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MIX - Mix Telematics Limited - Unaudited group interim financial results

Release Date: 15/11/2010 08:00
Code(s): MIX
Wrap Text

MIX - Mix Telematics Limited - Unaudited group interim financial results for the six month period ended 30 September 2010 MIX TELEMATICS LIMITED Incorporated in the Republic of South Africa Registration number 1995/013858/06 JSE code: MIX ISIN : ZAE000125316 ("MiX" or "the Company" or "the Group") Unaudited group interim financial results for the six month period ended 30 September 2010 - Revenue increased to R436 million - R254 million annuity - R185 million foreign currency - EBITDAR increased to R83 million - Adjusted HEPS maintained at 5,0 cents per share - Cash generated from operations maintained at R80 million A WORD FROM THE CEO, S JOSELOWITZ ("JOSS") Relative to the previous comparative reporting period, the standout difference for our Group is that we started this year with a couple of big wins and the implementation of these contracts is well progressed. Where 12 months ago, I reported an absolute absence of what we term "mega-deals", this year we were proud to kick off with the news that we had been awarded the Eskom fleet tender. This was the culmination of a lengthy race against our major competitors and again demonstrates our ability to compete against even much larger players. Thus far, we have confirmed orders for over 3 000 units from this customer and we estimate the total fleet potential to be close to 9 000 vehicles. Also significant is that large global customers have again been affirming their confidence in our product and service delivery - for example, we successfully won a 1 000-plus unit tender for PDO, a Shell operating company based in Oman. Strong cash generation remains a defining feature of the Group and again I am happy to report that our operations did not disappoint. The Group generated over R80 million from operations and reduced net debt by R36 million from this time last year. Net debt now sits at just over R53 million, down from R89 million 12 months ago - this reduction was achieved even after paying out R33 million to shareholders. Trading conditions during the period under review were a mixed bag. The recent World Cup event in South Africa was a lot of fun but was not good for our local business and frankly, we did not expect anything different. Some of our other regions traded quite strongly, most notably our Middle- East operation had a good six months. Although still trading in the red, our North American operation showed good revenue growth thanks in part to some repeat orders from existing customers - Baker Hughes have rolled out our devices into another 650 vehicles. Also, our focus into Latin America has started to bear fruit with over 3 000 subscribers added during the period under review. From our perspective, many of the world economies are still fragile and the UK has been particularly hard hit resulting in disappointing results from our operation based in Birmingham. The strength of the South African currency (the currency in which we report) continues to influence our results as we have positioned this Group as a Rand-hedge play. A strong Rand is not good for us and the currency has strengthened dramatically from the comparative reporting period to now. In fairness, the negative impact is somewhat reduced while some of our global operations are trading in the red. Competition in our industry is stiff but we have repeatedly demonstrated that we are strong and able and as far as global players are concerned, are ranked amongst the very best. We expect the weakness in global economies to remain so for some time but despite this, I feel strongly that we are well positioned to achieve our medium-term objectives. Under these less than ideal conditions and despite flat revenue and profit performance, we have again succeeded in growing our subscriber base and the associated recurring revenue to R254 million for the six months (up R17 million from the comparative period) - this is another indicator that your Group is growing in strength. One achievement that I am particularly proud of is that we have once again been adjudged by the CRF Institute to be one of South Africa`s top employers - this is the seventh year in a row that we have qualified in this category. On this note, I would like to extend the board`s and my sincere thanks to all of our executives and employees for their efforts over the last 15 years and particularly the past six months. It is thanks to them that we have such a great business. Condensed group income statement Six months Six months 12 months ended ended ended 30 September 30 September 31 March 2010 2009 2010
