Wrap Text
Abridged unaudited consolidated interim financial statements 2018
Cartrack Holdings Limited
Cartrack Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/036316/06)
Share Code: CTK ISIN:ZAE000198305
("Cartrack" or "the group")
Abridged unaudited consolidated interim financial statements 2018
Salient features
- Robust comparative subscriber growth of 21% to 666 422
- Subscription revenue up 19%
- Total revenue up 14% to R629,9 million
- Continued strong investment in operating capacity
- EBITDA of R297,1 million, up 26%
- EBITDA margin of 47%
- Normalised EPS (NEPS)1 of 46,2 cents, up 20%
- Basic earnings per share (EPS) of 46,6 cents, up 21%
- Headline EPS (HEPS) of 46,2 cents, up 20%
- Return on equity of 59%
- Declared dividend per share of 18 cents
- Cash generated from operating activities of R178,2 million
- Currency fluctuations had a R5,3 million negative impact on operating profit
1The presentation of normalised earnings per share is not an IFRS or JSE requirement. Management presents this measure as a supplementary performance measure.
Normalised earnings represents headline earnings plus/(less) any other unusual non-recurring and non-operating items not already taken into account in headline
earnings. In HY18 and HY17 there were no such adjustments and therefore NEPS equalled HEPS.
Commentary
GROUP PROFILE
Cartrack is a leading global provider of fleet management (Fleet), stolen vehicle recovery (SVR) and insurance telematics services, with a focus on technology
development to enhance customer experience. Cartrack already has an extensive footprint in 24 countries across Africa, Europe, North America, Asia-Pacific and
the Middle East. With a base of more than 666 000 active subscribers, the group ranks among the largest telematics companies globally.
Cartrack is a service-centric organisation focusing on in-house design, development and installation of telematics technology and data analytics. It provides
fleet-, mobile asset- and workforce management solutions, underpinned by real-time actionable business intelligence, delivered as Software-as-a-Service (SaaS),
as well as the tracking and recovery of stolen vehicles.
Cartrack's technology is widely accepted by motor manufacturers and insurers. Its customer telematics web interface provides a comprehensive set of features
ensuring the optimisation of both Fleet and human resources. As an expansion of its integrated service offering, Cartrack also provides driver risk assessment
offerings in the insurance telematics field.
In addition, Cartrack specialises in vehicle tracking and recovery. An industry-leading audited recovery rate of 93% as at 28 February 2017 reflects the
superior quality of its technology and services. The technology and infrastructure required for the recovery of stolen vehicles is a key barrier to entry for
competitors looking to enter the telematics industry in any high crime region.
Cartrack's vision is to achieve global industry leadership in the telematics industry, including Fleet, SVR and insurance telematics services, by ensuring that
it is the technology of choice to manage both fleets and workforces. Its mission is to provide its customers and partners with real-time actionable business
intelligence, based on advanced technology and reliable data.
GROUP PERFORMANCE
Cartrack has delivered a robust set of interim results with EPS growth of 21%. This was achieved as a result of strong subscriber and revenue growth while
maintaining industry-leading operating profit and EBITDA margins of 32% (HY17: 30%) and 47% (HY17: 43%) respectively. These operating metrics are indicative
of the strong performance of the annuity-based revenue model in a growth environment. The ongoing strategic decision to invest in distribution and operating
capacity in pursuit of sensible growth, and the realisation of economies of scale across businesses and segments have generated solid returns.
The group achieved period on period subscriber growth of 21%, increasing from 551 000 to more than 666 000 subscribers. South Africa, Europe and Asia-Pacific
all contributed positively to the growth, while the Africa segment showed a decrease in subscribers of 3% consequent upon the challenging economic conditions in
the region. The group continues to maintain a strong order book while focusing efforts on channel and market development.
Revenue increased by 14% from R554,1 million to R629,9 million period on period. Subscription revenue increased by 19% and now represents 88% of total revenue. The
increase in revenue can primarily be attributed to strong subscriber growth. Revenue was negatively impacted on consolidation by the strengthening rand. Had
exchange rates remained unchanged, revenue would have increased by 18% to R652,4 million.
