Wrap Text
Unaudited group interim financial results for the six month period ended 30 September 2012
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 2012
Highlights
Revenue R564 million up 20,3%
Annuity revenue R324 million up 14,9%
Foreign revenue R276 million up 29,0%
EBITDA R130 million up 43,9%
Operating profit R76 million up 60,8%
Adjusted HEPS 9,3 cents per share up 43,1%
First interim dividend declared of 4 cents per share
Subscriber base increased by more than 40 000 subscribers
The unaudited financial results were prepared under the supervision of ML Pydigadu CA(SA) in her capacity as Financial Director of the Group and were made
available on 12 November 2012.
A WORD FROM THE CEO, STEFAN JOSELOWITZ
The MiX group has got off to a fantastic start for this financial year. We have seen top-line growth continue to accelerate. For me, the most exciting number is
that we grew net subscribers by more than 40 000 over the past six months, double the growth in the comparative period. This is a sure sign that the long-term
strategic projects and technology investments that we have been making over the past years are really starting to pay off. Your group is competing more effectively
than ever before.
Whilst trading conditions remain challenging in many of the territories in which we operate, most of our businesses have delivered performances ahead of plan for
the year thus far. The group grew half-year revenue to R564 million (R469 million for the first half of last year), an increase of over 20%. EBITDA grew 44% to
R130 million (compared to R90 million for the comparative period last year).
Headline earnings for the six months were up 79% at R55 million (R31 million in 2011) which translates to 8,3 cents per share (cps) (4,7 cps in 2011). Adjusted
headline earnings were R61 million or 9,3 cps, up 44% from the comparative period (R42 million or 6,5 cps in 2011). The difference between normal- and adjusted-
is attributable to the write-back of the amortization of intangible assets arising on acquisitions.
I would like to take this opportunity to help potential investors understand the essence of the MiX Telematics Group:
MiX Telematics is a global leader in fleet management, driver safety and vehicle tracking Solutions, helping customers world-wide to effectively manage their
mobile assets through our SaaS (Software-as-a-Service) delivery model combined with value-added services including stolen vehicle recovery, consulting and driver
training.
To this end, we have organised the group into two primary divisions: Fleet Telematics (the home of our MiX Fleet Manager and MiX SafeDrive brands) and Consumer
Telematics (the home of our Matrix and Beam-e brands). Both divisions share some commonality in terms of base technology and platforms, but the services that each
provide are significantly different:
Fleet Solutions Currently accounting for roughly 70% of our group revenue and profits, this division is built on a typical SaaS model. Our customers rely on
MiX Telematics on-board computers and accessories, web-based software (including powerful reporting and analytics tools) and value-added services to improve
their overall productivity, operate more safely, and bring about significant cost and risk reductions. Our SaaS model is highly scalable in terms of adding new
subscribers and territories as evidenced by the fact that we operate globally, on six continents, in 112 countries. In six of those countries we own and manage
regional operations and engage directly with our customers. In the balance of the countries we deal through third-party distributors. All of our distributors
(135 in total) and our regional operations source products and services from the business we call MiX International this operation, based in Stellenbosch
South Africa, is responsible for much of the design, development and procurement of the MiX range of products and services. In effect, MiX International is a
central services organisation that wholesales our products and services to our regional operations and distributors who in turn, deal with our end-customers. MiX
International showed strong growth both at the revenue and EBITDA level. Most of our regional FLEET operations performed ahead of plan for the period under review:
o AFRICA This operation enjoyed a great six months with impressive growth at both top-line and profit level. Some new product offerings, which include a
trailer-tracking solution, are finding favour with both new and existing customers. We are also pleased with our recent acquisition of Intellichain which has bedded
down nicely. Intellichains integrated supply-chain management software dovetails perfectly with our current MiX Fleet Manager offerings and enhances our ability to
further grow the SaaS component of our annuity stream.
o North America We have made great progress in implementing the mega-deals carried forward from last year. We are competing on a number of high-value tenders
and need to see at least one turn into an order shortly. Our current exclusive focus on the Oil-and-Gas industry in this territory means that it is a
feast-or-famine kind of business the sales cycles on these big deals are long. We are at the stage of our evolvement in this territory where we need
to broaden our focus the team has been tasked with identifying new verticals in addition to Oil-and-Gas. In the meantime, our geographic diversification is paying
off and we are seeing our efforts in Latin America starting to gain momentum.
o EUROPE This business has performed behind plan for the year so far. Thankfully, we are still growing subscribers in the region albeit at a painfully slow
rate. Revenue is well down on the previous comparative period for two reasons:
Last year, we still had some revenue from One-Stop-Shop, the business we disposed of in that period.
