Wrap Text
Condensed Annual Financial Results for the year ended 29 February 2016
CARTRACK HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/036316/06)
Share code: CTK
ISIN: ZAE000198305
("Cartrack" or "the company")
CONDENSED ANNUAL
FINANCIAL RESULTS
2016
FLEET MANAGEMENT STOLEN VEHICLE RECOVERY INSURANCE TELEMATICS
CONDENSED ANNUAL
FINANCIAL RESULTS 2016
HIGHLIGHTS
Revenue of R1 billion, up 20%
DPS for the full year of 55 cents, up 20%
Profit after tax of R259.5 million, up 25%
Subscriber base of 502 849 units, up 17%
Operating profit of R344.8 million up 19%
Final dividend of 35 cents per share
HEPS of 81 cents, up 27%
EBITDA margin of 46% (2015: 43%)
EBITDA of R463.1 million, up 28%
Operating profit margin of 34% (2015: 35%)
Audited vehicle recovery rate at 94%, up 1%
COMMENTARY
Group profile
Cartrack is a leading global provider of Fleet Management, Stolen Vehicle Recovery and Insurance
Telematics services. The Group's activities are focused on the design, development and installation of
Telematics technology; data collection and analysis and the delivery of fleet and mobile asset management
solutions delivered as Software-as-a-Service ("SaaS") and the tracking and recovery of vehicles.
Cartrack has a presence in 21 countries in Africa, Europe, Asia and the Middle East. With an active subscriber
base of over 502 000 customers, the Group ranks among the top Telematics companies globally.
Group performance
Cartrack increased headline earnings by 27% to R241.9 million (2015: R191 million) and headline
earnings per share by 27% to 81 cents (2015: 64 cents). A final cash dividend of 35 cents per share
(2015: 30 cents) was declared, bringing the total dividend for the year to 55 cents per share, which
represents a 20% increase on the prior year.
The Group grew revenue by 20% to R1 billion with all regions contributing to this growth. The targeted
revenue growth for 2016 has been substantially realised, despite the trading conditions experienced
proving to be more adverse than originally forecast.
The global active subscriber base grew by 17% or some 72 000 units to 502 849 units. Contract
subscription revenue grew by 20% and continues to represent 84% of total revenue. The Fleet
Management subscriber base grew by 60 580 units, now representing 56% (2015: 51%) of the Cartrack
active contract base.
Profit before tax increased by 23% to R362.3 million. Good profitability was experienced in all regions,
apart from the new country start-ups in Asia and the Middle East. As part of its international expansion
drive, Cartrack opened new operations in six countries in Asia and the Middle East at the end of 2015,
using the established Singapore business as the central hub for the region. As expected, the costs
associated with such an expansion impacted negatively on the combined profitability of the international
businesses. No new international businesses were acquired or started during 2016 as the Group
focused on establishing the new operations in Asia. Revenue from international operations grew 25%
to R256.9 million, which represents 26% (2015: 25%) of global revenue. New expansion opportunities
continue to be a focus point and are investigated on merit.
Impact of foreign exchange rate changes on financial performance
Despite the sharp decline in the South African Rand, the net effect of currency fluctuations on Cartrack's
global business over the past year has impacted positively on the consolidated profit before tax by an
estimated R13 million. The main contributing factors are:
R million
- non-operating foreign exchange gain +15.5
- operating foreign exchange gain +11.5
- impact on costs of components procured for hardware included in cost of sales -11.0
- the fluctuation in the Rand against other Group trading currencies had a net
negative impact on consolidation -3.0
13.0
Segmental contribution
South Africa
This segment accounts for 74% of total revenue. Despite the economic slowdown evidenced by declining
new vehicle sales and lower consumer confidence, this region achieved record annual unit sales and
increased the subscriber base by 16% to 391 000 units.
Revenue grew by 19%, with all distribution channels recording strong growth. Relationships with a number
of key sales channels were strengthened, with Cartrack becoming the preferred supplier for fitments
to stock vehicles for a significant motor dealership group, and being selected to provide a customised
Telematics solution for the South African arm of MAN Truck and Bus, the major European manufacturer.
Operating expenses increased at a faster rate than revenue due primarily to:
- a build in sales and distribution channels; and
- a higher incidence of debtor defaults by cash-strapped consumers (being mostly individuals rather
than corporate clients). Strict credit controls and measures to mitigate write-offs are integral to
Cartrack's business model.
Operating profit increased by a satisfactory 16%, although contribution to Group operating profit reduced
to 80% (2015: 82%).
