{"url_path":"/sec/karo/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-09","source_url":"https://www.sec.gov/Archives/edgar/data/1828102/0001213900-26-066795-index.html","accession_number":"0001213900-26-066795","cik":"0001828102","ticker":"KARO","issuer_name":"Karooooo Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1828102/0001213900-26-066795-index.html","primary_entity_key":"0001828102","primary_entity_name":"Karooooo Ltd."},"word_count":12586,"has_tables":true,"body_markdown":"**Item 5. OPERATING AND FINANCIAL REVIEW AND\nPROSPECTS**\n\n** **\n\n**A.****OPERATING\nRESULTS**\n\n** **\n\n**MANAGEMENT’S DISCUSSION AND ANALYSIS\nOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n** **\n\nThe following discussion of our financial condition\nand results of operations should be read in conjunction with our consolidated annual financial statements and the notes thereto, included\nelsewhere in this annual report, as well as the information presented under “Presentation of Financial Information.” The\nfollowing discussion and analysis include forward-looking statements. These forward-looking statements are subject to risks, uncertainties\nand other factors that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements.\nFactors that could cause or contribute to these differences include, but are not limited to, those discussed elsewhere in this annual\nreport. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”\n\n \n\n**Overview**\n\n** **\n\nWe are a leading provider of an operational intelligence platform.\nThrough our cloud platform, we empower businesses to conquer operations including fleet and asset management, fuel management, workforce\nmanagement, logistics, safety including AI-assisted video safety, compliance, risk and environmental impact. Our platform delivers operational\nintelligence that simplifies decision making in physical operations and enable businesses to reduce costs, increase efficiency, improve\nsafety and strengthen workforce and customer satisfaction. Our business is vertically integrated, which affords us complete autonomy to\ndevelop the capabilities and features that differentiate our applications as well as the speed of our innovation. Since we own and control\nalmost every aspect of our smart device design, platform innovation and software application development, customer acquisition and onboarding,\ncustomer service and the management of our back-end support, we are able to move quickly without any significant third-party dependencies\nand inefficiencies. We have strategically grown our business and are now a global provider of a leading operational intelligence platform.\n\n \n\nKarooooo is headquartered in Singapore and owns 100% of Cartrack and\n81 % of Karooooo Logistics.\n\n \n\nWe serve customers in more than 20 countries,\nsupporting approximately 2.7 million subscribers as at February 28, 2026 and our highly scalable platform serves large multinational\nenterprises and individual consumers alike, enabling us to address a large, growing and underpenetrated global market. As at February\n28, 2026, we served more than 125,000 commercial customers (FY2025: 125,000+).\n\n \n\nFor management reporting purposes, we have organized our operations\ninto the following reportable segments, based on the nature of the products and services provided:\n\n \n\n●**Cartrack**is a provider of an operational intelligence platform that maximizes the value of transportation,\noperations and workflow data by providing insightful real-time data analytics to connected\nvehicles and equipment.\n\n \n\n●**Karooooo\nLogistics**provides a software application enabling the management of last mile B2B delivery\nand general operational logistics (Delivery-as-a-service or “DaaS”). This technology\naddresses the challenges of on-the-ground distribution for large enterprises requiring systems\nintegrations, payment gateways, third-party long-haul services and crowd-sourced drivers\nin order to scale and meet their operational needs.\n\n \n\n●**Carzuka** operated as a physical and e-commerce vehicle\nbuying and selling marketplace which allowed customers to source, buy and sell vehicles efficiently and cost effectively. In the third\nquarter of FY2024, despite the growth experienced by Carzuka in South Africa, we made the decision to cease buying second hand vehicles\nin South Africa. This followed considerable interaction with motor dealerships across South Africa during these periods, who perceived\nCarzuka’s business interests to conflict with their business interests and we did not want to risk the long-standing strategic\nrelationships that Cartrack had forged with motor dealerships across South Africa.\n\n \n\nThere are many components within\nCarzuka’s platform that had been built and developed and will continue to provide value to the existing Cartrack fleet platform.\nWith effect from financial year 2025, Carzuka has changed the focus of its operations such that the nature of the underlying services\noffered now aligns with Cartrack’s broader operations and has been integrated into that segment accordingly.\n\n \n\n63\n\n \n\n \n\nSince our founding, we have gained vast expertise\nand enhanced our business in the following areas:\n\n \n\n●Developing\nnew software applications such as fleet management, mobile asset accounting, workforce management\nand video solutions;\n\n \n\n●Assisting\ndiverse enterprise customers in digitally transforming their on-the-ground operations, including\nsystems integrations, fleet administration, field worker management, video-based safety,\nrisk mitigation, delivery management and ESG compliance and reporting;\n\n \n\n●Developing\ncapabilities in data management at scale as well as a broad range of communication technologies\nand protocols;\n\n \n\n●Expanding\nour sales and marketing focus to include commercial fleets of all sizes; and\n\n \n\n●Expanding\nour geographic footprint.\n\n \n\nOur single user interface and fully integrated\noperational intelligence platform runs on internally developed and cost-effective smart IoT devices, enabling us to deliver a unified\nand comprehensive service to our customers while maintaining control of our cost structure. Our discrete, sophisticated smart devices\nstream data to the platform, facilitating informed decisions about optimal asset efficiency and productivity, including live tracking\nand location of assets. Customers utilize the platform through an easily accessible web-based portal or mobile application, which is\ndesigned to be easy to deploy across customers’ entire mobile asset fleets. Our devices can be installed in a range of mobile assets\nindependent of asset procurement, allowing our customers to integrate our solutions in existing or new vehicles. Our platform includes\na wide range of reliable services to effectively serve the needs of a geographically diverse range of clients. Where appropriate, partnerships\nwith third-party technology providers are established to create incremental value to customers in the markets we serve.\n\n \n\nWe believe that maintaining financial discipline\nand prudent investment of capital provide a strong foundation for growth. In recent years, our business has demonstrated meaningful scale,\nconsistent growth, strong profitability, robust cash generation, and a healthy return on invested capital. For the financial year ended\nFebruary 28, 2026, we increased our subscribers to 2,662,222 (FY 2025: 2,302,236). For the financial year ended February 28, 2026, we\ngenerated subscription revenues of ZAR 4,843.7 million compared to subscription revenues of ZAR 4,068.2 million for the financial year\nended February 28, 2025, reflecting year-over-year growth of 19%. For the financial year ended February 28, 2026, we generated Adjusted\nFree 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\nfor the financial year ended February 28, 2025, reflecting a year-over-year growth of 90%.\n\n \n\nKarooooo’s profit for the year was ZAR\n1,011.1 million and ZAR 937.1 million, for the financial years ended February 28, 2026 and February 28, 2025, respectively, reflecting\na year-over-year increase of 8%.\n\n \n\nKarooooo’s Adjusted EBITDA (a non-IFRS\nmeasure) 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,\n2025, respectively, reflecting year-over-year growth of 16%.\n\n \n\nFinally, we believe strong net cash generated\nfrom operating activities is an important factor in supporting our robust business model and indicates our ability to provide the capital\nnecessary to invest in subscriber growth, territorial expansion and scaling Karooooo Logistics. For the financial years ended February\n28, 2026 and February 28, 2025, respectively, Karooooo generated net cash from operating activities of ZAR 1,967.1 million and ZAR 1,933.3\nmillion, reflecting a year-over-year increase of 2%. The net cash generated from operating activities for financial year 2025 were affected\nby the reclassification of ZAR 485.7 million of bank fixed deposits matured in June and July 2024, from other receivables back to cash\nand cash equivalents.\n\n \n\nThese results were achieved\nnotwithstanding the Group’s strategic investment in product innovation, geographical expansion, brand building and customer acquisition\nfor long-term, sustainable growth.\n\n \n\n64\n\n \n\n \n\nThe following table sets forth the segment revenue,\noperating profit, operating profit margin, adjusted EBITDA (a non-IFRS measure) and adjusted EBITDA margin (a non-IFRS measure) for the\nperiods presented.