MIDRAND, South Africa--(BUSINESS WIRE)--MiX Telematics Limited (NYSE:MIXT, JSE:MIX), a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), today announced financial results for its second quarter and first half of fiscal 2018, which ended on September 30, 2017.
“MiX reported a very strong second quarter, highlighted by our ability to exceed expectations across all key operating metrics,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “Our 18% year over year subscription revenue growth on a constant currency basis was broad-based, driven by uptake from our premium fleet customers globally. Additionally, this is the fifth consecutive quarter of adjusted EBITDA margin improvement. We are confident in our ability to maintain the momentum as we continue to execute our strategic initiatives and remain committed to achieving our longer-term adjusted EBITDA margin target of 30% plus.”
Financial performance for the three months ended September 30, 2017
Subscription revenue: Subscription revenue was R349.3 million ($25.8 million), an increase of 15.9% compared to R301.3 million ($22.2 million) for the second quarter of fiscal 2017. Subscription revenue increased more than 18% on a constant currency basis. Subscription revenue benefited from an increase of over 55,000 subscribers, representing an increase in the subscriber base of 9.4% from September 2016 to September 2017. Subscription revenue has also benefited from an expansion in the average revenue per user.
Total revenue: Total revenue was R411.2 million ($30.3 million), an increase of 11.7% compared to R368.2 million ($27.1 million) for the second quarter of fiscal 2017. Hardware and other revenue was R61.9 million ($4.6 million), a decrease of 7.3% compared to R66.8 million ($4.9 million) for the second quarter of fiscal 2017.
Gross Margin: Gross profit was R269.4 million ($19.9 million), compared to R253.1 million ($18.7 million) for the second quarter of fiscal 2017. Gross profit margin was 65.5%, compared to 68.8% for the second quarter of fiscal 2017.
Operating Margin: Operating profit was R45.3 million ($3.3 million), compared to R26.2 million ($1.9 million) for the second quarter of fiscal 2017. Operating margin was 11.0%, compared to 7.1% for the second quarter of fiscal 2017. The margin expansion was attributable primarily to the revenue growth leveraging our fixed overhead, and to ongoing cost management initiatives. Operating expenses of R224.1 million ($16.5 million) have declined by R2.8 million ($0.2 million), or 1.3%, since the second quarter of fiscal 2017.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was R103.3 million ($7.6 million), compared to R66.2 million ($4.9 million) for the second quarter of fiscal 2017. Adjusted EBITDA margin, a non-IFRS measure, for the second quarter of fiscal 2018 was 25.1%, compared to 18.0% for the second quarter of fiscal 2017.
Profit for the period and earnings per share: Profit for the period was R24.2 million ($1.8 million), compared to R23.2 million ($1.7 million) in the second quarter of fiscal 2017. Profit for the period includes a net foreign exchange gain of R3.2 million ($0.2 million) before tax. During the second quarter of fiscal 2017, profit for the period included a net foreign exchange loss of R8.4 million ($0.6 million), primarily relating to U.S. Dollar cash reserves, which are sensitive to R:$ exchange rate movements.
Earnings per diluted ordinary share were 4 South African cents, consistent with the second quarter of fiscal 2017. For the second quarter of fiscal 2018, the calculation was based on diluted weighted average ordinary shares in issue of 566.0 million compared to 633.4 million diluted weighted average ordinary shares in issue during the second quarter of fiscal 2017. The diluted weighted average ordinary shares in issue during the second quarter of fiscal 2018 were lower than in the second quarter of fiscal 2017, due to the weighted average impact of the share repurchases fully described in note 7 to the unaudited Group interim financial results for the six months ended September 30, 2017.
The Company's effective tax rate for the quarter was 50.2% compared to (15.4%) for the second quarter of fiscal year 2017. Ignoring the impact of net foreign exchange gains and losses, and related tax consequences, the tax rate which is used in determining adjusted earnings below, was 32.0% compared to 30.0% in the second quarter of fiscal 2017.
On a U.S. Dollar basis, and using the September 30, 2017 exchange rate of R13.5618 per U.S. Dollar, and at a ratio of 25 ordinary shares to one American Depositary Share ("ADS"), profit for the period was $1.8 million, or 8 U.S. cents per diluted ADS.
Adjusted earnings for the period and adjusted earnings per share: Adjusted earnings for the period, a non-IFRS measure, was R30.9 million ($2.3 million) compared to R20.0 million ($1.5 million) for the second quarter of fiscal 2017 and excludes the net foreign exchange gain of R3.2 million ($0.2 million) referred to above. Adjusted earnings for the second quarter of fiscal 2017 excluded the net foreign exchange loss of R8.4 million ($0.6 million) referred to above. Adjusted earnings per diluted ordinary share, also a non-IFRS measure, were 5 South African cents, compared to 3 South African cents in the second quarter of fiscal 2017.
On a U.S. Dollar basis, using the September 30, 2017 exchange rate of R13.5618 per U.S. Dollar, and at a ratio of 25 ordinary shares to one ADS, adjusted earnings for the period were $2.3 million, or 10 U.S. cents per diluted ADS.
Statement of Financial Position and Cash Flow: At September 30, 2017, the Company had R256.9 million ($18.9 million) of net cash and cash equivalents, compared to R311.3 million ($23.0 million) at March 31, 2017. The Company generated R104.0 million ($7.7 million) in net cash from operating activities for the three months ended September 30, 2017 and invested R100.2 million ($7.4 million) in capital expenditures during the quarter (including investments in in-vehicle devices of R71.8 million or $5.3 million), leading to free cash flow, a non-IFRS measure, of R3.8 million ($0.3 million) for the second quarter of fiscal 2018, compared with negative free cash flow of R15.8 million ($1.2 million) for the second quarter of fiscal 2017. The Company utilized R12.6 million ($0.9 million) in financing activities, compared to R488.8 million ($36.0 million) utilized during the second quarter of fiscal 2017. The cash utilized in financing activities during the second quarter of fiscal 2018 mainly consists of dividends paid. The cash utilized in financing activities during the second quarter of fiscal 2017 included share repurchases of R473.6 million ($34.9 million) and dividends paid of R15.3 million ($1.1 million).
Financial performance for the first half of fiscal 2018
Subscription revenue: Subscription revenue increased to R684.6 million ($50.5 million), an increase of 12.7% compared to R607.5 million ($44.8 million) for the first half of fiscal 2017. On a constant currency basis, subscription revenue increased by more than 17.0%. Subscription revenue benefited from an increase of over 55,000 subscribers, representing an increase in subscribers of 9.4% from September 2016 to September 2017. Subscription revenue has also benefited from an expansion in the average revenue per user.
Total revenue: Total revenue for the first half of fiscal 2018 was R816.8 million ($60.2 million), an increase of 9.3% compared to R747.3 million ($55.1 million) for the first half of fiscal 2017. Hardware and other revenue was R132.2 million ($9.7 million), compared to R139.7 million ($10.3 million) for the first half of fiscal 2017.
Gross margin: Gross profit for the first half of fiscal 2018 was R541.0 million ($39.9 million), an increase of 6.3% compared to R508.9 million ($37.5 million) for the first half of fiscal 2017. Gross profit margin was 66.2%, compared to 68.1% for the first half of fiscal 2017.
Operating margin: Operating profit for the first half of fiscal 2018 was R88.2 million ($6.5 million), compared to R49.1 million ($3.6 million) posted in the first half of fiscal 2017. The operating margin for the first half of fiscal 2018 was 10.8%, compared to the 6.6% posted in the first half of fiscal 2017. The margin expansion was attributable primarily to the revenue growth leveraging our fixed overhead, and to ongoing cost management initiatives.
Adjusted EBITDA: Adjusted EBITDA was R197.2 million ($14.5 million) compared to R126.7 million ($9.3 million) for the first half of fiscal 2017. The Adjusted EBITDA margin for the first half of fiscal 2018 was 24.1%, compared to 17.0% in the first half of fiscal 2017.
Profit for the period and earnings per share: Profit for the first half of fiscal 2018 was R58.1 million ($4.3 million), compared to R55.1 million ($4.1 million) in the first half of fiscal 2017. Profit for the period includes a net foreign exchange loss of R1.8 million ($0.1 million) before tax. During the first half of fiscal 2017, a net foreign exchange gain of R11.5 million ($0.8 million) was recorded, primarily relating to U.S. Dollar cash reserves which are sensitive to R:$ exchange rate movements.
Earnings per diluted ordinary share were 10 South African cents, compared to 8 South African cents in the first half of fiscal 2017. For the first half of fiscal 2018, the calculation was based on diluted weighted average ordinary shares in issue of 566.7 million compared to 697.9 million diluted weighted average ordinary shares in issue during the first half of fiscal 2017. The diluted weighted average ordinary shares in issue during the first half of fiscal 2018 were lower than in the first half of fiscal 2017 due to the weighted average impact of the share repurchases fully described in note 7 to the unaudited Group interim financial results for the six months ended September 30, 2017.
The Company's effective tax rate for the first half of fiscal 2018 was 34.0% compared to 19.1% for the first half of fiscal 2017.
Adjusted earnings for the period and adjusted earnings per share: Adjusted earnings for the first half of fiscal 2018, a non-IFRS measure, was R61.6 million ($4.5 million), compared to R37.3 million ($2.7 million) in the first half of fiscal 2017 and excludes the net foreign exchange loss of R1.8 million ($0.1 million) referred to above. Adjusted earnings for the first half of fiscal 2017, excludes the net foreign exchange gain of R11.5 million ($0.8 million). Adjusted earnings per diluted ordinary share was 11 South African cents, compared to 5 South African cents for the first half of fiscal 2017.