Investors might also recall that we converted the legacy DataTrak subscribers onto our core MiX platform and then shut down the DataTrak network. This
conversion resulted in a lower revenue per subscriber.
o MIDDLE EAST Although not an easy region to operate in right now, we have a well-established and experienced operation in place with a committed dealer
channel in multiple countries. Our team has delivered a series of solid wins that have not only kept us on plan for the period, but also bode well for coming months.
o AUSTRALIA This operation has delivered an excellent first-half performance and in the process has concluded a few mega-deals, which ensures that we have
an abundantly full pipeline going forward.
Consumer Solutions Through our powerful offerings, we provide our customers not only with stolen-vehicle-recovery services but also a broad range of
value-added safety and convenience features such as Crash-Alert, No-Go-Zones, and even an automated Tax Logbook. This division delivered great performance
so far this year particularly at the subscriber growth level. Market acceptance of our new Beam-e offering has been fantastic.
Analysis of the numbers will reveal that the subscriber growth does not appear to have flowed through to the revenue line this is not the case. During the
period under review, we changed the cellular data package that we use in this division to a non-CIB (connection incentive bonus) package. The quid-pro-quo for
foregoing this CIB (and the resultant negative impact on our revenue line) is that our monthly cellular data costs have reduced and the overall effect is that the
move is earnings enhancing.
Our consumer business currently operates primarily in South Africa but our team is in the process of taking the first major step towards globalisation. Watch
this space!
Returning to a few additional financial indicators:
Annuity revenue: This remains one of our key performance measures and we are happy to yet again show strong growth in our recurring revenue. For the six months
under review, annuity revenue grew to R324 million (up from R282 million as at September 2011) and it now represents a healthy 57% of total revenue.
Cash: Frankly, I am disappointed with our cash performance for this period. The group generated cash from operations of R66 million for the half-year period.
This is R10 million less than the 2011 comparative period. In accounting speak we could say that we have invested heavily in additional working capital but I am not
an accountant. The reality is that we were ineffective in following up on some slow payments from a handful of large debtors. Although we have made good progress
in rectifying this situation in October, we intend to make sure that we dont let ourselves down again going forward.
Foreign revenue grew to R276 million for the half-year period (up from R214 million as at September 2011) and represents close to half of total revenue.
Arising out of the strong financial performance of the group, the Board has for the first time approved an interim dividend of 4 cents per share.
We have enjoyed a great start to the year but I must confess that we remain nervous about the economies in some of the key territories in which we operate. Of
particular concern is the Eurozone where we are experiencing very tough trading conditions. Trading conditions aside, we believe that we have the talent and
technologies to meet our medium-term objectives. Once again, I would like to extend the Boards and my deep appreciation to our fantastic employees for their superb
efforts over the past six months.
CONDENSED CONSOLIDATED INCOME STATEMENT
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue 564 341 468 974 1 018 482
Cost of sales (210 945) (182 820) (390 926)
Gross profit 353 396 286 154 627 556
Other income net 4 598 3 148 7 008
Operating expenses (281 649) (241 833) (488 176)
Operating profit (note 3) 76 345 47 469 146 388
Finance income 1 090 865 2 392
Finance cost (1 993) (3 373) (5 265)
Profit before taxation 75 442 44 961 143 515
Taxation (21 972) (14 751) (40 275)
Profit for the period attributable to shareholders 53 470 30 210 103 240
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 47 788 44 070 45 386
Intangible assets 643 791 654 712 643 086
Deferred tax assets 17 735 15 584 13 267
Loans to external parties 5 738
Total non-current assets 709 314 720 104 701 739
Current assets
Inventory 50 307 46 299 46 014
Inventory held in client vehicles 33 647 29 879 29 709
Trade and other receivables 206 755 141 251 163 125
Loans to external parties 6 001
Taxation 1 441
Restricted cash 6 656 2 274 3 133
Cash and cash equivalents 93 176 113 367 118 695
Total current assets 390 541 334 511 366 677