Africa – Other
Africa is being affected by the declining global demand and subdued commodity prices and was also
impacted by the unexpected high and rapid depreciation of local currencies and inflation. These economic
conditions resulted in higher debtor defaults, specifically in respect of subscribers who contracted for
services at the lower end of the price spectrum. While trading conditions were challenging, the subscriber
base in Africa nevertheless grew by 10% after considerable churn and revenue increased by a satisfactory
22%. Operating profit increased 29% to R56.5 million.
Global resource prices have already shown some recovery since year-end and continued support of
normal operations in these countries remains a management priority.
Europe
Cartrack recorded a healthy growth of 23% in the subscriber base, despite the slow recovery in Europe
after the 2010 financial crisis. Price pressures impacted substantially on revenue growth, however
management believes that prices have stabilised. Revenue grew by 12% and the European segment
share of global revenue decreased marginally to 9% (2015: 10%). However, stringent cost management
and the strengthening of the Euro against the Rand contributed to an increase of 53% in operating profit,
which resulted in the contribution to global operating profit rising to 7% (2015: 5%).
Asia & Middle East
2016 was the first full year of operation for six of the Asian entities, with only Singapore being fully operative
for three years. The primary challenges were to establish Cartrack's credentials in the new territories, to
obtain all the appropriate technical approvals for our product range and to recruit and train quality staff.
This has been substantially achieved and the operations are now able to place a concerted emphasis on
the distribution and service aspects of the business.
This segment grew its subscriber base in line with expectations and lifted revenue 134% to R27.6 million.
The well-established Singapore operation increased its profitability this year on the back of solid subscriber
growth. As expected, the other newly established entities recorded losses, as the overhead expenditure on
the infrastructure build of each operation was increased to support the planned sales growth, culminating
in operating losses of R12 million in 2016.
The operating losses of these recently established entities are being closely managed during this
establishment stage and have been controlled within management's expectations. Sales have commenced
in all operations and a steady monthly increase is anticipated. Breakeven is only expected to be achieved
within approximately three years of commencement of trading.
Funding and capital management
Working capital and cash generation are key financial objectives and have received even greater focus
during 2016 given the slowdown in the global economy and the exchange rate volatility.
Our current ratio at 1.4 (2015: 1.3) and quick ratio at .9 (2015: 1), both indicate consistently healthy
cash generation and cash management. Inventory value has increased by R26 million, mainly attributable
to the acquisition of Cartrack Manufacturing (Pty) Limited in March 2015. An increase in defaulting
debtors has been experienced during 2016, and debtors' write-offs and provisions for bad debts have
been increased appropriately. The net debtor's book at the end of 2016 reflects an average debtors days
outstanding of one month, a deterioration of approximately ten days.
Low fixed asset infrastructure requirements to sustain growth, together with the tight working capital
controls, result in Cartrack being highly cash generative. Cash generated from operating activities during
2016, at R392 million, represents a 14% increase over 2015, despite the stock and trade receivable
increases of R79 million referred to above and higher tax payments made.
Acquisitions
As indicated in the interim results announcement, Cartrack purchased 100% of the shares in Cartrack
Manufacturing (Pty) Limited (formerly Onecell Manufacturing (Pty) Limited) from Onecell Holdings (Pty)
Limited on 1 March 2015 for R100, being the nominal share capital value. This acquisition places Cartrack
in full control of the supply chain for its products, from procurement of components to manufacture,
testing and repair.
Cartrack also acquired 100% of the shares in Cartrack Management Services (Pty) Limited (formerly
Bonito Recruitment Services (Pty) Limited) from Onecell Holdings (Pty) Limited on 1 March 2015
for R100, being the nominal share capital value. This company provides the services of executive
management and the non-executive directors to the Group.
Investing for tomorrow
Considerable focus and effort was placed on technology innovation during the year. Next generation
Telematics units are at an advanced stage of testing and will provide for enhanced performance and
additional features. Additional products were added to our range, in particular a unit which allows
continuous and cost-effective tracking of assets that travel internationally. New mobile applications
are being developed to foster a more intimate relationship with clients. The analysis of the vast volumes
of Telematics data received and the commercial uses for such data analytics remain key to business
sustainability well into the future.
Cartrack has also done substantial work in Europe, Asia and the Middle East over the past year to integrate
its technology and comply with the latest legislation in each region. The Group received approvals in
several markets and are far advanced in achieving approval in others. Compliance will provide the platform
to further increase Cartrack's addressable market and therefore sales in those regions.
