Imperial: Leaders in Mobility

Currency volatility in the markets in which we operate

The competitiveness and profitability of vehicle imports may be impacted by Rand volatility against major currencies, on the pricing of new vehicles and services and maintenance plans due to increases in parts pricing; and the ability to hedge at competitive rates.

Foreign currency translation differences may also arise from the consolidation of foreign subsidiaries.

• Active management of currency volatility through established hedging strategy and policy, monitoring and oversight structures.
• Foreign currency exposure is reviewed daily and forward cover positions weekly against the hedging policy and monitored through monthly forex committee meetings to assess committed and uncommitted vehicle orders and manage forex requirements.
• Monthly reviews of parts pricing to determine and manage the effect of currency changes on pricing.
• Review hedging instruments and assess appropriate hedging strategies monthly through the forex committee and quarterly through the asset and liabilities committee.

Enhance financial performance

Dependence on specific brands and reliance on key suppliers

Motus depends on our relationships with OEMs and franchised dealers, which are critical to our business model. We must comply with the agreements we have with them, which include meeting sales volumes and service targets. Failure to meet the required standards may affect our status as an exclusive distributor and retailer of global brands.

Motus works closely with OEMs to deliver innovative solutions to customers and ensure the relevance of products and services in the markets in which we operate.

Motus relies on ongoing commercial relationships with suppliers and sub-contractors and the loss of any significant supplier could impact on operations and financial performance.

• Proactive and continuous engagement and management of OEM relationships by leadership, including ongoing negotiation of fixed targets.
• Standards required by OEMs are maintained and expectations in terms of agreements are met or exceeded.
• Proactive monitoring of customer satisfaction and perception of the OEM brand.
• Management regularly meets their counterparts at OEMs to ensure strong relationships.
• Monitoring business performance to ensure targets are met and to identify and correct underperforming areas.

Market leadership

Slow or negative growth in the geographies in which Motus operates

The outlook for economic growth in South Africa is poor and any further downgrades of the South African sovereign rating could adversely impact the business; our current customer base may not be as anticipated and lead to low/reduced volume increase.

In addition, reduce margins may be achieved due to competitive market and change in product mix.

• Diversify revenue streams and grow the vehicle parc, supported by annuity income from financial services, parts and workshops.
• Regular review, analysis and reporting of product margins, product mix, unit growth and aggressive balance sheet management with particular focus on working capital investment.
• Ongoing monitoring of the economic environment and market forecasts to identify opportunities to increase sales.
• Identify financial and operational synergies to extract efficiencies and manage costs.
• Organic and acquisitive growth strategies focused on diversification across sectors and geographies.
• Invest in innovation to identify new channels to market and deepen penetration of existing customer base.

Enhance financial performance and market leadership

Regulatory and compliance

Motus is subject to a wide range of legislation, which it monitors to ensure compliance. Any breach of compliance could result in fines or sanctions that affect profitability and undermine reputation.

Changes in legislative environments and interpretations of law (eg National Credit Act, PoPI and Right to Repair in South Africa) is of key importance and may have uncertain consequences for our business model and operations.

The risk is further increased by the potential listing of Motus on the JSE and the need to apply the practices, procedures and governance structures appropriate for a JSE listed entity.

• Compliance officers in place and compliance audits conducted on a quarterly basis.
• Proactive monitoring, input and operational implementation plans and frameworks on emerging legislation.
• Increased capacity in legal and compliance units.
• Independent reviews by internal audit on compliance with regulatory requirements across the business.
• Legal compliance training programmes to increase awareness of and compliance with applicable legislation.
• A dedicated team is ensuring that Motus is ready to comply with all requirements relevant to a listed entity, including a review of the internal compliance framework to align to JSE Listings Requirements.

Enhance financial performance

B-BBEE status of South African-based operations

The changes to the B-BBEE codes requiring accelerated transformation, specifically higher levels of black ownership in our South African businesses. Failure to achieve set targets may impact on competitiveness and sustainability by reducing the ability to originate new business or maintain existing relationships in South Africa.

