KARO Karooooo Ltd

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2024

Commission File Number: 001-40300

KAROOOOO LTD.

(Exact name of registrant as specified in its charter)

1 Harbourfront Avenue

Keppel Bay Tower #14-07
Singapore 098632

+65 6255 4151

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F    ☒           Form 40-F    ☐

THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE FOLLOWING REGISTRATION STATEMENT OF THE REGISTRANT:

REGISTRATION STATEMENT ON FORM F-3 (NO. 333-280758) ORIGINALLY FILED WITH THE SEC ON JULY 11, 2024.

Karooooo Ltd.

Interim Report (unaudited) for the three months ended May 31, 2024

The Company’s Interim Report (unaudited) for the three months ended May 31, 2024 is contained at Exhibit 99.1 of this Form 6-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 23, 2024

EXHIBIT INDEX

4

Exhibit 99.1

Karooooo Ltd.
Interim Report (unaudited) for the three months ended May 31, 2024

Contents

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

GENERAL INFORMATION AND FORWARD-LOOKING STATEMENTS

The following discussion of our financial condition and results of operations should be read in conjunction with our interim condensed consolidated financial statements and the notes thereto included as part of this report, as well as the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors” sections in our Annual Report on Form 20-F for the financial year ended February 29, 2024 (“Annual Report”).

The discussion contains statements that constitute forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Forward-looking statements are based on our beliefs and assumptions and on information currently available to us, and include, without limitation, statements regarding our business, financial condition, strategy, results of operations, certain of our plans, objectives, assumptions, expectations, prospects and beliefs and statements regarding other future events or prospects. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “potential,” “assume,” “continue,” “may,” “will,” “should,” “could,” “shall,” “risk” or the negative of these terms or similar expressions that are predictions of or indicate future events and future trends.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus or the documents incorporated herein by reference. In addition, even if our results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us are consistent with the forward-looking statements contained in this prospectus and the documents incorporated herein by reference, those results or developments may not be indicative of results or developments in subsequent periods.

Factors that may cause our actual results to differ materially from those expressed or implied by the forward-looking statements in this prospectus and the documents incorporated herein by reference include, but are not limited to, the risks described under the heading titled “Risk Factors” in our Annual Report, subsequent quarterly reports on Form 6-K and other filings with the SEC. For example, factors that could cause actual results to vary from projected results include, but are not limited to:

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

GENERAL

Karooooo Ltd. (“Karooooo”), headquartered in Singapore, is a leading provider of an on-the-ground operations Internet of Things (“IoT”) software-as-a-service (“SaaS”) cloud that maximizes the value of data by providing insightful real-time data analytics and business intelligence reports. Its offering extends beyond connected vehicles and equipment, assisting diverse enterprise customers in digitally transforming their on-the-ground operations, including systems integrations, fleet administration, field worker management, video-based safety, risk mitigation, delivery management and ESG compliance and reporting. Our business is vertically integrated, which affords us complete autonomy with regards to the development of 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, client 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.

Karooooo Limited (“Karooooo”), owns 100% of Cartrack, 74.8% of Karooooo Logistics.

The following table sets forth the segment revenue, operating profit, operating profit margin, profit for the period, profit for the period margin, adjusted EBITDA and adjusted EBITDA margin for the periods presented.

Key Business Metrics

Number of Subscribers and Subscription Revenue

We have demonstrated a history of growing our subscriber base through growth in customers as a result of our proprietary platform with next-generation functionality and software features, sales-centric culture and competitive pricing. We believe that our ability to attract a range of diversified new customers and grow our subscriber base is key to building a sustainable 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.

The number of subscribers on our platform directly drives our subscription revenue, which made up 89% of total group’s revenue for the three months ended May 31, 2024.

For the three months ended May 31, 2024 and the three months ended May 31, 2023, Karooooo’s subscription revenue was ZAR 963.8 million and ZAR 836.4 million, respectively, which represents a 15% increase compared to the prior period.

Geographical Overview of Cartrack Subscribers and Subscription Revenue

For the three months ended May 31, 2024, and the three months ended May 31, 2023, Cartrack had 2,047,442 and 1,757,452 subscribers, respectively, which represents net subscriber growth of 289,990 or a 17% increase from period to period.

South Africa: Cartrack’s number of subscribers in South Africa increased 16% to 1,549,951 at May 31, 2024 (May 31, 2023: 1,339,905) with subscription revenue growth of 15%.

Asia Pacific, Middle East and United States: Cartrack’s number of subscribers in Asia Pacific, Middle East and United States increased 23% to 238,174 at May 31, 2024 (May 31, 2023: 193,557). This translates to 19% growth in subscription revenue (21% on a constant currency basis, a non-IFRS measure).