Outlook
The Telematics industry is experiencing tremendous opportunity through significant and growing
applications, not only in vehicles but also the tracking of other assets and mobile technology. While our
key focus remains on vehicles, we are keeping abreast of these opportunities by keeping our developments
and platforms flexible enough to accommodate other applications as and when we choose to further
broaden our product offering.
Despite the global economic and foreign exchange uncertainties, we expect to continue to see solid growth
in keeping with our track record. Opportunities in all segments remain and are being actively pursued.
We foresee excellent potential for growth in the USA and will consider suitable acquisitions on merit.
Auditors' report
The accompanying condensed financial statements have been extracted from the audited annual financial statements but
have not themselves been audited. Grant Thornton Chartered Accountants (SA), Johannesburg Partnership,
the group's independent auditors, have audited the consolidated financial statements for the year ended 29 February 2016 and
have issued an unqualified audit opinion. The auditor's report does not necessarily report on all of the information
contained in this announcement/financial results. Shareholders are therefore advised that, in order to obtain a full understanding
of the nature of the auditor's engagement, they should obtain a copy of the auditor's report, together with the accompanying
financial information, from the issuer's registered office. The directors take full responsibility for the preparation
of the condensed report and that the financial information has been corretly extracted from thr underlying annual financial statements.
Basis of accounting
The consolidated financial statements are prepared in compliance with JSE Listings Requirements, International
Financial Reporting Standards (IFRS) and Interpretations of those standards, as issued by the International
Accounting Standards Board (IASB), the financial reporting pronouncements as issued by the FRSC (Financial
Reporting Standards Council) that are relevant to its operations and have been effective for the annual reporting
period ending 29 February 2016, and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and the South African Companies Act, No 71 of 2008, as amended. The annual financial statements were
approved for issue by the board of directors on 30 May 2016 and are subject to approval by the annual general
meeting of shareholders, on 21 July 2016.
During the year Cartrack identified that the accounting treatment of subscriptions billed in advance has
been incorrectly applied in that the deferral of revenue from advance billings has not been properly applied
in all circumstances. In the past, revenue has consistently been recognised on annual contracts in full in
the year of invoice. On the other hand, certain monthly subscription billing was being incorrectly deferred
to the subsequent month although it was in fact due in respect of the invoicing month.
With effect from the 2016 year this incorrect accounting treatment has been rectified such that the
proportion of revenue invoiced in any accounting period is now deferred to the period to which it relates
and recorded in the balance sheet as a current liability.
In giving effect to this change in accounting treatment, the financial statements in respect of the two
previous financial years have been restated.
Accounting policies and their application are consistent with those used by the company in the previous
financial year.
Dividend declaration
Ordinary shareholders are advised that the board of directors has declared a final gross cash dividend of
35 cents per ordinary share (29.75 cents net of dividend withholding tax) for year to 29 February 2016
(the cash dividend). The cash dividend will be paid out of profits of the company.
Timetable
Share code CTK
ISIN ZAE000198305
Company registration number 2005/036316/06
Company tax reference number 9108121162
Dividend number 4
Gross cash dividend per share 35 cents
Issued share capital as at declaration date 300 000 000
Declaration date Tuesday, 31 May 2016
Last date to trade cum dividend Friday, 1 July 2016
Shares commence trading ex dividend Monday, 4 July 2016
Record date Friday, 8 July 2016
Dividend payment date Monday, 11 July 2016
Share certificates may not be dematerialised or rematerialised between Monday, 4 July 2016 and Friday,
8 July 2016, both dates inclusive.
Tax implications
The cash dividend is likely to have tax implications for both resident and non-resident shareholders.
Shareholders are therefore encouraged to consult their professional tax advisers should they be in any
doubt as to the appropriate action to take.
In terms of the Income Tax Act, the cash dividend will, unless exempt, be subject to dividend withholding tax
(DWT). South African resident shareholders that are liable for DWT, will be subject to DWT at a rate of 15%
of the cash dividend and this amount will be withheld from the cash dividend. Non-resident shareholders
may be subject to DWT at a rate of less than 15% depending on their country of residence and the
applicability of any double tax treaty between South Africa and their country of residence.
