I'm the executive responsible for strategy and investor relations. I am facilitating today's program, and I will start by introducing the agenda. Whichever way you look at it, we are Africa's leading integrated mobility solutions provider. To unpack Zeda's performance for the financial year ended 30th September 2025 is our Group CEO, Ramasela Ganda, who will take us through key themes and financial highlights, and highlights for the financial year. She will also touch on the business performance, taking us through the performance of our short-term rental business, which includes used car business, as well as our long-term leasing business. Ramasela will hand over to our Group Financial Director, Thobeka Ntshiza, to unpack group financial performance. After the finance session, Ramasela will come back on stage to discuss group strategy and conclude the presentation with outlook for the medium term.
I will come back and give you an opportunity to engage with the management team through questions and answers. Without wasting any time, I would like to call on stage our Group CEO, Ramasela Ganda.
Thank you, Babalwa. In 18 days, it will be three years since Africa's leading integrated mobility solutions provider was listed on the Johannesburg Stock Exchange. What a journey. Good morning. Thank you very much for taking your time to join us as we will be presenting the 2025 financial results. As Babalwa indicated, we will cover discipline and strategic execution that yielded the growth that saw our leasing business surpass the ZAR 3 billion revenue mark, the diversification of our funding, strong results that are underpinned by the diversified portfolio that Babalwa has just indicated of rental, leasing, and car sales, high quality of earnings that is fortified by our operating model despite trading and macroeconomic challenges, effective capital allocation yielding strong return on invested capital and a dividend payout, embedding our ESG strategy in delivering sustainable impact.
Ladies and gentlemen, I'm truly pleased to present a set of robust financial performance that highlights our significant progress in executing our strategy. We've achieved revenue of ZAR 10.6 billion, which is 1.7% up from last year. This is driven by strong leasing activity and a significant growth in our subscription offering. It is worth noting the performance in Greater Africa, in particular Zambia, Lesotho, and Ghana that have solidified our success. Our diverse portfolio and efficient operating model has enabled us to capitalize on opportunities and navigate the challenge in the changing market landscape. We operate in an automotive industry, so whatever happens and what happened this year really was testing. We continue to effectively manage utilization risk, maintenance risk, and residual value risk with high levels of agility. Because of that, our operating profit surged to ZAR 1.6 billion, which is ZAR 1.08 billion up from previous year.
The positive outcome can really be attributable to us understanding our business, being able to adapt in this dynamic market. Because of that, our headline earnings per share rose to ZAR 3.61 . That is 15.7% up from previous year. We also generated significant cash, especially in the second half of the financial year, from car sales. That gave us ZAR 1.8 billion cash generated before capital growth. The strong performance has led to the net debt EBITDA of 1.5x . This is significantly lower than what we've reported in the first half of this year. There is one word you will hear from me today, and it's called discipline. In this market, all that we needed to do was to be disciplined to what we promised to do as we adapt to the changing market condition.
The disciplined approach to our capital allocation has yielded impressive results, as evident on our return on invested capital at 14.7%, which is significantly higher than our WACC at 10.8%. In alignment with this robust capital allocation, I'm pleased to announce that the board approved a final dividend of ZAR 1.26 per share. That's the first in our three-year journey, so I'm very pleased, increasing the total dividend to ZAR 1.81. This is 50% of our earnings and marks an outstanding 81% increase over the years. Delivering against strategic pillar. Allow me to let you in deeper into the Zeda business. At the core of our business is a diligent approach to capital allocation. That's what we do. Every day is about capital allocation in our business, which consistently generates substantial cash and exceptional return on invested capital. What do we do?
We acquire that capital at the best and optimal cost. We strategically deploy in acquiring fleet assets for use by retail customers and juristic persons in order to deepen the usership economy. Our approach is to really manage utilization, maintenance, residual value to ensure that we maximize return and we maintain a sustainable and a thriving business. With that in mind, hence we focus on optimizing the balance sheet and diversifying our funding. The diversification of our funding involves a right mix of short and long-term debt, secured and unsecured. Critical in our rental fleet in decision-making is whether we're going to carry the asset on our balance sheet or we're going to lease it. That is part of our funding strategy.
In addition to that, it is critical that Head of our Operation Tlhabi look at our asset-light business, where we write maintenance on new vehicles, and that maintenance gives us upfront cash. With that upfront cash, that enables Thobeka to be able to go to the market on the balance. The maintenance fund enables us to also reduce the cost of funding. Every time when NAMSA reports data about new car sales going up, you must watch on the Zeda side the excitement. When you look at our growth, we said leasing is critical. Used car is critical for our business growth and short-term subscription. We further said Greater Africa is our focus. Our growth continued to be fueled by leasing, with heavy commercial fleet increasing by 30% to contribute 13% of our leasing revenue.