\n\n \n\n  \nCartrack  \nKarooooo\nLogistics  \n   \nKarooooo\nConsolidated  \n  \n\n  \n2026  \n2026  \n2025  \nY-o-Y\n\n%  \n2026  \n2026  \n2025  \nY-o-Y\n\n%  \n2026  \n2026  \n2025  \nY-o-Y\n\n% \n\n  \n(U.S$\n\nthousands (1))  \n(in R thousands)  \n   \n(U.S$\n\nthousands (1))  \n(in R thousands)  \n   \n(U.S$\n\nthousands (1))  \n(in R thousands)  \n  \n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nSubscription\nrevenue \n 303,497  \n 4,830,669  \n 4,055,394  \n 19% \n 822  \n 13,079  \n 12,783  \n 2% \n 304,319  \n 4,843,748  \n 4,068,177  \n 19%\n\nOther revenue \n 6,796  \n 108,173  \n 89,618  \n 21% \n -  \n -  \n -  \n -  \n 6,796  \n 108,173  \n 89,618  \n 21%\n\nVehicle sales \n -  \n -  \n 2,099  \n (100)% \n -  \n -  \n -  \n -  \n -  \n -  \n 2,099  \n (100)%\n\nDelivery\nservice \n -  \n -  \n -  \n -  \n 33,122  \n 527,199  \n 407,565  \n 29% \n 33,122  \n 527,199  \n 407,565  \n 29%\n\nTotal\nrevenue \n 310,293  \n 4,938,842  \n 4,147,111  \n 19% \n 33,944  \n 540,278  \n 420,348  \n 29% \n 344,237  \n 5,479,120  \n 4,567,459  \n 20%\n\nCost of revenue \n (86,801) \n (1,381,579) \n (1,078,699) \n 28% \n (23,458) \n (373,371) \n (285,708) \n 31% \n (110,259) \n (1,754,950) \n (1,364,407) \n 29%\n\nGross\nprofit \n 223,492  \n 3,557,263  \n 3,068,412  \n 16% \n 10,486  \n 166,907  \n 134,640  \n 24% \n 233,978  \n 3,724,170  \n 3,203,052  \n 16%\n\nGross\nprofit margin \n    \n 72% \n 74% \n    \n    \n 31% \n 32% \n    \n    \n 68% \n 70% \n   \n\nOperating\nprofit \n 86,066  \n 1,369,879  \n 1,272,980  \n 8% \n 2,817  \n 44,833  \n 39,353  \n 14% \n 88,882  \n 1,414,712  \n 1,312,333  \n 8%\n\nOperating\nprofit margin \n    \n 28% \n 31% \n    \n    \n 8% \n 9% \n    \n    \n 26% \n 29% \n   \n\n**Adjusted\nEBITDA (a non-IFRS measure)(2)** \n 140,603  \n 2,237,938  \n 1,930,688  \n 16% \n 2,983  \n 47,474  \n 42,772  \n 11% \n 143,586  \n 2,285,412  \n 1,973,460  \n 16%\n\n**Adjusted\nEBITDA margin (a non-IFRS measure)(2)** \n    \n 45% \n    \n 47% \n    \n    \n 9% \n 10% \n    \n    \n 42% \n 43%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\ndefine Adjusted EBITDA, a non-IFRS measure, as profit less finance income plus finance costs,\nfair value changes to derivative assets, taxation, depreciation and amortization, impairment\nof goodwill, and offering costs, less gain on disposal of subsidiaries. A reconciliation\nfrom segment operating profit to segment adjusted EBITDA is presented below. We define Adjusted\nEBITDA margin, a non-IFRS measure, as Adjusted EBITDA (a non-IFRS measure) divided by revenue.\n\n \n\n65\n\n \n\n \n\n**Reconciliation of segment operating profit to segment adjusted\nEBITDA (a non-IFRS measure)**\n\n \n\n  \nYear ended February 28, 2026 \n\n  \nCartrack  \nKarooooo Logistics  \nKarooooo Consolidated \n\n  \n(in R thousands) \n\n  \n   \n   \n  \n\nSegment operating profit \n 1,369,879  \n 44,833  \n 1,414,712 \n\nDepreciation and amortization \n 868,059  \n 2,641  \n 870,700 \n\nAdjusted EBITDA (a non-IFRS measure) \n 2,237,938  \n 47,474  \n 2,285,412 \n\n \n\n  \nYear ended February 28, 2025 \n\n  \nCartrack  \nKarooooo\nLogistics  \nKarooooo\nConsolidated \n\n  \n(in R thousands) \n\n  \n   \n   \n  \n\nSegment operating profit \n 1,272,980  \n 39,353  \n 1,312,333 \n\nDepreciation and amortization \n 659,140  \n 3,419  \n 662,559 \n\nGain on disposal subsidiaries \n (1,432) \n -  \n (1,432)\n\nAdjusted EBITDA (a non-IFRS\nmeasure) \n 1,930,688  \n 42,772  \n 1,973,460 \n\n \n\nWe define Segment adjusted EBITDA, a non-IFRS\nmeasure, as the adjusted EBITDA (definition noted above) allocated to the identified segments.\n\n \n\nWe define Segment adjusted EBITDA margin, a non-IFRS\nmeasure, as the adjusted EBITDA margin (definition noted above) allocated to the identified segments.\n\n \n\n**Factors Affecting Our Results of Operations**\n\n** **\n\nWe believe that our performance and future success\ndepend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed\nbelow and in the section of this annual report titled “Risk Factors.”\n\n \n\n**Subscriber Growth**\n\n** **\n\nWe derive substantially all of our revenue from\nsubscriptions to our operational intelligence platform. Our growth strategy is centered on increasing subscription revenue through the\nacquisition of new subscribers and the retention and expansion of existing subscriber relationships. We aim to drive this growth by continuously\nenhancing our platform with innovative features and offering value-added services that support customer adoption, engagement, and long-term\nretention.\n\n \n\nWe measure our success by our net subscriber\nbase growth. We calculate net subscriber growth as the difference between gross subscriber additions and gross subscriber churn over\na given period.\n\n \n\n**Customer Growth and Customer Retention**\n\n** **\n\nWe rely on our proprietary internal systems and\nprocesses as well as our own sales teams to drive customer growth and minimize third-party risks in acquiring customers. Customer growth\nis a key driver of subscriber growth (mobile assets under subscription contracts).\n\n \n\nWe offer our operational intelligence platform\nto a broad range of customers seeking a variety of mobility solutions. Neither our ability to acquire nor retain customers is dependent\non any specific industry, and we have not historically been materially exposed or vulnerable to cyclical or niche business sectors. Moreover,\nas a result of this industry agnostic approach, our customer mix has not materially affected our results of operations. We do, however,\nmonitor our customer mix to ensure that our sales and marketing efforts continue to be effective and evaluate exposure to customer concentration\nor other material risks in our subscriber base.\n\n \n\nWe seek to capitalize on growth opportunities\nin numerous regional markets, with subscribers currently located in more than 20 countries worldwide. In addition to driving subscription\nrevenue growth, we believe that our presence across multiple geographic markets and our exposure to multiple industry sectors mitigates\nrisk during periods of changing economic conditions.\n\n \n\n66\n\n \n\n** **\n\n**Foreign Currency Fluctuations**\n\n** **\n\nWe conduct business in multiple countries and\ncurrencies, and as a result, the Group is exposed to currency risk to the extent that sales, purchases, and borrowings of the foreign\noperations are denominated in a currency other than the respective functional currencies of Group companies (comprising the company and\nits subsidiaries). The functional currencies of Group companies are primarily the ZAR, USD, Euro (EUR), the Singapore\ndollar (SGD) and Polish zloty (PLN).\n\n \n\n(Refer to the Risk Factors note on foreign currencies on page 30 and\nNote 29.2 (c) on Currency Risk on page F-49)\n\n \n\n**Key Business Metrics**\n\n** **\n\nWe review a number of operating and financial\nmetrics, including the following key business metrics, to evaluate the performance of our business, identify trends, formulate business\nplans, make strategic decisions and assess operational efficiencies. Our calculation of the key business metrics and other measures discussed\nbelow may differ from other similarly titled metrics used by other companies, securities analysts or investors.\n\n \n\n**Number of Subscribers and Subscription Revenue**\n\n** **\n\nOur track record of subscriber growth reflects\nthe strength of our proprietary operational intelligence platform, ongoing innovation in software features and functionality, customer-focused\nsales organization and our competitive pricing model. We believe that our ability to attract a range of new customers and increase our\nsubscriber base is key to our business model.\n\n \n\nWe define our number of subscribers at the end\nof any particular period as the total number of connected vehicles and equipment using our platform at the end of such period. As at\nfinancial years ended February 28, 2026, and February 28, 2025, Cartrack had 2,662,222 and 2,302,236 subscribers, respectively, which\nrepresents net subscriber growth of 359,986 or a 16% increase from period to period.\n\n \n\nAs at February 28, 2025, and February 29, 2024,\nCartrack had 2,302,236 and 1,971,532 subscribers, respectively, which represents net subscriber growth of 330,704 or a 17% increase from\nperiod to period.\n\n \n\n  \nAs at February 28/29  \nY-o-Y % \n\n  \n2026  \n2025  \n**2024\n(2)**  \n2026  \n2025 \n\n  \n    \n    \n    \n    \n   \n\nSubscribers (as at end of period) \n 2,662,222  \n 2,302,236  \n 1,971,532  \n 16% \n 17%\n\n \n\nSubscription revenue is a key metric we use to\nevaluate our business as we derive substantially all our revenue from Cartrack’s sale of subscriptions to its operational intelligence\nplatform.\n\n \n\nFor the financial years ended February 28, 2026,\nFebruary 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\nmillion, respectively, which represents a 19% and 15% increase, respectively, compared to the prior period.\n\n \n\nCartrack’s subscription revenue increased\n19% 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\nended February 28, 2025 driven primarily by subscriber growth. The number of Cartrack’s subscribers on our platform directly drives\nour subscription revenue, which comprised 98% of Cartrack’s total revenue for the financial year ended February 28, 2026. Subscription\nrevenue growth was also supported by the sales of Video and Cartrack-Tag to our existing customers.\n\n \n\n  \nYear ended February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024\n(2)**  \n2026  \n2025 \n\n  \n(U.S.$\n\nthousands (1))  \n(in R thousands)  \n   \n  m\n\n  \n   \n   \n   \n  \n\nKarooooo’s Subscription Revenue \n 304,319  \n 4,843,748  \n 4,068,177  \n 3,535,805  \n 19% \n 15%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars at February 28, 2026 as set forth in the H.10 statistical release of\nthe Board of Governors of the Federal Reserve System. These translations should not be considered\nrepresentations that any such amounts have been, could have been or could be converted at\nthat or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because that disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\n67\n\n \n\n \n\n**Annualized Recurring Revenue (“ARR”)\n(a non-IFRS measure)**\n\n** **\n\nWe use ARR, a non-IFRS measure, as a measure\nof our revenue trend and an indicator of our future revenue opportunity from existing recurring customer contracts, assuming zero cancellations.\nWe define ARR as the annual run rate subscription revenue of subscription agreements from all customers at a point in time, calculated\nby taking the monthly subscription revenue for all customers during that month and multiplying by 12. ARR is not adjusted for the impact\nof any known or projected future customer cancellations, service upgrades or downgrades or price increases or decreases.\n\n \n\nThe amount of actual revenue that we recognize\nover any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to\nsubsequent changes in our pricing, service cancellations, upgrades or downgrades and acquisitions or divestitures.