On behalf of the board
David Brown Zak Calisto
Chairman Global chief executive officer
Johannesburg
31 May 2016
Sponsor
Investec Bank Limited
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
as at 29 February 2016
Restated Restated
Figures in Rand thousand Note(s) 2016 2015 2014
ASSETS
Non-current assets
Property, plant and equipment 207 534 150 530 104 489
Goodwill 3 156 011 144 269 99 433
Deferred tax 34 517 20 410 13 036
398 062 315 209 216 958
Current assets
Inventories 88 318 62 532 32 740
Loans to related parties 1 624 5 263 35 040
Trade and other receivables 128 655 81 705 55 904
Current tax receivable 5 500 449 352
Cash and cash equivalents 45 181 110 047 41 657
269 278 259 996 165 693
Total assets 667 340 575 205 382 651
EQUITY AND LIABILITIES
Equity
Share capital 4 42 488 42 488 42 488
Reserves 26 314 32 251 21 051
Retained income 375 306 285 632 145 956
Equity attributable to equity holders 444 108 360 371 209 495
of parent
Non-controlling interest 16 387 13 391 25 666
460 495 373 762 235 161
Liabilities
Non-current liabilities
Finance lease obligation 7 789 5 618 4 169
Deferred tax 1 040 236 1
8 829 5 854 4 170
Current liabilities
Trade and other payables 159 085 149 282 110 234
Loans from related parties 1 478 1 235 738
Finance lease obligation 6 604 6 218 3 527
Current tax payable 26 652 38 740 28 821
Share based payment liability 4 010 – –
Bank overdraft 187 114 –
198 016 195 589 143 320
Total liabilities 206 845 201 443 147 490
Total equity and liabilities 667 340 575 205 382 651
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 29 February 2016
Restated Restated
Figures in Rand thousand Note(s) 2016 2015 2014
Revenue 1 005 481 834 795 632 757
Cost of sales (186 749) (185 536) (130 004)
Gross profit 818 732 649 259 502 753
Other income 12 091 6 852 11 946
Operating expenses (486 017) (366 106) (260 837)
Operating profit 344 806 290 005 253 862
Investment revenue 6 256 4 533 1 742
Net foreign exchange gain 15 667 – –
Finance costs (4 463) (924) (1 211)
Profit before taxation 362 266 293 614 254 393
Taxation (102 779) (85 646) (72 708)
Profit for the year 259 487 207 968 181 685
OTHER COMPREHENSIVE INCOME:
Items that may be reclassified
to profit or loss:
Exchange differences on translating 3 399 (7 372) 18 276
foreign operations
Other comprehensive income for the 3 399 (7 372) 18 276
year net of taxation
Total comprehensive income for the year 262 886 200 596 199 961
Profit attributable to:
Owners of the parent 239 674 191 811 170 764
Non-controlling interest 19 813 16 157 10 921
259 487 207 968 181 685
Total comprehensive income
attributable to:
Owners of the parent 245 842 181 884 180 252
Non-controlling interest 17 044 18 712 19 709
262 886 200 596 199 961
EARNINGS PER SHARE
Basic earnings per share (cents) 6 80 64 59
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
for the year ended 29 February 2016
Total
Foreign attributable to
currency equity holders Non-
Share Share Total share translation Treasury Total Retained of the Group/ controlling Total
Figures in Rand thousand capital premium capital reserve shares reserves income Company interest equity
Opening balance as previously reported * 42 488 42 488 21 005 – 21 005 157 307 220 800 33 713 254 513
Adjustments
Prior period error (refer note 2) – – – 46 – 46 (11 351) (11 305) (8 047) (19 352)
Balance at 1 March 2014 as restated – 42 488 42 488 21 051 – 21 051 145 956 209 495 25 666 235 161
Profit for the year – – – – – – 191 811 191 811 16 157 207 968
Other comprehensive income – – – (4 817) – (4 817) – (4 817) (2 555) (7 372)
Total comprehensive income for the year – – – (4 817) – (4 817) 191 811 186 994 13 602 200 596
Foreign currency translation movements – – – 16 017 – 16 017 – 16 017 (16 017) –
within equity
Acquisition of subsidiary with NCI portion – – – – – – – – 1 838 1 838
Share issue 42 488 (42 488) – – – – – – – –
Buyback and cancellation of shares (510 000) – (510 000) – – – – (510 000) – (510 000)
Issue of new shares 510 000 – 510 000 – – – – 510 000 – 510 000
Dividends – – – – – – (48 000) (48 000) (10 832) (58 832)
Increase in interest of subsidiary – – – – – – (4 135) (4 135) (866) (5 001)
Total contributions by and distributions
to owners of company recognised directly
in equity 42 488 (42 488) – 16 017 – 16 017 (52 135) (36 118) (25 877) (61 995)
Balance at 1 March 2015 as restated 42 488 – 42 488 32 251 – 32 251 285 632 360 371 13 391 373 762
Profit for the year – – – – – – 239 674 239 674 19 813 259 487
Other comprehensive income – – – 6 168 – 6 168 – 6 168 (2 769) 3 399
Total comprehensive income for the year – – – 6 168 – 6 168 239 674 245 842 17 044 262 886
Purchase of shares for Share Incentive – – – – (12 105) (12 105) – (12 105) – (12 105)
Scheme (Treasury shares)
Dividends – – – – – – (150 000) (150 000) (14 048) (164 048)
Total contributions by and distributions
to owners of company recognised