Greater Africa region has seen a remarkable growth, with a 26% increase in revenue and now contributing 24% of our leasing revenue. This is driven by strong performance, especially, as I said, Zambia, Lesotho, and Ghana. There is no usership economy in our mind and our understanding without subscription. I am very pleased that the investment that we have made to change the customer journey in the subscription has yielded positive results, where we saw our subscription going up 53% in volume compared to prior year. This is really an area where we believe the market will continue to migrate to. We are committed to refining the customer journey in the subscription of an iLease because we have seen the results of what that investment yielded on the short-term mobility. iLease still has a lot of attraction, but very, very small conversion.
It is still our biggest challenge, but something that we believe the world will catch up. Talking about innovation, iLease and the market catching up, in November 2024, we launched our Digital Dealership. We've been dedicated and committed to transforming the way people buy used cars. We are pleased to see that this new approach has resonated with the market, leading to an increase in our retail sales. Our Digital Dealership is now contributing just under 2% of our retail business. This was really high in the second half of 2025 because car sales had more volume in the second half as well. Our delivery model, we have successfully completed an organizational redesign to enhance our customer focus. We have established three verticals: retail, corporate, and public sector that we believe will be more customer-focused and will drive value and will give customers seamless integrated mobility.
Our ESG mission statement is to integrate mobility solutions to responsibly deliver in a way that is more sustainable. As a fleet operator, we are committed to minimize environmental impact. One of the promises that we make to our customers is a clean car. A clean car requires water. Over the years, we've made sure by increasing recyclable water or recycled water, waterless, while we reduce usage of municipal source. We've managed to achieve a 3% reduction of municipal water. We've experienced a growing adoption of the EVs and the hybrid, with a closing number of EVs at 196 and 376 on hybrid units at the end of September. Our collaboration with the OEMs, as well as our customers, focusing on identifying opportunities to reduce emissions, we believe will yield better results even going forward. One area where we do not compromise is on safety.
It remains a top priority for both our brand ambassadors as well as our customers, particularly given that we spend a significant amount of time based on the nature of our business on the road. To enhance safety, our investment in corporate social responsibility, enterprise supplies development, is supported by a number of programs such as filling the potholes that we are doing with our partners, Discovery, AV safe drive for rental customers. Over and above that, we have opened a hub that monitors intensely driver behavior through our telematics system. We believe that more customers will benefit from this. This is a moment where I pause and I say, "Recent accolade," where we've been recognized as the top gendered empowered organization by TOPCO, and we've also received a certification as a top employer. This achievement stems from our intentional action that we've invested over time.
In addition, we have done an independent ethics maturity assessment conducted by an ethics institution. We have achieved an impressive 87%, indicating a strong commitment and behavior of an ethical leader. In addition, our independent risk maturity assessment resulted in an overall score of 4.5 out of 5. This is where, to me, our Chief Risk Officer talks about sustainability over and above just ESG. Looking at the trading environment, we have navigated a very challenging economic trading environment through a robust operating model. We operate in Lesotho. Most of our customers were donor funders. We operate in an environment where tariffs impacted our customers. Despite that, we have seen strong economic activity in countries like Zambia and Ghana. Major part of our financial year, Mozambique political instability continued, and it hindered our growth. However, it is pleasing to see that all the projections are showing positive economic recovery in Mozambique.
We've seen two major gas projects that were previously suspended that have recently resumed. There's a lot of tourism activity that is now starting in Mozambique. We are looking forward to a better Mozambique. Looking closer in South Africa, especially the automotive market shifted towards more affordable brands. We've seen it in both our car rental and our car leasing and our car sales business. The 1.5 percentage point reduction in interest rate, the record low new vehicle inflation in new vehicle sales has really boosted this market, where we saw new vehicle sales up 24% YoY . At the same time, used car declined by 1.4% on the register. Those vehicles that were registered, as you know, that we do not have an organization that consolidates, but the vehicles that were registered were lower by 1.4%.
Moving into the details of our operation, leasing business, we have achieved ZAR 3.2 billion revenue, which is 15.7% higher than the prior year. This is due to solid growth in financing, finance lease, and operating leases, strong contribution from heavy commercial, a significant growth in Zambia of 26%, Lesotho 36%, and Ghana 29%. Our leasing business is mainly comprising of two products. We've got full maintenance lease, which contributes about 80%. By nature of it, it means we take a complete risk on writing that lease. We've got operating lease with managed maintenance, which is the balance. In that, we do not take maintenance risk. In some cases, we also do not take residual value risk. What we've seen is that most of our heavy commercial customers opted for operating lease with guaranteed nominated residual value. This works in a similar way as any balloon payment.