\n\n \n\nOur calculation of ARR may differ from similarly\ntitled metrics presented by other companies. The following table shows Cartrack’s ARR for each of the periods presented calculated\nusing subscription revenue for the last month in each period:\n\n \n\n  \nAs at February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024\n(2)**  \n2026  \n2025 \n\n  \n(U.S.$\n\nthousands (1))  \n(in R thousands)  \n   \n  \n\n  \n    \n    \n    \n    \n    \n   \n\nAnnualized\nRecurring Revenue **(a non-IFRS measure)** \n 325,410  \n 5,179,462  \n 4,383,935  \n 3,769,381  \n 18% \n 16%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because that disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\nFor the financial years ended February 28, 2026\nand February 28, 2025, ARR was ZAR 5,179.5 million and ZAR 4,383.9 million, respectively, which represents a 18% increase. We believe\nthat ARR growth reflects the underlying momentum in our business.\n\n \n\nFor the financial years ended February 28, 2025\nand February 29, 2024, ARR was ZAR 4,383.9 million and ZAR 3,769.4 million, respectively, which represents a 16% increase from period\nto period.\n\n \n\n**Average Revenue Per Subscriber (“ARPU”)\n(a non-IFRS measure)**\n\n** **\n\nARPU measures the monetization of our platform\nand is an indicator of pricing efficiency, competitiveness and market positioning. ARPU is calculated on a quarterly basis by dividing\nthe cumulative subscription revenue for the quarter by the average of the opening subscriber balance at the beginning of the quarter\nand closing subscriber balance at the end of the quarter. The result is then divided by three to reflect monthly ARPU. On an annual basis,\nCartrack’s ARPU is calculated as the average of the four quarterly ARPUs in that year. Cartrack’s ARPU has been fairly consistent\nsince inception. Given our economies of scale and vertically integrated business model, the monthly ARPU of approximately ZAR 162.\n\n \n\nThe following table shows our historical ARPU\nfor each of the periods presented:\n\n \n\n  \nAs at February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024\n(2)**  \n2026  \n2025 \n\n  \n(U.S.$(1))  \n(in R’s)  \n   \n  \n\n  \n   \n   \n   \n   \n   \n  \n\nAverage\nRevenue Per Subscriber **(a non-IFRS measure)** \n 10  \n 162  \n 158  \n 160  \n 3% \n (1)%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because that disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\n68\n\n \n\n \n\n**Adjusted Earnings Before Interest Depreciation Taxation and Amortization\n(“Adjusted EBITDA”) (a non-IFRS measure)**\n\n** **\n\nIn addition to our results determined in accordance\nwith IFRS, we believe Adjusted EBITDA, a non-IFRS measure, is useful in evaluating our operating performance.\n\n \n\nWe use Adjusted EBITDA in our operational and\nfinancial decision-making and believe Adjusted EBITDA is useful to investors because similar measures are frequently used by securities\nanalysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability.\n\n \n\nWe define Adjusted EBITDA (a non-IFRS measure)\nas profit less finance income, plus finance costs, fair value changes to derivative assets, taxation, depreciation and amortization,\nimpairment of goodwill, and offering costs, less gain on disposal of subsidiaries.\n\n \n\nHowever, non-IFRS financial information is presented\nfor supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a\nsubstitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial\nmeasure and the reconciliation of Adjusted EBITDA to profit, its most directly comparable IFRS financial measure, and not to rely on\nany single financial measure to evaluate our business.\n\n \n\n  \nYear ended February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024(3)**  \n2026  \n2025 \n\n  \n(U.S.$\n\nthousands(1))   \n(in R thousands)  \n   \n  \n\nProfit for the year \n 63,525  \n 1,011,112  \n 937,110  \n 754,156  \n 8% \n 24%\n\nLess: Finance income \n (2,166) \n (34,476) \n (44,167) \n (39,418) \n (22)% \n 12%\n\nAdd: Finance costs \n 4,893  \n 77,874  \n 50,866  \n 15,822  \n 53% \n 221%\n\nAdd: Fair value changes to derivative assets \n —  \n —  \n —  \n 388  \n —  \n (100)%\n\nAdd: Taxation \n 21,897  \n 348,535  \n 309,811  \n 311,554  \n 12% \n (1)%\n\nAdd: Depreciation of property, plant and equipment and amortization\nof intangible assets \n 54,704  \n 870,700  \n 662,559  \n 648,142  \n 31% \n 2%\n\nAdd: Impairment of goodwill \n —  \n —  \n 43,600  \n —  \n (100)% \n 100%\n\nAdd: Offering costs \n 733  \n 11,667  \n 15,113  \n —  \n —  \n — \n\nLess: Gain on disposal of subsidiaries \n —  \n —  \n (1,432) \n —  \n —  \n — \n\nAdjusted EBITDA (a non-IFRS\nmeasure) \n 143,586  \n 2,285,412  \n 1,973,460  \n 1,690,644  \n 16% \n 17%\n\nProfit Margin \n    \n 18% \n 21% \n 18% \n    \n   \n\n**Adjusted\nEBITDA Margin(2) (a non-IFRS measure)** \n    \n 42% \n 43% \n 40% \n    \n   \n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\ndefine Adjusted EBITDA margin (a non-IFRS measure) as Adjusted EBITDA (a non-IFRS measure)\ndivided by revenue.\n\n \n\n(3)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because that disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\nFor the financial years ended February 28, 2026\nand February 28, 2025, Karooooo’s Adjusted EBITDA was ZAR 2,285.4 million and ZAR 1,973.5 million, respectively, which represents\na 16% increase. Cartrack has had a strong track record of profitability while it grows at scale. Karooooo Logistics is contributing positively\nto Karooooo’s Adjusted EBITDA while we continue to invest in the Karooooo Logistics business to drive scale.\n\n \n\nFor the financial years ended February 28, 2025 and February 29, 2024,\nKarooooo’s Adjusted EBITDA was ZAR1,973.5 million and ZAR1,690.6 million, respectively, which represents a 17% increase compared\nto the prior period, primarily due to Cartrack’s consistent profitability as a result of robust subscriber and subscription revenue\ngrowth offset by investment for growth. This result includes Carzuka’s losses of ZAR 43.3 million incurred in FY 2024.\n\n \n\n69\n\n \n\n \n\n**Free Cash Flow or Adjusted Free Cash Flow\n(a non-IFRS measure)**\n\n** **\n\nIn addition to our results determined in accordance\nwith IFRS, we believe Free Cash Flow or Adjusted Free Cash Flow, which are non-IFRS measures, are useful in evaluating our operating\nperformance. Free cash flow is a non-IFRS financial measure that we calculate as net cash generated from operating activities less purchases\nof property, plant and equipment. Adjusted Free Cash Flow is a non-IFRS financial measure that adjusts Free Cash Flow to exclude the\neffect of the fixed deposits with maturity dates exceeding three months that were classified under trade and other receivables.\n\n \n\nWe believe that Free Cash Flow and Adjusted Free\nCash Flow are useful indicators of liquidity and the ability of the Group to turn revenues into Free Cash Flow, respectively, that provide\ninformation to management and investors about the amount of cash generated from our operations that, after the investments in property\nand equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business and strengthening\nour financial position.\n\n \n\nHowever, non-IFRS financial information is presented\nfor supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a\nsubstitute for financial information presented in accordance with IFRS. In particular, Free Cash Flow or Adjusted Free Cash Flow does\nnot reflect any restrictions on the transfer of cash and cash equivalents within the Group or any requirement to repay the Group’s\nborrowings and does not take into account cash flows that are available from disposals or the issue of shares.\n\n \n\nManagement therefore takes such factors into\naccount in addition to Free Cash Flow or Adjusted Free Cash Flow when determining the resources available for acquisitions and for distribution\nto shareholders. Investors are encouraged to review the related IFRS financial measure and the reconciliation of these non-IFRS financial\nmeasures to their most directly comparable IFRS financial measures, and not to rely on any single financial measure to evaluate our business.\n\n \n\n  \nYear ended February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024\n(2)**  \n2026  \n2025 \n\n  \n(U.S.$\n\nthousands (1))  \n(in R thousands)  \n   \n  \n\nNet cash generated from operating\nactivities \n 123,585  \n 1,967,060  \n 1,933,295  \n 955,040  \n 2% \n 102%\n\nLess: purchase of property, plant and\nequipment \n (72,752) \n (1,157,969) \n (1,022,371) \n (876,354) \n 13% \n 17%\n\nFree cash flow (a non-IFRS measure) \n 50,833  \n 809,091  \n 910,924  \n 78,686  \n (11)% \n 1058%\n\nFixed deposits with maturity dates exceeding\nthree months \n -  \n -  \n (485,681) \n 485,681  \n (100)% \n   \n\nAdjusted Free cash flow\n(a non-IFRS measure) \n 50,833  \n 809,091  \n 425,243  \n 564,367  \n 90% \n (25)%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because that disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\nFor the financial years ended February 28, 2026\nand February 28, 2025, Karooooo’s Free Cash Flow was ZAR 809.0 million and ZAR910.9 million, respectively. As at February 29, 2024,\nincluded in the other receivables were fixed deposits of ZAR 485.7 million which matured in June and July 2024. Excluding the effect\nof these bank fixed deposits as at financial years ended February 28, 2025 and February 29, 2024, Adjusted Free Cash Flow (a non-IFRS\nmeasure) for the financial year ended February 28, 2025 would have been ZAR 425.2 million. Adjusted Free Cash Flow (a non-IFRS measure)\nfor the financial year ended February 28, 2026, amounted to ZAR 809.0 million, an increase of ZAR 383.8 million, or 90%.\n\n \n\n70\n\n \n\n \n\nThe increase in Adjusted Free Cash Flow (a non-IFRS\nmeasure) in financial year 2026 was primarily driven by a ZAR 76.7 million improvements in debtors’ book in February 2026. Improved\nsupplier terms and the timing of tax payments also contributed positively to adjusted free cash flow. Our uninstalled IoT devices levels\nwere well managed in the financial year 2026, following a deliberate build-up in the prior year to support accelerated growth in financial\nyear 2026. Adjusted free cash flow also improved as payments related to the construction of the South African head office building decreased\nsignificantly following the completion of the building in the prior year.