While continuing to invest in operational, service and distribution capacity, plus an accelerated investment in research and development, the group managed to
limit operating expense growth to 15%. Operating profit increased by 19% from R168,1 million to R200,1 million.
EPS increased by 21% to 46,6 cents (HY17: 38,5 cents). HEPS and NEPS increased by 20% to 46,2 cents (HY17: 38,4 cents). Return on equity of 59% (HY17: 53%) and
return on assets of 33% (HY17: 33%) remain indicative of the efficient application of capital across the group.
Lucrative growth opportunities are evident across all channels to market and in each operating region as the demand for telematics data continues to increase.
Opportunities to develop further vertically aligned revenue streams remain at the forefront of management's short and medium-term strategy.
Segment overview
South Africa
Cartrack delivered particularly strong results in the South Africa segment. Subscription revenue increased by 19% period-on-period and was in line with
subscriber growth of 19% over the same period. The realisation of a strong sales pipeline and an effective distribution strategy are the primary contributors to
this growth.
Effective cost management has resulted in single digit operating expense growth period on period. As the subscriber base continues to grow, Cartrack continues
to identify and exploit opportunities to realise economies of scale and operating efficiencies.
Overall, the South African market remains underpenetrated with many opportunities to provide customer-centric solutions to individuals and fleets alike.
Africa
The Africa segment delivered a resilient performance, notwithstanding the sluggish regional economic performance which has been evident over the past 18 months.
Revenue decreased period on period to R53,0 million (HY17: R57,0 million) as a result of the stronger rand over the same period. Had exchange rates remained
unchanged, revenue would have increased by 9%.
Financial hardship experienced by consumers, private and commercial customers alike, is the major factor contributing to the lacklustre new sales levels.
Encouragingly, subscribers have remained constant since 28 February 2017. All subsidiaries in this segment remain profitable in local currency terms and
continue to generate positive cash flows.
Operating costs in this segment have decreased by 6%. This is the result of careful cost management and a stabilisation in successful collection processes.
These remain key focus areas for management while the economic activity in the segment recovers from the challenges faced over the past 18 months. As a result,
operating profit remained largely unchanged at R17,8 million period on period.
A new management structure and a refreshed strategy for the segment in terms of sales, distribution and operating capacity has been implemented. Cartrack
expects these changes to positively impact the segment and group results over the next 6 - 18 months.
Europe
The segment delivered strong subscriber growth of 24% period on period largely as a result of the investment in distribution and operating capacity over the
previous 18 months. The consolidated segment revenue remained unchanged at R54,6 million. The strengthening rand impacted negatively on consolidated revenue.
Had exchange rates remained unchanged, revenue would have increased by 10% to R60,5 million. Competitive pricing pressure and selective entering of certain
lower priced market segments further impacted reported revenue.
The investment in distribution and operating capacity will continue as new channels to market are established. In particular, the insurance telematics and
individual retail markets remain underpenetrated. These markets present lucrative growth opportunities to provide telematics offerings and related value-added
services. Operating expenses as a percentage of revenue remain higher than the targeted levels resulting in lower operating profit margins. This will resolve
itself in the short to medium term as increased subscription revenues start reflecting for a full reporting cycle.
Asia-Pacific
Asia-Pacific continues to deliver strong subscriber growth in line with management's expectation. Subscribers increased by 122% period on period from 19 100 to
42 385. Subscription revenue increased by 112% from R22,0 million to R46,7 million while total revenue increased by 80% from R29,0 million to R52,1 million. On
a constant currency basis, subscription revenue would have increased by 140% to R53,0 million and total revenue would have increased by 106% to R59,6 million.
Cartrack continues to incur start-up costs within the region as the businesses in Thailand, Malaysia, Philippines and Indonesia in particular are established.
