARR lost as a result of customer churn over the past twelve months. See "Key Business Metrics-Annualized Recurring Revenue ("ARR") (a non-IFRS measure)." We calculate our CAC as our annual sales and marketing expense measured over the past twelve months.

General and Administration

Karooooo's general and administration operating expenses increased by 16% to ZAR1,097.0 million for the financial year ended February 28, 2026 from ZAR944.8 million for the financial year ended February 28, 2025. The increase of ZAR152.1 million was primarily driven by increases in Cartrack's general and administration operating expenses by 15% to ZAR992.4 million, reflecting our disciplined cost management combined with continued investment in infrastructure to support future growth. Karooooo Logistics' general and administration operating expenses were ZAR104.6 million incurred for the financial year ended February 28, 2026, compared to ZAR82.2 million incurred for the financial year ended February 28, 2025.

Research and Development

Karooooo's research and development operating expenses increased by ZAR34.5 million or 15% for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025, primarily due to an increase in Cartrack's research and development operating expenses by ZAR30.2 million, or 14%, as we continued our investment in innovation to improve and expand the capabilities of our operational intelligence platform and internal management system. Karooooo Logistics's research and development operating expenses were ZAR15.8 million incurred in the financial year ended February 28, 2026 as compared to ZAR11.5 million incurred in financial year ended February 28, 2025.

Expected Credit Losses on Financial Assets

Expected credit losses on financial assets increased ZAR10.0 million, or 9%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. The method of providing for expected credit losses is consistent with prior years.

Finance Income

Finance income decreased ZAR9.7 million, or 22%, for the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. This was primarily driven by lower interest earned on positive bank balances during the year.

Finance Costs

Finance costs increased ZAR27.0 million, or 53%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. This was primarily due to interest incurred on overdraft facilities utilised for working capital purposes and increased interest relating to lease liabilities.

Taxation

Our total effective tax rate for the financial year ended February 28, 2026 was 25.6%, which increased from 24.8% for the financial year ended February 28, 2025. This was primarily due to temporary differences between tax and accounting profits across the Group entities.

There is no dividends tax in Singapore.

See Note 23 to the accompanying consolidated financial statements included elsewhere in this annual report for a detailed reconciliation of the tax expense.

Non-Controlling Interest

Profit attributable to non-controlling interest, which represents the share of profit accruing to holders of equity in Karooooo's subsidiaries that are not wholly owned by the parent company, increased by ZAR1.1 million, or 7%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025.

Segment Information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM"). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group Chief Executive Officer ("CEO"), who makes strategic decisions for the Group.

The Group organized its business units based on its products and services into the following reportable segments:

The CODM monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on subscription revenue, total revenue and operating profit or loss.

The segment information was provided to the CEO. See Note 4 to the accompanying consolidated financial statements included elsewhere in this annual report for Segment related information.

The following table sets forth the geographical region by subscriber numbers, subscription revenue and total revenue for the Cartrack business unit at the end of the periods presented.

South Africa

The pace of growth in South Africa reflects our deliberate strategy to cement our leadership position in South Africa through a balanced combination of subscribers' additions and selling Video and Cartrack-Tag to our existing customers, contributed to Karooooo's robust financial performance. Revenue for South Africa increased ZAR604.6 million, or 21%, for the financial year ended February 28, 2026 driven by a 20% increase in subscription revenue of ZAR567.7 million primarily due to strong net subscriber growth of 16% or 269,346 subscribers.

Africa-Other

This region remains a positive cash generator and is strategic to our South African operations. The number of subscribers increased by 1% to 92,043 as at financial year ended February 28, 2026 (2025: 90,974), while the subscription revenue increased by ZAR17.7 million or 14%.

Europe

European revenue increased ZAR83.6 million, or 21%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. Subscription revenue increase ZAR84.6 million or 22% primarily driven by subscriber growth of 14% to 228,384 subscribers. We continued to expand our customer base and drive our distribution capabilities in the region.

Asia-Pacific, Middle East and USA

Revenue for Asia-Pacific, Middle East and USA increased ZAR97.9 million, or 15%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. Subscription revenue growth was driven by the number of subscribers in this region increasing 23% to 335,907 subscribers as at February 28, 2026. The pace of subscription revenue growth in the region was primarily driven by faster growth in certain countries that generate lower ARPU. As the second largest contributor to the Group, we view Southeast Asia as the Group's most compelling growth opportunity in the medium to long term.

We have elected to omit discussion of the earliest of the three years covered by our consolidated financial statements presented in this annual report because the disclosure as at and for the financial year ended February 29, 2024 was included in our annual report on Form 20-F (File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled "Item 5. Operating and Financial Review and Prospects."

Recent Accounting Pronouncements

A discussion of new accounting guidance that we have recently adopted, as well as accounting guidance that has been recently issued but not yet adopted by us, is included below and in Note 3 - Standards Issued But Not Yet Effective of our consolidated financial statements included elsewhere in this annual report.