\n\n \n\nCompared to financial year 2025, as Cartrack\naccelerates customer acquisition, we made significant investment of ZAR 818.5 million for in-vehicle IoT devices and ZAR 73.6 million\nfor future use IoT devices. Prepayments amounting to ZAR 24.8 million were made to purchase IoT components. The investment in IoT equipment\nfor current and future growth contributed to the decrease in Free Cash Flow.\n\n \n\nThe Free Cash Flow (a non-IFRS measure) generated\nis in line with Karooooo’s disciplined capital allocation strategy and support the Group’s growth objectives.\n\n \n\n**Components of Our Results of Operations**\n\n** **\n\n**Revenue**\n\n** **\n\nOur revenue is substantially derived from the\nprovision of mobility data analytics solutions on a subscription-based model typically under monthly subscription contracts. Our revenue\nis driven primarily by the number of assets subscribed to our operational intelligence platform and the price per asset under these subscription\ncontracts. Hardware sales, including sales to our licensees, and installation revenue and royalties we receive from our licensees, make\nup a minimal component of total revenue. Our initial per subscriber (or mobile asset) contract terms are generally 36 months with automatic\nmonthly renewals thereafter and may not be cancelled without penalty prior to the completion of the initial term. The expected life cycle\nof our subscription contracts is over 60 months. In some instances, we charge our customers for a ratable portion of the contract on\na periodic basis, generally in advance on a monthly basis, and in certain regions we apply annual escalations to the contract pricing.\nCustomers may prepay all or part of their contractual obligations for the full initial contract term. Our revenue also includes Delivery-as-a-service\n(“DaaS”) revenue generated from last-mile delivery services, including subscription-based revenue associated with these delivery\nservices. Prior to FY 2025, our revenue also included revenue from selling second-hand vehicles via the Carzuka platform.\n\n \n\n**Cost of Revenue**\n\n** **\n\nCost of revenue consists primarily of costs related\nto the depreciation and amortization of capitalized subscriber acquisition costs, which includes the telematics device, the cost of the\ninstallation and direct commissions paid to our sales staff. Other components of cost of revenue include non-capitalized automotive technician\ncosts, machine to machine (“M2M”) network communications costs and the costs of delivering safety and asset recovery services\nto our customers, including such costs incurred by our licensees. We capitalize the cost of installed telematics devices and direct sales\ncommissions and depreciate these costs over the expected useful life of the subscriber, which is currently over 60 months. We pay commissions\nto our sales teams only once a telematics device is installed and activated. If a customer subscription agreement is cancelled prior\nto the end of the expected useful life of the subscriber, the depreciation period is accelerated, resulting in the carrying capitalized\nvalue being expensed in the then-current period. If an installed telematics device requires replacement for defect, the cost is taken\nas an expense in the replacement period. Less significant cost of revenue items includes mapping costs. Our cost of revenue is generally\ndriven by the number of assets under subscription and solutions provided. We expect the cost of revenue in absolute terms to increase\nwith subscriber growth. Cost of revenue also includes cost of last-mile delivery services, and, prior to FY 2025, also included the cost\nof vehicles bought for and sold via the Carzuka platform.\n\n \n\n**Other Income**\n\n** **\n\nOther income substantially consists of the government grants and gain\non sale of property, plant and equipment and other less significant items.\n\n \n\n**Operating Expenses**\n\n** **\n\nOther operating expenses consist of sales and marketing, research\nand development, general and administration and expected credit losses on financial assets.\n\n \n\n71\n\n \n\n \n\n**Sales and Marketing**\n\n** **\n\nSales and marketing expenses consist primarily\nof wages and benefits for sales and marketing employees, and other marketing, advertising and promotional costs. Advertising costs consist\nprimarily of pay-per-click advertising with search engines, social media advertising and other online advertising platforms, as well\nas the costs to create and produce these advertisements.\n\n \n\nOur strategic investment in brand-building positions\nus well for growth. Sales and marketing expenses are expensed upfront, while the lifetime value of a customer is recognized over a prolonged\nperiod. Sales and marketing expenses may fluctuate as a percentage of subscription revenue and will continue to remain one of the largest\ncomponents of our operating expenses.\n\n \n\n**General and Administration**\n\n** **\n\nGeneral and administration expenses consist primarily\nof wages and benefits for administrative services, human resources, internal information technology support, executive, legal, finance\nand accounting employees; professional fees; expenses for business application software licenses; non-income related taxes; other corporate\nexpenses, such as insurance and general office related expenses, such as rent and utilities.\n\n \n\nIn addition to the above, general and administration\nexpenses consist of depreciation relating to other property, plant and equipment, excluding those related to subscriber acquisition costs,\nwhich are included in cost of revenue, and the amortization of intangible assets relating to purchased computer software infrastructure.\n\n \n\nWe expect that general and administration expenses\nwill increase as we continue to scale. However, our long-term target is to reduce general and administration expenses as a percentage\nof subscription revenue.\n\n \n\n**Research and Development**\n\n** **\n\nResearch and development expenses consist of\nwages and benefits for hardware engineers, product management and software development employees, technology experimental costs and the\namortization of intangible assets relating to capitalized development costs. We have focused our research and development efforts on\nexpanding and developing new offerings, improving customer experience and functionality and scalability of our platform. The majority\nof our research and development employees are located in Singapore, South Africa and Portugal. Research and development costs that qualify\nfor capitalization, such as costs related to new generation smart devices and new stacks for our platform, are capitalized and amortized\nover 3 years.\n\n \n\n**Expected Credit Losses on Financial Assets**\n\n** **\n\nExpected credit losses on financial assets consist of bad debts expensed,\nthe movement on the expected credit loss provision and any reversals.\n\n \n\n**Offering costs**\n\n** **\n\nFor the financial year ended February 28, 2026,\ncosts relating directly to the completed secondary public offering, which was announced on June 11, 2025 and successfully closed on June\n13,2025. For the financial year ended February 28, 2025, costs relating directly to the proposed secondary public offering announced\non July 24, 2024, and cancelled on July 26, 2024.\n\n \n\n**Finance Income**\n\n** **\n\nFinance income consists of interest earned on positive bank balances.\n\n \n\n72\n\n \n\n \n\n**Finance Costs**\n\n** **\n\nFinance costs consist of interest on bank overdraft facilities, interest-bearing\nloans and lease obligations.\n\n \n\n**Taxation**\n\n** **\n\nTaxation consists primarily of current and deferred income tax and\na minimal component of withholding tax.\n\n \n\n**Non-Controlling Interest**\n\n** **\n\nProfit attributable to non-controlling interest, which represents\nthe share of profit belonging to holders of equity in Karooooo’s subsidiaries that are not wholly owned by the parent company.\n\n \n\n**Results of Operations**\n\n** **\n\nThe following table sets forth our results of operations for the periods\npresented.\n\n \n\n  \nYear ended February 28/29  \nY-o-Y % \n\n  \n2026  \n2026  \n2025  \n**2024\n(3)**  \n2026  \n2025 \n\nConsolidated Statement of Profit and Loss \n(U.S.$\n\nthousands(1))  \n(in R thousands)  \n  \n\n  \n   \n   \n   \n   \n   \n  \n\nRevenue \n 344,237  \n 5,479,120  \n 4,567,459  \n 4,205,511  \n 20% \n 9%\n\nCost of revenue \n (110,259) \n (1,754,950) \n (1,364,407) \n (1,514,674) \n 29% \n (10)%\n\nGross profit \n 233,978  \n 3,724,170  \n 3,203,052  \n 2,690,837  \n 16% \n 19%\n\nOther income \n 941  \n 14,975  \n 10,369  \n 11,831  \n 44% \n (12)%\n\nOperating expenses \n (146,037) \n (2,324,433) \n (1,901,088) \n (1,660,166) \n 22% \n 15%\n\nSales and marketing \n (52,866) \n (841,453) \n (614,765) \n (500,903) \n 37% \n 23%\n\nGeneral and administration \n (68,920) \n (1,096,981) \n (944,833) \n (837,606) \n 16% \n 13%\n\nResearch and development \n (16,427) \n (261,467) \n (226,935) \n (212,235) \n 15% \n 7%\n\nExpected credit losses on financial assets \n (7,824) \n (124,532) \n (114,555) \n (109,422) \n 9% \n 5%\n\nOperating profit \n 88,882  \n 1,414,712  \n 1,312,333  \n 1,042,502  \n 8% \n 26%\n\nOffering costs \n (733) \n (11,667) \n (15,113) \n —  \n (23)% \n — \n\nFinance income \n 2,166  \n 34,476  \n 44,167  \n 39,418  \n (22)% \n 12%\n\nFinance costs \n (4,893) \n (77,874) \n (50,866) \n (15,822) \n 53% \n 221%\n\nFair value changes to derivative assets \n —  \n —  \n —  \n (388) \n —  \n (100)%\n\nImpairment of goodwill \n —  \n —  \n (43,600) \n —  \n (100)% \n 100%\n\nProfit before taxation \n 85,422  \n 1,359,647  \n 1,246,921  \n 1,065,710  \n 9% \n 17%\n\nTaxation \n (21,897) \n (348,535) \n (309,811) \n (311,554) \n 12% \n (1)%\n\nProfit for the year \n 63,525  \n 1,011,112  \n 937,110  \n 754,156  \n 8% \n 24%\n\n  \n    \n    \n    \n    \n    \n   \n\nProfit attributable to: \n    \n    \n    \n    \n    \n   \n\nOwners of the parent \n 62,445  \n 993,920  \n 921,031  \n 738,191  \n 8% \n 25%\n\nNon-controlling interest \n 1,080  \n 17,192  \n 16,079  \n 15,965  \n 7% \n 1%\n\n  \n 63,525  \n 1,011,112  \n 937,110  \n 754,156  \n 8% \n 24%\n\n  \n    \n    \n    \n    \n    \n   \n\nEarnings per share \n    \n    \n    \n    \n    \n   \n\nBasic and diluted earnings per share (US$’s & R’s) \n 2.02  \n 32.17  \n 29.81  \n 23.85  \n 8% \n 25%\n\n  \n    \n    \n    \n    \n    \n   \n\nAdjusted earnings per share (a non-IFRS measure) \n    \n    \n    \n    \n    \n   \n\nAdjusted\nbasic and diluted earnings per share (a non-IFRS measure) (2) (US$’s & R’s) \n 2.05  \n 32.55  \n 31.67  \n 23.85  \n 3% \n 33%\n\n \n\n73\n\n \n\n \n\n  \nYear ended February 28/29 \n\n  \n2026  \n2026  \n2025  \n**2024\n(3)** \n\n  \n(U.S.