Ignoring the impact of net foreign exchange gains and losses, and related tax consequences, the effective tax rate, which is used in calculating adjusted earnings, was 31.4% compared to 34.2% in the first half of fiscal 2017.
On a U.S. Dollar basis, and using the September 30, 2017 exchange rate of R13.5618 per U.S. Dollar, and at a ratio of 25 ordinary shares to one ADS, adjusted earnings for the first half of fiscal 2018 were $4.5 million, or 20 U.S. cents per diluted ADS, compared to $2.7 million, or 10 U.S. cents per diluted ADS in the first half of fiscal 2017.
Cash Flow: The Company generated R122.3 million ($9.0 million) in net cash from operating activities for the first half of fiscal 2018 and invested R182.5 million ($13.5 million) in capital expenditures during the period (including investments in in-vehicle devices of R124.5 million or $9.2 million), leading to negative free cash flow of R60.2 million ($4.4 million), compared with negative free cash flow of R50.0 million ($3.7 million) for the first half of fiscal 2017. Capital expenditure was R35.3 million ($2.6 million) higher than in the first half of fiscal 2017 primarily as a result of increased investments in in-vehicle devices due to the continued increase in the number of bundled subscription contracts.
Segment commentary for the first half of fiscal 2018
The segment results below are presented on an integral margin basis. In respect of revenue, this method of measurement entails reviewing the segmental results based on external revenue only. In respect of Adjusted EBITDA (the profit measure identified by the Company), the margin generated by our Central Services Organization ("CSO"), net of any unrealized intercompany profit, is allocated to the geographic region where the external revenue is recorded by our Regional Sales Offices ("RSOs").
CSO continues as a central service organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers and distributors. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments. CSO's operating expenses are not allocated to each RSO.
Each RSO's results reflect the external revenue earned, as well as the Adjusted EBITDA earned (or loss incurred) by each operating segment before the CSO and corporate cost allocations.
For further information in this regard, please refer to note 3 of the unaudited Group interim financial results for the six months ended September 30, 2017.
Segment |
Subscription |
Total Revenue |
Adjusted EBITDA |
% change on |
Adjusted EBITDA |
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Africa | 423,157 | 469,549 | 209,392 | 33.0% | 44.6% | |||||
The subscriber base grew 8.7% year over year. This growth and an increase in the number of bundled subscriptions resulted in subscription revenue growth of 13.0% in the segment. Total revenue increased by 11.8%. Enhanced scale and stringent cost control drove an expansion in the Adjusted EBITDA margin to 44.6% (up from the 37.5% Adjusted EBITDA margin reported in the first half of fiscal 2017). |
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Europe | 55,923 | 89,405 | 29,443 | 39.0% | 32.9% | |||||
The region's subscriber base grew by 5.2% year over year and in constant currency, subscription revenue growth was 7.0%. Total revenue increased on a constant currency basis by 28.7% due to higher hardware revenues compared to the first half of fiscal 2017. The region reported an Adjusted EBITDA margin of 32.9% (up from the 27.0% Adjusted EBITDA margin reported in the first half of fiscal 2017). | ||||||||||
Americas | 83,012 | 95,880 | 24,958 | 82.0% | 26.0% | |||||
The Americas segment subscriber base grew by 22.5% year over year. In addition, subscription revenue was assisted by the market’s preference for bundled deals across new and existing customers. Subscription revenue growth on a constant currency basis was 60.7%. Total revenue improved by 34.9% on a constant currency basis as hardware sales were lower. The region reported an Adjusted EBITDA margin of 26.0% (up from the 17.5% Adjusted EBITDA margin reported in the first half of fiscal 2017). | ||||||||||
Middle East and Australasia |
98,900 | 135,996 | 49,570 | 22.7% | 36.4% | |||||
Subscribers increased by 5.3% year over year while subscription revenue increased by 5.4% on a constant currency basis. Total revenue in constant currency declined by 3.2% as hardware and other revenues were lower than in the first half of fiscal 2017. The region reported an Adjusted EBITDA margin of 36.4% (up from the 26.4% Adjusted EBITDA margin reported in the first half of fiscal 2017). The improvement in Adjusted EBITDA margin was as a result of the restructuring plans implemented during the fourth quarter of fiscal 2017. |
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Brazil | 23,120 | 25,447 | 8,752 | 101.1% | 34.4% | |||||
Subscribers increased by 44.6% year over year and subscription revenue, also aided by the market’s preference for bundled deals, increased by 67.6% on a constant currency basis. On a constant currency basis, total revenue increased by 54.5%. The segment reported Adjusted EBITDA of R8.8 million in the first half of fiscal 2018, at an Adjusted EBITDA margin of 34.4% (up from the 25.4% Adjusted EBITDA margin reported in the first half of fiscal 2017). | ||||||||||
Central Services Organization ("CSO") | 515 | 553 | (68,849) | (7.0%) | — | |||||
CSO is responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments. The negative Adjusted EBITDA reported arises as a result of operating expenses carried by the segment. |
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Business Outlook
MiX Telematics has translated U.S. Dollar amounts in this Business Outlook paragraph from South African Rand at the exchange rate of R14.0838 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at October 30, 2017.
Based on information as of today, November 2, 2017, the Company is issuing the following financial guidance for the full 2018 fiscal year:
- Subscription revenue - R1,420 million to R1,432 million ($100.8 million to $101.7 million), which would represent subscription revenue growth of 14.5% to 15.5% compared to fiscal 2017.
- Total revenue - R1,661 million to R1,687 million ($117.9 million to $119.8 million), which would represent revenue growth of 7.8% to 9.5% compared to fiscal 2017.
- Adjusted EBITDA - R403 million to R421 million ($28.6 million to $29.9 million), which would represent Adjusted EBITDA growth of 33.6% to 39.7% compared to fiscal 2017.
- Adjusted earnings per diluted ordinary share of 22.0 to 23.5 South African cents based on 568 million diluted ordinary shares in issue, and based on an effective tax rate of 28.0% to 31.0%. At a ratio of 25 ordinary shares to one ADS, this equates to adjusted earnings per diluted ADS of 39.1 to 41.7 U.S. cents.
For the third quarter of fiscal 2018, the Company expects subscription revenue to be in the range of R362 million to R367 million ($25.7 million to $26.1 million) which would represent subscription revenue growth of 16.5% to 18.1% compared to the third quarter of fiscal 2017.
The key assumptions used in deriving the forecast are as follows:
- Growth in subscription revenue and vehicles under subscription are based on expected growth rates related to market conditions and takes into account growth rates achieved previously.
- Achieving hardware sales according to expectations. Hardware sales are dependent on the volumes of bundled solutions selected by customers.
- An average forecast exchange rate for the 2018 fiscal year of R13.5000 per $1.00.
The forecast is the responsibility of the board of directors and has not been reviewed or reported on by the Company’s external auditors. The Company’s policy is to give guidance on a quarterly basis, if necessary, and does not update guidance between quarters.
The Company provides earnings guidance only on a non-IFRS basis and does not provide a reconciliation of forward-looking Adjusted EBITDA and Adjusted Earnings per Diluted Ordinary Share guidance to the most directly comparable IFRS financial measures because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for foreign exchange gains/(losses) and related tax consequences, restructuring costs, share-based compensation costs, and other charges reflected in the Company’s reconciliation of historic non-IFRS financial measures, the amounts of which, based on past experience, could be material.
The information disclosed in this “Business Outlook” paragraph complies with the disclosure requirements in terms of paragraph 8.38 of the JSE Listings Requirements which deals with profit forecasts.
Quarterly Reporting Policy in respect of JSE Listings Requirements
Following the listing of the Company’s ADSs on the New York Stock Exchange, the Company has adopted a quarterly reporting policy. As a result of such quarterly reporting the Company is, in terms of paragraph 3.4(b)(ix) of the JSE Listings Requirements, not required to publish trading statements in terms of paragraph 3.4(b)(i) to (viii) of the JSE Listings Requirements.
Conference Call Information
MiX Telematics management will also host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 2:00 p.m. (South African Time) on November 2, 2017 to discuss the Company's financial results and current business outlook:
- The live webcast of the call will be available at the “Investor Information” page of the Company’s website, http://investor.mixtelematics.com.
- To access the call, dial +1-888-695-0609 (within the United States) or 0 800 982 089 (within South Africa) or +1-719-457-2641 (outside of the United States). The conference ID is 9357437.
- A replay of this conference call will be available for a limited time at +1-844-512-2921 (within the United States) or +1-412-317-6671 (within South Africa or outside of the United States). The replay conference ID is 9357437.
- A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.
About MiX Telematics Limited
MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to customers managing over 640,000 assets in approximately 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with solutions for safety, efficiency, risk and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania, Thailand and the United Arab Emirates as well as a network of more than 130 fleet partners worldwide. MiX Telematics shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX Telematics ADSs are listed on the New York Stock Exchange (NYSE: MIXT). For more information visit www.mixtelematics.com.
Forward-Looking Statements
This press release includes certain “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements concerning our financial guidance for the third quarter and full year of fiscal 2018, our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, those described under the caption “Risk Factors” in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission (the "SEC") for the fiscal year ended March 31, 2017, as updated by other reports that the Company files with or furnishes to the SEC. The Company assumes no obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
Non-IFRS financial measures
Adjusted EBITDA
To provide investors with additional information regarding its financial results, the Company has disclosed within this press release, Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is a non-IFRS financial measure; it does not represent cash flows from operations for the periods indicated and should not be considered an alternative to net income as an indicator of the Company's results of operations or as an alternative to cash flows from operations as an indicator of liquidity. Adjusted EBITDA is defined as the profit for the period before income taxes, net finance income/(costs) including foreign exchange gains/(losses), depreciation of property, plant and equipment including capitalized customer in-vehicle devices, amortization of intangible assets including capitalized in-house development costs and intangible assets identified as part of a business combination, share-based compensation costs, restructuring costs, profits/(losses) on the disposal or impairments of assets or subsidiaries, insurance reimbursements relating to impaired assets and certain litigation costs.