directly in equity – – – – (12 105) (12 105) (150 000) (162 105) (14 048) (176 153)
Balance at 29 February 2016 42 488 – 42 488 38 419 (12 105) 26 314 375 306 444 108 16 387 460 495
Note(s) 4 4 4
*R142 is not displaying due to rounding.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 29 February 2016
Restated Restated
Figures in Rand thousand Note(s) 2016 2015 2014
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from operations 391 752 343 834 276 326
Interest income 6 256 4 533 1 742
Finance costs (3 502) (360) (739)
Tax paid (133 120) (81 491) (62 410)
Net cash from operating activities 261 386 266 516 214 919
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant and equipment (158 216) (119 700) (80 470)
Sale of property, plant and equipment 3 923 4 651 3 170
Acquisition of subsidiaries, net of cash
acquired (15) (53 428) 2 367
Net cash from investing activities (154 308) (168 477) (74 933)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds on share issue* 4 – * –
Increase in loans from related parties 243 497 –
Decrease in loans to related parties 3 639 29 777 95 875
Finance lease (payments)/ receipts (1 596) 3 576 212
Purchase of shares for Share Incentive
Scheme (Treasury shares) (12 105) – –
Dividends paid (164 048) (58 832) (205 665)
Acquisitions resulting in increase in control
of subsidiaries – (5 001) –
Buyback of company's own shares – (510 000) –
Proceeds of share issue – 510 000 –
Net cash from financing activities (173 867) (29 983) (109 578)
TOTAL CASH MOVEMENT
FOR THE PERIOD (66 789) 68 056 30 408
Cash at the beginning of the period 109 933 41 657 12 826
Effect of exchange rate movement on cash
balances 1 850 220 (1 577)
Total cash at end of the period 44 994 109 933 41 657
ACCOUNTING POLICIES
1. PRESENTATION OF GROUP AND COMPANY FINANCIAL STATEMENTS
Reporting entity
Cartrack Holdings Limited is a Company domiciled in the Republic of South Africa. These
consolidated financial statements for the year ended 29 February 2016 comprise the Company
and its subsidiaries (collectively the "Group" and individually "Group companies"). The Group
is primarily involved in the design, development and installation of Telematics technology, data
collection and analysis and the delivery of fleet and mobile asset management solutions delivered
as Software-as-a-Service ('SAAS') and the tracking and recovery of vehicles.
Statement of compliance
The consolidated financial statements are prepared in compliance with JSE Listings Requirements,
International Financial Reporting Standards (IFRS) and interpretations of those standards, as issued
by the International Accounting Standards Board (IASB), the financial reporting pronouncements
as issued by the FRSC (Financial Reporting Standards Council) that are relevant to its operations
and have been effective for the annual reporting period ending 29 February 2016, and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and the South African
Companies Act, No 71 of 2008, as amended. The annual financial statements were approved for
issue by the Board of Directors on 30 May 2016 and are subject to approval by the Annual General
Meeting of shareholders, on 21 July 2016.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for
the measurement of certain financial assets and liabilities at fair value.
Functional and presentation currency
These consolidated financial statements are presented in South African Rand (ZAR), which is the
Company's functional currency. All financial information presented has been rounded off to the
nearest thousand Rand.
Going concern
The consolidated financial statements are prepared on the going-concern basis as the Directors
believe that funds will be available to finance future operations and that the realisation of assets and
settlement of liabilities, contingent obligations and commitments will occur in the ordinary course
of business.
During the year there has been a correction of an accounting error which is detailed in note 2.
NOTES TO THE CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS
2. CORRECTION OF ACCOUNTING ERROR
Group practice is to invoice subscriptions in advance and to defer recognising such subscriptions
in revenue to the subsequent accounting period(s) to which they relate. During 2016 it has been
identified that the deferral of advance billings has not been applied correctly in all circumstances.
In the ordinary course of business in South Africa and certain other African countries, a proportion
of subscriber contracts are entered into on an annual basis and are invoiced, and paid, annually in
advance. In the past, revenue has consistently been recognised on these annual contracts in full in
the year of invoice. On the other hand, certain subscription billing was being incorrectly deferred to
the subsequent month although it was in fact due in respect of the invoicing month.
