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MIX - Mix Telematics - Group Unaudited Interim Financial Results For The Six

Release Date: 16/11/2009 08:05
Code(s): MIX
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MIX - Mix Telematics - Group Unaudited Interim Financial Results For The Six Months Ended 30 September 2009 MIX TELEMATICS LIMITED Incorporated in the Republic of South Africa Registration number 1995/013858/06 JSE code: MIX ISIN : ZAE000125316 ("MiX Telematics" or "the Company" or "the Group") GROUP UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009 Revenue R431 million - R237 million annuity - R213 million foreign currency EBITDA R72 million (down 14% on 2008) Adjusted HEPS 5,0 cents per share (down 25% on 2008) Cash generated from operations - R80 million (2008: R64 million) A WORD FROM THE CEO, S JOSELOWITZ ("JOSS") For sake of continuity, I would like to start off this half-year update by quoting from my closing remarks in the report that we published for the March year-end: "Forgive me for pointing out the obvious, but global trading conditions remain tough and in some regions have deteriorated even further than last year. For now, our focus will remain on weathering the storm whilst executing well on the basics." As the results show, the trading conditions for the six months under review were exceedingly difficult. The Group was buffeted by a combination of poor new vehicle sales worldwide, a strong Rand and decision inertia by corporate clients unsure of their own prospects. In the face of these conditions I am satisfied with the performance of the Group for the period. By-and-large, we have weathered the storm and have executed well on the basics. Most divisions have managed to contain costs while continuing to develop the exciting new products and markets that are vital to our future success. Our positioning as a Rand-hedge investment is no secret so clearly a strong Rand is not ideal for a Group that provides its technologies and services all over the globe. Whilst we cannot do anything about the exchange rate, we are working hard to land some mega-deals, the absence of which was a defining feature of the past six months. Our efforts are starting to bear fruit and we are proud to have recently concluded significant deals with both British Gas and PDO (a large subsidiary of Shell based in the Middle East) - both of these deals were concluded after the period under review. Even in the absence of any mega-deals, our large annuity base helped limit the negative impact of disappointing new sales and confirms the attractiveness of our business model. Annuity revenue for the period was 55% of total revenue. Our continued focus on cash generation was maintained and I am pleased to report that the Group continued its stated path. Net debt was maintained at the R89 million level notwithstanding paying a dividend of R26,3 million on which STC of R2,6 million was paid. Whilst it is too early to call off the storm-watch, I remain very excited about the future of the Group and believe the next two years will deliver the fruits of our current labours. I would like to thank all the executives and employees for their efforts over the last six months. Condensed group income statement Six Six months 12 months months ended ended ended
30 30 September 31 March September 2009 2008 2009 Unaudited Reviewed Audited
R`000 R`000 R`000 Revenue 431 292 432 446 958 139 Cost of sales (176 097) (178 406) (393 515) Gross profit 255 195 254 040 564 624 Other income 4 323 3 807 10 210 Operating expenses (212 430) (193 956) (439 777) Operating profit (note 2) 47 088 63 891 135 057 Net finance cost (note 4) (9 128) (11 438) (25 931) Share of joint venture profit/(losses) 13 (416) (916) Profit before tax 37 973 52 037 108 210 Income tax expense (14 221) (15 452) (39 125) Profit for the period 23 752 36 585 69 085 Profit attributable to: Equity holders of the Company 23 752 36 585 69 085 Condensed group statement of comprehensive income Six Six months 12 months months ended ended ended 30 30 September 31 March
September 2009 2008 2009 Unaudited Reviewed Audited R`000 R`000 R`000