$  \n   \n   \n  \n\n  \nthousands(1))  \n(in R thousands) \n\n  \n   \n   \n   \n  \n\nReconciliation of basic and diluted earnings and adjusted earnings per share (a non-IFRS measure) \n   \n   \n   \n  \n\n  \n   \n   \n   \n  \n\nReconciliation between basic earnings and adjusted earnings (a non-IFRS measure) \n   \n   \n   \n  \n\nProfit attributable to ordinary\nshareholders \n 62,445  \n 993,920  \n 921,031  \n 738,191 \n\nAdjust for: \n    \n    \n    \n   \n\nOffering costs \n 733  \n 11,667  \n 15,113  \n — \n\nImpairment of goodwill \n —  \n —  \n 43,600  \n — \n\nGain on disposal of subsidiaries \n —  \n —  \n (1,432) \n — \n\nAdjusted profit attributable to ordinary shareholders\n(a non-IFRS measure) \n 63,178  \n 1,005,587  \n 978,312  \n 738,191 \n\n  \n    \n    \n    \n   \n\nWeighted average number of ordinary shares in issue at period\nend (000’s) on which the per share figures have been calculated \n 30,893  \n 30,893  \n 30,895  \n 30,948 \n\n  \n    \n    \n    \n   \n\nBasic and diluted earnings per share \n 2.02  \n 32.17  \n 29.81  \n 23.85 \n\n**Adjusted\nbasic and diluted earnings per share (a non-IFRS measure) (2)** \n 2.05  \n 32.55  \n 31.67  \n 23.85 \n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)Adjusted\nearnings per share, a non-IFRS measure, is defined as earnings per share in accordance with\nIFRS excluding the impact of offering costs, impairment of goodwill and gain on disposal\nof subsidiaries. In addition to our results determined in accordance with IFRS, we believe,\nAdjusted earnings per share, a non-IFRS measure, is useful in evaluating our operating performance.\nWe use Adjusted earnings per share in our operational and financial decision-making and believe\nAdjusted earnings per share is useful to investors because similar measures are frequently\nused by securities analysts, investors, rating agencies and other interested parties to evaluate\nour competitors and to measure profitability. A reconciliation from earnings per share to\nAdjusted earnings per share, a non-IFRS measure, is presented.\n\n \n\n(3)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because the disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n** **\n\n**Comparison of Results for the Year Ended February 28, 2026 and\nFebruary 28, 2025**\n\n \n\n**Revenue**\n\n \n\nKarooooo’s total revenue increased 20%\nto ZAR5,479.1 million.\n\n \n\nCartrack’s subscription revenue increased\nby 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\nyear ended February 28, 2025. Subscription revenue growth was driven by the acquisition of new customers and the sales of Video and Cartrack-Tag\nto our existing customers. Cartrack’s net subscriber addition growth increased 9% to 359,986 for the financial year ended February\n28, 2026 from 330,704 for the financial year ended February 28, 2025.\n\n \n\nKarooooo Logistics’s revenue increased\n29% to ZAR540.3 million (2025: ZAR420.3 million). Karooooo Logistics focuses on delivery-as-a-service (“DaaS”) through selected\nthird-party sourced drivers and logistics companies, and charges per delivery. The business model is highly scalable and is delivering\nattractive growth.\n\n \n\n**Cost of Revenue**\n\n** **\n\nKarooooo’s cost of revenue increased ZAR390.5\nmillion, or 29%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025.\n\n \n\nCartrack’s cost of revenue increased by\nZAR302.9 million or 28% and Karooooo Logistics’s increased cost of revenue of ZAR87.7 million or 31% for the financial year ended\nFebruary 28, 2026 is in line with the increase in revenue.\n\n \n\n74\n\n \n\n \n\n**Other Income**\n\n** **\n\nOther income increased ZAR4.6 million, or 44%,\nfor the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. Other income consists of the government\ngrants and gain on disposal of property, plant and equipment.\n\n \n\n**Operating Expenses**\n\n** **\n\nOperating expenses increased ZAR423.3 million,\nor 22%, for the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. Cartrack’s operating\nexpenses increased ZAR396.5 million, or 22%, for the financial year ended February 28, 2026 as compared to the financial year ended February\n28, 2025 driven primarily by investments in infrastructure and sales headcount to support territorial expansion and distribution capacity.\n\n \n\nKarooooo Logistics’s operating expenses\nincreased by 28% to ZAR122.1 million incurred for the financial year ended February 28, 2026, compared to ZAR95.3 million for the financial\nyear ended February 28, 2025 as we continued disciplined, strategic investment to drive the scalable growth of Karooooo Logistics.\n\n \n\nThe increase in operating expenses is set forth in more detail below:\n\n \n\n*Sales and Marketing*\n\n* *\n\n  \nYear ended February 28  \n  \n\n  \n2026  \n2026  \n2025  \nY-o-Y % \n\n  \n(U.S.$  \n   \n   \n  \n\n  \nthousands (1))  \n(in R thousands)  \n  \n\n  \n    \n    \n    \n   \n\nSales and marketing \n (52,866) \n (841,453) \n (614,765) \n 37%\n\n* *\n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\nKarooooo’s sales and marketing operating\nexpenses increased by ZAR226.7 million or 37% for the financial year ended February 28, 2026 compared to financial year ended February\n28, 2025, primarily driven by Cartrack.\n\n \n\nCartrack’s sales and marketing operating\nexpenses increased 37% to ZAR839.6 million for the financial year ended February 28, 2026 compared to financial year ended February 28,\n2025 as we invested in sales capacity to accelerate growth. We are encouraged by the early returns on our strategic investment in customer\nacquisition which are delivering intended outcomes and positioning us well for continued strong growth. Customer acquisition costs are\na major component of the cost of acquiring new customers and are not expensed over the expected life span of a customer, but rather when\nincurred. This component increased ZAR89.4 million, or 19%, for the financial year ended February 28, 2026.\n\n \n\nInvestment in sales and marketing generally takes\napproximately 6 months to translate into customer acquisition. We believe that our strategic investment in sales capacity positions us\nwell for long term growth. Our customer lifetime value (LTV) to customer acquisition costs (“CAC”) ratio, a non-IFRS measure,\ncontinues to exceed 9 times and underpins our disciplined approach to growth and customer acquisition.\n\n \n\nKarooooo Logistics’s sales and marketing\noperating expenses were ZAR1.9 million for the financial year ended February 28, 2026, compared to ZAR1.6 million for the financial year\nended February 28, 2025.\n\n \n\n*Lifetime value (LTV of a Customer) of customer\nrelationships to customer acquisition costs (CAC) (a non-IFRS measure)*\n\n \n\nWe calculate the LTV of our customer relationships\nas of a measurement date by dividing (i) the product of our subscription revenue gross margin measured over the past twelve months, and\nthe difference between our current period ARR (a non-IFRS measure) and prior comparative period (twelve months) ARR by (ii) the percentage\nof ARR lost as a result of customer churn over the past twelve months. See “Key Business Metrics—Annualized Recurring Revenue\n(“ARR”) (a non-IFRS measure).” We calculate our CAC as our annual sales and marketing expense measured over the past\ntwelve months.\n\n \n\n75\n\n \n\n \n\n*General and Administration*\n\n* *\n\n  \nYear ended February 28  \n  \n\n  \n2026  \n2026  \n2025  \nY-o-Y % \n\n  \n(U.S.$  \n   \n   \n  \n\n  \nthousands (1))  \n(in R thousands)  \n  \n\n  \n    \n    \n    \n   \n\nGeneral and administration \n (68,920) \n (1,096,981) \n (944,833) \n 16%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\nKarooooo’s general and administration operating\nexpenses increased by 16% to ZAR1,097.0 million for the financial year ended February 28, 2026 from ZAR944.8 million for the financial\nyear ended February 28, 2025. The increase of ZAR152.1 million was primarily driven by increases in Cartrack’s general and administration\noperating expenses by 15% to ZAR992.4 million, reflecting our disciplined cost management combined with continued investment in infrastructure\nto support future growth. Karooooo Logistics’ general and administration operating expenses were ZAR104.6 million incurred for\nthe financial year ended February 28, 2026, compared to ZAR82.2 million incurred for the financial year ended February 28, 2025.\n\n \n\n*Research and Development*\n\n* *\n\n  \nYear ended February 28  \n  \n\n  \n2026  \n2026  \n2025  \nY-o-Y % \n\n  \n(U.S.$  \n   \n   \n  \n\n  \nthousands (1))  \n(in R thousands)  \n  \n\n  \n    \n    \n    \n   \n\nResearch and Development \n (16,427) \n (261,467) \n (226,935) \n 15%\n\n* *\n\n(1)\nFor convenience purposes\nonly, amounts in South African rand as at February 28, 2026 have been translated to U.S. dollars using an exchange rate of ZAR 15.9167\nto U.S.$1.00, the exchange rate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release of the Board\nof Governors of the Federal Reserve System. These translations should not be considered representations that any such amounts have\nbeen, could have been or could be converted at that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\nKarooooo’s research and development operating\nexpenses increased by ZAR34.5 million or 15% for the financial year ended February 28, 2026 compared to financial year ended February\n28, 2025, primarily due to an increase in Cartrack’s research and development operating expenses by ZAR30.2 million, or 14%, as\nwe continued our investment in innovation to improve and expand the capabilities of our operational intelligence platform and internal\nmanagement system. Karooooo Logistics’s research and development operating expenses were ZAR15.8 million incurred in the financial\nyear ended February 28, 2026 as compared to ZAR11.5 million incurred in financial year ended February 28, 2025.