The Company has included Adjusted EBITDA and Adjusted EBITDA margin in this press release because they are key measures that the Company's management and Board of Directors use to understand and evaluate its core operating performance and trends; to prepare and approve its annual budget; and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of the Company's core business. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provides useful information to investors and others in understanding and evaluating its operating results.
The Company's use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from or as a substitute for analysis of our results as reported under IFRS. Some of these limitations are:
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
- Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company; and
- other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including operating profit, profit for the period and our other results.
Headline Earnings
Headline earnings is a profit measure required for JSE-listed companies and is calculated in accordance with circular 2/2015 issued by the South African Institute of Chartered Accountants. The profit measure is determined by taking the profit for the period prior to certain separately identifiable re-measurements of the carrying amount of an asset or liability that arose after the initial recognition of such asset or liability net of related tax (both current and deferred) and related non-controlling interest.
Adjusted Earnings and Adjusted Earnings Per Share
Adjusted earnings per share is defined as profit attributable to owners of the parent, MiX Telematics Limited, excluding net foreign exchange gains/(losses) net of tax, divided by the weighted average number of ordinary shares in issue during the period.
We have included Adjusted earnings per share in this press release because it provides a useful measure for period-to-period comparisons of the Company's core business by excluding net foreign exchange gains/(losses) from earnings. Accordingly, we believe that Adjusted earnings per share provides useful information to investors and others in understanding and evaluating the Company's operating results.
Free cash flow
Free cash flow is determined as net cash generated from operating activities less capital expenditure for investing activities. We believe that free cash flow provides useful information to investors and others in understanding and evaluating the Company’s cash flows as it provides detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures including investments in in-vehicle devices and development expenditure.
Constant currency and U.S. Dollar financial information
Financial information presented in United States Dollars ("U.S. Dollars" and "$") and constant currency financial information presented as part of the segment commentary constitute pro forma financial information under the JSE Listings Requirements. Unless otherwise stated, MiX Telematics has translated U.S. Dollar amounts from South African Rand ("R") at the exchange rate of R13.5618 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at September 30, 2017.
Constant currency information has been presented to illustrate the impact of changes in currency rates on the Group’s results. The constant currency information has been determined by adjusting the current financial reporting period results to the prior period average exchange rates, determined as the average of the monthly exchange rates applicable to the period. The measurement has been performed for each of the Group’s currencies, including the U.S. Dollar and British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results compared to the prior period results.
This pro forma financial information is the responsibility of the Group’s board of directors and is presented for illustrative purposes. Because of its nature, the pro forma financial information may not fairly present MiX Telematics’ financial position, changes in equity, results of operations or cash flows. The pro forma financial information does not constitute pro forma information in accordance with the requirements of Regulation S-X of the SEC or generally accepted accounting principles in the United States. In addition, the rules and regulations related to the preparation of pro forma financial information in other jurisdictions may also vary significantly from the requirements applicable in South Africa. The information contained in this report has not been reviewed or audited by the Group's auditors.
JSE Sponsor: |
Java Capital Trustees and Sponsors Proprietary Limited |
Unaudited interim financial results |
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CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||
South African Rand |
Six months |
Six months |
Three months |
Three months |
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Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Revenue | 816,830 | 747,256 | 411,167 | 368,160 | ||||||||
Cost of sales | (275,864 | ) | (238,369 | ) | (141,732 | ) | (115,050 | ) | ||||
Gross profit | 540,966 | 508,887 | 269,435 | 253,110 | ||||||||
Other income/(expenses) - net | 2,879 | 530 | (64 | ) | 71 | |||||||
Operating expenses | (455,676 | ) | (460,321 | ) | (224,116 | ) | (226,955 | ) | ||||
-Sales and marketing | (98,238 | ) | (97,652 | ) | (49,259 | ) | (49,122 | ) | ||||
-Administration and other charges | (357,438 | ) | (362,669 | ) | (174,857 | ) | (177,833 | ) | ||||
Operating profit | 88,169 | 49,096 | 45,255 | 26,226 | ||||||||
Finance (costs)/income - net | (84 | ) | 18,995 | 3,402 | (6,120 | ) | ||||||
-Finance income | 3,900 | 23,082 | 5,108 | 6,102 | ||||||||
-Finance costs | (3,984 | ) | (4,087 | ) | (1,706 | ) | (12,222 | ) | ||||
Profit before taxation | 88,085 | 68,091 | 48,657 | 20,106 | ||||||||
Taxation | (29,941 | ) | (12,973 | ) | (24,417 | ) | 3,092 | |||||
Profit for the period | 58,144 | 55,118 | 24,240 | 23,198 | ||||||||
Attributable to: | ||||||||||||
Owners of the parent | 58,084 | 55,130 | 24,248 | 23,205 | ||||||||
Non-controlling interests | 60 | (12 | ) | (8 | ) | (7 | ) | |||||
58,144 | 55,118 | 24,240 | 23,198 | |||||||||
Earnings per share | ||||||||||||
-basic (R) | 0.10 | 0.08 | 0.04 | 0.04 | ||||||||
-diluted (R) | 0.10 | 0.08 | 0.04 | 0.04 | ||||||||
Earnings per American Depositary Share | ||||||||||||
-basic (R) | 2.59 | 1.98 | 1.08 | 0.92 | ||||||||
-diluted (R) | 2.56 | 1.97 | 1.07 | 0.92 | ||||||||
Ordinary shares ('000)1 | ||||||||||||
-in issue at September 30 | 559,381 | 562,259 | 559,381 | 562,259 | ||||||||
-weighted average | 560,677 | 695,746 | 558,824 | 632,113 | ||||||||
-diluted weighted average | 566,715 | 697,920 | 566,008 | 633,413 | ||||||||
Weighted average American Depositary Shares ('000)1 | ||||||||||||
-in issue at September 30 | 22,375 | 22,490 | 22,375 | 22,490 | ||||||||
-weighted average | 22,427 | 27,830 | 22,353 | 25,285 | ||||||||
-diluted weighted average | 22,669 | 27,917 | 22,640 | 25,337 | ||||||||
1 |
September 30, 2017 figure excludes 40,000,000 (September 30, 2016: 40,000,000) treasury shares held by MiX Telematics Investments Proprietary Limited ("MiX Investments"), a wholly owned subsidiary of the Group. |
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CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||
United States Dollar |
Six months ended |
Six months ended |
Three months ended |
Three months |
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Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Revenue | 60,230 | 55,100 | 30,318 | 27,147 | ||||||||
Cost of sales | (20,341 | ) | (17,577 | ) | (10,451 | ) | (8,483 | ) | ||||
Gross profit | 39,889 | 37,523 | 19,867 | 18,664 | ||||||||
Other income/(expenses) - net | 212 | 39 | (5 | ) | 5 | |||||||
Operating expenses | (33,600 | ) | (33,943 | ) | (16,525 | ) | (16,735 | ) | ||||
-Sales and marketing | (7,244 | ) | (7,201 | ) | (3,632 | ) | (3,622 | ) | ||||
-Administration and other charges | (26,356 | ) | (26,742 | ) | (12,893 | ) | (13,113 | ) | ||||
Operating profit | 6,501 | 3,619 | 3,337 | 1,934 | ||||||||
Finance (costs)/income - net | (6 | ) | 1,401 | 251 | (451 | ) | ||||||
-Finance income | 288 | 1,702 | 377 | 450 | ||||||||
-Finance costs | (294 | ) | (301 | ) | (126 | ) | (901 | ) | ||||
Profit before taxation | 6,495 | 5,020 | 3,588 | 1,483 | ||||||||
Taxation | (2,208 | ) | (957 | ) | (1,800 | ) | 228 | |||||
Profit for the period | 4,287 | 4,063 | 1,788 | 1,711 | ||||||||
Attributable to: | ||||||||||||
Owners of the parent | 4,283 | 4,064 | 1,789 | 1,712 | ||||||||
Non-controlling interests | 4 | (1 | ) | (1 | ) | (1 | ) | |||||
4,287 | 4,063 | 1,788 | 1,711 | |||||||||
Earnings per share | ||||||||||||
-basic ($) | 0.01 | 0.01 |
# |
# |
||||||||