The heavy commercial customer commits to buy the vehicle. What it does, as I've indicated at the beginning, we manage maintenance, we manage residual, we manage utilization. In this case, all those risks are passed to the business. In addition to that, the heavy commercial business, most of our customers are large corporates with their maintenance and service workshop. In that way, that's why we do not take maintenance risk. When you see that, you will realize why we are showing our operating lease in the same fashion as you will see the dealer. Pleasing that our EBITDA continued to rise. Our investment in the heavy commercial really impacted the depreciation that came from the business. Also, as I've indicated, operating leases' margins are not the same as the finance lease purely because the risks are passed through.
Our operating margin remained stable at 23%. Operating profit declined by 1%. This decline on operating profit, last year, we've had a three-year end on our maintenance fund, which gave us a good ZAR 100 million in our books. This year, we've worked harder to close it, and we were just down 1%. Rental business, we've achieved ZAR 7.4 billion, really a decline of 3.4% from previous year. This decrease was primarily attributable to car sales, which was influenced by a lower inventory level in the first half of the financial year. Part of the lower level was due to our tactical decision that we made in light of the shifting dynamic in the automotive market, where one-year-old vehicles increasingly compete with new cars. To adapt to these changes, we adjusted our model, traditionally of holding the vehicles in the car rental business for 12 months.
We then extended the life of that vehicle. By extending the life, we reevaluated the resale value of this vehicle that is no longer 12 months, but that will be disposed of either at 18 months. This reassessment, we have used both internal data and external market factors. Looking at that and the changes that we have done and what the car sales did in the second half, with the revenue declining by 4%, the volume was down 14.6%. The car sales team really worked hard and successfully protected our margin. We have seen stability in our margin because of the vehicles that we sold. The reassessment that we did in the first half has really yielded the benefit that we are looking for. When you look at car rental business, we have achieved a 2.1% increase in rental days. This is driven by 43.5% from strategic partnerships that we have.
We've seen an improvement in local ledger, but as I've indicated, the winner for the period was a subscription offering. This was, however, offset by the replacement business. Over the period, I've reported it, we are seeing a decline in this environment. Inbound is very price-sensitive. The competition has been very intense, and it's been a price competition. We have seen corporate asset buying down and going more to affordable brands, meaning then affordable groups. That has impacted our revenue. The cost containment initiative, which focused on managing damage costs, turning around out of services, yielded greater efficiency with utilization up from 71% to 73%. This is within our range of 73%-75%.
When you look at it all, you can see that the agility of our operating model has allowed us to shift swiftly to navigate through this changing landscape, which resulted in operating profit up 23.3% to ZAR 872 million. The operating margin increased by 300 basis points to 12%, demonstrating strong quality of earnings. At this point, I'll hand over to Thobeka.
Thank you, Ramasela, and good morning. It is my pleasure to present to you the financial results for Zeda Limited for the financial year ended date is September 2025. Ramasela has indicated to you that from a car rental business, we have seen revenue decrease by 3.4%. However, from a car leasing perspective, we have seen this business increase in revenue by an impressive 15.7%. I will then go into these operating segments in greater detail.
Starting with the car rental business, you will see that from an overall fleet size, which contributed to the revenue that was generated by this business segment, the revenue is down and the units are down. The units decrease are driven by the lower car sales disposals that we saw in this financial year. We've indicated to you that we saw a volume decrease in the car sales units by 14.6% and driven by the market factors that Ramasela has unpacked. What is pleasing is that notwithstanding those double-digit decreases, the overall revenue only decreased by a single digit of 4.1%. This was achieved by two things. We did see that the car sales team was able to dispose of more units in this financial year through the retail segments.
We've done this with the same footprint, so we didn't increase additional cost, but able to go fetch opportunities of improved earnings by disposing through retail. The second element was being able to make sure that through the car rental cycle, as we buy and we utilize, we utilize right, protecting the residual values, that at the disposal cycle, we were able to still fetch the residual value margins that we were anticipating from a forward-looking perspective. When we drill into the actual car rental business, I am pleased that even in these challenging economic times, what we were able to do is protect our activity base. From a build days perspective, our build days have been able to be going up at 2.1%. That says that we are still a preferred choice for our consumers.