• Active monitoring and oversight of B-BBEE scorecards and targets.
• Appointment of an executive to drive and report on transformation initiatives.
• Clear initiatives in place to meet employment equity targets and skills development, including graduate training programmes and management key performance indicators (KPIs).
• Standardised reporting process implemented to report a full B-BBEE scorecard with independent verification of initiatives and targets.
• Actively assess and respond to the impact of the revised B-BBEE codes.
• Joint ventures with strategic B-BBEE partners are being secured in various sub-divisions.
• Transformation committee project to review and implement best practice employment equity recommendations.

Market leadership

IT strategy and execution of architecture, systems and applications

The legacy of decentralised IT systems and infrastructure makes it critical to reduce systems complexity, while ensuring that proprietary data is protected and addressing cybersecurity, system stability and innovation.

IT strategies need to be flexible and effective to support operational alignment and collaboration across the value chain to reduce complexity, duplication and costs.

• Board oversight and monitoring of material IT projects.
• Strategy alignment review done per division to ensure appropriate IT strategies.
• Centralised IT departments reporting into a divisional chief information officer (CIO).
• Active monitoring of IT systems and franchise networks.
• Business continuity processes and disaster recovery plans are in place to ensure operations are unaffected by outages.
• Commercial and governance IT role created to oversee vendor management and day-to-day IT processes.
• Standardised IT governance and information policies focusing on IT reporting and security.
• Ongoing cyber risk assessments and monthly security reporting.
• Appointment of information security officer to oversee IT security.
• Implementation of cybersecurity guidelines.
• Analyse requirements for cyber insurance cover.

Improve operational excellence

Succession and talent management

The limited pool of qualified skills and the impact of an ageing skilled working population in South Africa are challenges in accessing the talent needed to resource our growth strategies. Besides leadership skills, our businesses depend on specialised technical and customer facing skills, which need to be developed and retained.

Our ability to operate or expand effectively depends largely on the experience, skills and performance of senior management and technically skilled employees and ensures that the appropriate retention and succession planning processes are in place.

• Implementation of best people practices, supported by the appropriate systems to become an employer of choice in the automotive industry.
• Identification of key current and future skills and aligning these to talent management programmes.
• Training and development programmes, including specialist training academies.
• Improve employee engagement through management communication, employee focus groups and diversity workshops.
• Implement a co-ordinated talent management strategy and related human capital architecture, including the development of a top talent database and addressing transformation requirements.
• Co-ordinated transformation policies and programmes focused on development and promotion of internal candidates, and recruitment of employment equity candidates.

Invest in human capital and change management

Rapid speed of disruption due to innovation

The pace of change has accelerated and will inevitably require established brands to embrace digital capabilities to be competitive. Customers are becoming more product savvy and accustomed to the convenience of the digital experience. Sustained competitive advantage is increasingly achieved through innovation.

• Ongoing monitoring of market trends and new innovations by executives.
• Keeping abreast of innovative changes by competitors.
• Bringing in new and improved ways of doing business to reduce costs and increase profitability.
• Motor-Related Financial Services operates as innovation hub based on proven expertise, proprietary data and ability to predict and respond to mobility-related trends.
• Innovation forum to design and drive innovation projects, with sponsorship at senior executive levels in the organisation.
• Creation of an innovation fund and skills transfer model to provide dedicated resources to innovation.
• Align current and future skill requirements to talent management programme and performance management approach.

Drive innovation

Expansion, acquisition and business integration

With any expansion and acquisition strategy, there is a risk of entering markets that are not well understood. After businesses are acquired, their integration into the group requires stringent and pragmatic processes to ensure value is not impaired.

In addition, there is a risk of deploying capital in areas of low return that may require high effort to succeed.

• Clearly defined expansion areas have been identified.
• Group mandate relating to investments in place.
• Regular review of acquisition risks and criteria at executive level.
• Clear acquisition guidelines defined and overseen by group investment committee.
• Formal authority limits are adhered to.
• Formal post-acquisition review process.
• Retaining existing management to allow for knowledge transfer over the medium term and sufficient time for succession planning.
• Evaluate returns through ROIC.
• Enter into effective strategic partnerships.

Market leadership