\n\n \n\n**Expected Credit Losses on Financial Assets**\n\n** **\n\nExpected credit losses on financial assets increased\nZAR10.0 million, or 9%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. The method\nof providing for expected credit losses is consistent with prior years.\n\n \n\n76\n\n \n\n \n\n**Finance Income**\n\n** **\n\nFinance income decreased ZAR9.7 million, or 22%,\nfor the financial year ended February 28, 2026 compared to the financial year ended February 28, 2025. This was primarily driven by lower\ninterest earned on positive bank balances during the year.\n\n \n\n**Finance Costs**\n\n** **\n\nFinance costs increased ZAR27.0 million, or 53%,\nfor the financial year ended February 28, 2026 compared to financial year ended February 28, 2025. This was primarily due to interest\nincurred on overdraft facilities utilised for working capital purposes and increased interest relating to lease liabilities.\n\n \n\n**Taxation**\n\n** **\n\nOur total effective tax rate for the financial\nyear ended February 28, 2026 was 25.6%, which increased from 24.8% for the financial year ended February 28, 2025. This was primarily\ndue to temporary differences between tax and accounting profits across the Group entities.\n\n \n\nThere is no dividends tax in Singapore.\n\n \n\nSee Note 23 to the accompanying consolidated\nfinancial statements included elsewhere in this annual report for a detailed reconciliation of the tax expense.\n\n \n\n**Non-Controlling Interest**\n\n** **\n\nProfit attributable to non-controlling interest,\nwhich represents the share of profit accruing to holders of equity in Karooooo’s subsidiaries that are not wholly owned by the\nparent company, increased by ZAR1.1 million, or 7%, for the financial year ended February 28, 2026 compared to financial year ended February\n28, 2025.\n\n \n\n**Segment Information**\n\n** **\n\nOperating segments are reported in a manner consistent\nwith the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The CODM, who is responsible for allocating\nresources and assessing performance of the operating segments, has been identified as the Group Chief Executive Officer (“CEO”),\nwho makes strategic decisions for the Group.\n\n \n\nThe Group organized its business units based on its products and services\ninto the following reportable segments:\n\n \n\n●Cartrack\nis a provider of an operational intelligence platform that maximizes the value of transportation,\noperations and workflow data by providing insightful real-time data analytics to connected\nvehicles and equipment.\n\n \n\n●Karooooo Logistics provides a software application enabling the management\nof last mile delivery and general operational logistics (Delivery-as-a-service or “DaaS”). This technology addresses the challenges\nof on-the-ground distribution for large enterprises requiring systems integrations, payment gateways, third-party long-haul services and\ncrowd-sourced drivers in order to scale and meet their operational needs.\n\n \n\n●Carzuka\noperated as a physical and e-commerce vehicle buying and selling marketplace which allowed\ncustomers to source, buy and sell vehicles efficiently and cost effectively. In Quarter 3\nof FY2024, despite the growth experienced by Carzuka in South Africa, a decision was made\nto cease buying second hand vehicles in South Africa. This followed considerable interaction\nwith motor dealerships across South Africa who perceived Carzuka’s business interests\nto conflict with their business interests, and Cartrack did not want to risk the long-standing\nstrategic relationships that Cartrack forged with them. There are many components within\nCarzuka’s platform that had been built and developed that will continue to provide\nvalue to the existing Cartrack fleet platform. With effect from financial year 2025, Carzuka\nhas changed the focus of its operations such that the nature of the underlying services offered\nnow aligns with Cartrack’s broader operations and has been integrated into that segment\naccordingly.\n\n \n\nThe CODM monitors the operating results of its\nbusiness units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance\nis evaluated based on subscription revenue, total revenue and operating profit or loss.\n\n \n\nThe segment information was provided to the CEO.\nSee Note 4 to the accompanying consolidated financial statements included elsewhere in this annual report for Segment related information.\n\n \n\n77\n\n \n\n \n\nThe following table sets forth the geographical\nregion by subscriber numbers, subscription revenue and total revenue for the Cartrack business unit at the end of the periods presented.\n\n \n\n  \nCartrack \n\n  \nYear\nended February 28 \n\n  \nSubscriber  \n   \nSubscription\nRevenue  \n   \nTotal\nRevenue  \n  \n\n  \n2026  \n2025  \nY-o-Y \n\n%  \n2026  \n2026  \n2025  \nY-o-Y \n\n%  \n2026  \n2026  \n2025  \nY-o-Y \n\n% \n\n  \n(in\nUnits)  \n   \n(U.S.$\n\nthousands(1))  \n(in\nR thousands)  \n   \n(U.S.$\n\nthousands(1))  \n(in\nR thousands)  \n  \n\nSouth\nAfrica \n 2,005,888  \n 1,736,542  \n 16% \n 217,864  \n 3,467,675  \n 2,900,018  \n 20% \n 222,983  \n 3,549,147  \n 2,944,506  \n 21%\n\nAfrica-Other \n 92,043  \n 90,974  \n 1% \n 9,289  \n 147,853  \n 130,105  \n 14% \n 9,383  \n 149,339  \n 143,803  \n 4%\n\nEurope \n 228,384  \n 200,774  \n 14% \n 29,679  \n 472,391  \n 387,777  \n 22% \n 30,335  \n 482,841  \n 399,209  \n 21%\n\nAsia-Pacific,\nMiddle East & USA \n 335,907  \n 273,946  \n 23% \n 46,665  \n 742,750  \n 637,494  \n 17% \n 47,592  \n 757,515  \n 659,593  \n 15%\n\nTotal \n 2,662,222  \n 2,302,236  \n 16% \n 303,497  \n 4,830,669  \n 4,055,394  \n 19% \n 310,293  \n 4,938,842  \n 4,147,111  \n 19%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n**South Africa**\n\n** **\n\nThe pace of growth in South Africa reflects our\ndeliberate strategy to cement our leadership position in South Africa through a balanced combination of subscribers’ additions\nand selling Video and Cartrack-Tag to our existing customers, contributed to Karooooo’s robust financial performance. Revenue for\nSouth Africa increased ZAR604.6 million, or 21%, for the financial year ended February 28, 2026 driven by a 20% increase in subscription\nrevenue of ZAR567.7 million primarily due to strong net subscriber growth of 16% or 269,346 subscribers.\n\n \n\n**Africa-Other**\n\n** **\n\nThis region remains a positive cash generator\nand is strategic to our South African operations. The number of subscribers increased by 1% to 92,043 as at financial year ended February\n28, 2026 (2025: 90,974), while the subscription revenue increased by ZAR17.7 million or 14%.\n\n \n\n78\n\n \n\n \n\n**Europe**\n\n** **\n\nEuropean revenue increased ZAR83.6 million, or 21%, for the financial\nyear ended February 28, 2026 compared to financial year ended February 28, 2025. Subscription revenue increase ZAR84.6 million or 22%\nprimarily driven by subscriber growth of 14% to 228,384 subscribers. We continued to expand our customer base and drive our distribution\ncapabilities in the region.\n\n \n\n**Asia-Pacific, Middle East and USA**\n\n** **\n\nRevenue for Asia-Pacific, Middle East and USA\nincreased ZAR97.9 million, or 15%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025.\nSubscription revenue growth was driven by the number of subscribers in this region increasing 23% to 335,907 subscribers as at February\n28, 2026. The pace of subscription revenue growth in the region was primarily driven by faster growth in certain countries that generate\nlower ARPU. As the second largest contributor to the Group, we view Southeast Asia as the Group’s most compelling growth opportunity\nin the medium to long term.\n\n \n\nWe have elected to omit discussion of the earliest\nof the three years covered by our consolidated financial statements presented in this annual report because the disclosure as at and\nfor 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\non June 9, 2025, under the section titled “Item 5. Operating and Financial Review and Prospects.”\n\n \n\n**Recent Accounting Pronouncements**\n\n** **\n\nA discussion of new accounting guidance that we have recently adopted,\nas well as accounting guidance that has been recently issued but not yet adopted by us, is included below and in Note 3 — Standards\nIssued But Not Yet Effective of our consolidated financial statements included elsewhere in this annual report.\n\n \n\nThe new and amended standards and interpretations\nthat are issued, but not yet effective, up to the date of issuance of the Group’s financial statements which could be relevant\nto the Group are disclosed below. The Group intends to adopt these new and amended standards and interpretations, when they become effective.\nAt the date of authorization of the financial statements, the Group continues to assess and evaluate the impact to its financials on\nthe initial adoption of these new accounting standards and interpretations and its related applicable period.\n\n \n\nDetails of amendment \nAnnual periods\n\nbeginning on/after\n\n  \n \n\nIFRS 7 and IFRS 9: Amendments to the Classification and Measurement of Financial Instruments \nJanuary 1, 2026\n\nAnnual Improvements to IFRS Accounting Standards \nJanuary 1, 2026\n\nIFRS 18: Presentation and Disclosure in Financial Statements \nJanuary 1, 2027\n\nIFRS 19: Subsidiaries without Public Accountability: Disclosures \nJanuary 1, 2027\n\nAmendments to IAS 21: Lack of Exchangeability* \nJanuary 1, 2027\n\nAmendments to IAS 28 and IFRS 10: Sale or Contribution of Assets\nbetween an Investors and its Associate or Joint Venture \nTo be determined\n\n \n\n*The effective date is for\nthe updated sections only – Translation to a Hyperinflationary Presentation Currency.\n\n \n\n**Emerging Growth Company**\n\n** **\n\nAs a company with less than US$1.235 billion\nin revenue during our last financial year, we qualify as an “emerging growth company” as defined in the JOBS Act. An emerging\ngrowth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public\ncompanies. These provisions include an exemption from the auditor attestation requirement in the assessment of our internal control over\nfinancial reporting pursuant to the Sarbanes-Oxley Act.