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MIX - Mix Telematics Limited - Audited group financial results for year ended
31 March 2010
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")
Audited group financial results for year ended 31 March 2010
Dividend increased by 25% to 5 cents per share
Revenue R840 million
- R477 million annuity
- R379 million foreign currency
EBITDA R160 million
Adjusted HEPS 12,8 cents per share
Cash generated from operations R175 million
Net borrowings reduced by R41 million to R48 million
A WORD FROM THE CEO, S JOSELOWITZ ("JOSS")
I am pleased to report that your Group navigated relatively unscathed through
what I can attest to being the toughest year in my business memory. The first
six months in particular were brutal from a trading perspective although we
definitely started seeing signs of easing as the year progressed. Thankfully,
our order pipeline at the start of the 2011 financial year is much healthier
than it was looking 12 months ago. Those investors that reviewed my report
last year will note that it did not come as a surprise to your management that
2010 was going to prove to be a tough year. Superficial analysis and
comparison to the previous reporting period will show basic earnings per share
down by 4,7%, but in fairness this flatters us. I have always maintained that
"adjusted HEPS" is the number that gives the most clarity into our performance
and at 12,8 cents per share, we are 19,5% down on the previous year.
Your Group operates in 111 countries. As a consequence of this global
footprint we are a Rand-hedge investment so any strengthening of the South
African currency is detrimental to our results. In the year under review, the
local currency was on average much stronger against the Pound, Dollar and Euro
than in the previous period. We estimate the adverse impact of the Rand
strength on our revenue has been R63 million and the subsequent impact on our
earnings has been R18 million. This translates into about 3 cents per share.
Whilst on the topic of number analysis, I will stick with my perennial
favourites:
- Annuity revenue: This is the cornerstone of our business model and at R477
million, annuity revenue is up 14% on last year.
- Foreign revenue: Based on a rampantly strong Rand, it is not surprising that
our foreign revenue is down 11% against the previous comparative reporting
period.
- Cash: Although marginally lower than last year, our strong cash flow is once
again evident, with cash generated from operations amounting to R175 million.
Our net debt position has reduced from R89 million in 2009 to R48 million.
Given our strong cash generation I`m pleased to report that your Board has
declared a dividend of 5 cents. This is an increase of 25% which is in line
with your Board`s aim of giving our shareholders a better than inflation
return on their investment.
Whilst world trading conditions have shown signs of improvement, the state of
the global economy remains fragile. Your directors and management are adopting
a cautious approach to an economic environment which could continue with the
current slow improvement or which could show a rapid reverse given the
financial crisis in the Euro monetary area. But we believe that we have
weathered the worst of the global meltdown, we have emerged in a stronger
position and I remain excited about the future of the Group.
Condensed group income statement
Year to Year to
31 March 31 March
2010 % 2009
Audited Change Audited
R`000 R`000
Revenue 840 488 (12,3) 958 139
Cost of sales (337 603) (393 515)
Gross profit 502 885 (10,9) 564 624
Other income - net 1 547 10 210
Operating expenses (394 577) (439 777)
Operating profit (note 4) 109 855 (18,7) 135 057
Net finance costs (16 329) (25 931)
Share of joint venture losses (529) (916)
Profit before tax 92 997 (14,1) 108 210
Taxation (26 909) (39 125)
Profit for the year attributable to 66 088 (4,3) 69 085
owners of the parent
Condensed group statement of comprehensive income
Year to Year to
31 March 31 March
2010 % 2009
Audited Change Audited
R`000 R`000
Profit for the year attributable to 66 088 69 085
owners of the parent
Other comprehensive income/(losses)
Exchange differences on translating (36 340) (17 888)
foreign entities
Fair value reserve on available-for-
sale financial asset
Arising in the current year 167 (1 211)
Charged to the income statement - 1 728
Exchange differences on net investment (14 981) (2 105)
in foreign operations
Taxation relating to components of 1 752 394
other comprehensive income
Other comprehensive loss for the year, (49 402) (19 082)
net of tax
Total comprehensive income for the year 16 686 50 003
attributable to owners of the parent
Ordinary shares (million)
- in issue 657 000 657 000
- weighted average 657 000 649 917
- diluted weighted average 657 974 649 917
Attributable earnings per share (cents)
- basic 10,1 (4,7) 10,6
- diluted 10,0 (5,7) 10,6
Reconciliation of headline earnings and adjusted headline earnings