These businesses are between 18 and 30 months into the establishment cycle and will continue to absorb resources until breaking even at between three and four
years from commencement of operating activity. Singapore, in its fourth year of operation, is now consistently contributing to the growth in group revenue and
operating profit.
The market in this segment remains considerably underpenetrated due to fragmented market participants delivering entry-level telematics offerings, enabling
Cartrack to exploit its more sophisticated, reliable products and customer-centric services. Cartrack remains poised to exploit new opportunities while
expanding cross-border relationships as it drives its robust and proven offerings to SVR and Fleet customers in this segment.
USA
Cartrack expanded in-field testing in the USA in the six months ended 31 August 2017. This revealed the need for further hardware and software adaptations in
order to successfully compete in this marketplace. R4,3 million in operating expenses were incurred during the interim reporting period. Sales activities have
now commenced.
MANAGING OUR BALANCE SHEET
Capital allocation and cash management remain key focus areas which are monitored and managed on an ongoing basis.
Inventory balances, specifically components required for the FY18/19 production cycle, increased significantly since 28 February 2017 mainly due to increasing
lead times by suppliers and increased forecasted sales for the group. Production has been planned to meet growth targets while ensuring that sufficient buffer
stock remains available to provide for adequate lead times associated with global distribution and unforeseen component shortages or obsolescence. This has
resulted in inventory days increasing to 254 days (FY17: 197 days). Management expects the inventory days to improve in HY2-18 as the sales pipeline is
realised.
The planned and continued investment in distribution and operating capacity of the group, as well as the increase in inventory levels to ensure uninterrupted
realisation of the sales pipeline, has resulted in the re-investment of cash flows generated from operating activities, resulting in current and quick ratios of
0,9 (FY17: 1,1) and 0,5 (FY17: 0,7) respectively. The group continues to hold prudent provisions for doubtful debt and obsolete stock.
Debtors' days (after provision for bad debts) have improved to 30 days (FY17: 31 days). This is a key metric indicating operational effectiveness and a strong
focus on credit management, improved collections processes and prudent provisioning practices that will be maintained.
Notwithstanding the significant and continuing investment in distribution and operating capacity within the group which will require cash resources in the short
to medium term, and despite short-term borrowings, Cartrack remains highly cash generative with a strong and positive cash flow forecast for the foreseeable
future.
OUTLOOK2
SaaS, within the context of the Internet of Things (IoT), continues to rapidly expand as the digital civilisation comes of age. Cartrack remains at the
forefront of the related telematics expansion and continues to drive innovation and application through its interaction with customers and strategic research
and development activities.
Customers are ever more demanding and reliant on the telematics market to optimise business intelligence relating to assets and people on a global scale.
Cartrack will continue to become a more integral part of its current and future customers' lives. This will require a continued and deliberate investment in
technology, information management, human resources as well as distribution and operating capacity in current and new markets. Under certain circumstances, this
may be achieved through market consolidation to the extent that operational efficiencies can be realised while customer service deepens.
The South African market, particularly in the lower vehicle value segment, remains underpenetrated. Opportunities to provide customer-centric solutions that put
Cartrack customers in control will be exploited.
The Africa-Other operations will be closely monitored and managed in anticipation of a more favourable economic environment. The order book in Europe remains
strong while new sales are being actively pursued. Asia-Pacific continues to gain operational mass as a region, with a strong sales pipeline and many cross-
border opportunities which are being exploited.
Notwithstanding global economic and foreign exchange volatility, Cartrack expects to continue double digit subscriber and revenue growth in the foreseeable
future.
BASIS OF ACCOUNTING
The abridged consolidated interim financial statements have been prepared in accordance with the requirements of the JSE Listings Requirements for preliminary
reports, and the requirements of the Companies Act, 71 of 2008, applicable to summary financial statements. The Listings Requirements require preliminary
reports to be prepared in accordance with the framework concepts as a minimum and the measurement and recognition requirements of IFRS, IAS 34: Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council. The accounting policies applied in the preparation of the consolidated financial statements from which the abridged
consolidated interim financial statements were derived are in terms of IFRS and are consistent, in all material respects, with those detailed in Cartrack's
prior year annual financial statements.