Unaudited Unaudited Audited R`000 R`000 R`000 Revenue 435 575 431 292 840 488 Cost of sales (171 137) (176 097) (337 603) Gross profit 264 438 255 195 502 885 Other income - net 463 4 323 1 547 Operating expenses (220 565) (212 430) (394 577) Operating profit (note 3) 44 336 47 088 109 855 Finance income 1 532 8 698 3 665 Finance cost (8 395) (17 826) (19 994) Share of joint venture - 13 (529) (losses)/profit Profit before taxation 37 473 37 973 92 997 Taxation (13 886) (14 221) (26 909) Profit for the period 23 587 23 752 66 088 attributable to shareholders Condensed group statement of comprehensive income Six months Six months 12 months ended ended ended 30 September 30 September 31 March
2010 2009 2010 Unaudited Unaudited Audited R`000 R`000 R`000 Profit for the period 23 587 23 752 66 088 attributable to shareholders Other comprehensive (losses)/income: Exchange differences on (2 943) (30 307) (36 340) translating foreign entities Fair value reserve on 1 290 (40) 167 available-for-sale financial asset Exchange differences on (2 068) (11 932) (14 981) net investment in foreign operations Taxation relating to - 1 331 1 752 components of other comprehensive income Other comprehensive (3 721) (40 948) (49 402) loss for the period, net of tax Total comprehensive 19 866 (17 196) 16 686 income/(loss) for the period attributable to shareholders Ordinary shares (`000) - in issue 657 000 657 000 657 000 - weighted average 657 000 657 000 657 000 - diluted weighted 660 394 657 000 657 974 average Attributable earnings per share (cents) - basic 3,6 3,6 10,1 - diluted 3,6 3,6 10,0 Reconciliation of headline earnings and adjusted headline earnings Six months Six months 12 months ended ended ended 30 September 30 September 31 March
2010 2009 2010 Unaudited Unaudited Audited R`000 R`000 R`000 Profit for the period 23 587 23 752 66 088 attributable to shareholders Adjusted for: Loss on disposal of 28 82 496 property, plant, equipment and intangible assets Taxation on the above (9) - (111) components Headline earnings 23 606 23 834 66 473 Headline earnings per share (cents) - basic 3,6 3,6 10,1 - diluted 3,6 3,6 10,1 Headline earnings 23 606 23 834 66 473 Amortisation of IFRS3 10 840 10 806 20 801 intangible assets Taxation on the amortisation (1 615) (1 626) (3 217) of the IFRS3 intangible assets Adjusted headline earnings 32 831 33 014 84 057 Adjusted headline earnings per share (cents) - basic 5,0 5,0 12,8 - diluted 5,0 5,0 12,8 Condensed group statement of financial position 30 September 30 31 March September 2010 2009 2010 Unaudited Unaudited Audited
R`000 R`000 R`000 ASSETS Non-current assets Property, plant and 42 765 45 002 44 424 equipment Intangible assets 651 756 664 439 653 171 Available-for-sale 3 903 3 198 2 683 financial asset and other assets Deferred tax assets 13 586 16 680 8 209 Total non-current assets 712 010 729 319 708 487 Current assets Inventory 40 432 32 397 29 691 Inventory held in client 26 709 23 306 24 809 vehicles Trade and other receivables 118 635 114 597 126 929 Taxation 1 503 74 1 857 Restricted cash 1 653 1 320 1 639 Cash and cash equivalents 104 065 86 283 155 011 Total current assets 292 997 257 977 339 936 Total assets 1 005 007 987 296 1 048 423 EQUITY AND LIABILITIES Capital and reserves Share capital 13 13 13 Share premium 787 353 787 353 787 353 Retained 27 499 (5 574) 36 762 earnings/(accumulated losses) Other reserves (177 475) (166 677) (174 306) Total equity 637 390 615 115 649 822 Non-current liabilities Borrowings 56 551 90 789 96 056 Deferred tax liabilities 28 035 36 580 27 067 Provisions 15 290 15 077 14 703 Total non-current 99 876 142 446 137 826 liabilities Current liabilities Trade and other payables 133 967 115 373 124 090 Borrowings 71 794 52 248 71 740 Taxation 3 239 10 884 3 964 Bank overdraft 28 998 32 548 35 347 Provisions 29 743 18 682 25 634 Total current liabilities 267 741 229 735 260 775 Total equity and 1 005 007 987 296 1 048 423 liabilities Net borrowings (note 5) (53 278) (89 302) (48 132) Net asset value per share 97,0 93,6 98,9 (cents) Net tangible asset value (2,2) (7,5) (0,5) per share (cents) Capital expenditure - incurred 27 103 19 310 45 658 - authorised but not spent 17 188 10 898 27 543 Condensed group statement of cash flows Six months Six months 12 months ended ended ended
30 September 30 September 31 March 2010 2009 2010 Unaudited Unaudited Audited R`000 R`000 R`000