Europe: Cartrack’s number of subscribers in Europe increased 17% to 173,588 at May 31, 2024 (May 31, 2023: 148,927). This translates to 19% growth in subscription revenue (15% on a constant currency basis, a non-IFRS measure).

Africa (excluding South Africa): Cartrack’s number of subscribers in Africa (excluding South Africa) increased 14% to 85,729 at May 31, 2024 (May 31, 2023: 75,063).

The constant currency presented above has been determined by adjusting the current financial reporting period results to the results reported for the three months ended May 31, 2023, using the average of the monthly exchange rates applicable to that period. The measurement has been performed for each of the group’s operating currencies.

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, taxation, depreciation and amortization, plus impact of non-recurring operational expenses, if any.

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.

Free Cash Flow (a non-IFRS measure)

In addition to our results determined in accordance with IFRS, we believe free cash flow and free cash flow margin, 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. Free cash flow margin, also a non-IFRS measure, is calculated as free cash flow divided by revenue.

We believe that free cash flow and free cash flow margin 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, 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 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 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 this non-IFRS financial measure to its most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.

Results of Operations

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

Comparison of Results for the Three Months Ended May 31, 2024 and May 31, 2023

Revenue

Karooooo’s revenue increased by ZAR 85.0 million, or 9%, to ZAR 1,081.8 million for the three months ended May 31, 2024 from ZAR 996.8 million for the three months ended May 31, 2023.

Cartrack’s revenue increased by ZAR 127.6 million, or 15%, to ZAR 981.1 million for the three months ended May 31, 2024 from ZAR 853.4 million for the three months ended May 31, 2023. Cartrack’s subscription revenue increased by ZAR 125.4 million, or 15%, to ZAR 959.6 million for the three months ended May 31, 2024 from ZAR 834.2 million for the three months ended May 31, 2023. Cartrack achieved strong customer acquisition in the quarter, resulting in net subscriber growth of 17%. See, further, “Key Business Metrics—Number of Subscribers and Subscription Revenue—Geographical Overview of Cartrack Subscribers and Subscription Revenue” above.

Karooooo Logistics delivered significant revenue growth to ZAR 100.8 million for the three months ended May 31, 2024 (May 31, 2023: ZAR 61.8 million), up 63%. Karooooo Logistics focuses on delivery-as-a-service (“Daas”) through selected third-party sourced drivers and logistics companies, and charges per delivery.

Cost of Sales

Karooooo’s cost of sales decreased ZAR 35.8 million, or 10%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023. This was primarily due to Carzuka ceasing to buy secondhand vehicles during the three months ended November 30, 2023 and being integrated into Cartrack’s broader operations, resulting in decreased combined cost of sales.

Cost of sales of ZAR 66.4 million relating to Karooooo Logistics for the three months ended May 31, 2024 compared to ZAR 42.8 million for the three months ended May 31, 2023 is in line with the increase in revenue.

Other Income

Other income decreased ZAR 0.6 million, or 28%, for the three months ended May 31, 2024, compared to the three months ended May 31, 2023. This was due to decrease in sales of fixed assets.

Operating Expenses

Operating expenses increased ZAR 44.9 million, or 11%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023.

Cartrack’s operating expenses were ZAR 427.5 million for the three months ended May 31, 2024 compared to ZAR 370.9 million for the three months ended May 31, 2023, an increase of ZAR 56.6 million, or 15%.

Karooooo Logistics operating expenses were ZAR 21.8 million for the three months ended May 31, 2024 compared to ZAR 14.4 million for the three months ended May 31, 2023, an increase of ZAR 7.4 million, or 51%.

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

Sales and Marketing

Karooooo’s sales and marketing operating expenses increased by ZAR 15.5 million or 12% for the three months ended May 31, 2024 compared to the three months ended May 31, 2023.

Cartrack’s sales and marketing operating expenses were ZAR 139.9 million for the three months ended May 31, 2024 compared to ZAR 115.3 million for the three months ended May 31, 2023, an increase of ZAR 24.5 million, or 21%. This reflected our investment in customer acquisition positions, demonstrating our continued commitment to territorial expansion and growth.

Karooooo Logistics’ sales and marketing operating expenses were ZAR 0.4 million for the three months ended May 31, 2024 compared to ZAR 0.2 million for the three months ended May 31, 2023, an increase of ZAR 0.2 million, or 101%. This reflected our continued investment to scale Karooooo Logistics.

We believe that the continued and strategic investment in enhancing our vertically integrated sales and marketing capabilities to leverage our go-to-market strategy drives customer acquisition and places us well for long term growth and margin expansion.