Year to Year to
31 March 31 March
2010 % 2009
Audited Change Audited
R`000 R`000
Profit for the year attributable to 66 088 69 085
owners of the parent
Adjusted for:
Loss on disposal of property, plant and 496 425
equipment
Impairment of available-for-sale - 1 728
financial assets
Impairment of intangible assets - 10 226
Negative goodwill - (1 325)
Income tax effect on the above (111) (81)
components
Headline earnings 66 473 (17,0) 80 058
Headline earnings per share (cents)
- basic 10,1 (17,9) 12,3
- diluted 10,1 (17,9) 12,3
Headline earnings 66 473 80 058
Amortisation of IFRS 3 intangible 20 801 26 798
assets
Tax effect on the amortisation of the (3 217) (3 229)
IFRS 3 intangible assets
Adjusted headline earnings 84 057 (18,9) 103 627
Adjusted headline earnings per share
(cents)
- basic 12,8 (19,5) 15,9
- diluted 12,8 (19,5) 15,9
Condensed group statement of financial position
31 March 31 March
2010 2009
Audited Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 44 424 51 755
Intangible assets 653 171 693 345
Available-for-sale financial asset and other 2 683 3 675
assets
Deferred tax assets 8 209 13 481
Total non-current assets 708 487 762 256
Current assets
Inventory 29 691 40 544
Inventory held in client vehicles 24 809 23 456
Trade and other receivables 126 929 135 396
Taxation 1 857 436
Restricted cash 1 639 1 351
Cash and cash equivalents 155 011 140 095
Total current assets 339 936 341 278
Total assets 1 048 423 1 103 534
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13
Share premium 787 353 787 353
Retained earnings/(accumulated losses) 36 762 (3 046)
Other reserves (174 306) (126 893)
Total equity 649 822 657 427
Non-current liabilities
Borrowings 96 056 120 232
Deferred tax liabilities 27 067 35 611
Provisions 14 703 17 886
Total non-current liabilities 137 826 173 729
Current liabilities
Trade and other payables 124 090 139 511
Borrowings 71 740 81 170
Taxation 3 964 10 603
Bank overdraft 35 347 27 732
Provisions 25 634 13 362
Total current liabilities 260 775 272 378
Total equity and liabilities 1 048 423 1 103 534
Net borrowings (note 6) (48 132) (89 039)
Net asset value per share (cents) 98,9 100,1
Net tangible asset value per share (cents) (0,5) (5,5)
Capital expenditure
- incurred 45 658 30 250
- authorised but not spent 27 543 10 000
Condensed group statement of cash flows
Year to Year to
31 March 31 March
2010 2009
Audited Audited
R`000 R`000
Cash generated from operations 174 529 226 497
Net finance costs (15 178) (25 864)
Taxation paid (36 334) (61 491)
Net cash generated from operating activities 123 017 139 142
Investing activities
Capital expenditure (45 658) (30 250)
Proceeds from disposal of property, plant, 1 350 367
equipment and intangible assets
Acquisition of subsidiary companies, net of cash - (31 045)
acquired
Net cash utilised in investing activities (44 308) (60 928)
Financing activities
Net borrowings (repaid)/raised (33 312) 47 010
Dividends paid (26 247) (9 600)
Net cash (utilised in)/generated from financing (59 559) 37 410
activities
Net increase in cash and cash equivalents 19 150 115 624
Cash and cash equivalents at beginning of the 112 363 (1 666)
year
Exchange losses on cash and cash equivalents (11 849) (1 595)
Cash and cash equivalents at end of the year 119 664 112 363
Abbreviated segmental analysis
Inter-
Total segment
revenue revenue EBITDA
R`000 R`000 R`000
Year to 31 March 2010
Africa Vehicle tracking and 328 221 (5 115) 76 871
recovery
Fleet management 160 534 (7 383) 32 484
United Fleet management 204 924 (1 978) 6 368
Kingdom
North America Fleet management 23 920 (9) (11 031)
Middle East Fleet management 108 281 (6 036) 9 550
International Fleet management and 156 812 (121 683) 50 476
development
Corporate and consolidation journal - - (4 489)
entries
Inter-segment elimination (142 204) 142 204
Total 840 488 - 160 229
Year to 31 March 2009
Africa Vehicle tracking and 334 351 (1 433) 78 487
recovery
Fleet management 156 106 - 27 047
United Fleet management 264 494 (5 863) 5 464
Kingdom
North America Fleet management 39 112 - (949)
Middle East Fleet management 83 665 (4 262) 17 838
International Fleet management and 205 568 (113 599) 82 310
development
Corporate and consolidation journal - - (12 817)
entries
Inter-segment elimination (125 157) 125 157 -
Total 958 139 - 197 380
Assets Liabilities
R`000 R`000
Year to 31 March 2010
Africa Vehicle tracking and 272 194 (131 283)
recovery
Fleet management 72 301 (145 934)
United Fleet management 112 424 (62 564)
Kingdom
North America Fleet management 11 770 (23 602)
Middle East Fleet management 60 748 (23 473)
International Fleet management and 259 393 (135 256)
development
Corporate and consolidation journal 506 464 (123 360)
entries
Inter-segment elimination (246 871) 246 871
Total 1 048 423 (398 601)
Year to 31 March 2009
Africa Vehicle tracking and 284 762 (159 000)
recovery
Fleet management 86 309 (75 862)