With effect from the 2016 year this incorrect accounting treatment has been rectified such that
the proportion of revenue invoiced in any accounting period is now deferred to the period to which it
relates and recorded in the balance sheet as a current liability.
In giving effect to this correction in accounting treatment, the financial statements in respect of the
two previous financial years have been restated.
Figures in Rand thousand 2015 2014
Consolidated Statement of Financial Position
Asset
Deferred tax asset net of liability
Previously stated 8 674 5 047
Adjustment 11 500 7 988
20 174 13 035
Trade and other receivables
Previously stated 68 177 45 081
Adjustment 13 528 10 823
81 705 55 904
Liabilities
Trade and other payables
Previously stated (101 135) (73 750)
Adjustment (48 147) (36 484)
(149 282) (110 234)
Income tax asset net of liability
Previously stated (35 872) (26 790)
Adjustment (2 419) (1 679)
(38 291) (28 469)
Equity
Retained Earnings Closing
Previously stated (300 413) (157 307)
Adjustment 14 781 11 351
(285 632) (145 956)
Foreign currency translation reserve
Previously stated (32 317) (21 005)
Adjustment 66 (46)
(32 251) (21 051)
Figures in Rand thousand 2015 2014
Non-controlling interest
Previously stated (24 082) (33 713)
Adjustment 10 691 8 047
(13 391) (25 666)
2014 Opening Retained Earnings
Previously stated – (204 587)
Adjustment – 10 524
– (194 063)
2014 Non-controlling interest
Previously stated – (32 080)
Adjustment – (6 110)
– (38 190)
2014 Opening Foreign currency translation reserve
Previously stated – (11 452)
Adjustment – (77)
– (11 529)
Consolidated Statement of Comprehensive Income
Revenue
Previously stated 843 701 637 020
Adjustment (8 906) (4 263)
834 795 632 757
Taxation
Previously stated (88 442) (74 130)
Adjustment 2 796 1 422
(85 646) (72 708)
Profit attributable to:
Owners of the parent 191 811 170 765
Previously stated 195 244 171 591
Adjustment (3 433) (826)
Non-controlling interest 16 157 10 920
Previously stated 18 834 12 935
Adjustment (2 677) (2 015)
207 968 181 685
Basic earnings per share (cents)
Previously stated 65 59
Adjustment (1) –
64 59
Headline earnings per share (cents)
Previously stated 65 58
Adjustment (1) –
64 58
3. GOODWILL
Goodwill is allocated to cash generating units (CGUs) within the reportable segments.
Asia &
South Africa Africa – Other Europe Middle East Total
Balance 1 March 2013 1 499 80 756 – – 82 255
Additions – 1 763 – 899 2 662
Translation adjustments – 14 400 – 116 14 516
28 February 2014 1 499 96 919 – 1 015 99 433
Additions – 382 45 041 471 45 894
Translation adjustments – 1 955 (3 390) 377 (1 058)
28 February 2015 1 499 99 256 41 651 1 863 144 269
Additions 157 – – – 157
Translation adjustments – (3 074) 14 031 628 11 585
29 February 2016 1 656 96 182 55 682 2 491 156 011
Impairment testing
The group performs goodwill impairment testing on an annual basis.
The recoverable amount of the cash generating units is determined using a discounted cash flow
technique, which requires the use of assumptions. The cash flow projections are based on financial
budgets and forecasts covering a five-year period. The cash flow projections include specific
estimates for five years and a terminal growth rate thereafter.
The key assumptions used for the projection of cash flows are:
Assumption Approach used in determining values
Compound annual This is the average annual compound growth rate in the subscriber base that
growth rate (CAG%) of is derived from the forecast acquisition of new subscribers less cancellations
subscriber base ("churn") from year 1 (the budget period) through to year 5. Thereafter a
terminal value has been calculated assuming a 3% per annum growth rate in
net cash flow after year 5. The growth rate applied for the acquisition of new
subscribers is considered to be the main driver of revenue, profitability and
hence free cash flow. CGUs are at different maturity levels in their business
cycles and hence will reflect considerably different growth rates; the various
geographical markets the CGUs operate within also have differences in
their economics which have been taken into consideration. The growth rate
determined by management is based on historical data from both external
and internal sources and is consistent with reported global Telematics growth
forecasts for the medium to long term and with the assumptions that a market
participant would make.
Assumption Approach used in determining values
Discount rates The rate reflects the specific risks relating to the country and industry in
which the entity operates.
Other cashflow Revenue forecasts are based on 2016 selling price structures without any
assumptions inflationary impact. Operating costs assume appropriate increases for both
inflationary and infrastructural increases. Capital expenditure and working
capital requirements to support the forecast growth have been taken into
account. Exchange rates ruling at 29 February 2016 have been applied
throughout the five-year forecast period.