Profit for the period 23 752 36 585 69 085 Other comprehensive income: Exchange differences on translating (30 307) (12 840) (17 888) foreign currencies Fair value reserve on available-for-sale financial asset Arising in the current year (40) (217) (1 211) Charged to the income statement - - 1 728 Exchange differences on shareholder loan (11 932) (680) (2 105) Income tax relating to components of 1 331 198 394 other comprehensive income Net loss recognised in other (40 948) (13 539) (19 082) comprehensive income Total comprehensive (loss)/income for the (17 196) 23 046 50 003 period Total comprehensive (loss)/income attributable to: Equity holders of the Company (17 196) 23 046 50 003 Ordinary shares (million) - in issue 657 000 657 000 657 000 - weighted average 657 000 642 833 649 917 - diluted weighted average 657 000 642 833 649 917 Attributable earnings per share - basic 3,6 5,7 10,6 - diluted 3,6 5,7 10,6 Reconciliation of headline earnings and adjusted headline earnings Six Six months 12 months
months ended ended ended 30 30 September 31 March September
2009 2008 2009 Unaudited Reviewed Audited R`000 R`000 R`000 Profit attributable to equity holders of 23 752 36 585 69 085 the Company Adjusted for: Loss on disposal of property, plant and 82 - 425 equipment Impairment of available-for-sale - - 1 728 financial asset Impairment of intangible assets - - 10 226 Negative goodwill - (1 581) (1 325) Income tax effect on the above components - - (81) Headline earnings 23 834 35 004 80 058 Headline earnings per share (cents) - basic 3,6 5,4 12,3 - diluted 3,6 5,4 12,3 Headline earnings 23 834 35 004 80 058 Amortisation of IFRS3 intangible assets 10 806 11 155 26 798 Income tax effect on the amortisation of (1 626) (3 232) (3 229) the IFRS3 intangible assets Adjusted headline earnings 33 014 42 927 103 627 Adjusted headline earnings per share (cents) - basic 5,0 6,7 15,9 - diluted 5,0 6,7 15,9 Condensed group statement of financial position 30 30 September 31 March September 2009 2008 2009
Unaudited Reviewed Audited R`000 R`000 R`000 ASSETS Non-current assets Property, plant and equipment 45 002 57 239 51 755 Intangible assets 664 439 721 354 693 345 Available-for-sale and other investments 3 198 5 321 3 675 Deferred income tax 16 680 12 457 13 481 Total non-current assets 729 319 796 371 762 256 Current assets Inventory 32 397 68 114 40 544 Inventory held in client vehicles 23 306 23 439 23 456 Trade and other receivables 114 597 161 864 135 396 Current income tax asset 74 74 436 Cash and cash equivalents 86 283 30 568 140 095 Restricted cash 1 320 1 000 1 351 Total current assets 257 977 285 059 341 278 Total assets 987 296 1 081 430 1 103 534 EQUITY AND LIABILITIES Capital and reserves Share capital 13 13 13 Share premium 787 353 787 353 787 353 Accumulated losses (5 574) (35 546) (3 046) Other reserves (166 677) (122 394) (126 893) Total equity 615 115 629 426 657 427 Non-current liabilities Interest bearing borrowings 90 789 120 787 120 232 Deferred income tax 36 580 39 516 35 611 Provisions and other liabilities 15 077 18 792 17 886 Total non-current liabilities 142 446 179 095 173 729 Current liabilities Trade and other payables 115 373 148 827 139 511 Interest bearing borrowings 52 248 79 170 81 170 Current income tax 10 884 27 371 10 603 Bank overdraft 32 548 8 678 27 732 Provisions and other liabilities 18 682 8 863 13 362 Total current liabilities 229 735 272 909 272 378 Total equity and liabilities 987 296 1 081 430 1 103 534 Net borrowings (note 5) (89 302) (178 067) (89 039) Net asset value per share (cents) 93,6 95,8 100,1 Net tangible asset value per share (8) (14) (6) (cents) Capital expenditure - incurred 19 310 17 651 30 250 - authorised but not spent 10 898 15 000 10 000 Condensed group statement of cash flows Six Six months 12 months
months ended ended ended 30 30 September 31 March September
2009 2008 2009 Unaudited Reviewed Audited R`000 R`000 R`000 Cash generated from operating activities 79 754 64 498 226 497 Net interest expense (note 4) (8 734) (11 438) (25 864) Taxation paid (15 810) (15 762) (61 491) Net cash generated from operating 55 210 37 298 139 142 activities Investing activities Capital expenditure (19 310) (17 651) (30 250) Proceeds from disposal of property, plant - - 367 and equipment Acquisition of subsidiary companies - (30 767) (31 045) Net cash utilised in investing activities (19 310) (48 418) (60 928) Financing activities Net borrowings (repaid)/raised (58 177) 45 109 47 010 Dividends paid (26 280) (9 600) (9 600) Net cash (utilised in)/generated from (84 457) 35 509 37 410 financing activities Net (decrease)/increase in cash and cash (48 557) 24 389 115 624 equivalents Cash and cash equivalents at beginning of 112 363 (1 666) (1 666) period Exchange losses on cash and cash (10 071) (833) (1 595) equivalents Cash and cash equivalents at end of 53 735 21 890 112 363 period