United Fleet management 137 325 (130 632)
Kingdom
North America Fleet management 13 081 (12 836)
Middle East Fleet management 53 586 (13 652)
International Fleet management and 180 007 (150 564)
development
Corporate and consolidation journal 602 275 (157 372)
entries
Inter-segment elimination (253 811) 253 811
Total 1 103 534 (446 107)
Condensed group statement of changes in equity
Retained
earnings/
Share Share Other (accumulated
capital premium reserves losses) Total
R`000 R`000 R`000 R`000 R`000
Balance at 31 March 13 770 353 (109 817) (62 531) 598 018
2008
Dividends paid - - - (9 600) (9 600)
(note 7)
Total comprehensive - - (19 082) 69 085 50 003
income for the year
Share-based payments - - 2 006 - 2 006
Shares issued on - 17 000 - 17 000
business combination
Balance at 31 March 13 787 353 (126 893) (3 046) 657 427
2009
Dividends paid - - (26 280) (26 280)
(note 7)
Total comprehensive - - (49 402) 66 088 16 686
income for the year
Share-based payments - - 1 989 - 1 989
Balance at 31 March 13 787 353 (174 306) 36 762 649 822
2010
Notes to the condensed group financial statements
1. Audit opinion
The independent auditors, PricewaterhouseCoopers Inc., have issued their
opinion on the Group`s financial statements for the year ended 31 March 2010.
The audit was conducted in accordance with International Standards on
Auditing. A copy of their unqualified audit report is available for inspection
at the Company`s registered office. These condensed financial statements have
been derived from the Group financial statements and are consistent in all
material respects with the Group financial statements.
2. Basis of preparation and accounting policies
These condensed year end 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, the Listings
Requirements of the JSE Limited and the South African Companies Act.
The accounting policies applied are consistent with those followed in the
preparation of the consolidated financial statements for the year ended 31
March 2009, except where the Group has adopted new or revised accounting
standards.
The Group has adopted the following new or revised accounting standards in the
current year, which had no material impact on the Group`s results:
- IAS 1 (Revised) Presentation of Financial Statements
- IFRS 8 Operating Segments
- Amendments to IFRS 7 Financial Instruments: Disclosures - Improving
Disclosures about Financial Instruments
3. Operating segments
The 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, amortisation, impairment of assets and negative goodwill
("EBITDA") level. This measure provides a greater comparison of performance
across all segments. All comparative figures have been reclassified in
accordance with this revised disclosure. A reconciliation of EBITDA to
operating profit is set out in note 4.
4. Operating profit and EBITDA
Year to Year to
31 March 31 March
2010 2009
Audited Audited
R`000 R`000
Operating profit 109 855 135 057
Add depreciation, amortisation, impairment and 50 374 62 323
other (note 5)
EBITDA per segmental analysis 160 229 197 380
5. Depreciation, amortisation, impairment and
other
Year to Year to
31 March 31 March
2010 2009
Audited Audited
R`000 R`000
Depreciation and amortisation 29 573 24 896
Amortisation of IFRS 3 intangible assets 20 801 26 798
Impairment of available-for-sale financial - 1 728
assets
Impairment of intangible assets - 10 226
Negative goodwill - (1 325)
Total 50 374 62 323
6. Net borrowings
Net borrowings is calculated as being interest-bearing borrowings less cash
and cash equivalents, but excluding restricted cash.
7. Dividends
A dividend of R26,3 million (2009: R9,6 million) was paid during the year
under review. Using shares in issue of 657 million (2009: 640 million) this
equates to a dividend of 4,0 (2009: 1,5) cents per share.
8. Contingent liabilities
Connection incentives
The Group receives connection/upgrade incentives from Mobile Telephone
Networks (Proprietary) Limited for connecting subscribers to their network. In
the event that a subscriber contract is terminated during the contract period,
the full amount of the connection/upgrade incentive received for this
subscriber contract becomes repayable. In the unlikely event that every
subscriber contract is terminated prematurely, the potential liability would
amount to R79,6 million (31 March 2009: R78,9 million). Any loss incurred in
terms of this arrangement is considered minimal.
9. Exchange rates
31 March 31 March
2010 2009
The following major rates of exchange were used:
SA Rand: United States Dollar - closing 7,37 9,72
- average 7,85 9,05
SA Rand: British Pound - closing 11,10 13,82
- average 12,51 14,73
10. Subsequent events
Other than the dividend declared of 5 cents per share, and the Vehicle
Security Association of South Africa ("VESA") developments detailed below, the
directors are not aware of any matter material or otherwise arising since 31
March 2010 and up to the date of this report, not otherwise dealt with herein.