The following CAG and discount rates have been applied to the CGUs within each operating segment:
29 February 2016
South Africa Africa – Other Europe Asia
% % % %
Compound annual growth 12 19 25 38
rate in subscribers
Discount rates 20 34 19 10
28 February 2015
South Africa Africa – Other Europe Asia
% % % %
Compound annual growth rate in 10 8 10 10
subscribers
Discount rates 20 20 20 20
Management has reassessed the risks applicable to each operating segment and the projections for
growth of each CGU within the segments. This has resulted in a greater variability in both projected
growth rates and discount (risk) rates being applied in the 2016 goodwill impairment testing process
compared to 2015 and is considered more comprehensive and appropriate.
Based on the above assumptions and calculations it was determined that there was sufficient
headroom above goodwill, therefore no impairment was necessary.
Sensitivity analysis
To test the sensitivity of the two key assumptions, being the future compound subscriber growth rate
and the discount rate (i.e risk profile), the following changes have been made to these factors:
- Compound annual subscriber growth rate: the projected growth rates per segment have been
adjusted downwards in South Africa by 2%, Africa by 4%, Europe by 2% and Asia by 2%.
- Discount rate: the projected discount rates per segment have been increased by 5%.
The adjusted growth and discount rates on which the sensitivity has been based are shown in the
table below:
Key assumptions – sensitivity analysis
29 February 2016
South Africa Africa – Other Europe Asia
% % % %
Compound annual growth rate 10 15 23 36
in subscribers
Discount rates 25 39 24 15
Based on these independently downward adjusted growth rate assumptions and increased risk
assumptions, there remains sufficient headroom above goodwill so as not to require any impairment.
4. SHARE CAPITAL
Authorised 2016 2015 2014
1 000 000 000 Ordinary shares of no par value 1 000 000 1 000 000 –
1 000 Ordinary shares of R1 each at par value – – 1
1 000 000 1 000 000 1
700 000 000 Unissued shares are under the
control of the directors in terms of a resolution
passed at the AGM on 25 August 2015.
Reconciliation of number of shares issued:
Reported as at beginning of year 300 000 * *
Issue of no par value – 300 000 –
Issue of par value shares – ordinary shares – – *
300 000 300 000 *
* Amounts not displaying due to rounding
Issued
300 000 000 ordinary shares of no par value 42 488 42 488 42 488
5. DIRECTORS' AND KEY MANAGEMENT EMOLUMENTS
29 February 2016
Other Provident Directors'
Emoluments Bonuses benefits fund fees Total
Directors
IJ Calisto (Executive) 2 852 160 – – – 3 012
JR Edmeston
(Executive) 1 872 1 370 102 – – 3 344
DJ Brown
(Non-executive) – – – – 957 957
AT Ikalafeng
(Non-executive) – – – – 540 540
K White
(Non-executive) – – – – 531 531
Key management
Paid by subsidiary
companies 3 956 689 120 120 – 4 885
8 680 2 219 222 120 2 028 13 269
28 February 2015
Other Provident Directors'
Emoluments Bonuses benefits fund fees Total
Directors
IJ Calisto (Executive) 1 712 160 – – – 1 872
JR Edmeston
(Executive) 1 758 1 387 96 – – 3 241
J Marais (Executive) 1 452 131 120 – – 1 703
C Sanderson
(Executive) 1 017 211 – 53 – 1 281
DJ Brown
(Non-executive) – – – – 319 319
AT Ikalafeng
(Non-executive) – – – – 189 189
K White
(Non-executive) – – – – 168 168
5 939 1 889 216 53 676 8 773
Other Provident Directors'
Emoluments Bonuses benefits fund fees Total
Directors
JR Edmeston
(Executive) 1 654 1 115 96 – – 2 865
J Marais (Executive) 1 363 114 120 – – 1 597
C Sanderson
(Executive) 720 47 – – – 767
3 737 1 276 216 – – 5 229
Directors and Key Management emoluments are paid for through subsidiary companies of the group.
6. BASIC EARNINGS PER SHARE
2016 2015 2014
Basic earnings per share (cents) 80 64 59
The calculation of basic earnings per share has been based on the following profit attributable to
ordinary shareholders and the weighted average number of shares in issue.