Total assets 1 099 855 1 054 615 1 068 416
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13 13
Share premium 789 397 787 353 787 589
Other reserves (135 863) (153 316) (154 745)
Retained earnings 140 127 66 203 139 233
Total equity 793 674 700 253 772 090
Non-current liabilities
Borrowings 15 783
Deferred tax liabilities 12 572 25 892 25 816
Total non-current liabilities 12 572 41 675 25 816
Current liabilities
Trade and other payables 153 938 163 882 157 038
Borrowings 2 885 11 668 22 941
Taxation 16 297 7 651 11 403
Provisions 31 253 45 569 28 963
Bank overdraft 89 236 83 917 50 165
Total current liabilities 293 609 312 687 270 510
Total equity and liabilities 1 099 855 1 054 615 1 068 416
Net cash (note 6) 1 055 1 999 45 589
Net asset value per share (cents) 120,5 106,6 117,5
Net tangible asset value per share (cents) 22,8 6,9 19,6
Capital expenditure
incurred 26 748 24 047 50 740
authorised but not spent 20 943 33 330 37 303
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating activities
Cash generated from operations 65 968 75 758 165 751
Net financing costs (1 148) (2 339) (3 632)
Taxation paid (34 598) (17 690) (35 769)
Net cash generated from operating activities 30 222 55 729 126 350
Investing activities
Capital expenditure (26 748) (24 047) (50 739)
Loans granted to external parties (5 485) (5 486)
Acquisition of subsidiary, net of cash acquired (note 11) 23
Proceeds on sale of property, plant and equipment 18 429 867
Net cash used in investing activities (26 707) (29 103) (55 358)
Financing activities
Proceeds from share capital issued 1 808 236
Net borrowings repaid (20 185) (36 884) (41 548)
Dividends paid (52 520) (39 370) (39 374)
Net cash used in financing activities (70 897) (76 254) (80 686)
Net decrease in cash and cash equivalents (67 382) (49 628) (9 694)
Net cash and cash equivalents at beginning of the period 68 530 70 039 70 039
Exchange gains on cash and cash equivalents 2 792 9 039 8 185
Net cash and cash equivalents at end of the period 3 940 29 450 68 530
RECONCILIATION OF HEADLINE AND ADJUSTED HEADLINE EARNINGS
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Profit for the period 53 470 30 210 103 240
Adjusted for:
Net (gain)/loss on disposal of property, plant and equipment (18) 453 430
Impairment of product development costs capitalised 4 066 1 332
Foreign currency translation reserve released due to
liquidation of intermediary subsidiary holding company (note 11) (1 619)
Tax effect on the above components (1 135) (4) (323)
Headline earnings 54 764 30 659 104 679
Headline earnings per share (cents)
basic 8,3 4,7 15,9
diluted 8,1 4,6 15,8
Headline earnings 54 764 30 659 104 679
Amortisation of intangible assets arising out of business combinations 8 158 9 830 18 500
Trading loss from business unit disposed of during the year 3 594 3 509
Tax effect on the amortisation of intangible assets arising out of
business combinations (1 619) (1 618) (3 235)
Adjusted headline earnings 61 303 42 465 123 453
Adjusted headline earnings per share (cents)
basic 9,3 6,5 18,8
diluted 9,1 6,4 18,6
CONDENSED consolidated STATEMENT OF COMPREHENSIVE INCOME
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Profit for the period 53 470 30 210 103 240
Other comprehensive income/(losses):
Exchange differences on translating foreign operations 16 504 32 304 29 816
Exchange differences on net investment in foreign operations 1 429 (6 724) (6 718)
Taxation relating to components of other comprehensive income
Other comprehensive income for the period, net of tax 17 933 25 580 23 098
Total comprehensive income for the period attributable to shareholders 71 403 55 790 126 338
Ordinary shares ('000)
in issue 658 825 657 000 657 200
weighted average 657 289 657 000 657 045
diluted weighted average 671 954 660 841 662 322
Attributable earnings per share (cents)
basic 8,1 4,6 15,7
diluted 8,0 4,6 15,6
CONDENSED SEGMENTAL ANALYSIS
Total Intersegment
revenue revenue EBITDA Assets
R'000 R000 R000 R'000
6 months ended 30 September 2012 (Unaudited)
Africa Consumer Solutions 173 866 (5 442) 39 843 270 768
Fleet Solutions 136 859 (2 724) 41 627 97 182
Europe Fleet Solutions 55 198 (6 978) 61 067
North America Fleet Solutions 91 312 5 531 59 926
Middle East and Australasia Fleet Solutions 108 561 18 626 95 667
International Fleet Solutions and Development 161 641 (154 930) 46 396 253 660
Total 727 437 (163 096) 145 045 838 270
Corporate and consolidation entries (15 356) 415 355
Inter-segment elimination (163 096) 163 096 (153 770)
Total 564 341 129 689 1 099 855
6 months ended 30 September 2011 (Unaudited)
Africa Consumer Solutions 166 831 (4 342) 35 205 246 473
Fleet Solutions 109 870 (1 195) 32 304 58 257