As previously reported, the Competition Commission had referred a complaint
that VESA (of which Matrix (now MiX Telematics Africa (Proprietary) Limited)
was a member) had engaged in anti-competitive behaviour. This complaint was
heard by the Competition Tribunal which, subsequent to year end found against
MiX Telematics Africa (Proprietary) Limited, three other VESA members ("the
parties") and VESA. The parties have subsequently appealed the ruling. At the
time of the ruling the maximum exposure to the parties was the legal costs of
the aggrieved party. These costs are not considered material. As previously
advised, no fine could be imposed under law by the Tribunal.
11. Changes to the Board
As previously announced, Mr S Evans resigned as finance director on 24 July
2009. In November 2009 Mr T Welton resigned as a non-executive and audit
committee chairman and was appointed an executive director and chief financial
officer, Mr A Patel was appointed the chairman of the audit committee and Ms F
Roji was appointed a member of the audit committee.
COMMENTARY
1. Nature of business
The MiX Telematics group is focused on all levels of vehicle telematics,
combining vehicle tracking and recovery, fleet management, driver and
passenger safety and compliance services.
2. Operations
MiX Telematics Africa
MiX Telematics Africa comprises Matrix, the vehicle tracking and recovery
business, and Enterprise and RSA Fleet which provide fleet management
solutions to clients in South Africa and SADC countries in east and west
Africa. Vehicle Tracking and Recovery subscriber numbers held firm, supported
by the Matrix premium brand, during a year in which vehicle sales volumes
declined due to the economic downturn. In the recent months new vehicle sales
have showed improvement, an encouraging start to the new financial year. The
Fleet Management business increased its subscriber base and improved revenue
per subscriber, achieving better than expected results from the African
expansion plan.
MiX Telematics International
MiX Telematics International provides fleet management products and services
to Group subsidiary companies and to certain global customers and is also the
Group`s technology and development centre. The year saw the release of several
new products and infrastructure platforms aimed at improving the service to
customers. The global hosting infrastructure was expanded to cater for the
growing subscriber connection base.
MiX Telematics UK
MiX Telematics UK provides fleet management products and solutions to
customers across the United Kingdom, Europe and North Africa. These solutions
have provided major quantifiable running cost, safety and carbon emission
benefits to customers operating in an environment in which legislative
controls are becoming more stringent. The United Kingdom and Europe suffered
an extended recession during the year but the recovery, whilst fragile, is
producing promising enquiries and new orders.
MiX Telematics SDI Middle East
MiX Telematics SDI provides fleet management products and driver training
solutions to customers in the Middle East, Eastern Europe and Australasia.
Unit sales and connection performance was lower than expected due to the
recession which severely impacted the oil and gas producers. Despite the
downturn in business from existing customers, SDI was successful in being
awarded contracts with a major global customer and significant clients in the
Middle East.
MiX Telematics North America
MiX Telematics North America provides fleet management products and solutions
to its customers in the USA and Canada. The US economy contracted
significantly during the past year, only recently showing signs of
improvement. Not having a sizeable annuity base to act as a shock absorber,
this contraction impacted adversely on results. Of late, an increase in
economic activity in the region has been experienced, particularly in the oil
and gas sector and new enquiries are beginning to produce encouraging results.
The business is expanding its footprint and will in future cover central and
south America.
For and on behalf of the board:
SR Bruyns SB Joselowitz
Midrand
7 June 2010
NOTICE OF DIVIDEND DECLARATION NUMBER 3 AND SALIENT FEATURES
Notice is hereby given that the directors have declared a cash dividend of 5
cents per share for the year ended 31 March 2010. The salient dates in order
to participate in the dividend are:
- Last date to trade cum dividend Friday, 23 July 2010
- Trading ex dividend commences Monday, 26 July 2010
- Record date Friday, 30 July 2010
- Payment date Monday, 2 August 2010
Share certificates may not be dematerialised or rematerialised between Monday,
26 July 2010 and Friday, 30 July 2010, both dates inclusive.
On behalf of the board
Probity Business Services (Proprietary) Limited
(Company Secretary)
7 June 2010
Registered office:
Matrix CornerHowick Close, Waterfall ParkMidrand
Directors: SR Bruyns* (Chairman)SB Joselowitz (CEO)R BothaTE BuzerRA Frew*R
Friedman*A Patel*CWR TaskerAR WeltonF Roji* (alternate)*Non-executive
Company secretary:
Probity Business Services (Proprietary) Limited
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Java Capital (Proprietary) Limited
For more information on our final results, please visit our website at
www.mixtelematics.com
Date: 07/06/2010 08:00:01 Supplied by www.sharenet.co.za
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