Cash generated from 80 282 79 754 174 529 operations Net financing costs (5 800) (8 734) (15 178) Taxation paid (18 676) (15 810) (36 334) Net cash generated 55 806 55 210 123 017 from operating activities Investing activities Capital expenditure (27 103) (19 310) (45 658) Proceeds from 205 - 1 350 disposal of property, plant and equipment and intangible assets Net cash utilised in (26 898) (19 310) (44 308) investing activities Financing activities Net borrowings (39 449) (58 177) (33 312) repaid Dividends paid (32 810) (26 280) (26 247) Net cash utilised in (72 259) (84 457) (59 559) financing activities Net (43 351) (48 557) 19 150 (decrease)/increase in cash and cash equivalents Cash and cash 119 664 112 363 112 363 equivalents at beginning of period Exchange losses on (1 246) (10 071) (11 849) cash and cash equivalents Cash and cash 75 067 53 735 119 664 equivalents at end of period Abbreviated segmental analysis Inter- Total segment revenue revenue EBITDA R`000 R`000 R`000
Six months ended September 2010 Africa Vehicle tracking and 168 914 (2 748) 33 453 recovery
Fleet management 93 693 (462) 21 919 United Kingdom Fleet management 82 649 - (423) North America Fleet management 23 987 - (2 496) Middle East Fleet management 54 737 - 8 522 International Fleet management and 96 416 (81 611) 19 770 development Corporate and - - (9 004) consolidation journal entries Inter-segment (84 821) 84 821 elimination Total 435 575 - 71 741 Six months ended September 2009 Africa Vehicle tracking and 163 096 (2 201) 37 668 recovery
Fleet management 77 951 (2 936) 15 119 United Kingdom Fleet management 120 492 (823) 6 965 North America Fleet management 9 759 (10) (5 989) Middle East Fleet management 54 086 (3 381) 6 060 International Fleet management and 72 449 (59 541) 17 860 development Corporate and 2 747 (396) (5 445) consolidation journal entries Inter-segment (69 288) 69 288 - elimination Total 431 292 - 72 238 12 months ended March 2010 Africa Vehicle tracking and 328 221 (5 115) 76 871 recovery
Fleet management 160 534 (7 383) 32 484 United Kingdom Fleet management 204 924 (1 978) 6 368 North America Fleet management 23 920 (9) (11 031) Middle East Fleet management 108 281 (6 036) 9 550 International Fleet management and 156 812 (121 683) 50 476 development Corporate and - - (4 489) consolidation journal entries Inter-segment (142 204) 142 204 - elimination Total 840 488 - 160 229 EBITDAR Assets R`000 R`000
Six months ended September 2010 Africa Vehicle tracking and 43 292 243 322 recovery Fleet management 23 441 56 071 United Fleet management (231) 101 987 Kingdom North America Fleet management (2 496) 12 704 Middle East Fleet management 8 522 47 282 International Fleet management and 19 770 232 786 development Corporate and (9 242) 510 574 consolidation journal entries Inter-segment (199 719) elimination Total 83 056 1 005 007 Six months ended September 2009 Africa Vehicle tracking and 46 648 239 404 recovery Fleet management 15 690 66 391 United Fleet management 6 965 122 961 Kingdom North America Fleet management (5 989) 15 790 Middle East Fleet management 6 060 49 582 International Fleet management and 17 860 230 375 development Corporate and (5 445) 576 681 consolidation journal entries Inter-segment - (313 888) elimination Total 81 789 987 296 12 months ended March 2010 Africa Vehicle tracking and 94 448 272 194 recovery Fleet management 33 802 72 301 United Fleet management 6 368 112 424 Kingdom North America Fleet management (11 031) 11 770 Middle East Fleet management 9 550 60 748 International Fleet management and 50 476 259 393 development
Corporate and (4 584) 506 464 consolidation journal entries Inter-segment (246 871) elimination Total 179 029 1 048 423 Condensed group statement of changes in equity Share Share Other capital premium reserves R`000 R`000 R`000
Balance at 31 March 2009 13 787 353 (126 893) Dividends paid (note 6) - - - Total comprehensive loss for the - - (40 948) period Share based payments - - 1 164 Balance at 30 September 2009 13 787 353 (166 677) Total comprehensive income for - - (8 454) the period Share based payments - - 825 Balance at 31 March 2010 13 787 353 (174 306) Dividend paid (note 6) - - - Total comprehensive income for - - (3 721) the period Share based payments - - 552 Balance at 30 September 2010 13 787 353 (177 475) Retained
earnings/ (accumulated losses) Total R`000 R`000