\n\n \n\nWe may take advantage of these provisions for\nup 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\ngrowth 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\non which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our\nordinary shares held by non-affiliates exceeds US$700.0 million as of the prior June 30th, or (C) the date on which we have\nissued 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\nof these reduced burdens. To the extent that we take advantage of these reduced reporting burdens, the information that we provide shareholders\nmay be different than you might obtain from other public companies in which you hold equity interests.\n\n \n\n79\n\n \n\n \n\n**B.****LIQUIDITY\nAND CAPITAL RESOURCES**\n\n** **\n\nOur principal sources of liquidity are our cash\ngenerated from operations, cash and cash equivalents as well as borrowings available under our loan and funding facilities. Cash and\ncash equivalents consist primarily of cash or deposit with banks. As at February 28, 2026, our cash and cash equivalents totaled ZAR1,153.9\nmillion.\n\n \n\nWe believe that our cash generated from operations,\ncash and cash equivalents on hand and availability under our funding facility will be sufficient to fund our working capital and capital\nexpenditure requirements for at least the next twelve months. In addition, we may choose to raise additional funds at any time through\nequity or debt financing arrangements, if required for additional working capital, capital expenditures or other strategic investments.\nOur belief concerning liquidity is based on currently available information. To the extent this information proves to be inaccurate,\nor if circumstances change, future availability of credit or other sources of financing may be reduced, and our liquidity could be adversely\naffected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described\nin the section of this annual report titled “Risk Factors.” Depending on the severity and direct impact of these factors\non us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.\n\n \n\n** **** **\n**Year ended February 28/29**** **** **\n**Y-o-Y %**** **\n\n  \n2026  \n2026  \n2025  \n**2024(2)**  \n2026  \n2025 \n\n  \n(U.S.$\n\nthousands (1))  \n(in R thousands)  \n   \n  \n\n  \n   \n   \n   \n   \n   \n  \n\nNet cash generated from operating activities \n 123,585  \n 1,967,060  \n 1,933,295  \n 955,040  \n 2% \n 102%\n\nNet cash utilized by investing activities \n (76,269) \n (1,213,952) \n (1,077,335) \n (932,187) \n 13% \n 16%\n\nNet cash utilized by financing activities \n (44,424) \n (707,086) \n (443,260) \n (592,954) \n 60% \n (25)%\n\n \n\n(1)For\nconvenience purposes only, amounts in South African rand as at February 28, 2026 have been\ntranslated to U.S. dollars using an exchange rate of ZAR 15.9167 to U.S.$1.00, the exchange\nrate for U.S. dollars as at February 28, 2026 as set forth in the H.10 statistical release\nof the Board of Governors of the Federal Reserve System. These translations should not be\nconsidered representations that any such amounts have been, could have been or could be converted\nat that or any other exchange rate. See “Exchange Rates” for further information\nabout recent fluctuations in exchange rates.\n\n \n\n(2)We\nhave elected to omit discussion of the earliest of the three years covered by our consolidated\nfinancial statements presented in this annual report because the disclosure as at and for\nthe financial year ended February 29, 2024 was included in our annual report on Form 20-F\n(File No. 001-40300), filed with the SEC on June 9, 2025, under the section titled “Item\n5. Operating and Financial Review and Prospects.”\n\n \n\n**Operating Activities**\n\n** **\n\nStrong net cash generated from operating activities\nis an important factor in supporting our robust business model, and is an indication of our ability to provide the capital necessary\nto invest in subscriber growth and territorial expansion.\n\n \n\nNet cash generated from operating activities\nincreased ZAR33.8 million, or 2%, for the financial year ended February 28, 2026 compared to financial year ended February 28, 2025.\nCash generated from operations before working capital changes increased by ZAR348.0 million.\n\n \n\nAs at February 28, 2025, included in other receivables\nwere fixed deposits placed with a licensed bank amounting to ZAR485.7 million that matured in June and July 2024. As a result of these\nfixed deposits, net cash generated from operating activities for the financial year ended February 28, 2025 were ZAR 1,933.3 million,\nprimarily driven by strong subscription revenue growth and improved earnings, partially offset by working capital utilization to support\nbusiness growth and higher financial costs related to term loans and bank overdrafts.\n\n \n\n80\n\n \n\n \n\n**Investing Activities**\n\n** **\n\nNet cash utilized by investing activities increased\nZAR136.6 million, or 13%, for the financial year ended February 28, 2026 compared to the prior period. The increase was primarily driven\nby ZAR186.3 million increased in investment capitalized in-vehicle telematic devices and IoT devices held for future use for planned\nsubscribers’ growth. The increased, was partially offset by a decrease in capital expenditure due to the completion of construction\nof the South African Central Office during the year.\n\n \n\n**Financing Activities**\n\n** **\n\nNet cash utilized by financing activities increased\nZAR263.8 million, or 60% for the financial year ended February 28, 2026 compared to the prior period. This was primarily due to payment\nof dividends of ZAR693.6 million, partially offset by net proceeds from term loans of ZAR136.2 million during the financial year. Net\ncash utilized by financing activities was also impacted by a cash outflow of ZAR117.6 million relating to lease liabilities repayment\nduring the year.\n\n \n\n**Other Financial Assets**\n\n** **\n\nAs at February 29, 2024, the Group derecognized\na derivative – call option - relating to its acquisition of Karooooo Logistics, following an agreement by shareholders to cancel\nthe call option. The call option was derecognized in the profit or loss. There were no such derivatives as at February 28, 2026 and February\n28, 2025.\n\n \n\n**Loan and Funding Facilities**\n\n** **\n\n**Mortgage bond**\n\n** **\n\nThe mortgage bond of ZAR65 million that was registered\nin favor of First Rand Bank Limited over the remaining extent of Erf 160, Rosebank and Portion 6 of Erf 161, Rosebank, registered in\nthe name of Purple Rain Properties No 444 Proprietary Limited (“PRP”) was repaid in December 2025. PRP subsequently entered\ninto an agreement with The Standard Bank of South Africa Limited (“SBSA”) for a mortgage bond of ZAR440 million to be registered\nin favor of SBSA over the consolidated plots of land, Erf 160 and Portion 6 of Erf 161 (“erven”), on which the South Africa\nCentral Office had been erected. The registration of the consolidated erven, cancellation of the repaid mortgage bond, and registration\nof the mortgage bond in favor of SBSA, is in progress. Upon registration of the SBSA mortgage bond, the limited suretyship of ZAR60 million\nprovided by Cartrack Proprietary Limited for the repaid mortgage bond will accordingly be cancelled.\n\n \n\nInterest to be levied on the mortgage bond is\nat prime less 1.75% and repayment is over a period of 10 years.\n\n \n\n**Term loan**\n\n \n\nIn June 2024, The Standard Bank of South Africa\nLimited (“SBSA”) extended a loan of ZAR250.0 million to Purple Rain Properties No.444 Proprietary Limited (the owner of the\nSouth Africa Central Office) for funding the construction of the building (“the Facilities Agreement”). Interest at a rate\nof 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\nto the Facilities Agreement, subject to the registration of a mortgage bond of R440 million in favor of SBSA. Cartrack Proprietary Limited\nprovided a limited guarantee as security for this loan, pending the registration of the mortgage bond. The financial conditions under\nthe loan agreement include a Loan to Value Ratio varying from 68% from the period commencing on February 26, 2025 (the First Utilisation\nDate) until the first anniversary of the First Utilisation Date and 62% during the next calendar period of 12 months. The Interest Coverage\nRatio shall not be less than 1.45 times for the period from the First Utilisation Date until the first anniversary of the First Utilisation\nDate and 1.77 times in the following period of 12 months. As at the date of this report, the financial conditions have been met.\n\n \n\nIn September 2024 and June 2025, Cartrack Portugal,\nS.A., secured loans of EUR2.0 million and EUR1.0 million, respectively, from Banco Comercial Português, S.A. The loan bears an\ninterest rate of 6-month Euribor rate plus 0.75%, with repayments scheduled over a seven-year and five-year period. There are no covenants\nrelating to these loans.\n\n \n\nIn January 2026, Cartrack Espana. S.L.U., secured a EUR 0.08 million\nloan from Abanca- Préstamo. The loan bears an interest rate of 3.5% per year and matured on April 22, 2026.\n\n \n\n**Bank overdraft and overdraft facilities**\n\n** **\n\nIn March 2020, Cartrack Proprietary Limited entered\ninto a Short-Term Facility Letter with Capitec Bank Limited (“Capitec Bank”), previously Mercantile Bank, as amended and\nsupplemented from time to time, for an unsecured short-term overdraft and other facilities (the “Overdraft Facility”). Pursuant\nto the most recent Addendum to the Short-Term Facility Letter, dated June 23, 2025, the Overdraft Facility was increased to ZAR300.0\nmillion. Amounts due under the Overdraft Facility bear interest at Capitec Bank’s prime lending rate, which as at the date of this\nannual report was 10.5%. Subject to completion of the annual review, Capitec Bank has approved the extension of the expiry date to June\n30, 2026.\n\n \n\nIn August 2025, Cartrack Proprietary Limited\nentered into a Short-Term Facility Letter with The Standard Bank of South Africa Limited (“Standard Bank”), as amended and\nsupplemented from time to time, for an unsecured short-term working capital and other facilities (the “Working Capital Facility”).