-diluted ($) | 0.01 | 0.01 |
# |
# |
||||||||
Earnings per American Depositary Share | ||||||||||||
-basic ($) | 0.19 | 0.15 | 0.08 | 0.07 | ||||||||
-diluted ($) | 0.19 | 0.15 | 0.08 | 0.07 | ||||||||
Ordinary shares ('000)1 | ||||||||||||
-in issue at September 30 | 559,381 | 562,259 | 559,381 | 562,259 | ||||||||
-weighted average | 560,677 | 695,746 | 558,824 | 632,113 | ||||||||
-diluted weighted average | 566,715 | 697,920 | 566,008 | 633,413 | ||||||||
Weighted average American Depositary Shares ('000)1 | ||||||||||||
-in issue at September 30 | 22,375 | 22,490 | 22,375 | 22,490 | ||||||||
-weighted average | 22,427 | 27,830 | 22,353 | 25,285 | ||||||||
-diluted weighted average | 22,669 | 27,917 | 22,640 | 25,337 | ||||||||
# Amounts less than $0.01 |
||
1 |
September 30, 2017 figure excludes 40,000,000 (September 30, 2016: 40,000,000) treasury shares held by MiX Telematics Investments Proprietary Limited ("MiX Investments"), a wholly owned subsidiary of the Group. |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
South African Rand | United States Dollar | |||||||||||
Six months ended |
Six months ended |
Six months ended |
Six months ended |
|||||||||
Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Profit for the period | 58,144 | 55,118 | 4,287 | 4,063 | ||||||||
Other comprehensive income: | ||||||||||||
Items that may be subsequently reclassified to profit or loss | ||||||||||||
Exchange differences on translating foreign operations | 18,796 | (58,619 | ) | 1,386 | (4,323 | ) | ||||||
- Attributable to owners of the parent | 18,785 | (58,571 | ) | 1,385 | (4,319 | ) | ||||||
- Attributable to non-controlling interests | 11 | (48 | ) | 1 | (4 | ) | ||||||
Taxation relating to components of other comprehensive income | — | 478 | — | 35 | ||||||||
Other comprehensive income/(loss) for the period, net of tax | 18,796 | (58,141 | ) | 1,386 | (4,288 | ) | ||||||
Total comprehensive income/(loss) for the period | 76,940 | (3,023 | ) | 5,673 | (225 | ) | ||||||
Attributable to: | ||||||||||||
Owners of the parent | 76,869 | (2,963 | ) | 5,668 | (221 | ) | ||||||
Non-controlling interests | 71 | (60 | ) | 5 | (4 | ) | ||||||
Total comprehensive income/(loss) for the period | 76,940 | (3,023 | ) | 5,673 | (225 | ) | ||||||
HEADLINE EARNINGS | ||||||||||||
Reconciliation of headline earnings | ||||||||||||
South African Rand | United States Dollar | |||||||||||
Six months |
Six months |
Six months |
Six months |
|||||||||
Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Profit for the period attributable to owners of the parent | 58,084 | 55,130 | 4,283 | 4,064 | ||||||||
Adjusted for: | ||||||||||||
(Profit)/loss on disposal of property, plant and equipment and intangible assets | (313 | ) | 17 | (23 | ) | 1 | ||||||
Impairment of product development costs capitalized | 127 | 144 | 9 | 11 | ||||||||
Income tax effect on the above components | — | (23 | ) | — | (2 | ) | ||||||
Headline earnings attributable to owners of the parent | 57,898 | 55,268 | 4,269 | 4,074 | ||||||||
Headline earnings | ||||||||||||
Headline earnings per share | ||||||||||||
-basic (R/$) | 0.10 | 0.08 | 0.01 | 0.01 | ||||||||
-diluted (R/$) | 0.10 | 0.08 | 0.01 | 0.01 | ||||||||
Headline earnings per American Depositary Share | ||||||||||||
-basic (R/$) | 2.58 | 1.99 | 0.19 | 0.15 | ||||||||
-diluted (R/$) | 2.56 | 1.98 | 0.19 | 0.15 | ||||||||
ADJUSTED EARNINGS | ||||||||||||
Reconciliation of adjusted earnings | ||||||||||||
South African Rand |
Six months ended |
Six months ended |
Three months ended |
Three months |
||||||||
Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Profit for the period attributable to owners of the parent | 58,084 | 55,130 | 24,248 | 23,205 | ||||||||
Net foreign exchange losses/(gains) | 1,784 | (11,496 | ) | (3,209 | ) | 8,421 | ||||||
Income tax effect on the above component | 1,692 | (6,381 | ) | 9,853 | (11,637 | ) | ||||||
Adjusted earnings attributable to owners of the parent | 61,560 | 37,253 | 30,892 | 19,989 | ||||||||
Adjusted earnings | ||||||||||||
Adjusted earnings per share | ||||||||||||
-basic (R) | 0.11 | 0.05 | 0.06 | 0.03 | ||||||||
-diluted (R) | 0.11 | 0.05 | 0.05 | 0.03 | ||||||||
Adjusted earnings per American Depositary Share | ||||||||||||
-basic (R) | 2.74 | 1.34 | 1.38 | 0.79 | ||||||||
-diluted (R) | 2.72 | 1.33 | 1.36 | 0.79 | ||||||||
United States Dollar | ||||||||||||
Figures are in thousands unless otherwise stated | ||||||||||||
Profit for the period attributable to owners of the parent | 4,283 | 4,064 | 1,789 | 1,712 | ||||||||
Net foreign exchange losses/(gains) | 132 | (848 | ) | (237 | ) | 621 | ||||||
Income tax effect on the above component | 125 | (471 | ) | 726 | (858 | ) | ||||||
Adjusted earnings attributable to owners of the parent | 4,540 | 2,745 | 2,278 | 1,475 | ||||||||
Adjusted earnings per share | ||||||||||||
-basic ($) | 0.01 |
# |
# |
# |
||||||||
-diluted ($) | 0.01 |
# |
# |
# |
||||||||
Adjusted earnings per American Depositary Share | ||||||||||||
-basic ($) | 0.20 | 0.10 | 0.10 | 0.06 | ||||||||
-diluted ($) | 0.20 | 0.10 | 0.10 | 0.06 | ||||||||
# Amounts less than $0.01
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||||||
South African Rand | United States Dollar | |||||||||||
Figures are in thousands unless otherwise stated | September 30, | March 31, | September 30, | March 31, | ||||||||
2017 | 2017 | 2017 | 2017 | |||||||||
Unaudited | Audited | Unaudited | Unaudited | |||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 352,503 | 294,120 | 25,992 | 21,687 | ||||||||
Intangible assets | 909,920 | 881,900 | 67,094 | 65,028 | ||||||||
Finance lease receivable | — | 22 | — | 2 | ||||||||
Deferred tax assets | 33,124 | 28,130 | 2,442 | 2,074 | ||||||||
Total non-current assets | 1,295,547 | 1,204,172 | 95,528 | 88,791 | ||||||||
Current assets | ||||||||||||
Inventory | 53,738 | 26,449 | 3,962 | 1,950 | ||||||||
Trade and other receivables | 299,984 | 260,576 | 22,120 | 19,214 | ||||||||
Finance lease receivable | 62 | 140 | 5 | 10 | ||||||||
Taxation | 26,689 | 26,302 | 1,968 | 1,939 | ||||||||
Restricted cash | 14,151 | 13,268 | 1,043 | 978 | ||||||||
Cash and cash equivalents | 283,526 | 375,782 | 20,906 | 27,709 | ||||||||
Total current assets | 678,150 | 702,517 | 50,004 | 51,800 | ||||||||
Total assets | 1,973,697 | 1,906,689 | 145,532 | 140,591 | ||||||||
EQUITY | ||||||||||||
Stated capital (note 7) | 837,004 | 854,345 | 61,719 | 62,997 | ||||||||
Other reserves | 17,788 | (4,370 | ) | 1,311 | (322 | ) | ||||||
Retained earnings | 627,371 | 594,514 | 46,260 | 43,837 | ||||||||
Equity attributable to owners of the parent | 1,482,163 | 1,444,489 | 109,290 | 106,512 | ||||||||
Non-controlling interest | 14 | (1,558 | ) | 1 | (115 | ) | ||||||
Total equity | 1,482,177 | 1,442,931 | 109,291 | 106,397 | ||||||||
LIABILITIES | ||||||||||||
Non-current liabilities | ||||||||||||
Deferred tax liabilities | 111,743 | 100,067 | 8,240 | 7,379 | ||||||||
Provisions | 1,981 | 1,833 | 146 | 135 | ||||||||
Total non-current liabilities | 113,724 | 101,900 | 8,386 | 7,514 | ||||||||
Current liabilities | ||||||||||||
Trade and other payables | 321,783 | 309,110 | 23,724 | 22,791 | ||||||||
Taxation | 6,872 | 4,521 | 507 | 333 | ||||||||
Provisions | 21,126 | 28,778 | 1,558 | 2,122 | ||||||||
Share-based payment liability | 1,353 | — | 100 | — | ||||||||
Bank overdraft | 26,662 | 19,449 | 1,966 | 1,434 | ||||||||
Total current liabilities | 377,796 | 361,858 | 27,855 | 26,680 | ||||||||
Total liabilities | 491,520 | 463,758 | 36,241 | 34,194 | ||||||||
Total equity and liabilities | 1,973,697 | 1,906,689 | 145,532 | 140,591 | ||||||||
Net cash (note 6) | 256,864 | 356,333 | 18,940 | 26,275 | ||||||||
Net asset value per share (R/$) | 2.65 | 2.56 | 0.20 | 0.19 | ||||||||
Net tangible asset value per share (R/$) | 1.02 | 1.00 | 0.08 | 0.07 | ||||||||
Capital expenditure | ||||||||||||
-incurred | 177,127 | 289,418 | 13,061 | 21,341 | ||||||||
-authorized but not spent | 50,448 | 132,836 | 3,720 | 9,795 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
South African Rand | United States Dollar | |||||||||||
Six months ended |
Six months ended |
Six months ended |
Six months ended |
|||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||
Figures are in thousands unless otherwise stated | 2017 | 2016 | 2017 | 2016 | ||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Operating activities | ||||||||||||
Cash generated from operations | 141,163 | 124,340 | 10,409 | 9,168 | ||||||||
Net financing income | 1,703 | 7,666 | 126 | 565 | ||||||||
Taxation paid | (20,582 | ) | (34,792 | ) | (1,518 | ) | (2,565 | ) | ||||
Net cash generated from operating activities | 122,284 | 97,214 | 9,017 | 7,168 | ||||||||
Cash flows from investing activities | ||||||||||||