Balance at 31 March 2009 (3 046) 657 427 Dividends paid (note 6) (26 280) (26 280) Total comprehensive loss 23 752 (17 196) for the period Share based payments - 1 164 Balance at 30 September (5 574) 615 115 2009 Total comprehensive 42 336 33 882 income for the period Share based payments - 825 Balance at 31 March 2010 36 762 649 822 Dividend paid (note 6) (32 850) (32 850) Total comprehensive 23 587 19 866 income for the period Share based payments - 552 Balance at 30 September 27 499 637 390 2010 Notes to the condensed unaudited group interim financial results 1. Basis of preparation and accounting policies These condensed unaudited group interim financial results for the half year ended 30 September 2010 have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") and are in compliance with IAS 34: Interim Financial Reporting, AC 500 standards as issued by the Accounting Practices Board or its successor, the Listings Requirements of the JSE Limited and the South African Companies Act. These interim financial results have not been audited or reviewed by the Group`s auditors. The condensed unaudited group interim financial results do not include all the information and disclosures required in the annual financial results and should be read in conjunction with the Group`s annual financial statements for the year ended 31 March 2010, which have been prepared in accordance with IFRS. The accounting policies applied are consistent with those followed in the preparation of the Group`s annual financial statements for the year ended 31 March 2010, except where the Group has adopted new or revised accounting standards. The Group has adopted the required new or revised accounting standards in the current period, none of which had a material impact on the Group`s results. 2. Operating segments The MiX Telematics businesses are managed primarily on a geographic and also on a product basis. During the current period, together with profit measures previously used, a new additional measure of profit performance of the operating segments has been introduced being; earnings before interest, tax, depreciation, amortisation and depreciation of inventory in client vehicles ("EBITDAR"). A reconciliation of EBITDAR to operating profit is set out in note 3. 3. Operating profit, EBITDA and EBITDAR Six months Six months 12 months ended ended ended 30 September 30 September 31 March 2010 2009 2010
Unaudited Unaudited Audited R`000 R`000 R`000 Operating profit 44 336 47 088 109 855 Add depreciation and 27 405 25 150 50 374 amortisation (note 4) EBITDA per segmental 71 741 72 238 160 229 analysis Add inventory in 11 315 9 551 18 800 client vehicles depreciated EBITDAR per segmental 83 056 81 789 179 029 analysis 4. Depreciation and amortisation Six months Six months 12 months ended ended ended 30 September 30 September 31 March
2010 2009 2010 Unaudited Unaudited Audited R`000 R`000 R`000 Depreciation and 16 565 14 344 29 573 amortisation Amortisation of IFRS3 10 840 10 806 20 801 intangible assets Sub-total 27 405 25 150 50 374 Inventory in client 11 315 9 551 18 800 vehicles depreciated Total 38 720 34 701 69 174 5. Net borrowings Net borrowings is calculated as being interest bearing borrowings less cash and cash equivalents, but excluding restricted cash. 6. Dividends No interim dividend was declared as per our policy. A final dividend of R32,9 million (2010: R26,3 million) was paid during the period under review. Using shares in issue of 657 million (2010: 657 million) this equates to a dividend of 5,0 (2010: 4,0) cents per share. 7. Contingent liabilities 7.1. Connection incentives The Group receives connection/upgrade incentives from Mobile Telephone Networks (Proprietary) Limited for connecting subscribers to their network. In the event that a subscriber contract is terminated during the contract period, the full amount of the connection/upgrade incentive received for this subscriber contract becomes repayable. In the unlikely event that every subscriber contract is terminated prematurely, the potential liability would amount to R76,8 million (30 September 2009: R75,6 million and 31 March 2010: R79.6 million). No loss is expected under this arrangement. 8. Exchange rates 30 September 30 September 31 March 2010 2009 2010