DIVIDEND DECLARATION
Continued strong subscriber growth, together with rental sales increasing as a proportion of total sales, will require further and probable accelerated
reinvestment in the medium-term of cash generated through operations. To finance this growth, management deems it prudent to declare, within policy, a dividend
at the higher end of the dividend cover range. Ordinary shareholders are advised that the board of directors has declared an interim gross cash dividend of 18
cents per ordinary share (14,4 cents net of dividend withholding tax) for the period ended 31 August 2017 (the cash dividend). The cash dividend will be paid
out of profits of the company.
2Any forecast information included in this section has not been reviewed and reported on by Cartrack's auditor in accordance with 8.40(a) of the JSE
Listings Requirements. The directors take sole responsibility for the statements.
Share code CTK
ISIN ZAE000198305
Company registration number 2005/036316/06
Company tax reference number 9108121162
Dividend number 7
Gross cash dividend per share 18 cents
Issued share capital as at declaration date 300 000 000
Declaration date Wednesday, 11 October 2017
Last date to trade cum dividend Tuesday, 5 December 2017
Shares commence trading ex dividend Wednesday, 6 December 2017
Record date Friday, 8 December 2017
Dividend payment date Monday, 11 December 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 6 December 2017 and Friday, 8 December 2017, both days 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 20% 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 20% 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
11 October 2017
Sponsor
Investec Bank Limited
Abridged unaudited consolidated interim statement of financial position
as at 31 August 2017
Figures in rand thousand Notes Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
Assets
Non-current assets
Property, plant and equipment 3 405 052 258 146
Goodwill 117 467 151 615
Deferred taxation 50 347 43 287
572 866 453 048
Current assets
Inventories 160 348 86 705
Loans to related parties 1 823 1 823
Trade and other receivables 4 164 494 130 956
Current taxation receivable 3 320 2 576
Cash and cash equivalents 42 121 56 615
372 106 278 675
Total assets 944 972 731 723
Equity and Liabilities
Equity
Share capital 42 488 42 488
Reserves (32 762) 8 145
Retained income 495 287 379 271
Equity attributable to equity holders of parent 505 013 429 904
Non-controlling interest 12 871 17 945
517 884 447 849
Liabilities
Non-current liabilities
Finance lease obligation 23 015 11 645
Deferred taxation 2 512 2 423
25 527 14 068
Current liabilities
Trade and other payables* 178 803 168 868
Loans from related parties 4 693 1 228
Finance lease obligation 18 518 10 848
Current taxation payable 46 475 44 321
Provisions for warranties* 5 928 5 812
Share-based payment liability 7 022 6 028
Bank overdraft 140 122 32 701
401 561 269 806
Total liabilities 427 088 283 874
Total equity and liabilities 944 972 731 723
*Provisions for warranties, previously included in trade and other payables, have been disclosed separately on the face of the statement of financial
position (August 2017: R5 928 440; August 2016: R5 812 000). This fairly presents the financial position of the group.