What has been a shift that we have identified are the consumers buying down. What that means is, as the consumers are coming from a car rental services utilizing perspective, they are now going for more the smaller car groups. That has shifted our overall rental rate because of that mix. The additional shift was the increase in the monthly subscription by an impressive 53%. We have also seen increases in other segments with longer length. That basket of goods, together with the buy down, saw our rate dropping year- on- year. Between the build days and the car rental, still positioning our rental business very well. The sum of the two really then presenting the results of 3.4% down year- on- year. When we just shift our focus to the leasing business, from a fleet size, stable.
When you go inside and unpack, you do pick up that as our consumers from a traditional full maintenance lease contract are dropping. From our strategic execution, as we see more growth coming from heavy commercial and the expansion of our business in Greater Africa, that has also seen the business shift in terms of how the consumers are consuming our leasing products. Ramasela has indicated a transition that we have seen occur over time where consumers are now specifically upfront at the inception of the contract, tell us that they would like a guaranteed residual value and they would like to buy the vehicle at the end. As the consumers were increasing in proportion of this preference, it then required us to review from a business segment the nature of the transaction that we are now offering.
This shift has seen us go into a retail type of transaction where we are actually now selling these vehicles upfront to the customers. The customers are paying for these vehicles over a period of time. As we continued to look at the data and look at how the consumer growth in this particular aspect is increasing, we then went and assessed in terms of is it still appropriate to treat these transactions as a typical operating lease. That assessment then changed the treatment in terms of assessment into a dealer-lessor type of treatment where we also recognize profit margins upfront, the details of which we have also unpacked in our annual financial statements. In addition to that, we continue to penetrate growth in terms of the overall corporate segment.
Ramasela has unpacked the impressive growth we have seen in Greater Africa in terms of particularly Zambia and Lesotho. Out of that, the sum of that pool is helping us to generate 15.7% in terms of revenue increase. From a total revenue perspective, revenue is up 1.7%. It really also speaks to the strength of our diversified business portfolio. In terms of EBITDA margins and operating profits, in terms of the salient features that contributed to our profitability, to touch on our continued drive for operational excellence and where we have seen our utilization improve from 71% to 73%. Also to remind you that during our interim results, I shared with you the work that had been done with the business in terms of really now enhancing our methodology of reassessing residual values.
This process was enabling us as a business to adopt a more future-orientated approach, using data that we've been gathering from car sales over a period of time to better understand how do these vehicles behave at disposal cycle. We are able to go into granular details in terms of the make, range, model, understanding the utilization, the mileage, and the year. The outcome of that was being able to now ascribe a residual value at a unit level, which then informed us at what rate to depreciate these vehicles. This change in estimate had an impact of ZAR 77 million in the first half of the financial year. This doubled in the second half with the impact in the reported numbers that we are sharing in front of you.
As we were looking at these residual values and how we've been able to call them, the outcome of that is also evidenced in the profit margins that we've seen in the disposal cycle of the used cars in the second half of the year. In total, the used car margins continued to be strong. That is why even with the double-digit decrease in the volumes, the revenue was only down 4.1%. When I move to our financing cost, we are a business that uses debt to fund our business. It is upon us to make sure that as we then use debt and the financing cost are one of the single most important and material costs in our profitability, how do we keep those costs as low as possible? In this financial year, we embarked on a journey.
In the first half of the year, we successfully created and established Zeda Financing Limited that entered into a common terms agreement with certain financiers that enabled us to refinance existing or legacy debt into new debt. The upside of this refinancing program was we were able to shift from secured funding to unsecured funding. In that shift, also doing this at the lower cost of funding. Another development that we had in this financial year was our inaugural bond. We went to market in the first half of this financial year where we raised ZAR 850 million. It is pleasing and it was impressive that for our first bond issuance, we were able to raise this at a 5%—5 basis points below price guidance.
The sum of this work and the journey that we have done really enabling us to enjoy a lower cost of funding year- on- year. We certainly benefited and enjoyed the four cycles of the prime rate decrease in our financial year with a positive impact of a 100 basis point decline year- on- year. When you then look at our cost of funding, whilst it has gone up by 2.8%, it is a function of the increase in gross debt, but the quantum mitigated by the lower cost of funding in this financial year. That lower cost of funding coming down by 80 basis points. On an annualized basis, that number is more like 160 basis points split between the prime rate reduction and the work that we have done in terms of reducing the cost of funding.
When we look at our effective tax charge, you will see that we have kept that stable year- on- year. The factors that influence our effective tax rate remain stable. We continuously manage and minimize non-deductible expenses in our business. When I just cast your eye on the joint venture income, that does fluctuate depending on the profitability of that joint venture, which is driven by maintenance profit drop-off at a timing cycle with the vehicles that are on that joint venture. In terms of all the other elements, remaining very stable. We have generated growing earnings for Zeda over the three-year cycle with an impressive 15% plus increase in HEPS in this financial year to 361. BEPS also having gone up by 12.5%.