Capital expenditure payments | (182,516 | ) | (147,187 | ) | (13,458 | ) | (10,853 | ) | ||||
Deferred consideration paid | — | (735 | ) | — | (54 | ) | ||||||
Proceeds on sale of property, plant and equipment and intangible assets | 1,218 | 198 | 90 | 15 | ||||||||
Decrease in restricted cash | 22 | 3,765 | 2 | 278 | ||||||||
Increase in restricted cash | (689 | ) | (566 | ) | (51 | ) | (42 | ) | ||||
Net cash used in investing activities | (181,965 | ) | (144,525 | ) | (13,417 | ) | (10,656 | ) | ||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of ordinary shares | 1,325 | 4,529 | 98 | 334 | ||||||||
Share repurchase | (18,666 | ) | (473,601 | ) | (1,376 | ) | (34,922 | ) | ||||
Dividends paid to Company's owners | (25,200 | ) | (30,458 | ) | (1,858 | ) | (2,246 | ) | ||||
Net cash used in financing activities | (42,541 | ) | (499,530 | ) | (3,136 | ) | (36,834 | ) | ||||
Net decrease in cash and cash equivalents | (102,222 | ) | (546,841 | ) | (7,536 | ) | (40,322 | ) | ||||
Net cash and cash equivalents at the beginning of the period | 356,333 | 860,762 | 26,275 | 63,470 | ||||||||
Exchange gains/(losses) on cash and cash equivalents | 2,753 | (2,593 | ) | 201 | (191 | ) | ||||||
Net cash and cash equivalents at the end of the period | 256,864 | 311,328 | 18,940 | 22,957 | ||||||||
FREE CASH FLOW | ||||||||||||
Reconciliation of free cash flow to net cash generated from operating activities | ||||||||||||
Six months ended |
Six months ended |
Three months ended |
Three months |
|||||||||
South African Rand | September 30, | September 30, | September 30, | September 30, | ||||||||
Figures are in thousands unless otherwise stated | 2017 | 2016 | 2017 | 2016 | ||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Net cash generated from operating activities | 122,284 | 97,214 | 103,960 | 69,113 | ||||||||
Capital expenditure payments | (182,516 | ) | (147,187 | ) | (100,172 | ) | (84,960 | ) | ||||
Free cash flow | (60,232 | ) | (49,973 | ) | 3,788 | (15,847 | ) | |||||
United States Dollar | ||||||||||||
Figures are in thousands unless otherwise stated | ||||||||||||
Net cash generated from operating activities | 9,017 | 7,168 | 7,666 | 5,096 | ||||||||
Capital expenditure payments | (13,458 | ) | (10,853 | ) | (7,386 | ) | (6,265 | ) | ||||
Free cash flow | (4,441 | ) | (3,685 | ) | 280 | (1,169 | ) | |||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||
Attributable to owners of the parent | ||||||||||||||||||
South African Rand
Figures are in thousands unless otherwise stated |
Stated capital |
Other reserves |
Retained earnings |
Total |
Non- controlling interest |
Total equity |
||||||||||||
Balance at April 1, 2016 (Audited) | 1,320,955 | 74,262 | 526,082 | 1,921,299 | (1,491 | ) | 1,919,808 | |||||||||||
Total comprehensive income | — | (58,093 | ) | 55,130 | (2,963 | ) | (60 | ) | (3,023 | ) | ||||||||
Profit for the period | — | — | 55,130 | 55,130 | (12 | ) | 55,118 | |||||||||||
Other comprehensive loss | — | (58,093 | ) | — | (58,093 | ) | (48 | ) | (58,141 | ) | ||||||||
Transactions with owners | (469,153 | ) | 5,435 | (30,489 | ) | (494,207 | ) | — | (494,207 | ) | ||||||||
Shares issued in relation to share options exercised | 4,529 | — | — | 4,529 | — | 4,529 | ||||||||||||
Share-based payment | — | 5,435 | — | 5,435 | — | 5,435 | ||||||||||||
Dividends declared | — | — | (30,489 | ) | (30,489 | ) | — | (30,489 | ) | |||||||||
Share repurchase (note 7) | (473,682 | ) | — | — | (473,682 | ) | — | (473,682 | ) | |||||||||
Balance at September 30, 2016 (Unaudited) | 851,802 | 21,604 | 550,723 | 1,424,129 | (1,551 | ) | 1,422,578 | |||||||||||
Total comprehensive income | — | (22,786 | ) | 66,328 | 43,542 | (7 | ) | 43,535 | ||||||||||
Profit for the period | — | — | 66,328 | 66,328 | (5 | ) | 66,323 | |||||||||||
Other comprehensive income | — | (22,786 | ) | — | (22,786 | ) | (2 | ) | (22,788 | ) | ||||||||
Transactions with owners | 2,543 | (3,188 | ) | (22,537 | ) | (23,182 | ) | — | (23,182 | ) | ||||||||
Shares issued in relation to share options exercised | 2,543 | — | — | 2,543 | — | 2,543 | ||||||||||||
Share-based payment | — | (3,188 | ) | — | (3,188 | ) | — | (3,188 | ) | |||||||||
Dividends declared |
— | — | (22,537 | ) | (22,537 | ) | — | (22,537 | ) | |||||||||
Balance at March 31, 2017 (Audited) | 854,345 | (4,370 | ) | 594,514 | 1,444,489 | (1,558 | ) | 1,442,931 | ||||||||||
Total comprehensive income | — | 18,785 | 58,084 | 76,869 | 71 | 76,940 | ||||||||||||
Profit for the period | — | — | 58,084 | 58,084 | 60 | 58,144 | ||||||||||||
Other comprehensive income | — | 18,785 | — | 18,785 | 11 | 18,796 | ||||||||||||
Transactions with owners | (17,341 | ) | 3,373 | (25,227 | ) | (39,195 | ) | 1,501 | (37,694 | ) | ||||||||
Shares issued in relation to share options exercised | 1,325 | — | — | 1,325 | — | 1,325 | ||||||||||||
Share-based payment | — | 4,874 | — | 4,874 | — | 4,874 | ||||||||||||
Dividends declared (note 8) | — | — | (25,227 | ) | (25,227 | ) | — | (25,227 | ) | |||||||||
Share repurchase (note 7) | (18,666 | ) | — | — | (18,666 | ) | — | (18,666 | ) | |||||||||
Transactions with non-controlling interests (note 9) | — | (1,501 | ) | — | (1,501 | ) | 1,501 | — | ||||||||||
Balance at September 30, 2017 (Unaudited) | 837,004 | 17,788 | 627,371 | 1,482,163 | 14 | 1,482,177 | ||||||||||||
|
||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||
Attributable to owners of the parent | ||||||||||||||||||
United States Dollar |
Stated capital |
Other reserves |
Retained earnings |
Total |
Non- controlling interest |
Total equity |
||||||||||||
Balance at April 1, 2016 (Unaudited) | 97,403 | 5,476 | 38,791 | 141,670 | (110 | ) | 141,560 | |||||||||||
Total comprehensive income | — | (4,284 | ) | 4,065 | (219 | ) | (5 | ) | (224 | ) | ||||||||
Profit for the period | — | — | 4,065 | 4,065 | (1 | ) | 4,064 | |||||||||||
Other comprehensive loss | — | (4,284 | ) | — | (4,284 | ) | (4 | ) | (4,288 | ) | ||||||||
Transactions with owners | (34,594 | ) | 401 | (2,248 | ) | (36,441 | ) | — | (36,441 | ) | ||||||||
Shares issued in relation to share options exercised | 334 | — | — | 334 | — | 334 | ||||||||||||
Share-based payment | — | 401 | — | 401 | — | 401 | ||||||||||||
Dividends declared | — | — | (2,248 | ) | (2,248 | ) | — | (2,248 | ) | |||||||||
Share repurchase (note 7) | (34,928 | ) | — | — | (34,928 | ) | — | (34,928 | ) | |||||||||
Balance at September 30, 2016 (Unaudited) | 62,809 | 1,593 | 40,608 | 105,010 | (115 | ) | 104,895 | |||||||||||
Total comprehensive income | — | (1,680 | ) | 4,891 | 3,211 |
* |
3,211 | |||||||||||
Profit for the period | — | — | 4,891 | 4,891 |
* |
4,891 | ||||||||||||
Other comprehensive income | — | (1,680 | ) | — | (1,680 | ) |
* |
(1,680 | ) | |||||||||
Transactions with owners | 188 | (235 | ) | (1,662 | ) | (1,709 | ) | — | (1,709 | ) | ||||||||
Shares issued in relation to share options exercised | 188 | — | — | 188 | — | 188 | ||||||||||||
Share-based payment | — | (235 | ) | — | (235 | ) | — | (235 | ) | |||||||||
Dividends declared |
— | — | (1,662 | ) | (1,662 | ) | — | (1,662 | ) | |||||||||
Balance at March 31, 2017 (Unaudited) | 62,997 | (322 | ) | 43,837 | 106,512 | (115 | ) | 106,397 | ||||||||||
Total comprehensive income | — | 1,385 | 4,283 | 5,668 | 5 | 5,673 | ||||||||||||
Profit for the period | — | — | 4,283 | 4,283 | 4 | 4,287 | ||||||||||||
Other comprehensive income | — | 1,385 | — | 1,385 | 1 | 1,386 | ||||||||||||
Transactions with owners | (1,278 | ) | 248 | (1,860 | ) | (2,890 | ) | 111 | (2,779 | ) | ||||||||
Shares issued in relation to share options exercised | 98 | — | — | 98 | — | 98 | ||||||||||||
Share-based payment | — | 359 | — | 359 | — | 359 | ||||||||||||
Dividends declared (note 8) | — | — | (1,860 | ) | (1,860 | ) | — | (1,860 | ) | |||||||||
Share repurchase (note 7) | (1,376 | ) | — | — | (1,376 | ) | — | (1,376 | ) | |||||||||
Transactions with non-controlling interests (note 9) | — | (111 | ) | — | (111 | ) | 111 | — | ||||||||||
Balance at September 30, 2017 (Unaudited) | 61,719 | 1,311 | 46,260 | 109,290 | 1 | 109,291 | ||||||||||||
* Amount less than $1000.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Basis of preparation and accounting policies
Condensed unaudited Group interim financial results for the half year ended September 30, 2017
These condensed unaudited Group interim financial results for the half year ended September 30, 2017 have been prepared in accordance with International Financial Reporting Standard ("IFRS"), IAS 34: Interim financial reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council ("FRSC"), the JSE Listings Requirements and the requirements of the South African Companies Act, No. 71 of 2008. The interim financial results have not been audited or reviewed by the Group’s external auditors.