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements which could be relevant to the Group are disclosed below. The Group intends to adopt these new and amended standards and interpretations, when they become effective. At the date of authorization of the financial statements, the Group continues to assess and evaluate the impact to its financials on the initial adoption of these new accounting standards and interpretations and its related applicable period.

Emerging Growth Company

As a company with less than US$1.235 billion in revenue during our last financial year, we qualify as an "emerging growth company" as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act.

We may take advantage of these provisions for up to five years from our IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon (A) the last day of the financial year in which we had more than US$1.235 billion in annual revenue, (B) the date on which we are deemed to be a "large accelerated filer" under the rules of the SEC, which means the market value of our ordinary shares held by non-affiliates exceeds US$700.0 million as of the prior June 30^th, or (C) the date on which we have issued more than US$1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. To the extent that we take advantage of these reduced reporting burdens, the information that we provide shareholders may be different than you might obtain from other public companies in which you hold equity interests.

Our principal sources of liquidity are our cash generated from operations, cash and cash equivalents as well as borrowings available under our loan and funding facilities. Cash and cash equivalents consist primarily of cash or deposit with banks. As at February 28, 2026, our cash and cash equivalents totaled ZAR1,153.9 million.

We believe that our cash generated from operations, cash and cash equivalents on hand and availability under our funding facility will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, if required for additional working capital, capital expenditures or other strategic investments. Our belief concerning liquidity is based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of credit or other sources of financing may be reduced, and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section of this annual report titled "Risk Factors." Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Operating Activities

Strong net cash generated from operating activities is an important factor in supporting our robust business model, and is an indication of our ability to provide the capital necessary to invest in subscriber growth and territorial expansion.

Net cash generated from operating activities increased ZAR33.8 million, or 2%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. Cash generated from operations before working capital changes increased by ZAR348.0 million.

As at February 28, 2025, included in other receivables were fixed deposits placed with a licensed bank amounting to ZAR485.7 million that matured in June and July 2024. As a result of these fixed deposits, net cash generated from operating activities for the financial year ended February 28, 2025 were ZAR 1,933.3 million, primarily driven by strong subscription revenue growth and improved earnings, partially offset by working capital utilization to support business growth and higher financial costs related to term loans and bank overdrafts.

Investing Activities

Net cash utilized by investing activities increased ZAR136.6 million, or 13%, for the financial year ended February 28, 2026 compared to the prior period. The increase was primarily driven by ZAR186.3 million increased in investment capitalized in-vehicle telematic devices and IoT devices held for future use for planned subscribers' growth. The increased, was partially offset by a decrease in capital expenditure due to the completion of construction of the South African Central Office during the year.

Financing Activities

Net cash utilized by financing activities increased ZAR263.8 million, or 60% for the financial year ended February 28, 2026 compared to the prior period. This was primarily due to payment of dividends of ZAR693.6 million, partially offset by net proceeds from term loans of ZAR136.2 million during the financial year. Net cash utilized by financing activities was also impacted by a cash outflow of ZAR117.6 million relating to lease liabilities repayment during the year.

Other Financial Assets

As at February 29, 2024, the Group derecognized a derivative - call option - relating to its acquisition of Karooooo Logistics, following an agreement by shareholders to cancel the call option. The call option was derecognized in the profit or loss. There were no such derivatives as at February 28, 2026 and February 28, 2025.

Loan and Funding Facilities

Mortgage bond

The mortgage bond of ZAR65 million that was registered in favor of First Rand Bank Limited over the remaining extent of Erf 160, Rosebank and Portion 6 of Erf 161, Rosebank, registered in the name of Purple Rain Properties No 444 Proprietary Limited ("PRP") was repaid in December 2025. PRP subsequently entered into an agreement with The Standard Bank of South Africa Limited ("SBSA") for a mortgage bond of ZAR440 million to be registered in favor of SBSA over the consolidated plots of land, Erf 160 and Portion 6 of Erf 161 ("erven"), on which the South Africa Central Office had been erected. The registration of the consolidated erven, cancellation of the repaid mortgage bond, and registration of the mortgage bond in favor of SBSA, is in progress. Upon registration of the SBSA mortgage bond, the limited suretyship of ZAR60 million provided by Cartrack Proprietary Limited for the repaid mortgage bond will accordingly be cancelled.

Interest to be levied on the mortgage bond is at prime less 1.75% and repayment is over a period of 10 years.

Term loan

In June 2024, The Standard Bank of South Africa Limited ("SBSA") extended a loan of ZAR250.0 million to Purple Rain Properties No.444 Proprietary Limited (the owner of the South Africa Central Office) for funding the construction of the building ("the Facilities Agreement"). Interest at a rate of prime less 1.5% was levied by the bank and the loan matured on December 21, 2025. In February, 2026, the parties concluded an addendum to the Facilities Agreement, subject to the registration of a mortgage bond of R440 million in favor of SBSA. Cartrack Proprietary Limited provided a limited guarantee as security for this loan, pending the registration of the mortgage bond. The financial conditions under the loan agreement include a Loan to Value Ratio varying from 68% from the period commencing on February 26, 2025 (the First Utilisation Date) until the first anniversary of the First Utilisation Date and 62% during the next calendar period of 12 months. The Interest Coverage Ratio shall not be less than 1.45 times for the period from the First Utilisation Date until the first anniversary of the First Utilisation Date and 1.77 times in the following period of 12 months. As at the date of this report, the financial conditions have been met.