Additional factors that have enabled us to be able to generate these earnings is our culture of cost control and cost discipline, continuously making sure that in our processes across the value chains, we eliminate and reduce the waste and we are efficient in all that we do. You will see that when you look at our administrative and operating expenses remaining controlled in this financial year, growing up by 2.3%. This is below inflation. I've mentioned that our effective tax rate has remained stable. What you will also note is we've enjoyed benefits of the strengthening of the ZAR against the U.S. dollar for our Ghana operations. This time last year, we were faced with the hit of an unrealized foreign exchange losses of ZAR 46.3 million. This turned into a positive for us. It was a gain in this financial year of ZAR 23.5 million.
That contributed to our earnings for this financial year. We have sustainable growth. It is important to emphasize sustainable growth because every vehicle that we put on balance sheet, whether it is car rental or leasing, is carefully considered in terms of the right investment and to generate the appropriate return on invested capital. The assets that we have today, if you look at the rental business, there has been growth in terms of the vehicles that are on balance sheet.
That is really driven by the collaboration between Tlhabi and Claudine, looking at what does the customer want from a utilizing of the car rental, the type and the size of the vehicles that they are looking for, but also understanding the outlook in terms of how will these vehicles perform when there is a disposal opportunity and we come to the natural disposal cycle of our vehicles. The sum of that, then assessing what are we buying in this financial year for opportunities that we are going to be able to fetch in 2026 financial year. That is why you see, and we have indicated that there has been a shift in terms of more vehicles that we have put on balance sheet in this financial year.
The investment in Greater Africa, the investment in heavy commercial, and the continuous growth in our corporate segment has also contributed to the increase in the vehicles invested for the leasing business. Just touching on our working capital. To start with inventory, inventory levels are stable year- on- year. That is an important position because we pride ourselves in making sure that we do not have idle assets at any point in time. The vehicles must be working in car rental, and we deflate just in time for the disposal cycle. We always look at having a month and a half in terms of stock for the car sales business to start the new month, and our inventory levels continue to emulate that. The receivables balance has gone up. You will see also we have taken a negative knock, a negative impact in our income statement.
We have an increase in terms of expected credit losses. Yes, that was driven in part by timing. I say timing because we do have consumers that have come to us, particularly those that are front-facing in the commodities market, and their volumes have decreased, which has impacted their cash flows, requesting reprieve in terms of their payment terms and also asking for extended payment terms, which said we just had higher balances at the end of our financial year. In addition, we have also seen some certain challenges in state-owned entities in Greater Africa, which we have also been engaging with. What is pleasing is in the two months of the 2026 financial year, I've seen a significant improvement in terms of the rehabilitation of those receivable values and the cash starting and continuing to come through.
That is certainly an area that we are going to continue to work on because we also make sure that from a working capital management, we remain very robust. I indicated earlier that we are a business that uses debt, but we also use it responsibly. I say responsibly because if you look at the financial ratios that from a coverage perspective we need to maintain, even as our growth is taking place and we're growing using debt, we continue to have strong coverage ratios with our interest cover times stable and maintained at five times. Our net debt to EBITDA is at 1.5 x. It is also important to just remind you that as I always speak about using debt to fund our business, we do have a blend of equity and debt.
At every investment cycle, in each of the assets in our balance sheet, there is an equity component, embedded equity, that is going to be then generated and realized in the new disposal cycle. You will see that from a net debt to fleet value, 57% is debt. The rest was our own equity that we've invested and we continue to then realize compounded returns effect. From a net debt perspective, year- on- year, debt at ZAR 5.2 billion against ZAR 4.7 billion in the previous financial year. Capital structure. Our optimal capital structure is at 70/30. This is where we have ascertained that this is where we will enjoy the lowest weighted average cost of capital. If you look at where we finished this financial year, gross debt to equity at 65/35, and the net equity level is at 61/39.
What is also pleasing to see is we've generated cash and cash equivalents in our closing balance sheet of ZAR 1.1 billion. When you look at our capital structure, it tells you two things: that we do generate equity well internally. That growth is demonstrated by the equity build-up that we have seen since we listed as Zeda Limited. We have built up equity of ZAR 2 billion, and we have paid just under ZAR 300 million of that as dividends to our shareholders. In addition to that, what you will see in this capital structure is it is well poised, and it has given us a balance sheet headroom from a growth perspective. This is an important element because we are in a growth phase for Zeda Limited.