Abridged unaudited consolidated interim statement of profit or loss and other comprehensive income
for the six months ended 31August 2017
Figures in rand thousand Notes Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
Revenue 5 629 866 554 148
Cost of sales (112 255) (108 711)
Gross profit 517 611 445 437
Other income 3 782 3 052
Operating expenses 6 (321 321) (280 398)
Operating profit 200 072 168 091
Investment revenue 1 982 2 095
Finance costs (5 965) (2 117)
Profit before taxation 196 089 168 069
Taxation (52 137) (48 704)
Profit for the six months 143 952 119 365
Other comprehensive income:
Items that may be reclassified to profit or loss in future periods:
Exchange differences on translating foreign operations 19 756 (19 397)
Other comprehensive income for the six months net of taxation 19 756 (19 397)
Total comprehensive income for the six months 163 708 99 968
Profit attributable to:
Owners of the parent 139 190 115 100
Non-controlling interest 4 762 4 265
143 952 119 365
Total comprehensive income attributable to:
Owners of the parent 163 084 96 931
Non-controlling interest 624 3 037
163 708 99 968
Earnings per share
Per share information
Basic earnings per share (cents) 8.1 46,6 38,5
Abridged unaudited consolidated interim statement of changes in equity
for the period ended 31August 2017
Figures in rand thousand Share Foreign Treasury Total Retained Total Non- Total
capital currency shares reserves income attributable controlling equity
translation to equity interest
reserve holders of
the group
Balance at 1 September 2016 42 488 20 250 (12 105) 8 145 379 271 429 904 17 945 447 849
Profit 1 September 2016 to 28 February 2017 - - - - 141 795 141 795 3 014 144 809
Other comprehensive income 1 September 2016 to 28 February 2017 - (64 801) - (64 801) - (64 801) (1 518) (66 319)
Total comprehensive income for the six months: 1 September 2016 to 28 February 2017 - (64 801) - (64 801) 141 795 76 994 1 496 78 490
Dividends 1 September 2016 to 28 February 2017 - - - - (59 321) (59 321) (4 832) (64 153)
Reduction due to capital distribution in Cartrack Polska.SP.ZO.O - - - - - - (409) (409)
Total contributions by and distributions to owners of company recognised directly in equity - - - - (59 321) (59 321) (5 241) (64 562)
Balance at 1 March 2017 42 488 (44 551) (12 105) (56 656) 461 745 447 577 14 200 461 777
Profit 1 March 2017 to 31 August 2017 - - - - 139 190 139 190 4 762 143 952
Other comprehensive income 1March 2017 to 31 August 2017 - 23 894 - 23 894 - 23 894 (4 138) 19 756
Total comprehensive income for the six months: 1 March 2017 to 31 August 2017 - 23 894 - 23 894 139 190 163 084 624 163 708
Dividends 1 March 2017 to 31 August 2017 - - - - (104 709) (104 709) (524) (105 233)
Increase in holding of subsidiary - Cartrack Technologies (China) Limited - - - - (939) (939) 747 (192)
Acquisition of subsidiary with NCI portion - Cartrack New Zealand Limited - - - - - - (2 176) (2 176)
Total contributions by and distributions to owners of company recognised directly in equity - - - - (105 648) (105 648) (1 953) (107 601)
Balance at 31 August 2017 42 488 (20 657) (12 105) (32 762) 495 287 505 013 12 871 517 884
Abridged unaudited consolidated interim statement of cash flows
for the period ended 31 August 2017
Figures in rand thousand Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
Cash flows from operating activities
Cash generated from operations 242 623 253 578
Interest income 1 982 2 095
Finance costs (4 658) (2 659)
Taxation paid (61 748) (41 445)
Net cash from operating activities 178 199 211 569
Cash flows from investing activities
Purchase of property, plant and equipment (185 152) (129 599)
Sale of property, plant and equipment 2 279 2 693
Acquisition of subsidiaries, net of cash acquired (5) -
Net cash from investing activities (182 878) (126 906)
Cash flows from financing activities
Increase in loans from related parties 915 248
Decrease/(increase) in loans to related parties 2 765 (199)
Finance lease receipts 9 643 9 783
Dividends paid (105 233) (105 613)
Increase in holding of subsidiary (192) (7000)
Reduction due to capital distribution in Cartrack Polska.SP.ZO.O - (409)
Net cash from financing activities (92 102) (103 190)
Total cash movement for the six months (96 781) (18 527)
Cash at the beginning of the period (2 227) 44 994
Effect of exchange rate movement on cash balances 1 007 (2 553)
Total cash at end of the six months (98 001) 23 914
Accounting policies
1.Presentation of group financial statements
Statement of compliance
The abridged consolidated interim financial statements have been prepared in accordance with the requirements of the JSE Listings Requirements for preliminary
reports, and the requirements of the Companies Act, 71 of 2008, applicable to summary financial statements. The Listings Requirements require preliminary
reports to be prepared in accordance with the framework concepts as a minimum and the measurement and recognition requirements of IFRS, IAS 34: Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council. The accounting policies applied in the preparation of the consolidated interim financial statements from which the
abridged consolidated financial statements were derived are in terms of IFRS and are consistent, in all material respects, with those detailed in Cartrack's
prior year annual financial statements.
