Executive Review
of Performance

for the year ended 31 March 2024

The Year Under Review

I am pleased to present on behalf of the Board a solid set of results for the Group. Considering all the challenges of 2024, we are pleased that we managed to grow the sustainable headline earnings per share by 5% to 487 cents.

FY2024 was another year of constant challenges in South Africa. However, we managed to navigate our way through the usual suspects of load shedding, water supply issues and logistics problems, not only at the Durban port, but with worsening shipping channels issues specifically in the Mediterranean and off the coast of Africa. South Africa infrastructure problems continue to beset the country, resulting in muted economic activity. With elections underway across the world, uncertainty of these outcomes has resulted in downward pressure in general on third world currencies, specifically the Rand, which acts as their proxy.

Despite all these challenges facing our businesses, our Group has navigated through them and our business remains resilient.
In this regard, credit is due to our dedicated management teams, who have acted swiftly and creatively to, where possible, mitigate against the full impact of our challenging operating environment. Our talented teams have even been able to create new opportunities to grow, optimise or diversify the business as appropriate. More on this in Our Operating Environment on page 15. The relative strength of our balance sheet has allowed us the time to focus on each of the operational challenges as they arose, as well as to invest in inventory, assisting us to
mitigate supply chain risks, price increases and other challenges.

Net Debt

Net bank debt was further reduced during the year by
R151 million. Cash generation continues to be strong with cash generated by operations amounting to R818 million. The net investment in working capital over the year was R150 million. The management teams worked hard on managing working
capital levels throughout the year to keep our investment
relatively flat with the majority of the investment in working
capital going into finance leases to customers in the capital equipment segment. We further paid R205 million of dividends to ordinary and preference shareholders. Finally, we bought back 2 294 672 ordinary shares for R61 million and 267 243 preference
shares for R27 million. The Group has significant banking facilities available, enabling us to fund the Group’s activities and grow in line with our Group strategy.

Reporting Segments

Consistent with the prior year, we report our businesses as five segments and while the Kian Ann Group forms part of the first segment below, we report separately on the KAG due to its relative size and contribution. Our segments are:

Replacement Parts, Services and Solutions: Earth-Moving Equipment (“RPE”)
Kian Ann Group (“KAG”)
Replacement Parts, Services and Solutions: Industrial (“RPI”)
Replacement Parts, Services and Solutions: Auto-Agri (“RPA”)
Capital Equipment and Related Parts and Services (“CE”)

Financials per segment

RPE

The RPE segment includes, inter alia, the businesses of Equipment Spare Parts Africa (Proprietary) Limited (“ESP”) and KMP Holdings Limited (“KMP”).

RPE has delivered strong performance during the trading year, achieving above average results in revenue and operating profit:
revenue increased by 10.6%;
the sustainable operating profit before interest on financing transactions and foreign exchange movements (“operating profit”) increased by 32.8%;
the net operating assets in this segment were R481 million and the return on net operating assets was 29.8%;

Further efficiencies and synergies are envisaged through the sales of KMP into our KAG, where further focus will be put on improving product pricing and increasing our product offering and cross selling to our customers.

KAG

The KAG Group is equity accounted as a joint venture.
The US market provided tempered demand throughout the year for undercarriage components with the other companies in KAG managing to provide satisfactory results, against the backdrop of the increasing geopolitical tensions between China and the West.

In respect of the year under review:

the sustainable operating profit before interest on financing transactions and foreign exchange movements (“operating profit”) decreased by 27% to SGD26 million;
the net operating assets in this segment were SGD203 million and the return on net operating assets was 12.8%.

RPI

RPI focuses on the import and local manufacture of industrial consumable products, services, and solutions for all industries
in Southern Africa. RPI offers world-class solutions and products with the aim to improve the efficiency of our customers and ensure that they remain globally competitive.

RPI continues to limit the impact of loadshedding and water disruptions with the use of generators, solar, where viable, and water storage solutions, but the impact of areas outside our control, like that of connectivity and, the impacts of these factors on our customers, has affected the business performance. The significant increase in freight charges and the continued local increase in fuel prices resulted in the higher cost of products. Due to contract pricing with several of our major customers, the effect of these higher product costs cannot always be passed on immediately, which has put pressure on our gross margins in some areas of the business. The business continues to focus on inventory, ensuring the correct fill rates for customers, while also focusing on strategies to move inventory that will move out of the current age cycle.

In respect of the year under review:

revenue increased by 1.9% from R4.8 billion to R4.9 billion;
the sustainable operating profit increased by 2.2% from R317 million to R324 million;
the net operating assets increased marginally by 3% from R1.84 billion to R1.90 billion;
the return on net operating assets for the financial year was 17.1%, a decrease of 0.1% from 17.2%.