It is important that we are then in a strong position to continue to fund business as usual, but also to fund the growth. From a returns perspective, having generated a return on invested capital of 14.7%, and our weighted average cost of capital has decreased to 10.8%. That decrease informed by the work that we have done in terms of continuing to reduce the cost of funding. Our return on equity sitting at 21.9%, and that 21.9% also informed by the timing of our investment cycle, especially on the leasing business, where we then earn the returns for the shareholders over a period of time. I'd like to just sit on this cash slide to walk you through how do we generate cash as a group. If you look at the gray bar, we've generated from operations cash of ZAR 6.6 billion.
This is from the rental, the leasing business, and the disposal of vehicles that have been sold through car sales. We have then paid our dues in terms of interest and tax, and then we replace fleet like for like, so that from a continuous perspective, we are in the same position as we were based on the needs of the consumer. That has left us with cash from a capital allocation perspective of ZAR 1.8 billion. This is available cash to invest in growth of fleet, to reward shareholders in the form of dividends, but will also underpin the additional growth factors that will then be coming from the business. In this financial year alone, we grew in fleet to the value of just under ZAR 2 billion, with a net cash outflow of ZAR 351 million.
From a funding facilities perspective, we've closed the financial year with committed facilities of ZAR 5.5 billion. We also have uncommitted facilities in terms of our ability to access the debt capital market, with the uncommitted facility of ZAR 4.1 billion. The sum of that also really giving us access to capital that we will require for the business. If you look at our financial covenants, all our financial covenants for this financial year have also been met. I spoke about the transition in this financial year, having put in place the common terms agreement, having gone with our first inaugural bond auction. When you look at that, you can see the shift in terms of this time last year, we were 100% secured in terms of funding. This has now reduced to 23% in terms of secured and now unsecured debt sitting at 77%.
In terms of a stable position, we expect that to settle at between 80% to 20%. The 20% in terms of secured, really informed by the nature of our businesses in car rental, where there is still a place for OEM-backed type of floor plans that we acquire vehicles with. That is the 20% that on an ongoing basis will remain a secured debt for the business. In terms of our updates, to share that from a Moody's credit rating, we have maintained our credit rating. This for us is a confidence boost because it says that even as Moody's, an external independent agent looking at our business, they are pleased by the type of work that we're doing in terms of growing, maintaining strong coverage ratios, but also the work that we've done in terms of lengthening the maturity profile of our funding.
I have also shared the inaugural listed bonds. From an outlook perspective, we will continue to maintain an optimal capital structure, and we will continue to seek opportunities to reduce our cost of funding. With that, I'd like to hand back to Ramasela.
Earlier on, I did indicate the word discipline. That cuts across the work we've done in the last three years, where we have successfully grown our business, looking at the leasing business, which we have promised to look at, Greater Africa, the subscription offering. Where are we now? We are leveling up. We are gearing up. Zeda, as an integrated mobility, we've looked at our strategy. We look at the discipline that is required to take us to the next level. I am very pleased that four critical strategies that we approved change significantly the work that we've been doing.
We had a technology strategy, data strategy, and all these are based and will be executed based on a detailed blueprint. The one thing we are very clear about is that the work that we've done in the last three years, we will continue to build on it. Before we can even think about executing, we're looking at that. What will this do for the Zeda business? It will digitalize everything that we've been doing. Most of you are consumers of car rental business, and I'm sure you can attest to the traditional way that we're still doing the business. We will make sure that the customer's 360 view, you're being offered exactly what you need. Flexibility. We do a lot of things. Subscription, IDs, it's about personal tailored solution.
The days that I've been waiting for will definitely bring it here, where I don't have to book a group, but I'll book a car. That is because I am Ramasela, not because I'm a customer, a number. That is what this digital journey will do, a seamless mobility into the Zeda book. We are about the continent. We are about Africa. We've been to Southern Africa, plus Ghana, business. Talking about Ghana, after the Africa strategy was approved, that really spelled out our path into the continent. The board also saw it fit that we relook and we stay in Ghana as a hub to the West Africa. Yes, we've addressed the challenges. Thobeka and the treasury team have been working to make sure that we deal with the currency, because there was no doubt there is growth and continues to be growth in Ghana.
To make things even better, there is better liquidity than it was before. Africa strategy expands to the entire continent. What makes it really key is that we have been offered just under 20 countries in the African continent by Avis Budget Group. We will then be able to expand in that continent. How will we do it? We will do it in a disciplined way, following our customers, looking at economic growth, and really partnering with companies that have been with us for many years. Inorganic growth, when you look at inorganic growth, we are going to focus on the adjacencies of the integrated mobility. What does that mean in its simplest format? It is that our business is about acquiring the fleet, utilizing the fleet, disposing of the fleet.