Abbreviated segmental analysis Total revenue Six months ended September 2009 R`000 Africa Stolen vehicle recovery 163 096 Fleet management 77 951 United Kingdom Fleet management 120 492 North America Fleet management 9 759 Middle East Fleet management 54 086 International Fleet management and development 72 449 All other segments 2 747 Group Goodwill and IFRS 3intangible - assets Inter-segment elimination (69 288) Total 431 292 Six months ended September 2008 Africa Stolen vehicle recovery 163 537 Fleet management 99 682 United Kingdom Fleet management 129 182 North America Fleet management 4 554 Middle East Fleet management 6 555 International Fleet management and development 93 260 All other segments - Group Goodwill and IFRS 3intangible - assets Inter-segment elimination (64 324) Total 432 446 12 months ended March 2009 Africa Stolen vehicle recovery 334 351 Fleet management 156 106 United Kingdom Fleet management 264 494 North America Fleet management 39 112 Middle East Fleet management 83 665 International Fleet management and development 205 568 All other segments - Group Goodwill and IFRS 3intangible - assets Inter-segment elimination (125 157) Total 958 139
Inter-segment revenue EBITDA Assets Six months ended September 2009 R`000 R`000 R`000 Africa (2 201) 37 668 239 404 (2 936) 15 119 66 391 United Kingdom (823) 6 965 122 961 North America (10) (5 989) 15 790 Middle East (3 381) 6 060 49 582 International (59 541) 17 860 230 375 All other segments (396) (5 445) 142 561 Group - - 434 120 Inter-segment elimination 69 288 - (313 888) Total - 72 238 987 296 Six months ended September 2008 Africa - 36 933 261 987 - 18 331 59 931 United Kingdom (2 395) 3 422 174 664 North America - (1 241) 8 840 Middle East (239) 766 32 975 International (61 690) 29 875 126 749 All other segments - (3 694) 105 986 Group - - 469 212 Inter-segment elimination 64 324 - (158 914) Total - 84 392 1 081 430 12 months ended March 2009 Africa (1 433) 78 487 284 762 - 27 047 86 309
United Kingdom (5 863) 5 464 137 325 North America - (949) 13 081 Middle East (4 262) 17 838 53 586 International (113 599) 82 310 180 007 All other segments - (12 817) 139 412 Group - - 462 863 Inter segment elimination 125 157 - (253 811) Total - 197 380 1 103 534 Condensed statement of changes in equity Stated Share Other capital premium reserves
R`000 R`000 R`000 Balance at 31 March 2008 13 770 353 (109 817) Dividends paid - - - Total comprehensive income for the period - - (13 539) Share-based payments - - 962 Shares issued on business combination - 17 000 - Balance at 30 September 2008 13 787 353 (122 394) Total comprehensive income for the period - - (5 543) Share-based payments - - 1 044 Balance at 31 March 2009 13 787 353 (126 893) Dividends paid (note 6) - - - Total comprehensive loss for the period - - (40 948) Share-based payments - - 1 164 Balance at 30 September 2009 13 787 353 (166 677)
Accumulated losses Total R`000 R`000 Balance at 31 March 2008 (62 531) 598 018 Dividends paid (9 600) (9 600) Total comprehensive income for the period 36 585 23 046 Share-based payments - 962 Shares issued on business combination - 17 000 Balance at 30 September 2008 (35 546) 629 426 Total comprehensive income for the period 32 500 26 957 Share-based payments - 1 044 Balance at 31 March 2009 (3 046) 657 427 Dividends paid (note 6) (26 280) (26 280) Total comprehensive loss for the period 23 752 (17 196) Share-based payments - 1 164 Balance at 30 September 2009 (5 574) 615 115 Notes to the condensed group interim financial results 1. Basis of preparation and accounting policies These condensed group interim financial results 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 Listings Requirements of the JSE Limited and the South African Companies Act (1973), as amended. These interim financial results have not been audited or reviewed by the Company`s auditors. The condensed group interim financial results do not include all the information and disclosures required in the annual financial results and should be read in conjunction with the Group`s annual financial statements for the year ended 31 March 2009. The accounting policies applied are consistent with those followed