The following major rates of exchange were used: SA Rand: United States 6,95 7,43 7,37 Dollar - closing SA Rand: United States 7,46 8,19 7,85 Dollar - average SA Rand: British Pound - 10,98 11,83 11,10 closing SA Rand: British Pound - 11,34 12,43 12,51 average 9. Events after the reporting period The directors are not aware of any matter material, or otherwise, arising since the period end and up to the date of this report, not otherwise dealt with herein. 10. Changes to the Board As previously announced, Mr Anthony Welton resigned as interim executive financial director and resumed the role of non-executive director on 31 July 2010. On 1 August 2010, Mrs Megan Pydigadu was appointed as executive financial director, Mr Afzal Patel relinquished his role of audit committee chair, Mr Anthony Welton resumed the role of chair of the audit committee and Mr Hubert Brody was appointed as non-executive director. On 11 November 2010, Ms Fundiswa Roji, previously an alternate board member to Mr Afzal Patel, was appointed non-executive director and Mr Howard Scott was appointed as an executive director. COMMENTARY 1. Nature of business MiX is a group that is focused on all levels of vehicle telematics, combining vehicle tracking and recovery, fleet management, driver and passenger safety and compliance services. 2. Operations MiX Telematics Africa MiX Telematics Africa comprises Matrix, the vehicle tracking and recovery business, the Enterprise business which focuses on providing large scale Enterprise solutions and RSA Fleet which provide fleet management solutions to clients in South Africa and SADC countries in east and west Africa. The Fleet Management business increased its subscriber base, improved revenue per subscriber and achieved good growth from the African expansion plan. Vehicle Tracking and Recovery revenue and subscriber numbers has shown some improvement, due to improved new vehicle sales volumes. The MiX- and Matrix brands benefitted from strong marketing spend during the Soccer World Cup. MiX Telematics International MiX Telematics International (based in Stellenbosch) provides fleet management products and services to Group subsidiary companies and to certain global customers and is also the Group`s technology and development centre. The half year saw the release of the MiX3000 - a combined tracking, fleet management and recovery product for South Africa as well as the launch of MiX DriveTime, for managing European driving hours compliance in real- time. The period also saw a significant investment in additional development resources as well as changes to our development methodologies in order to facilitate faster time to market of compelling, high quality products. MiX Telematics UK MiX Telematics UK provides fleet management products and solutions to customers across the United Kingdom, Europe and North Africa. These solutions have provided major quantifiable running cost, safety and carbon emission benefits to customers operating in an environment in which legislative controls are becoming more stringent. The United Kingdom and Europe are slowly emerging from an extended recession but the MiX Telematics base is still expanding with some exciting new products launched into the European market at the end of the period. MiX Telematics SDI Middle East MiX Telematics SDI provides driver safety, training and management solutions to customers in the Middle East, Eastern Europe and Australasia. Since a large percentage of revenue comes from the Oil and Gas sector, the easing off of the global recession and gradual increase in the oil price has resulted in numerous opportunities that were previously on hold, being tabled again. As a result, sales of product and services is steadily improving and the pipeline for additional business into existing and new customers is very positive. MiX Telematics North America MiX Telematics North America provides driver safety, training and fleet management solutions to customers throughout the Americas This year has started significantly better than last for this business with repeat business flowing from existing Oil and Gas customers. A new focus into South America is also delivering value and Latin America in particular is becoming a real contributor to the business. Revenues so far this year are already up significantly over the comparative trading period. The mission still remains to build an annuity base with real critical mass in this region and although still a long way from achieving this, annuity revenues have more than doubled since this time last year. For and on behalf of the board: SR Bruyns SB Joselowitz Midrand 15 November 2010 Registered office: Matrix Corner, Howick Close, Waterfall Park, Midrand Directors: SR Bruyns* (Chairman) SB Joselowitz (CEO) R Botha TE Buzer CWR Tasker ML Pydigadu H Scott RA Frew* R Friedman* A Patel* AR Welton* HR Brody* F Roji *Non-executive Company secretary: Probity Business Services (Proprietary) Limited Auditors: PricewaterhouseCoopers Inc. Sponsor: Java Capital For more information on our interim results, please visit our website at www.mixtelematics.co.za/page/investor-results/ Date: 15/11/2010 08:00:08 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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