Basis of measurement
The abridged unaudited consolidated interim financial statements have been prepared on the historical cost basis.
Functional and presentation currency
These abridged unaudited consolidated interim 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 ZAR, unless otherwise indicated.
Going concern
The abridged unaudited consolidated interim 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.
2.Segment reporting
The group is organised into geographical business units and has five 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 revenue and
profit or loss and is measured consistently with the abridged unaudited interim consolidated financial statements.
Segment report - 31 August 2017 South Africa Africa - Other Europe Asia-Pacific and USA Total
Middle East
Revenue 469 932 53 013 54 559 52 129 233 629 866
Cost of sales (88 660) (9 599) (5 776) (8 005) (215) (112 255)
Gross profit 381 272 43 414 48 783 44 124 18 517 611
Other income 2 497 136 367 782 - 3 782
Net operating foreign exchange (loss)/gain (2 096) (295) 521 322 - (1 548)
Operating expenses (204 638) (25 502) (40 497) (45 283) (3 853) (319 773)
Operating profit 177 035 17 753 9 174 (55) (3 835) 200 072
Financing cost (4 836) (231) (325) (573) - (5 965)
Financing revenue 76 1 903 - 3 - 1 982
Profit before taxation 172 275 19 425 8 849 (625) (3 835) 196 089
Total tangible assets 502 820 88 373 120 949 107 673 7 690 827 505
Total liabilities (289 471) (40 602) (51 096) (44 889) (1 030) (427 088)
Goodwill 117 467
Equity 517 884
Refer to note 5 for additional information on revenue.
Refer to note 6 for additional information on operating expenses, and on net operating foreign exchange.
Segment report - 31 August 2016 South Africa Africa - Other Europe Asia-Pacific and USA Total
Middle East
Revenue 413 154 56 972 55 063 28 959 - 554 148
Cost of sales (80 092) (10 214) (11 303) (7 102) - (108 711)
Gross profit 333 062 46 758 43 760 21 857 - 445 437
Other income 2 238 157 63 594 - 3 052
Net operating foreign exchange (loss)/gain (501) (1 415) 47 (193) - (2 062)
Operating expenses (189 424) (27 136) (34 102) (26 457) (1 217) (278 336)
Operating profit 145 375 18 364 9 768 (4 199) (1 217) 168 091
Financing cost (1 971) - (138) (8) - (2 117)
Financing revenue 1 264 807 - 24 - 2 095
Profit before taxation 144 668 19 171 9 630 (4 183) (1 217) 168 069
Total tangible assets 368 032 80 562 82 958 46 825 1 731 580 108
Total liabilities (190 312) (41 825) (31 875) (19 617) (245) (283 874)
Goodwill 151 615
Equity 447 849
Refer to note 5 for additional information on revenue.
Refer to note 6 for additional information on operating expenses, and on net operating foreign exchange.