in the preparation of the Group`s annual financial statements for the year ended 31 March 2009, except where the Group has adopted new or revised accounting standards. The Group adopted all IFRS and interpretations which became effective during the period under review and which were deemed applicable to the Group, including IAS 1 - Revised Presentation of Financial Statements and IFRS 8 - Operating Segments, none of which had any material impact on the Group`s results. MiX Telematics` businesses are managed primarily on a geographic and also on a product basis. In accordance with IFRS 8 - Operating Segments, MiX Telematics has revised the disclosure of its segments. In addition, the assessment of the profit performance of the operating segments has been amended and is now measured at the earnings before interest, tax, depreciation and amortisation ("EBITDA") level. This measurement provides a greater comparison of performance across all segments. All comparative figures have been reworked in accordance with this revised disclosure. The reconciliation of EBITDA to operating profit is set out in note 2.
2. Operating profit and EBITDA (R`000) Six months Six months 12 months ended ended Ended 2009 2008 2009
Operating profit 47 088 63 891 135 057 Add depreciation, amortisation and other 25 150 20 501 62 323 (note 3) EBITDA per segmental analysis 72 238 84 392 197 380 3. Depreciation, amortisation, impairment and other (R`000) Six months Six months 12 months
ended ended ended 2009 2008 2009 Depreciation and amortisation 14 344 10 927 24 896 Amortisation of IFRS3 intangible assets 10 806 11 155 26 798 Impairment of available-for-sale - - 1 728 financial asset Impairment of intangible assets - - 10 226 Negative goodwill - (1 581) (1 325) Total 25 150 20 501 62 323 4. Net finance cost(R`000) Six months Six months 12 months
Ended Ended Ended 2009 2008 2009 Interest expense on borrowings 17 432 11 941 26 887 Interest received on surplus cash (8 698) (503) (1 023) Net interest expense 8 734 11 438 25 864 Discount adjustment on non-current 394 - 67 provisions Total 9 128 11 438 25 931 5. Net borrowings Net borrowings are comprised of the sum of all interest bearing borrowings and bank overdraft less cash and cash equivalents, but excluding restricted cash. 6. Dividends A dividend of R26,3 million (2008: R9,6 million) was paid during the six months under review. Using shares in issue of 657 million (2008: 640 million) this equates to a dividend of 4,0 (2008: 1,5) cents per share. STC of R2,7 million was paid on the R26 million dividend. 7. Contingent liabilities 7.1. Connection incentives The Group has received connection and upgrade incentives from Mobile Telephone Networks (Proprietary) Limited for connecting subscribers to their network. In the event that a subscriber contract is terminated during the contract period, the full amount of the connection/upgrade incentive received for this subscriber contract becomes repayable. In the unlikely event that all subscriber contracts are terminated prematurely, the potential liability would amount to R76 million (31 March 2009: R79 million). No loss is expected under this arrangement. 7.2. Vehicle Security Association of South Africa ("VESA") Since the last report, the Competition Tribunal of South Africa has now held hearings following the complaint that VESA (of which MiX Telematics Africa (Proprietary) Limited was a member) had engaged in anti-competitive behaviour in the period ended in June 2003. The Competition Tribunal has not yet issued its ruling on this matter. Due to the nature of the complaint, even an adverse finding should result in no monetary fine being imposed by the Competition Tribunal. However, in the advent of an adverse finding, there is the risk that the Company may be sued by third parties who believe they suffered prejudice. It should be noted that the complainant in this matter has acknowledged that they did not suffer any damages as their venture was not capable of commercial launch during the period in question. 7.3. Net working capital dispute Post 30 September 2009, the Group settled the dispute with the vendors of OmniBridge RSA and OmniBridge Europe regarding the fair value of net working capital in the businesses at the effective date of acquisition. The settlement is not material and will have no impact on earnings. 8. Exchange rates 30 September 30 September 31 March 2009 2008 2009 The following major rates of exchange were used: SA Rand: United States - Dollar closing 7,43 8,20 9,72 - weighted average 8,19 7,94 9,05 SA Rand: British Pound - closing 11,83 14,90 13,82 - weighted average 12,43 15,06 14,73