Europe Fleet Solutions 64 882 (5 826) 83 787
North America Fleet Solutions 57 412 2 771 47 138
Middle East and Australasia Fleet Solutions 56 390 5 648 60 164
International Fleet Solutions and Development 129 813 (110 687) 32 012 257 292
Total 585 198 (116 224) 102 114 753 111
Corporate and consolidation entries (11 969) 429 309
Inter-segment elimination (116 224) 116 224 (127 805)
Total 468 974 90 145 1 054 615
12 months ended 31 March 2012 (Audited)
Africa Consumer Solutions 342 324 (8 546) 73 523 253 162
Fleet Solutions 232 542 (2 953) 79 040 79 082
Europe Fleet Solutions 126 782 (6 541) 71 110
North America Fleet Solutions 156 013 (298) 13 532 54 365
Middle East and Australasia Fleet Solutions 131 393 14 528 72 333
International Fleet Solutions and Development 286 433 (245 208) 83 450 258 692
Total 1 275 487 (257 005) 257 532 788 744
Corporate and consolidation entries (19 980) 408 349
Inter-segment elimination (257 005) 257 005 (128 677)
Total 1 018 482 237 552 1 068 416
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 SEPTEMBER 2012
Share Share Other Retained
capital premium reserves earnings Total
R'000 R000 R000 R000 R000
Balance at 31 March 2011 13 787 353 (179 844) 75 413 682 935
Dividends declared of 6 cents per share (note 8) (39 420) (39 420)
Total comprehensive income for the period 25 580 30 210 55 790
Share-based payments 948 948
Balance at 30 September 2011 13 787 353 (153 316) 66 203 700 253
Total comprehensive (loss)/income for the period (2 482) 73 030 70 548
Shares issued in relation to share options exercised * 236 236
Share-based payments 1 053 1 053
Balance at 31 March 2012 13 787 589 (154 745) 139 233 772 090
Dividends declared of 8 cents per share (note 8) (52 576) (52 576)
Total comprehensive income for the period 17 933 53 470 71 403
Shares issued in relation to share options exercised * 1 808 1 808
Share-based payments 949 949
Balance at 30 September 2012 13 789 397 (135 863) 140 127 793 674
*Amount less than R1 000
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Basis of preparation and accounting policies
These condensed unaudited Group interim financial results for the half year ended 30 September 2012 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, the 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. The interim financial results have not been audited or reviewed by the Groups external 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 Groups annual financial statements for the year ended 31 March 2012, which have been
prepared in accordance with IFRS.
The accounting policies applied are consistent with those followed in the preparation of the Groups annual financial statements for the
year ended 31 March 2012, except where the Group has adopted new or revised accounting standards, none of which had a material impact on
the Groups results.
2. Operating segments
The MiX Telematics businesses are managed primarily on a geographic, and also on a product basis. A reconciliation of EBITDA to operating
profit is set out in note 3.
3. Operating profit and EBITDA
6 months ended 6 months ended 12 months ended
30 September 30 September 31 March
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit 76 345 47 469 146 388
Add: depreciation, amortisation and impairments (note 4) 53 344 42 676 91 164
EBITDA per segmental analysis 129 689 90 145 237 552
4. Depreciation, amortisation and impairment
Depreciation and amortisation 28 703 21 953 48 083
Amortisation of intangible assets arising out of business combinations 8 158 9 830 18 500
Impairment of product development costs capitalised 4 066 1 332
Inventory in client vehicles amortised 12 417 10 893 23 249
Total 53 344 42 676 91 164
5. Effective tax rate
The effective tax rate reduced from 32,8% in the six month period ended 30 September 2011 to 29,1% for this reporting period. This is primarily
due to the change in South Africas tax code treatment of dividends whereby Dividends Tax on shareholders has replaced Secondary Tax on Companies.
6. Net cash
Net cash is calculated as being net cash and cash equivalents, excluding restricted cash less interest-bearing borrowings.
7. Borrowings
Borrowings decreased from R22,9 million at 31 March 2012 to R2,9 million at 30 September 2012. The decrease in borrowings is due to repayments of
R20,2 million during the period. The reduction in borrowings has contributed to a decrease in finance costs compared to the first half of the
previous financial year.
8. Dividends
A final dividend of R52,6 million (2011: R39,4 million) was declared during the period under review and paid on 9 July 2012. Using shares in issue
of 657,2 million (2011: 657,0 million) this equates to a dividend of 8,0 (2011: 6,0) cents per share.