The condensed unaudited Group interim financial results do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual financial statements for the year ended March 31, 2017, which have been prepared in accordance with IFRS.
The preparation of interim financial results requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. In preparing these condensed interim financial results, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation and uncertainty were the same as those applied to the consolidated financial statements for the year ended March 31, 2017.
The condensed unaudited Group interim financial results were prepared under the supervision of the Interim Group Chief Financial Officer, PM Dell, CA (SA). The results were made available on November 2, 2017.
The Group has adopted all the new, revised or amended accounting pronouncements as issued by the International Accounting Standards Board (IASB) which were effective for the Group from April 1, 2017, none of which had a material impact on the Group.
Financial results for the second quarter of fiscal 2018
In addition to the condensed unaudited Group interim financial results for the half year ended September 30, 2017, additional financial information in respect of the second quarter of fiscal 2018 has been presented together with the relevant comparative information. The quarterly information comprises a condensed consolidated income statement, a reconciliation of adjusted earnings to profit for the period, a reconciliation of Adjusted EBITDA to profit for the period (note 4) and other financial and operating data (note 11).
The quarterly financial results have not been audited or reviewed by the Group’s external auditors.
Presentation currency and convenience translation
The Group’s presentation currency is South African Rand. In addition to presenting these interim financial results in South African Rand, supplementary information in U.S. Dollars has been prepared for the convenience of users of the Group interim financial results. Unless otherwise stated, the Group has translated U.S. Dollar amounts from South African Rand at the exchange rate of R13.5618 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at September 30, 2017. The U.S. Dollar figures may not compute as they are rounded independently.
The supplementary information prepared in U.S. Dollars constitutes pro forma financial information under the JSE Listings Requirements. This pro forma financial information is the responsibility of the Group’s Board of Directors and is presented for illustrative purposes. Because of its nature, the pro forma financial information may not fairly present MiX Telematics’ financial position, changes in equity, results of operations or cash flows. The pro forma financial information does not constitute pro forma information in accordance with the requirements of Regulation S-X of the SEC or generally accepted accounting principles in the United States. In addition, the rules and regulations related to the preparation of pro forma financial information in other jurisdictions may also vary significantly from the requirements applicable in South Africa.
2. Accounting policies
The accounting policies used in preparing these financial results are in terms of IFRS and are consistent in all material respects with those applied in the preparation of the Group’s annual financial statements for the year ended March 31, 2017.
3. Segment information
Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.
The chief operating decision maker ("CODM") reviews the segment results on an integral margin basis as defined by management. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified collectively as the executive committee and the Chief Executive Officer who make strategic decisions. In respect of revenue, this method of measurement entails reviewing the segmental results based on external revenue only. In respect of Adjusted EBITDA (the profit measure identified by the CODM), the margin generated by CSO, net of any unrealized intercompany profit, is allocated to the geographic region where the external revenue is recorded by our RSOs. The costs remaining in CSO relate mainly to research and development of hardware and software platforms, common marketing, product management and technical and distribution support to each of the RSOs. CSO is a reportable segment of the Group because it produces discrete financial information which is reviewed by the CODM and has the ability to generate external revenues.
Each RSO's results therefore reflect the external revenue earned, as well as the Adjusted EBITDA earned (or loss incurred) by each operating segment before the remaining CSO and corporate costs allocations. Segment assets are not disclosed as segment information is not reviewed on such a basis by the CODM.
3. Segment information (continued)
South African Rand |
Subscription |
Hardware and |
Total |
Adjusted |
||||||||
Six months ended September 30, 2017 (unaudited) | ||||||||||||
Africa | 423,157 | 46,392 | 469,549 | 209,392 | ||||||||
Europe | 55,923 | 33,482 | 89,405 | 29,443 | ||||||||
Americas | 83,012 | 12,868 | 95,880 | 24,958 | ||||||||
Middle East and Australasia | 98,900 | 37,096 | 135,996 | 49,570 | ||||||||
Brazil | 23,120 | 2,327 | 25,447 | 8,752 | ||||||||
Total Regional Sales Offices | 684,112 | 132,165 | 816,277 | 322,115 | ||||||||
Central Services Organization | 515 | 38 | 553 | (68,849 | ) | |||||||
Total Segment Results | 684,627 | 132,203 | 816,830 | 253,266 | ||||||||
Corporate and consolidation entries | — | — | — | (56,070 | ) | |||||||
Total | 684,627 | 132,203 | 816,830 | 197,196 | ||||||||
Six months ended September 30, 2016 (unaudited) |
Subscription |
Hardware and |
Total |
Adjusted |
||||||||
Africa | 374,377 | 45,520 | 419,897 | 157,386 | ||||||||
Europe | 59,097 | 19,256 | 78,353 | 21,185 | ||||||||
Americas | 56,958 | 21,403 | 78,361 | 13,713 | ||||||||
Middle East and Australasia | 102,271 | 50,774 | 153,045 | 40,412 | ||||||||
Brazil | 14,365 | 2,792 | 17,157 | 4,351 | ||||||||
Total Regional Sales Offices | 607,068 | 139,745 | 746,813 | 237,047 | ||||||||
Central Services Organization | 443 | — | 443 | (64,354 | ) | |||||||
Total Segment Results | 607,511 | 139,745 | 747,256 | 172,693 | ||||||||
Corporate and consolidation entries | — | — | — | (46,014 | ) | |||||||
Total | 607,511 | 139,745 | 747,256 | 126,679 | ||||||||
3. Segment information (continued)
United States Dollar Figures are in thousands unless otherwise stated |
Subscription |
Hardware and |
Total |
Adjusted |
|||||||||
Six months ended September 30, 2017 (unaudited) | |||||||||||||
Africa | 31,202 | 3,421 | 34,623 | 15,440 | |||||||||
Europe | 4,124 | 2,468 | 6,592 | 2,171 | |||||||||
Americas | 6,121 | 949 | 7,070 | 1,840 | |||||||||
Middle East and Australasia | 7,292 | 2,736 | 10,028 | 3,655 | |||||||||
Brazil | 1,705 | 171 | 1,876 | 645 | |||||||||
Total Regional Sales Offices | 50,444 | 9,745 | 60,189 | 23,751 | |||||||||
Central Services Organization | 38 | 3 | 41 | (5,077 | ) | ||||||||
Total Segment Results | 50,482 | 9,748 | 60,230 | 18,674 | |||||||||
Corporate and consolidation entries | — | — | — | (4,134 | ) | ||||||||
Total | 50,482 | 9,748 | 60,230 | 14,540 | |||||||||
Six months ended September 30, 2016 (unaudited) |
Subscription |
Hardware and |
Total |
Adjusted |
|||||||||
Africa | 27,605 | 3,357 | 30,962 | 11,605 | |||||||||
Europe | 4,358 | 1,419 | 5,777 | 1,562 | |||||||||
Americas | 4,200 | 1,578 | 5,778 | 1,011 | |||||||||
Middle East and Australasia | 7,541 | 3,744 | 11,285 | 2,980 | |||||||||
Brazil | 1,059 | 206 | 1,265 | 321 | |||||||||
Total Regional Sales Offices | 44,763 | 10,304 | 55,067 | 17,479 | |||||||||
Central Services Organization | 33 | — | 33 | (4,745 | ) | ||||||||
Total Segment Results | 44,796 | 10,304 | 55,100 | 12,734 | |||||||||
Corporate and consolidation entries | — | — | — | (3,393 | ) | ||||||||
Total | 44,796 | 10,304 | 55,100 | 9,341 | |||||||||
4. Reconciliation of Adjusted EBITDA to Profit for the Period | ||||||||||||
South African Rand |
Six months ended |
Six months ended |
Three months ended |
Three months |
||||||||
Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Adjusted EBITDA | 197,196 | 126,679 | 103,313 | 66,230 | ||||||||
Add: | ||||||||||||
Decrease in restructuring cost provision | — | 431 | — | — | ||||||||
Net profit on sale of property, plant and equipment and intangible assets | 313 | — | — | 43 | ||||||||
Less: | ||||||||||||
Depreciation (1) | (71,576 | ) | (45,525 | ) | (37,096 | ) | (24,586 | ) | ||||
Amortization (2) | (31,387 | ) | (25,829 | ) | (16,823 | ) | (12,297 | ) | ||||
Impairment of product development costs capitalized | (127 | ) | (144 | ) | (35 | ) | (144 | ) | ||||
Share-based compensation costs | (6,226 | ) | (6,499 | ) | (4,079 | ) | (3,020 | ) | ||||
Equity-settled share-based compensation costs | (4,874 | ) | (5,435 | ) | (2,727 | ) | (3,020 | ) | ||||