3. Property, plant and equipment
31 August 2017 31 August 2016
Accumulated Accumulated
Cost depreciation Carrying value Cost depreciation Carrying value
Buildings 6 380 (1 816) 4 564 5 734 (1 073) 4 661
Capital rental units 610 043 (271 546) 338 497 412 511 (202 955) 209 556
Computer software 5 205 (1 253) 3 952 2 560 (883) 1 677
Furniture and fixtures 6 603 (3 754) 2 849 6 707 (3 303) 3 404
IT equipment 31 405 (19 780) 11 625 21 638 (15 026) 6 612
Leasehold improvements 4 783 (4 736) 47 4 993 (4 975) 18
Motor vehicles 69 972 (28 025) 41 947 55 871 (25 548) 30 323
Office equipment 3 788 (3 261) 527 4 185 (3 281) 904
Plant and machinery 1 972 (1 285) 687 2 030 (1 198) 832
Security equipment 819 (462) 357 547 (388) 159
Total 740 970 (335 918) 405 052 516 776 (258 630) 258 146
Figures in rand thousand Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
4.Trade and other receivables
Trade receivables 162 037 133 004
Allowance for impairment of trade receivables (41 828) (21 862)
120 209 111 142
Prepayments 28 045 11 553
Deposits 2 477 1 679
Sundry debtors 5 578 5 423
Value added taxation receivable 8 185 1 159
164 494 130 956
Credit quality of trade and other receivables
The credit quality of trade and other receivables can be assessed by reference to historical information. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy, legal handover, financial reorganisation and default or delinquency in payments (more than 90 days overdue)
are considered indicators that the trade receivable is impaired.
Figures in rand thousand Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
5.Revenue
Sale of hardware 64 562 76 881
Subscription revenue 557 238 467 292
Sundry sales 8 066 9 975
629 866 554 148
6.Operating expenses
Depreciation in operating expenses 45 611 32 055
Employee costs 143 097 119 673
Marketing 13 378 11 478
Bad debts 15 677 19 388
Net operating foreign exchange loss 1 548 2 062
Other operating expenses 73 781 80 239
Research and development 28 229 15 503
321 321 280 398
Expense items have been reallocated to more accurately represent the nature of their cost.
Operating forex losses results from transactions in the normal course of business. These exchange losses are disclosed as part of operating expenses in the
consolidated statement of profit and loss.
7.Financial instruments - Fair values and risk management
Financial assets and liabilities are materially short term in nature and settled in the ordinary course of business with the exception of finance lease
agreements. The fair values of these short-term financial instruments approximate in all material respects the carrying amounts of the instruments as disclosed
in the statement of financial position. Finance lease agreements are variable rate instruments which mature over a period of approximately 60 months. It is
estimated that the fair value of these agreements materially approximate the carrying amounts of the instruments as disclosed in the statement of financial
position.
Figures in rand thousand Unaudited Unaudited
six months six months
ended ended
31 August 31 August
2017 2016
8.Earnings per share
8.1.Basic earnings per share
Basic earnings per share (cents) 46,6 38,5
Weighted average number of ordinary shares ('000) (basic) 300 000 300 000
Effect of treasury shares held (1 234) (1 234)
298 766 298 766
Basic earnings
Profit attributable to ordinary shareholders 139 190 115 100
8.2.Headline earnings per share
Headline earnings per share (cents) 46,2 38,4
Reconciliation between basic earnings and headline earnings
Basic earnings 139 190 115 100
Adjusted for:
Gain on disposal of assets net of tax (1 131) (231)
138 059 114 869
8.3.Normalised earnings per share
Normalised earnings per share (cents) 46,2 38,4
Reconciliation between headline earnings and normalised earnings
Headline earnings 138 059 114 869
Net non-operating foreign exchange gain - -
138 059 114 869
9.Commitments
Mercantile Bank Limited has provided a facility of R70 million to Cartrack (Pty) Ltd. At the end of the period the amount utilised was R55 million.
Mercantile Bank Limited has provided a facility of R80 million (August 2016: R40 million) to Cartrack Manufacturing (Pty) Ltd. Cartrack (Pty) Ltd has provided
limited suretyship in favour of Mercantile Bank Limited for this facility. At the end of the period, the amount utilised was R80 million (August 2016:
R33 million).
Nedbank Limited has provided a facility of R5 million (August 2016: R5 million) to Plexique (Pty) Ltd. Cartrack (Pty) Ltd has provided a limited guarantee for
the facility in favour of Nedbank Limited. At the end of the period, the amount utilised was R3 million (August 2016: R1,1 million).