\nThe Working Capital Facility amounts to ZAR300.0 million. Amounts due under the Working Capital Facility bear interest at Standard Bank’s\nprime lending rate minus 1%, which as at the date of this annual report was 9.5%.\n\n \n\nAs at February 28, 2026, ZAR407.7 million (2025: ZAR205.3 million)\nof these facilities had been utilized.\n\n \n\n81\n\n \n\n \n\n**Off-Balance Sheet Arrangements**\n\n** **\n\nWe do not engage in any off-balance sheet activities\nor have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose and structured finance\nentities.\n\n \n\n**Contractual Obligations**\n\n** **\n\nThe following table summarizes our contractual obligations as at February\n28, 2026.\n\n \n\nThe table below analyses the Group’s financial\nliabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual\nmaturity date. The amounts disclosed in the table are the contractual undiscounted cash flows and include contractual interest payments.\n\n \n\nAt February 28, 2026 \nLess than\n1 year  \n2 years  \n3 years  \n4 years  \n5 years\n\nor more  \nTotal \n\n  \n(in R thousands) \n\n  \n   \n   \n   \n   \n   \n  \n\nTerm loans \n 83,386  \n 79,288  \n 75,643  \n 72,243  \n 313,232  \n 623,792 \n\nLease obligations \n 141,305  \n 113,304  \n 61,317  \n 9,218  \n 1,263  \n 326,407 \n\nTrade and other payables \n 522,978  \n —  \n —  \n —  \n —  \n 522,978 \n\nLoan from a related party \n 85  \n —  \n —  \n —  \n —  \n 85 \n\nBank overdraft \n 407,668  \n —  \n —  \n —  \n —  \n 407,668 \n\n \n\n**C.****RESEARCH\nAND DEVELOPMENT, PATENTS AND LICENSES**\n\n** **\n\nFor our disclosure in respect of research and\ndevelopment, technology and intellectual property please refer to Item 4.B. “Information on the Company— Business Overview”.\n\n \n\n**D.****TREND\nINFORMATION**\n\n** **\n\nSee Item 4.B. “Information on the Company—Business\nOverview,” Item 5.A. “Operating and Financial Review and Prospectus—Operating Results” and Item 5.B. “Operating\nand Financial Review and Prospects—Liquidity and Capital Resources” within this annual report.\n\n \n\n**Quarterly Financial Information and Other Information**\n\n** **\n\nThe following table sets forth our unaudited\nquarterly operational and financial information for each of the eight most recent quarters for the financial period ended February 28,\n2026. We have prepared the unaudited quarterly operational and financial information on a consistent basis with the consolidated financial\nstatements included elsewhere in this annual report. In the opinion of management, the unaudited quarterly operational and financial\ninformation reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this\ndata. This information should be read in conjunction with the consolidated financial statements and related notes included elsewhere\nin this annual report. The results of historical periods are not necessarily indicative of results for a full year or for any future\nperiod.\n\n \n\n  \nThree Months Ended \n\nQuarterly Subscriber Data \nMay 31,\n2024  \nAugust 31,\n2024  \nNovember 30,\n2024  \nFebruary 28,\n2025  \nMay 31,\n2025  \nAugust 31,\n2025  \nNovember 30,\n2025  \nFebruary 28,\n2026 \n\n  \n(subscribers and percentage growth) \n\nSubscribers (as at end of period) \n 2,047,442  \n 2,136,610  \n 2,223,227  \n 2,302,236  \n 2,386,249  \n 2,456,989  \n 2,568,467  \n 2,662,222 \n\nNet subscriber growth for the three months \n 75,910  \n 89,168  \n 86,617  \n 79,009  \n 84,013  \n 70,740  \n 111,478  \n 93,755 \n\nGrowth against comparative prior year quarter \n 17% \n 17% \n 17% \n 15% \n 17% \n 15% \n 16% \n 16%\n\n \n\n82\n\n \n\n \n\n \n\n  \nThree Months Ended \n\nQuarterly Financial Results Data \nMay 31,\n2024  \nAugust 31,\n2024  \nNovember 30,\n2024  \nFebruary 28,\n2025  \nMay 31,\n2025  \nAugust 31,\n2025  \nNovember 30,\n2025  \nFebruary 28,\n2026 \n\n  \n(in R thousands) \n\n  \n   \n   \n   \n   \n   \n   \n   \n  \n\nRevenue \n 1,081,825  \n 1,106,721  \n 1,159,390  \n 1,219,523  \n 1,277,017  \n 1,343,894  \n 1,409,830  \n 1,448,379 \n\nSubscription revenue \n 963,768  \n 985,985  \n 1,031,942  \n 1,086,482  \n 1,141,059  \n 1,182,284  \n 1,239,099  \n 1,281,306 \n\nHardware and installation revenue \n 16,203  \n 15,253  \n 16,859  \n 18,213  \n 11,317  \n 12,701  \n 14,154  \n 4,687 \n\nOther revenue \n 3,169  \n 7,103  \n 5,044  \n 7,774  \n 7,020  \n 12,164  \n 24,960  \n 21,170 \n\nCarzuka \n 2,099  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\nKarooooo Logistics \n 96,586  \n 98,380  \n 105,545  \n 107,054  \n 117,621  \n 136,745  \n 131,617  \n 141,216 \n\nCost of revenue \n (334,416) \n (328,053) \n (351,359) \n (350,579) \n (403,714) \n (431,460) \n (430,983) \n (488,793)\n\nGross profit \n 747,409  \n 778,668  \n 808,031  \n 868,944  \n 873,303  \n 912,434  \n 978,847  \n 959,586 \n\nOther income \n 1,682  \n 4,284  \n 3,408  \n 995  \n 1,457  \n 6,244  \n 5,821  \n 1,453 \n\nOperating expenses \n (449,344) \n (480,754) \n (486,264) \n (484,726) \n (522,966) \n (562,657) \n (615,491) \n (623,319)\n\nSales and marketing \n (140,248) \n (156,898) \n (156,981) \n (160,638) \n (180,687) \n (210,280) \n (230,016) \n (220,470)\n\nGeneral and administration \n (221,494) \n (239,418) \n (249,508) \n (234,413) \n (244,913) \n (276,946) \n (285,408) \n (289,714)\n\nResearch and development \n (57,609) \n (54,109) \n (57,447) \n (57,770) \n (63,780) \n (60,050) \n (62,618) \n (75,019)\n\nExpected credit losses on financial\nassets \n (29,993) \n (30,329) \n (22,328) \n (31,905) \n (33,586) \n (15,381) \n (37,449) \n (38,116)\n\nOperating profit \n 299,747  \n 302,198  \n 325,175  \n 385,213  \n 351,794  \n 356,021  \n 369,177  \n 337,720 \n\nFinance income \n 11,213  \n 13,708  \n 8,824  \n 10,422  \n 10,429  \n 10,926  \n 5,504  \n 7,617 \n\nFinance costs \n (5,634) \n (11,826) \n (16,784) \n (16,622) \n (15,166) \n (17,245) \n (20,378) \n (25,085)\n\nFair value changes to derivative assets \n —  \n —  \n —  \n —  \n —  \n —  \n —  \n — \n\nImpairment of goodwill \n —  \n —  \n —  \n (43,600  \n —  \n —  \n —  \n — \n\nOffering costs \n —  \n (15,470) \n 407  \n (50) \n —  \n (12,172) \n 203  \n 302 \n\nProfit before taxation \n 305,326  \n 288,610  \n 317,622  \n 335,363  \n 347,057  \n 337,530  \n 354,506  \n 320,554 \n\nTaxation \n (80,043) \n (72,844) \n (76,897) \n (80,027) \n (78,183) \n (88,961) \n (86,020) \n (95,371)\n\nProfit for the year \n 225,283  \n 215,766  \n 240,725  \n 255,336  \n 268,874  \n 248,569  \n 268,486  \n 225,183 \n\n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nProfit attributable to: \n    \n    \n    \n    \n    \n    \n    \n   \n\nOwners of the parent \n 221,584  \n 211,543  \n 237,264  \n 250,640  \n 264,095  \n 243,576  \n 264,109  \n 222,140 \n\nNon-controlling interest \n 3,699  \n 4,223  \n 3,461  \n 4,696  \n 4,779  \n 4,993  \n 4,377  \n 3,043 \n\n  \n 225,283  \n 215,766  \n 240,725  \n 255,336  \n 268,874  \n 248,569  \n 268,486  \n 225,183 \n\n \n\n83\n\n \n\n \n\n**E.****CRITICAL\nACCOUNTING ESTIMATES**\n\n** **\n\nOur discussion and analysis of our financial\ncondition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with\nIFRS. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and\njudgments that affect the reported amounts and related disclosures. We believe that the estimates, assumptions and judgments involved\nin the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider\nthese to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual\nresults may differ from these estimates under different assumptions and conditions.\n\n \n\n**Useful Life of Capitalized Telematics Devices, Capitalized Commission\nAssets and Revenue Recognition from Deferred Revenue**\n\n** **\n\nWe complete a detailed assessment annually on\nthe expected life cycle of subscriber contracts across the Group. The continued growth in our customer base over the past few years has\nprovided a more comprehensive database of information and more certainty to support the assessment of the average useful life of subscriber\ncontracts with customers. On the basis of such information, the average useful life of a subscriber contract was over 60 months as at\nfinancial year ended February 28, 2026. Contracts that terminate prior to the end of useful life result in accelerated depreciation of\nthe underlying capitalized telematics devices and capitalized commission assets being recognized immediately.\n\n \n\n**Goodwill**\n\n** **\n\nWe test goodwill for impairment on an annual\nbasis. The recoverable amounts of cash-generating units have been determined based on the higher of value-in-use calculations and fair\nvalue less costs of disposal. The value-in-use calculations are performed internally by the Group and require the use of various estimates\nand assumptions regarding discount rates and the future financial performance of the cash-generating units. The fair value costs of disposal\nare performed by an external valuer using the market approach, by applying price-to-value metrics observed in comparable companies to\nthe Cash Generating Unit (“CGU”).\n\n \n\n**Provision for expected credit losses (“ECLs”) of\ntrade receivables**\n\n** **\n\nWe apply a simplified approach in calculating\nECLs. Therefore, we do not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting\ndate. We determine expected credit losses of trade receivables by making debtor-specific assessment of expected impairment loss for long\noverdue trade receivables and using a provision matrix for remaining trade receivables that is based on its historical credit loss experience,\nadjusted for forward-looking factors specific to the debtors and the economic environment. At every reporting date, historical default\nrates are updated and changes in the forward-looking estimates are analyzed.\n\n \n\nThe assessment of the correlation between historical\nobserved default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in\ncircumstances and of forecast economic conditions. The historical credit loss experience and forecast of economic conditions may also\nnot be representative of customer’s actual default in the future.\n\n \n\nPlease refer to Note 2.1 to the accompanying\nconsolidated financial statements included elsewhere in this annual report for information about the critical accounting policies, as\nwell as Note 2.2 for a description of our other significant accounting policies.\n\n \n\n84"}