Cash-settled share-based compensation costs | (1,352 | ) | (1,064 | ) | (1,352 | ) | — | |||||
Net loss on sale of property, plant and equipment and intangible assets | — | (17 | ) | (19 | ) | — | ||||||
Increase in restructuring cost provision | (24 | ) | — | (6 | ) | — | ||||||
Operating profit | 88,169 | 49,096 | 45,255 | 26,226 | ||||||||
Add: Finance (costs)/income - net | (84 | ) | 18,995 | 3,402 | (6,120 | ) | ||||||
Less: Taxation | (29,941 | ) | (12,973 | ) | (24,417 | ) | 3,092 | |||||
Profit for the period | 58,144 | 55,118 | 24,240 | 23,198 | ||||||||
(1) | Includes depreciation of property, plant and equipment (including in-vehicle devices). | |
(2) | Includes amortization of intangible assets (including product development costs and intangible assets identified as part of a business combination). | |
4. Reconciliation of Adjusted EBITDA to Profit for the Period (continued) | ||||||||||||
United States Dollar |
Six months ended |
Six months ended |
Three months ended |
Three months ended |
||||||||
Figures are in thousands unless otherwise stated | September 30, | September 30, | September 30, | September 30, | ||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Adjusted EBITDA | 14,540 | 9,341 | 7,618 | 4,884 | ||||||||
Add: | ||||||||||||
Decrease in restructuring cost provision | — | 32 | — | — | ||||||||
Net profit on sale of property, plant and equipment and intangible assets | 23 | — | — | 3 | ||||||||
Less: | ||||||||||||
Depreciation (1) | (5,278 | ) | (3,357 | ) | (2,735 | ) | (1,813 | ) | ||||
Amortization (2) | (2,314 | ) | (1,905 | ) | (1,240 | ) | (907 | ) | ||||
Impairment of product development costs capitalized | (9 | ) | (11 | ) | (4 | ) | (10 | ) | ||||
Share-based compensation costs | (459 | ) | (479 | ) | (301 | ) | (223 | ) | ||||
Equity-settled share-based compensation costs | (359 | ) | (401 | ) | (201 | ) | (223 | ) | ||||
Cash-settled share-based compensation costs | (100 | ) | (78 | ) | (100 | ) | — | |||||
Net loss on sale of property, plant and equipment and intangible assets | — | (1 | ) | (1 | ) | — | ||||||
Increase in restructuring cost provision | (2 | ) | — |
* |
— | |||||||
Operating profit | 6,501 | 3,619 | 3,337 | 1,934 | ||||||||
Add: Finance (costs)/income - net | (6 | ) | 1,401 | 251 | (451 | ) | ||||||
Less: Taxation | (2,208 | ) | (957 | ) | (1,800 | ) | 228 | |||||
Profit for the period | 4,287 | 4,063 | 1,788 | 1,711 | ||||||||
(1) | Includes depreciation of property, plant and equipment (including in-vehicle devices). | |
(2) | Includes amortization of intangible assets (including product development costs and intangible assets identified as part of a business combination). | |
* Amount less than $1000.
5. Reconciliation of Adjusted EBITDA margin to Profit for the Period margin | ||||||||||||
Six months ended |
Six months ended |
Three months ended |
Three months ended |
|||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||||||
Adjusted EBITDA margin | 24.1 | % | 17.0 | % | 25.1 | % | 18.0 | % | ||||
Add: | ||||||||||||
Decrease in restructuring cost provision | — | 0.1 | % | — | — | |||||||
Net profit on sale of property, plant and equipment and intangible assets | 0.0 | % | — | — | 0.0 | % | ||||||
Less: | ||||||||||||
Depreciation | (8.7 | %) | (6.1 | %) | (9.0 | %) | (6.8 | %) | ||||
Amortization | (3.8 | %) | (3.5 | %) | (4.1 | %) | (3.3 | %) | ||||
Impairment of product development costs capitalized | (0.0 | %) |
(0.0 |
%) |
(0.0 | %) |
(0.0 |
%) |
||||
Share-based compensation costs | (0.8 | %) | (0.9 | %) | (1.0 | %) | (0.8 | %) | ||||
Equity-settled share-based compensation costs | (0.6 | %) | (0.7 | %) | (0.7 | %) | (0.8 | %) | ||||
Cash-settled share-based compensation costs | (0.2 | %) | (0.2 | %) | (0.3 | %) | — | |||||
Net loss on sale of property, plant and equipment and intangible assets | — | (0.0 | %) | (0.0 | %) | — | ||||||
Increase in restructuring cost provision | (0.0 | %) | — | (0.0 | %) | — | ||||||
Operating profit margin | 10.8 | % | 6.6 | % | 11.0 | % | 7.1 | % | ||||
Add: Finance (costs)/income - net |
(0.0 | %) | 2.5 | % | 0.8 | % | (1.6 | %) | ||||
Less: Taxation | (3.7 | %) | (1.7 | %) | (5.9 | %) | 0.8 | % | ||||
Profit for the period margin | 7.1 | % | 7.4 | % | 5.9 | % | 6.3 | % | ||||
6. Net Cash
Net cash is calculated as being net cash and cash equivalents, excluding restricted cash less interest bearing borrowings.
7. Share Repurchase
Fiscal 2018
On May 23, 2017, the MiX Telematics Board approved a share repurchase program of up to R270 million ($19.9 million) under which the Company may repurchase its ordinary shares, including American Depositary Shares ("ADSs"). The Company may repurchase its shares from time to time at its discretion through open market transactions and block trades, based on ongoing assessments of the capital needs of the Company, the market price of its securities and general market conditions. This share repurchase program may be discontinued at any time by the Board of Directors, and the Company has no obligation to repurchase any amount of its securities under the program. The repurchase program will be funded out of existing cash resources.
At September 30, 2017, the following purchases had been made under the share repurchase program:
South African Rand
|
Total number of |
Average |
Shares
under the |
Total value of |
Maximum value of |
||||||||
June 2017 | 5,015,660 | 3.72 | 5,015,660 | 18,666 | 251,334 | ||||||||
5,015,660 | 5,015,660 | 18,666 | 251,334 | ||||||||||
United States Dollar
|
Total number of |
Average |
Shares canceled |
Total value of |
Maximum value of |
|||||||||
June 2017 | 5,015,660 | 0.27 | 5,015,660 | 1,376 | 18,532 | |||||||||
5,015,660 | 5,015,660 | 1,376 | 18,532 | |||||||||||
(1) | Including transaction costs. | |
Subsequent to the repurchase, the shares were de-listed and now form part of the authorized unissued share capital of the Company. At September 30, 2017, the Company had 559,380,738 ordinary shares of no par value in issue (excluding 40,000,000 treasury shares held by MiX Investments).
Fiscal 2017
On April 29, 2016, the Company entered into an agreement (the “share repurchase agreement”) with Imperial Holdings Limited ("Imperial Holdings") and Imperial Corporate Services Proprietary Limited ("Imperial Corporate Services"), a wholly owned subsidiary of Imperial Holdings, to repurchase all 200,828,260 of the Company’s shares held by Imperial Corporate Services (the “repurchase shares”) at R2.36 ($0.17) per repurchase share, for an aggregate repurchase consideration of R474.0 million or $34.9 million (the “repurchase”). At the general meeting held on August 1, 2016, shareholders of the Company approved the repurchase in terms of the JSE Listings Requirements and the South African Companies Act, No. 71 of 2008, at which point the transaction was accounted for in terms of IFRS. The repurchase was implemented on August 29, 2016. Subsequent to the repurchase, the shares were delisted and now form part of the authorized unissued share capital of the Company.
The financial effect of the transaction was as follows:
Figures are in thousands unless otherwise stated | South African Rand | United States Dollar | ||||
Aggregate repurchase consideration | 473,955 | 34,948 | ||||
Impact of discounting related to fiscal 2017 share repurchase transaction | (3,222 | ) | (238 | ) | ||
Transaction costs capitalized | 2,949 | 218 | ||||
Total share repurchase cost | 473,682 | 34,928 | ||||
8. Dividends Paid
The following dividends were declared by the Company during the six months ended September 30, 2017 (excluding dividends paid on treasury shares):
- In respect of the fourth quarter of fiscal year 2017, a dividend of R11.3 million ($0.8 million) was declared on May 23, 2017 and paid on June 19, 2017. Using shares in issue of 563,514,561 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 South African cents or 0.1 U.S. cents per ordinary share; and
- In respect of the first quarter of fiscal 2018, a dividend of R14.0 million ($1.0 million) was declared on August 1, 2017 and paid on August 28, 2017. Using shares in issue of 558,498,901 (excluding 40,000,000 treasury shares), this equated to a dividend of 2.5 South African cents or 1.8 U.S. cents per share.
9. Acquisition of non-controlling interest
In June 2014, the Group entered into an agreement with Edge Gestão Empresarial LTDA (“Edge”), whereby Edge was granted a 5% holding in the equity interest of MiX Brazil. Prior to this agreement Edge held a non-controlling interest in MiX Brazil of 0.0025%. Edge is a Brazilian-based investment company controlled by Luiz Munhoz, the Managing Director of MiX Brazil. The increase in the equity interests granted to Edge was in respect of services provided by Luiz Munhoz to MiX Brazil, in his role as Managing Director of MiX Brazil. In terms of the quotaholders agreement Edge had an option to transfer its interest in MiX Brazil back to the Group at fair value. The agreement with Edge represented a cash-settled share-based payment.