Anything in between that makes customer journey seamless, anything in between that makes us deliver returns, that's what we will be doing, because we are about greater return. Any investment that we are going to be making, we have set the standard of the return on invested capital. We will have our invested capital continuously. While we're doing this, it is important to note that we believe car sale will still grow. We are working to continuously grow our leasing. The South African region and Southern African region that we've been operating, there's still growth in that area. We will grow. Expect to see our business of today competing and growing with additional countries that will be coming. I want to tell you all of it, our premise on one word, which is discipline. It has to be return on investment.
Be mindful of this. I want to move to the outlook. What does the medium term hold? It's about the customer. It's about customer retention. It's about growth. I've already indicated, expect to see leasing, heavy commercial, Greater Africa. Expect to see technology and data driving the way we do business and how we do business, how we price, and how we deliver in everything that we do. This definitely says the work we've done in the last three years of diversifying our funding. Now, being with our first bond, we are now ready to grow. Zeda, as Babalwa started, it is Africa's leading integrated mobility. What we are saying is Africa is not Southern Africa. That's where our growth is sitting.
We will continue to do things responsibly as ethical leaders in all places we go, because sustainability is the way and the only way to build a sustainable and a thriving business. Thank you for your attention. Thank you.
Thank you, Ramasela and Thobeka. Ladies and gentlemen, I would now like to give you an opportunity to ask questions. I will start by taking questions from the room. I will also read questions from the webcast. Please raise your hand. The roaming mic will come to you. Introduce yourself and the company that you work for. I think the first one is.
Hi, good morning. [Tobang] from Nedbank. Thank you very much for the presentation today. Very exciting to see Africa back on the strategic agenda for Zeda, given last year's pronouncements from the management team.
Can you please advise us what prompted the shift in looking as if you are going to reinforce your Africa strategy and expand to more markets? The second one is on the used car sales business and operational question around 1.5 x stock seems to be a bit low, and the numbers show that it's on the low side, whereas if you had more, you could have yielded more on the top line. Two questions for me. Thank you.
Thank you. Can we take another question? Okay, can we answer the question, Ramasela?
Thank you very much, [Tobang], for that question.
One of the key elements was the negotiation with Avis Budget Group that has allocated us more country, that we are no longer having one isolated country in Ghana, that even as we go and face the challenges, if we've got a broader way of diversifying our regional risk. This has really said, now that we've got access to this, we are able to diversify our risk, even if we reinforce it in the West, but it will be not just one country that we've had, which was in isolation.
The used car question? Can we change the mic?
Thanks for the question. I think traditionally we've always kept the 1.5 stock because that seems to be the sweet spot of how we turn our stock in conjunction with how we plan our defleet cycle.
At times during seasonal times, while we are looking at the active fleet on rental, we would consider shifting that either way. It could be 2x of stock during certain periods of seasonality, but on average, it sits at 1.5x . Thanks.
Thank you. I have a couple of questions on the webcast. The first one is from Daniel, and it reads as follows. The cash flow and the net debt has deteriorated versus the last financial year. How will the high dividend acquisitions and expansion in Africa be financed? The second question from Eugene. Thank you for your informative presentation. Please, could you advise what the split of the fleet is in number of vehicles between one, rental, two, leasing, three, subscription? Also, please advise what is the average age of vehicles as per the segments. Thank you. Can you take the first question, Thobeka?
Thanks, Babalwa. Daniel, I have appreciated that when you look at our annual financial statement, it does not crystallize well how the business generates cash. That is why I have built in the disaggregating slide that I have shared with you, where in this financial period alone, after replacing every fleet that we have started with, we were left with cash of ZAR 1.8 billion. That cash has then informed us in terms of the disciplined capital allocation towards the shareholder returns, but also the investment of growth. The single biggest growth, that ZAR 2 billion growth fleet into our balance sheet for the next cycle.
Thank you, Thobeka. The question about the split of the fleet? Yes.
Thank you very much. Tlhabi is going to just cover some of the points that I missed, but thank you, Eugene, for the question.
In one of the slides, Thobeka showed us that the split in between rental and leasing, leasing 54%, rental 46%. You go on to ask the fleet inside subscription. The way we want to look at that is that what is the volume contribution of subscription to the overall car rental? In our instance, it is up 53%, and it contributes 25% of the volume. More importantly, it has jumped from 17% to 25%. It tells you the importance of subscription in car rental. It has two characteristics. It gives us length, and it helps us with utilization as well. Tlhabi, do you want to cover the average?
Thanks, Litha. Good afternoon, Eugene. Thanks for your question.