9. Events after the reporting period The directors are not aware of any matter material or otherwise arising since the end of the period and up to the date of this report, not otherwise dealt with in this report. COMMENTARY 1. Nature of business MiX Telematics is a Group that is focused on all levels of vehicle telematics, combining vehicle tracking, driver and passenger safety and recovery services, a complete range of fleet management products and services and driver training services. 2. Operations MiX Telematics Africa: R Botha MiX Telematics Africa comprises Matrix, the stolen vehicle recovery business; and Enterprise and RSA Fleet, which provide fleet management solutions to clients in SADC countries and east and west Africa. Recent trading conditions in South Africa have been dreadful but despite this, the businesses held market share and produced solid results. MiX Telematics International: C Tasker MiX Telematics International provides fleet management services to Group subsidiaries and to global customers not served by MiX Telematics offshore companies. This business also forms the core of the Group`s research and development activities. The business`s results suffered due to Rand strength during the six months under review and the world-wide economic recession which impacted adversely on many of the Group`s global customers. MiX Telematics UK: T Buzer MiX Telematics UK provides fleet management solutions to customers across the United Kingdom and Europe. Whilst trading conditions were tough, our restructuring efforts in this business are starting to flow through to the bottom line as evident in an improved EBITDA profit. The 3 500 vehicle Go Ahead Bus fleet has been fully installed and has demonstrated the company`s ability to service large international clients and fleets. The company has recently been awarded the fleet contract for British Gas and other large trials are currently in the adjudication process. MiX Telematics SDI Middle East: C Tasker Acquired in September 2008, SDI operates in Dubai and Australia, supplying fleet management products and driver training services primarily to the oil and gas sectors in the Middle East and Eastern Europe. This sector has seen considerable contraction following the global economic meltdown and specifically the chaos caused to our target market by the recent volatility in the oil price. Thankfully, signs of life are starting to appear in the oil-and- gas sector and MiX SDI has recently won a significant tender for driving training services to PDO (a Shell operating company) in Oman. MiX Telematics North America: S Joselowitz Acquired in August 2008, this Dallas based business has been fully integrated into the Group, supplying fleet management solutions to its US customers. In the second half of the previous financial year, the business was successful in winning the Baker-Hughes and Chevron contracts. Like SDI, this business is heavily focused on the oil-and-gas sector where spending activity all but dried up during the period under review. Again like SDI, we are starting to see increased interest from potential customers and have recently been contracted to open a small Journey Management Center for Schlumberger in the USA. 3. Changes to the Board As previously announced on 24 July 2009, Mr S Evans resigned as finance director. Mr A Welton, previously a non-executive director and chairman of the audit committee, assumed the position of financial director pending a permanent appointment. Midrand12 November 2009 Registered office: Matrix Corner, Howick Close, Waterfall Park, Midrand Directors: SR Bruyns* (Chairman) SB Joselowitz (CEO) R Botha TE Buzer RA Frew* R Friedman* A Patel* CWR Tasker AR Welton F Roji*(alternate) *non-executive director Company secretary: Probity Business Services (Proprietary) Limited Auditors: PricewaterhouseCoopers Inc. Sponsor: Java Capital (Proprietary) Limited For more information on our interim results, please visit our website at www.mixtelematics.co.za/page/investor-results/ www.mixtelematics.com Date: 16/11/2009 08:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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