RPA

RPA, which operates in South Africa and certain European countries, consists of automotive and agricultural replacement parts businesses. RPA focuses on the importation and distribution of automotive aftermarket parts and Original Equipment Manufacturer (“OEM”) kits, as well as driveshaft parts and other replacement parts for the agricultural industry. The Polish operations and warehouse have been part of the robust performance, validating these acquisitions with further growth into Europe expected in the years ahead. Operations out of Spain will be the first new operation started in the year ahead.

New product lines will be introduced into the Imex business which was acquired in July. Located in Castleford in the UK, Imex supplies aftermarket automotive components mainly into the UK market. As part of the growth of the RPA segment, management are evaluating the potential of expanding the product range into passenger car products as well as opening further branches across the European continent to continue the expansion of the offshore portion of the business and to broaden
the customer and product base.

In respect of the year under review

revenue increased by 34% from R551 million to R738 million, primarily driven by the Imexpart acquisition;
sustainable operating profit for the segment decreased by 18.7% from R111 million to R91 million;
net operating assets increased by 47% from R339 million to R499 million;
the return on net operating assets for the financial year
decreased from 32.8% to 18.2%.

CE sells capital equipment, spare parts and provides the related services to the earth-moving, construction, mining, and logistics industries.

Mining and material handling showed strong demand for some of the bigger machines supplied by CE due to high commodity prices and the weakening Rand. However, the problems being experienced in the South African harbours and transport thereto are hindering sales and impacting revenue for the mining community for export product. The construction industry woes continue, as they also faced a very tough year, with very little in both infrastructure and commercial build.

Through the year our capital equipment competitors, who represent Japanese brands in the market, have had the upper hand as the Rand strengthened against the Yen, making their products more competitive against those which were either Euro or US dollar priced. CE therefore had to reduce its gross profit margins to compete. The demand for the Tonly rigid off-road dump truck out of China continues to grow and is contributing meaningfully to both revenue and gross profit.

After-market spare parts sales in the OEM market continue to do well. Spare parts contribute a significant part of the annual gross profit of this segment

Repurchase of Shares

The Group repurchased 2 294 672 ordinary shares at an average price of R26 per share. The total consideration of the repurchase was R61 million.

Further, the Group repurchased 267 243 preference shares at an average price of R102 per share. The total consideration of the repurchase was R27 million.

Both these purchases have proved to be earnings enhancing

Dividend

We are pleased to increase our dividend declaration by 5 cents, from 100 to 105 cents per share for the year.

FY 2024 Strategy Review

The Group strives to be a world leading industrial products supplier in both Southern Africa and selective international markets, often
exclusively, which are always available and are overlaid with a technical and solution service. We add value through our distribution
chain, inventory holdings, product availability and by providing technical support. Technical support helps prevent disintermediation
and is a key part of our strategy to add value to our customers. We aim to grow a diversified sustainable replacement parts Group,
providing above market returns to stakeholders. We constantly review and restructure our existing businesses to ensure they achieve
the desired returns. We aim to have a geographical (50% of the Group income outside South Africa) and a sectorial diverse Group within
two years.

To realise our Group strategy, we focus on the following key strategic objectives:

Constantly review and restructure our existing businesses to ensure they achieve the desired returns
Geographically diversify into markets that meet the Group’s investment criteria such that, 50% of the Group’s income is from outside
of South Africa within the next two years.
Diversify into aligned sectors which leverage off the Group’s skill set within the next two years.

Assessment of our Performance in FY 2024

Overall, the Group’s performance has been pleasing, particularly within the context of a tough global economy. Below, we provide an
assessment of our performance against the following objectives which we set for the Group in respect of FY 2024:

FY 2024 Objective

Managing working capital and optimising operations
Generating cash
Growing BMG China
Managing supply chain challenges
Looking for appropriate acquisitions

Self Assessment

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1
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1.5
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Our objectives for FY 2025 include the following:

Maintaining earnings growth
Managing working capital and optimising operations
Generating cash
Managing and limiting geopolitical impacts on the business
Looking for appropriate acquisitions

Appreciation

In this regard, credit is due to our dedicated management teams, who have acted swiftly and creatively to, where possible, mitigate against the full impact of our challenging operating environment. Our talented teams have even been able to create new opportunities to grow, optimise or diversify the business as appropriate. More on this in Our Operating Environment on page 15 of our Integrated Annual Report. The relative strength of our balance sheet has allowed us the time to focus on each of the operational challenges as they arose, as well as to invest in inventory, assisting us to mitigate supply chain risks, price increases and other challenges.

Executive Reviewof Performance