In September 2024 and June 2025, Cartrack Portugal, S.A., secured loans of EUR2.0 million and EUR1.0 million, respectively, from Banco Comercial Português, S.A. The loan bears an interest rate of 6-month Euribor rate plus 0.75%, with repayments scheduled over a seven-year and five-year period. There are no covenants relating to these loans.

In January 2026, Cartrack Espana. S.L.U., secured a EUR 0.08 million loan from Abanca- Préstamo. The loan bears an interest rate of 3.5% per year and matured on April 22, 2026.

Bank overdraft and overdraft facilities

In March 2020, Cartrack Proprietary Limited entered into a Short-Term Facility Letter with Capitec Bank Limited ("Capitec Bank"), previously Mercantile Bank, as amended and supplemented from time to time, for an unsecured short-term overdraft and other facilities (the "Overdraft Facility"). Pursuant to the most recent Addendum to the Short-Term Facility Letter, dated June 23, 2025, the Overdraft Facility was increased to ZAR300.0 million. Amounts due under the Overdraft Facility bear interest at Capitec Bank's prime lending rate, which as at the date of this annual report was 10.5%. Subject to completion of the annual review, Capitec Bank has approved the extension of the expiry date to June 30, 2026.

In August 2025, Cartrack Proprietary Limited entered into a Short-Term Facility Letter with The Standard Bank of South Africa Limited ("Standard Bank"), as amended and supplemented from time to time, for an unsecured short-term working capital and other facilities (the "Working Capital Facility"). The Working Capital Facility amounts to ZAR300.0 million. Amounts due under the Working Capital Facility bear interest at Standard Bank's prime lending rate minus 1%, which as at the date of this annual report was 9.5%.

As at February 28, 2026, ZAR407.7 million (2025: ZAR205.3 million) of these facilities had been utilized.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose and structured finance entities.

Contractual Obligations

The following table summarizes our contractual obligations as at February 28, 2026.

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and include contractual interest payments.

For our disclosure in respect of research and development, technology and intellectual property please refer to Item 4.B. "Information on the Company- Business Overview".

See Item 4.B. "Information on the Company-Business Overview," Item 5.A. "Operating and Financial Review and Prospectus-Operating Results" and Item 5.B. "Operating and Financial Review and Prospects-Liquidity and Capital Resources" within this annual report.

Quarterly Financial Information and Other Information

The following table sets forth our unaudited quarterly operational and financial information for each of the eight most recent quarters for the financial period ended February 28, 2026. We have prepared the unaudited quarterly operational and financial information on a consistent basis with the consolidated financial statements included elsewhere in this annual report. In the opinion of management, the unaudited quarterly operational and financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this data. This information should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report. The results of historical periods are not necessarily indicative of results for a full year or for any future period.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with IFRS. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

Useful Life of Capitalized Telematics Devices, Capitalized Commission Assets and Revenue Recognition from Deferred Revenue

We complete a detailed assessment annually on the expected life cycle of subscriber contracts across the Group. The continued growth in our customer base over the past few years has provided a more comprehensive database of information and more certainty to support the assessment of the average useful life of subscriber contracts with customers. On the basis of such information, the average useful life of a subscriber contract was over 60 months as at financial year ended February 28, 2026. Contracts that terminate prior to the end of useful life result in accelerated depreciation of the underlying capitalized telematics devices and capitalized commission assets being recognized immediately.

Goodwill

We test goodwill for impairment on an annual basis. The recoverable amounts of cash-generating units have been determined based on the higher of value-in-use calculations and fair value less costs of disposal. The value-in-use calculations are performed internally by the Group and require the use of various estimates and assumptions regarding discount rates and the future financial performance of the cash-generating units. The fair value costs of disposal are performed by an external valuer using the market approach, by applying price-to-value metrics observed in comparable companies to the Cash Generating Unit ("CGU").

Provision for expected credit losses ("ECLs") of trade receivables

We apply a simplified approach in calculating ECLs. Therefore, we do not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. We determine expected credit losses of trade receivables by making debtor-specific assessment of expected impairment loss for long overdue trade receivables and using a provision matrix for remaining trade receivables that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. At every reporting date, historical default rates are updated and changes in the forward-looking estimates are analyzed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.

Please refer to Note 2.1 to the accompanying consolidated financial statements included elsewhere in this annual report for information about the critical accounting policies, as well as Note 2.2 for a description of our other significant accounting policies.