Handsome dividend on cards for Motus shareholders
The newly-listed and recently unbundled automotive business cites its high free cash flows as reason for windfall
Motus Holdings, the recently unbundled automotive business of Imperial Holdings, will pay shareholders a handsome dividend because of its high free cash flows, says CEO Osman Arbee.
Motus’s unbundling and separate listing on the JSE’s specialty retailers sector, which has been on the cards since 2014, is meant to reduce complexity, duplication and costs.
“Our business generates lots of free cash flow. We will be able to pay a nice dividend. We have annuity income streams in the form of our financial services business because that generates cash without hoarding your balance sheet,” Arbee said at the company’s JSE listing on Thursday.
Other than financial services, the company’s other businesses are import and distribution, retail and rental, and aftermarket parts. Motus operates in Southern Africa and internationally, primarily through dealerships in the UK and Australia. As at June 30, the company’s share of SA’s retail market was 19.9% it and sells about 100,000 new vehicles a year.
According to its pre-listing circular, the importer and distributor of Hyundai, Kia, Renault and Mitsubishi motor vehicles and parts gave a dividend guidance of 45% of headline earnings per share in the 2018 financial year.
Arbee said the company’s listing would give shareholders a better understanding of the company’s activities.
“We import on one side, retail vehicles, service them, sell parts, [and] we have an after market business. And then there is the financial services business,” he said.
He said the unbundling was necessary because there were no synergies between Motus and Imperial Logistics, Imperial Holdings’ logistics business.
“The only thing [Motus and Imperial Logistics] had in common was the [Imperial Holdings] balance sheet,” he said.
In the year ended June 30, Motus’s revenue was R77.7bn, while its operating profit was R3.6bn. Its net debt-to-equity ratio was 50%.
Motus’s share price dipped 11.09%, from an opening of R95, to a close of R84.46.