9. Contingent liabilities
Network Services Agreement
In terms of a network service agreement with Mobile Telephone Networks Proprietary Limited (MTN), MTN is entitled to claw back payments from
MiX Africa in the event of early cancellation of the agreement or certain minimum base connections not being maintained over the term of the
agreement. The maximum potential liability under the arrangement is R68,8 million. No loss is expected under this arrangement.
Taxation
MiX Africas dispute with SARS in respect of the disallowance of the Section 24C deduction going back to 2008, as set out in full in our annual
report for the year ended 31 March 2012, is ongoing. Our maximum exposure remains R4 million.
10. Exchange rates
30 September 30 September 31 March
2012 2011 2012
The following major rates of exchange were used:
SA Rand : United States
Dollar closing 8,31 7,91 7,69
average 8,19 6,94 7,43
SA Rand : British
Pound closing 13,44 12,36 12,29
average 12,94 11,24 11,84
11. Significant events
Acquisition of the business of Intellichain Proprietary Limited (Intellichain)
On 1 May 2012, the Group acquired the business of Intellichain (constituting employees and specific assets and liabilities), a software solution
company that focuses on fleet management and supply chain execution. The services offered by Intellichain are compatible with the Groups existing
fleet management Solutions and the acquisition broadens the array of services offered to current and future fleet management customers. The purchase
consideration amounted to the outstanding balance of the loan provided to Intellichain in the 2012 financial year. The provisional fair values of
assets acquired and liabilities assumed are as follows:
R000
Property, plant and equipment 183
Software 5 739
Trade receivables 756
Cash and cash equivalents 23
Trade and other payables (655)
Total identifiable assets 6 046
Acquisition date fair value of consideration paid 6 046
The Group has elected to finalise the identification and allocation of fair values to all assets and liabilities acquired within a period of 12 months
from the effective date, as allowed in accordance with IFRS.
The revenue earned during the period of R3,0 million and the post acquisition loss incurred of R1,1 million have been included in the condensed
consolidated results.
No material acquisition related expenses were incurred during the acquisition of the business.
Sunstore liquidation
An internal restructuring process was undertaken in the 2012 financial year, whereby certain of the Groups investments were transferred to the parent
company from Sunstore Ltd, an intermediary offshore holding company. The liquidation of Sunstore Ltd has now been completed. In line with the Groups
elected accounting policy to recycle cumulative exchange differences on the date of disposal, change in control or liquidation of a subsidiary,a credit
amount of R1,6 million has been released to the income statement.
12. Subsequent events
Other than the interim dividend declared and the share conversion described below, 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.
Share conversion
On 16 October 2012 the new Memorandum of Incorporation was accepted by the Companies and Intellectual Property Commission. As a result the issued share
capital of MiX Telematics of 659 450 000 shares was converted from shares of 0,002 cent each to shares of no par value.
Interim dividend declared
Shareholders are advised that, subsequent to 30 September 2012, an interim cash dividend of 4 cents per share has been declared by the Board. The dividend
timetable is set out below:
Last date to trade cum distribution Friday, 30 November
Shares trade ex distribution Monday, 3 December
Record date Friday, 7 December
Payment date Monday, 10 December
Share certificates may not be dematerialised or rematerialised between Monday, 3 December 2012 and Friday, 7 December 2012, both dates inclusive.
In terms of the Listings Requirements of the JSE Limited regarding the new Dividends Tax effective 1 April 2012, the following additional
information is disclosed:
1. The dividend has been declared out of income reserves;
2. The local dividend tax rate is 15%;
3. There are no Secondary Tax on Companies credits utilised against the dividend;
4. The gross local dividend amount is 4 cents per share for shareholders exempt from paying the new Dividends Tax;
5. The net local dividend amount is 3,4 cents per share for shareholders liable to pay the new Dividends Tax;
6. The stated capital of MiX Telematics is 659 450 000 shares of no par value;
7. MiX Telematics tax reference number is 9155/661/84/7.
For and on behalf of the Board:
SR Bruyns SB Joselowitz
Midrand
7 November 2012
Registered office: Matrix Corner, Howick Close, Waterfall Park, Midrand
Directors: SR Bruyns* (Chairman); SB Joselowitz (CEO); R Botha; HR Brody*; TE Buzer;
CH Ewing*; RA Frew*; R Friedman*; ML Pydigadu; F Roji*; HG Scott; RA Shough*; CWR Tasker; AR Welton*
*Non-executive
Company secretary: Probity Business Services Proprietary Limited
Auditors: PricewaterhouseCoopers Inc.
Sponsor: Java Capital
For more information please visit our website at:
www.mixtelematics.com
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