General and Administration

Karooooo’s general and administration operating expenses increased by 12% to ZAR 221.5 million for the three months ended May 31, 2024 from ZAR 198.3 million for the three months ended May 31, 2023. This planned increase reflects management’s commitment to build a strong infrastructure that supports growth, while also demonstrating our ability to contain costs.

Research and Development

Karooooo’s research and development operating expenses increased by ZAR 8.0 million or 16% for the three months ended May 31, 2024 compared to the three months ended May 31, 2023 primarily due to an increase in Cartrack’s research and development operating expenses by ZAR 9.1 million, or 20%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023 as the group continued its investment for improvement, enrichment and expansion of its connected cloud during the three months ended May 31, 2024.

Expected Credit Losses on Financial Assets

Expected credit losses on financial assets decreased ZAR 1.9 million, or 6%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023. The method in providing for expected credit losses is consistent with prior years.

Finance Income

Finance income increased ZAR 0.3 million, or 3%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023. This was primarily due to an increase in interest earned on positive bank balances during the course of the year.

Finance Costs

Finance costs increased ZAR 3.5 million, or 159%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023. This was primarily due to interest expense incurred for bank overdraft and the lease assets.

Taxation

Our total effective tax rate for the three months ended May 31, 2024 was 26%, which decreased from 31% for the three months ended May 31, 2023. This was primarily due to a decrease in taxes incurred in the three months ended May 31, 2024, partly attributable to reduction in corporate income tax rate in South Africa.

There is no dividends tax in Singapore.

Non-Controlling Interest

Profit attributable to non-controlling interest, relates to a portion of Karooooo’s subsidiaries not owned by the parent and decreased by ZAR 0.8 million, or 17%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023.

LIQUIDITY AND CAPITAL RESOURCES

General

For a discussion on liquidity and capital resources generally, please refer to the “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources” section in our Annual Report.

Liquidity and Cash Flows

Our principal sources of liquidity are our cash generated from operations, cash and cash equivalents on hand and borrowings available under our revolving credit facility. Cash and cash equivalents consist primarily of cash on deposit with banks. Cash and cash equivalents totaled ZAR 949.6 million as of May 31, 2024.

Operating Activities

Net cash generated from operating activities increased ZAR 496.0 million, or 146%, for the three months ended May 31, 2024 compared to the three months ended May 31, 2023, primarily due to an increase in cash generated from operations before working capital changes of ZAR 86.7 million and a net decrease in working capital of ZAR 417.8 million due to a decrease in trade receivables and other receivables, decrease in inventories, increase in trade and other payables, deferred revenue and capitalized commission assets.

Investing Activities

Net cash utilized by investing activities increased ZAR 82.0 million, or 42%, for the three months ended May 31, 2024 compared to the prior period, primarily due to an increase of ZAR 84.8 million in investment in property, plant and equipment compared to the prior period.

Financing Activities

Net cash utilized by financing activities increased by ZAR 19.8 million for the three months ended May 31, 2024 compared to the prior period primarily due to ZAR 15.2 million from repurchase and cancellation of ordinary shares of a subsidiary and ZAR 3.5 million from purchase of treasury shares. Net cash utilized by financing activities was also impacted by an increase in cash outflow of ZAR 2.4 million for the three months ended May 31, 2024 relating to lease liabilities repayment.

Certain other Balance Sheet Matters

At May 31, 2024, Karooooo’s property, plant and equipment had increased by ZAR 94.5 million to ZAR 2,127.3 million (February 29, 2024: ZAR 2,032.8 million). This was primarily due to an increase of ZAR 48.1 million in in-vehicle capitalized telematic devices, an increase of ZAR 5.0 million in telematic devices available for future sales and an investment of ZAR 37.2 million in building the South African central office.

In line with business growth and currency fluctuations, trade and other payables increased to ZAR 465.7 million (February 29, 2024: ZAR 446.3 million). Trade and other receivables and prepayments decreased to ZAR 595.8 million (February 29, 2024: ZAR 985.4 million). At February 29, 2024 fixed deposits placed with banks amounting to ZAR 485.7 million, which matured in June and July 2024, were included in other receivables.

Debtor’s collection days remain within our historical norms at 30 days (February 29, 2024: 29 days).

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 of May 31, 2024.

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.

other matters

Share Capital and Reserves

At the Annual General Meeting (“AGM”) held on July 12, 2023, 97.35% of Karooooo’s shareholders passed a resolution authorizing the repurchase of up to 10% of the company’s shares. Purchases of ordinary shares by the company may be made by way of market purchases on the Nasdaq and/or the Johannesburg Stock Exchange (the “JSE”).  At our next AGM, we expect to seek approval for the renewal of our share repurchase program on the same terms.