If I just take you to page 61, slide 12 of the booklet, and the revenue that Thobeka spoke to, the average fleet units that are reported on there. I think just read that in conjunction with page 10 of the booklet. Our rental fleet has stayed circa at about 20,000 vehicles year- on- year. That has not increased, and I think our leasing fleet is still at around the levels of 17,000. I think part of what Litha pointed out is in terms of the volumes attributable to the subscription, but we do not reserve vehicles by segment. Therefore, all of the rental vehicles would service all of the segments. In terms of the actual age, our leasing contracts are on average about 46 months, and our vehicles are currently about 26 months old.
The rental fleet, the vehicles we keep using various tactics between 12 and 18 months on average. Thanks.
Thanks, Tlhabi. Thanks, Litha. Can I check if there are questions from the room? Mic is actually.
Thank you so much. My name is Dumi. I'm from Standard Bank. I've got a comment and a question. I wanted to congratulate Zeda Management and the staff on, I think, a good set of results, especially the good cost control. Well done. My question is on the short-term subscription volumes that you mentioned were up 53%. I think this definitely aligns with the usership economy strategy. I know Ramasela mentioned that conversion rates are still an issue. I just wanted to find out how does management intend to address the conversion rates. Thank you.
Thank you, Dumi. Should I see another hand? Okay, let's take the question on subscription. Litha?
Hello? Thank you, Dumi, for your question. I think real-life lessons lie in our short-term subscription business, where we've improved the customer journey. In the past, it used to take 22 clicks to get to a car. It now takes four clicks, and it's easy to use, and it's flexible. What we want to do is to transfer that to the long-term subscription of iLease, and we are well underway with the modernization of all of that. I think more importantly, for us, subscription is the future. It de-risks us from traditional car rental. It looks at mobility requirements from our customers across the board. It doesn't require a plane ticket. It doesn't require a holiday. It's a customer who's looking for mobility. That's the addressable market that we're looking at. Thanks.
Thank you, Litha. I have two questions on the dealer-lessor accounting. One from Daniel.
He's asking if this change in leases and booking profits upfront, the margin should go up instead of going down, while Matthew is asking if this was a reclassification of leases that existed already or only for leases moving forward from the implementation date. Do you want to take that, Thobeka?
Thanks, Babalwa. The application of the dealer-lessor is for 2025 contracts that were written in 2025 and not looking back beyond that. In terms of the margin impact, if you think about the traditional car dealership industry, it is a single-digit profit margin industry. Even in our aspect, it's not a significant margin contributor. That's why you saw the contraction in terms of the leasing business and EBITDA, for example, coming down from 58% to 53%.
Thank you, Thobeka. While I still have you, there's a question from Matthew, and it reads as follows.
The three loan facilities are due December 2025, 2026, and 2027. The former is coming up soon. Has the December 2025 facility of roughly ZAR 1 billion been repaid or extended?
A significant portion of the billion has been already settled in the October month of this year. With the remaining balance, which is well below 50%, that remaining balance is what we will then settle when it's due in December. We continuously assess the maturity dates of the various loans, and there are processes in place that we have to make sure that we manage and monitor that buildup so that when the payments are due, there's sufficient cash or refinancing alternatives to then settle those loans.
Thank you, Thobeka. I will read the last two questions on the webcast. One is from Brent. It's for you, Ramasela.
Please, can you update us on the review of your BEE scorecard and whether it remains a key objective considering your increased opportunities in the rest of Africa? While Hosi is asking, could you please clarify the key reasons why Avis transferred the 20 markets to Zeda? Sounds like a change of their strategy.
Thank you very much. Maybe let me start with the second question. We are Avis's largest corporate outside the U.S. as a licensee. Engagement, conversation about growth, Avis does have new leadership, and there is a clear strategy, and Avis is really aggressive on growing into the continent. There is a focus on that. Having taken that, we are well set in order to grow.
I must add, one of the things they've indicated was these are not the only countries that are available, but that's the list that we currently have. Looking at BEE, we are still a very much South African company. The bulk of our returns are coming from South Africa. It is important that as a South African company that wants to remain competitive, especially in the industries and customers and competitors that we compete with, BEE certificate is not even required by our customers, but sometimes even our suppliers where we have counter businesses, they require that. It is still a very important part, and we are still really trying to make sure that we get to close it as soon as possible.
Thank you, Ramasela. Can I check if there's no question from the room before we close?
Ladies and gentlemen, with no further questions, we have reached the end of our session. We are looking forward to engaging with you over the next few days. For our guests, refreshments are served, and everyone else on the line, please enjoy your day further. Thank you.