Cartrack Investments UK Limited has provided Cartrack Espana, S.L. with a loan in the amount of Euro 1,4 million (August 2016: Euro 1,4 million) ("the Loan").
Cartrack Technologies Asia Pte. Limited has provided Cartrack Investments UK Limited with a guarantee for repayment of the loan.
The group has signed subordination agreements with all insolvent subsidiaries.
In the period August 2017, Cartrack Manufacturing (Pty) Ltd has no outstanding forward exchange contracts. Cartrack Manufacturing (Pty) Ltd had forward
exchange contracts in August 2016: R70 million which expired on 3 April 2017.
10.Acquisitions
Acquisitions occurring during the six months ended 31 August 2017 Cartrack New Zealand Limited
In April 2017, the group acquired 51% interest in Cartrack New Zealand Limited for a cash consideration of 510 New Zealand dollars from Johan De Wet. The group
acquired this company in order to achieve economies of scale, standardisation, integration and operational simplification in order to stimulate future growth.
Cartrack Technologies (China) Limited
In July 2017, the group acquired 10% minority interest in Cartrack Technologies (China) Limited for a cash consideration of 20,000 Singapore dollars from YC
Lee. The group acquired this company in order to achieve economies of scale, standardisation, integration and operational simplification in order to stimulate
future growth.
Acquisitions occurring during the 31 August 2016 year end Cartrack North East (Pty) Ltd
In July 2016, the group acquired the full minority interest of 24.5% in Cartrack North East (Pty) Ltd for a cash consideration of R7 million from the Phillip
Oosthuysen Trust. The new shareholding in Cartrack North East (Pty) Ltd is 100%. The group acquired this company in order to achieve economies of scale,
standardisation, integration and operational simplification in order to stimulate future growth.
11.Constant Currency segment Report1
Figures in Rand thousand South Africa Africa - Other Europe Asia-Pacific and Middle East USA Total Total
HY18 HY17
Revenue 469 932 62 170 60 483 59 573 260 652 418 554 148
Cost of sales (88 306) (11 080) (7 070) (9 929) (194) (116 579) (108 711)
Gross profit 381 626 51 090 53 413 49 644 66 535 839 445 437
Other income 2 497 168 398 882 - 3 945 3 052
Net operating foreign exchange gain/(loss) (2 096) (330) 572 359 - (1 495) (2 062)
Operating expenses (204 638) (29 958) (44 376) (49 656) (4 314) (332 942) (278 336)
Operating profit 177 389 20 970 10 007 1 229 (4 248) 205 347 168 091
Financing cost (4 836) (230) (345) (628) - (6 039) (2 117)
Financing revenue 76 2 283 - 4 - 2 363 2 095
Profit before taxation 172 629 23 023 9 662 605 (4 248) 201 671 168 069
1This pro forma information is the responsibility of the directors of Cartrack.
The purpose of this pro forma information is to provide insight into the impact of foreign exchange movements on the statement of comprehensive income and
related earnings information, and is for illustrative purposes only. Due to its nature, it may not fairly present Cartrack's financial position, changes in
equity, and results of operations or cash flows. This information has not been reviewed or audited by the Group's auditors.
The impact is computed as a combination of the following two calculations:
- Components included in cost of sales are largely procured in US Dollars. The impact of currency fluctuations on cost of sales for the period to 31 August 2017
was recomputed by applying the average exchange rates applicable to the corresponding 31 August 2016 cost of sales, being those rates applicable at the dates of
stock procurement. On this basis, the cost of sales for period to 31 August 2017 would have decreased by 2%; and
- All other actual 31 August 2017 line items were recalculated at the average exchange rates applied for the period ended 31 August 2016.
Cartrack Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/036316/06)
Share Code: CTK ISIN:ZAE000198305
("Cartrack" or "the group")
Registered office
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
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
Rosebank Towers
15 Biermann Street
Rosebank
2001
(PO Box 61051, Marshalltown, 2107)
Date: 11/10/2017 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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