Figures in Rand thousand 2016 2015 2014
Weighted average number of ordinary shares
('000) at the beginning of the year 300 000 300 000 –
Issued ordinary shares at 1 March 2013 – – 211 268
Effect of shares issued in April 2013 – – 78 279
Effect of treasury shares (51) – –
299 949 300 000 289 547
Basic earnings 239 674 191 811 170 764
In 2014 and 2015 the 300 000 000 shares in issue, weighted accordingly, were treated as a share
split for earnings per share purposes. This provides the user with more comparable and relevant
information.
7. HEADLINE EARNINGS PER SHARE
2016 2015 2014
Headline earnings per share (cents) 81 64 58
The calculation of headline earnings per share has been based on the following profit attributable to
ordinary shareholders and the weighted average number of ordinary shares in issue as determined
above in note 6.
Figures in Rand thousand 2016 2015 2014
Reconciliation between basic earnings and
headline earnings
Basic earnings 239 674 191 811 170 764
Adjusted for:
Reversal of bargain purchase 3 279 – –
Bargain purchase – – (3 353)
Gain on disposal of assets net of tax (1 019) (738) (833)
241 934 191 073 166 578
8. DILUTED EARNINGS PER SHARE
There are no dilutive instruments and therefore diluted earnings per share is the same as basic
earnings per share.
9. NORMALISED EARNINGS PER SHARE
2016 2015 2014
Normalised earnings per share (cents) 75 64 58
The calculation of normalised earnings per share has been based on the following profit attributable
to ordinary shareholders and the weighted average number of shares in issue as determined above
in note 6 .
Figures in Rand thousand 2016 2015 2014
Reconciliation between headline earnings and
normalised earnings
Headline earnings 241 934 191 073 166 578
Net foreign exchange gain on intercompany
financing arrangements (15 667) – –
226 267 191 073 166 578
10. SEGMENT REPORTING
The Group is organised into geographical business units and has four reportable segments.
The Group monitors the operating results of its business units separately for the purpose of
making decisions about resource allocation and performance assessment. Segment information
is evaluated based on profit or loss and is measured consistently with consolidated financial
statements.
Segment Report – Asia &
29 February 2016 South Africa Africa – Other Europe Middle East Total
Revenue 748 600 139 198 90 036 27 647 1 005 481
Intersegment elimination
of revenue* 195 551 271 841 1 899 198 562
Revenue before segment
elimination 944 151 139 469 90 877 29 546 1 204 043
Profit before taxation
includes the following
items: 274 711 60 110 23 477 3 968 362 266
Investment revenue 2 987 3 268 – 1 6 256
Finance costs 4 360 10 78 15 4 463
Net foreign exchange gain 2 830 3 891 498 19 780 26 999
Depreciation 79 692 2 317 18 657 1 994 102 660
Total tangible assets 188 102 79 049 83 273 160 905 511 329
Total liabilities (84 377) (54 544) (53 355) (14 569) (206 845)
Goodwill 156 011
Equity 460 495
Segment Report – Asia &
28 February 2015 South Africa Africa – Other Europe Middle East Total
Revenue 628 547 114 002 80 422 11 824 834 795
Intersegment elimination
of revenue 34 974 – – – 34 974
Revenue before segment
elimination 663 521 114 002 80 422 11 824 869 769
Profit before taxation
includes the following
items: 238 358 46 499 15 835 (7 078) 293 614
Investment revenue 1 617 2 916 – – 4 533
Finance costs 693 210 8 13 924
Net foreign exchange gain** 35 307 8 83 433
Depreciation 58 816 1 917 10 389 475 71 597
Total tangible assets 291 359 88 837 36 605 14 135 430 936
Total liabilities (134 009) (49 060) (13 097) (5 277) (201 443)
Goodwill 144 269
Equity 373 762
* The amount of R195 551 in the South African segment includes Cartrack Manufacturing (Pty) Ltd which was acquired on 1 March 2015.
** Includes operating and non-operating exchange gains.
CORPORATE INFORMATION
Registered office
Cartrack Holdings Limited
11 Keyes Avenue
Rosebank
2196
(PO Box 4709, Rivonia, 2128)
Directors
Independent Non-executive Directors
David Brown (Independent Chairman)
Thebe Ikalafeng
Kim White
Executive Directors
Isaias Jose Calisto (Global Chief Executive Officer)
John Richard Edmeston (Global Chief Financial Officer)
Company Secretary
Anname de Villiers
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
2196
(PO Box 4709, Rivonia, 2128)
Sponsor
Investec Bank Limited
2nd Floor
100 Grayston Drive
Sandown
Sandton
2196
(PO Box 785700, Sandton, 2146)
Transfer Secretary
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg
2001
(PO Box 61051, Marshalltown, 2107)
www.cartrack.co.za
Date: 31/05/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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