Karooooo repurchased 57,806 shares of its common stock in February 2024 and May 2024, at an average purchase price of USD 24.84 per share. We subsequently cancelled 51,106 shares on May 25, 2024. The remaining 6,700 shares were cancelled on June 18, 2024.

At May 31, 2024, Karooooo had 30,900,000 ordinary shares in issue, with 30,893,300 shares outstanding, and paid-up share capital of USD 504,520,625 plus SGD 1,000.

The negative common control reserve of ZAR 2.7 billion on the balance sheet relates to a common control transaction on November 18, 2020, in which the loan of USD 194.0 million from Isaias Jose Calisto was converted into Karooooo share capital. Consequently, Karooooo acquired control of Cartrack. On that date, 20,331,894 shares were issued to Isaias Jose Calisto and Karooooo registered ZAR 2.7 billion in paid-up capital, resulting in the common control reserve.

The ZAR 3.6 billion other reserve on the balance sheet relates to the buyout of 95,350,657 Cartrack shares at ZAR 42.00 per share from minorities when Cartrack delisted from the JSE, totaling ZAR 4.0 billion. This was offset by the ZAR 0.4 billion previously reported in the non-controlling interest. The ZAR 0.4 billion relates to the net asset value of 95,350,657 Cartrack minority shares acquired by Karooooo.

ZAR 12.0 million of other capital reserve on the balance sheet relates to the cancellation of Karooooo’s treasury shares and ZAR 11.4 million of other capital reserve relates to the repurchase and cancellation of Karooooo Logistics’s ordinary shares.

Other Events in the First Quarter of 2025

In April 2024, the Board approved a resolution for Karooooo Logistics (Pty) Ltd to repurchase its ordinary shares at a purchase price of ZAR 15.2 million in accordance with the Companies Act of South Africa and to cancel the repurchased shares. As a result, the Group’s effective shareholding in Karooooo Logistics (Pty) Ltd is now 74.8%.

Events after the First Quarter of 2025

In June 2024, The Standard Bank of South Africa Limited extended a loan of ZAR 250 million to Purple Rain Properties No. 444 Proprietary Limited (the owner of the regional South Africa head office under construction) at South Africa Prime Rate less 1.5%. The loan will mature on December 21, 2025 and the funds were used to settle an intercompany loan from Cartrack Pty Ltd.

Dividend Policy

The Board recognizes the importance to the group of investment in achieving growth at scale, and endeavors to avoid swings in dividend profile.

However, the payment and timing of dividends in cash or other distributions (such as a return of capital to shareholders through share buy-backs, for example) are determined by the Board after considering factors that include: earnings and free cash flow; current and anticipated capital requirements; economic conditions; contractual, legal, tax and regulatory restrictions (including covenants contained in any financing agreements); the ability of group subsidiaries to distribute funds to Karooooo; and such other factors the Board may deem relevant. 

Karooooo aims to reinvest retained earnings to the extent that it aligns with the group’s required return on incrementally reinvested capital, return on equity, and short- to medium-term growth strategy.

Subject to Karooooo’s constitution and in accordance with the Singapore Companies Act, the Board may, without the approval of shareholders, declare and pay interim dividends. Any final dividends must be approved by an ordinary resolution at a general meeting of shareholders.

The Board may review and amend the dividend policy from time to time.

Dividend Declaration

In accordance with the dividend policy set out above, an interim dividend of USD 1.08 per ordinary share, pertaining to the first quarter of Karooooo’s 2025 financial year, will be paid on August 12, 2024, to JSE shareholders on record as at the close of business on Thursday, August 8, 2024 and on August 14, 2024 to Nasdaq shareholders on record as at the close of business on August 8, 2024. Although Karooooo’s reporting currency is ZAR, its statutory filings in Singapore are reported in USD, as a result of which dividends are declared in USD. The details with respect to the dividends declared for holders of our ordinary shares are as follows:

INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED INTERIM CONDENSED Consolidated StatementS of Financial Position

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

UNAUDITED INTERIM CONDENSED Consolidated StatementS of Profit and Loss

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

 UNAUDITED INTERIM CONDENSED Consolidated StatementS of Comprehensive Income

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

UNAUDITED INTERIM CONDENSED Consolidated StatementS of Changes in Equity

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements.

UNAUDITED INTERIM CONDENSED Consolidated StatementS of Cash Flows

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Notes to unaudited INTERIM CONDENSED consolidated financial statementS