In September 2017 Edge exercised the put option in the quotaholders agreement. In terms of the sale agreement MiX Investments acquired Edge’s 5% equity interest in MiX Brazil for R1.4 million ($0.1 million) which increased the Group's interest in MiX Brazil to 100%. As a result, the Group recognised a cash-settled share-based payment expense and liability of R1.4 million ($0.1 million). The non-controlling interest related to MiX Brazil of R1.5 million ($0.1 million) was also transferred to other reserves within equity.
10. Contingent Liabilities
Service agreement
In terms of an amended network services agreement with Mobile Telephone Networks Proprietary Limited (“MTN”), MTN is entitled to claw back payments from MiX Telematics Africa Proprietary Limited in the event of early cancellation of the agreement or certain base connections not being maintained over the term of the agreement. No connection incentives will be received in terms of the amended network services agreement. The maximum potential liability under the arrangement is R46.1 million or $3.4 million. No loss is considered probable under this arrangement.
11. Other Operating and Financial Data | |||||||||||
South African Rand |
Six months ended |
Six months ended |
Three months ended |
Three months |
|||||||
Figures are in thousands except for subscribers | September 30, | September 30, | September 30, | September 30, | |||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||||||
Subscription revenue | 684,627 | 607,511 | 349,262 | 301,337 | |||||||
Adjusted EBITDA | 197,196 | 126,679 | 103,313 | 66,230 | |||||||
Cash and cash equivalents | 283,526 | 346,873 | 283,526 | 346,873 | |||||||
Net cash | 256,864 | 310,960 | 256,864 | 310,960 | |||||||
Capital expenditure incurred | 177,127 | 146,638 | 98,003 | 83,808 | |||||||
Property, plant and equipment expenditure | 127,452 | 95,852 | 72,846 | 56,560 | |||||||
Intangible asset expenditure | 49,675 | 50,786 | 25,157 | 27,248 | |||||||
Total development cost incurred | 67,342 | 73,264 | 34,167 | 36,034 | |||||||
Development cost capitalized | 32,804 | 40,337 | 16,148 | 21,028 | |||||||
Development cost expensed within administration and other charges | 34,538 | 32,927 | 18,019 | 15,006 | |||||||
Subscribers | 640,158 | 584,994 | 640,158 | 584,994 | |||||||
United States Dollar |
Six months ended |
Six months ended |
Three months ended |
Three months |
|||||||
Figures are in thousands except for subscribers | September 30, | September 30, | September 30, | September 30, | |||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||||||
Subscription revenue | 50,482 | 44,796 | 25,753 | 22,219 | |||||||
Adjusted EBITDA | 14,540 | 9,341 | 7,618 | 4,884 | |||||||
Cash and cash equivalents | 20,906 | 25,577 | 20,906 | 25,577 | |||||||
Net cash | 18,940 | 22,929 | 18,940 | 22,929 | |||||||
Capital expenditure incurred | 13,061 | 10,813 | 7,226 | 6,180 | |||||||
Property, plant and equipment expenditure | 9,398 | 7,068 | 5,371 | 4,171 | |||||||
Intangible asset expenditure | 3,663 | 3,745 | 1,855 | 2,009 | |||||||
Total development cost incurred | 4,966 | 5,402 | 2,520 | 2,657 | |||||||
Development cost capitalized | 2,419 | 2,974 | 1,191 | 1,551 | |||||||
Development cost expensed within administration and other charges | 2,547 | 2,428 | 1,329 | 1,106 | |||||||
Subscribers | 640,158 | 584,994 | 640,158 | 584,994 | |||||||
Exchange Rates |
|||||||||||
The following major rates of exchange were used: |
|||||||||||
South African Rand: United States Dollar |
|||||||||||
-closing |
13.56 |
13.86 |
13.56 |
13.86 |
|||||||
-average |
13.18 |
14.53 |
13.17 |
14.06 |
|||||||
South African Rand: British Pound |
|||||||||||
-closing |
18.13 |
17.98 |
18.13 |
17.98 |
|||||||
-average |
17.05 |
19.99 |
17.23 |
18.46 |
|||||||
12. Fair Value of Financial Assets and Liabilities Measured at Amortized Cost
The fair values of trade and other receivables, restricted cash, cash and cash equivalents, trade payables, accruals, bank overdraft and other payables approximate their book values as the impact of discounting is not considered material due to the short-term nature of both the receivables and payables.
13. Subsequent Events
The directors are not aware of any matter material or otherwise arising since September 30, 2017 and up to the date of this report, not otherwise dealt with herein.
14. Dividend Declared
On October 31, 2017 the Board declared in respect of the second quarter of fiscal year 2018, which ended on September 30, 2017, a dividend of 2.5 South African cents (0.2 U.S. cents) per ordinary share to be paid on Monday, November 27, 2017.
The details with respect to the dividends declared for ordinary shareholders are as follows:
Last day to trade cum dividend |
Tuesday, November 21, 2017 | ||||
Securities trade ex dividend |
Wednesday, November 22, 2017 | ||||
Record date | Friday, November 24, 2017 | ||||
Payment date | Monday, November 27, 2017 | ||||
Share certificates may not be dematerialized or rematerialized between Wednesday, November 22, 2017 and Friday, November 24, 2017, both days inclusive.
Shareholders are advised of the following additional information:
- the dividend has been declared out of income reserves;
- the local dividends tax rate is 20%;
- the gross local dividend amounts to 2.5 South African cents per ordinary share;
- the net local dividend amount is 2.0 South African cents per ordinary share for shareholders liable to pay dividends tax;
- the issued ordinary share capital of MiX Telematics is 599,380,738 ordinary shares of no par value; and
- the Company’s tax reference number is 9155/661/84/7.
The details with respect to the dividends declared for holders of our ADSs are as follows:
Ex dividend on New York Stock Exchange (NYSE) |
Wednesday, November 22, 2017 | |||||
Record date | Friday, November 24, 2017 | |||||
Approximate date of currency conversion | Monday, November 27, 2017 | |||||
Approximate dividend payment date | Tuesday, December 12, 2017 | |||||
15. Changes to the Board
With effect from October 3, 2017, Fundiswa Roji-Maplanka, was appointed as an independent non-executive director to the Board of Directors, and a member of the Audit and Risk Committee, as well as the Social and Ethics Committee. Fundiswa was previously a non-executive director of MiX Telematics from August 2007 to November 2014.
16. Development costs historical data
The table below sets out development costs incurred and capitalized for each of the last eight quarters including the period ended September 30, 2017.
South African Rand | |||||||||||||||||||||||
Figures are in thousands (Unaudited) | Three months ended | ||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, |
September 30, |
June 30, | March 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
Total development costs incurred | 34,167 | 33,175 | 32,152 | 36,696 | 36,034 | 37,230 | 28,693 | 28,016 | |||||||||||||||
Development costs capitalized | 16,148 | 16,656 | 17,268 | 20,415 | 21,028 | 19,309 | 12,136 | 16,308 | |||||||||||||||
Development costs expensed within administration and other charges | 18,019 | 16,519 | 14,884 | 16,281 | 15,006 | 17,921 | 16,557 | 11,708 | |||||||||||||||
United States Dollar | |||||||||||||||||||||||
Figures are in thousands (Unaudited) | Three months ended | ||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, |
September 30, |
June 30, | March 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | ||||||||||||||||
Total development costs incurred | 2,520 | 2,446 | 2,370 | 2,706 | 2,657 | 2,745 | 2,116 | 2,065 | |||||||||||||||
Development costs capitalized | 1,191 | 1,228 | 1,273 | 1,505 | 1,551 | 1,424 | 895 | 1,202 | |||||||||||||||
Development costs expensed within administration and other charges | 1,329 | 1,218 | 1,097 | 1,201 | 1,106 | 1,321 | 1,221 | 863 | |||||||||||||||
17. Taxation
Section 11D Allowances relating to tax assets recognized
MiX Telematics International Proprietary Limited (“MiX International”), a subsidiary of the Group, historically claimed a 150% allowance for research and development spend in terms of section 11D (“S11D”) of the South African Income Tax Act No. 58 of 1962 (“the Act”). As of October 1, 2012, the legislation relating to the allowance was amended. The amendment requires pre-approval of development project expenditure on a project specific basis by the South African Department of Science and Technology (“DST”) in order to claim a deduction of the additional 50% over and above the expenditure incurred (150% allowance). Since the amendments to S11D of the Act, MiX International had been claiming the 150% deduction resulting in a recognized tax benefit. MiX International has complied with the amended legislation by submitting all required documentation to the DST in a timely manner, commencing in October 2012.
In June 2014, correspondence was received from the DST indicating that the research and development expenditure on certain projects for which the 150% allowance was claimed in the 2013 and 2014 fiscal years did not, in the DST’s opinion, constitute qualifying expenditure in terms of the Act. MiX International, through due legal process, had formally requested a review of the DST’s decision not to approve this expenditure. While approvals were obtained for a portion of this project expenditure as a result of a further review performed by the DST in February 2017, we continue to seek approval for the remaining projects and as such the legal process is ongoing. In addition to the approvals that were subject to the legal process, further approvals have been obtained for certain project expenditure, relating to both current and prior financial years. However, at period end, an uncertain tax position remains in relation to S11D deductions in respect of which approvals remain pending.
Since the introduction of the DST pre-approval process, the Group has recognized in the income statement cumulative tax incentives in addition to the incurred cost of R19.6 million ($1.4 million) in respect of S11D deductions, of which R1.4 million ($0.1 million) was recognized during the six months ended September 30, 2017. R16.8 million ($1.2 million) relates to deductions in respect of development project expenditure which has been approved by the DST. R2.8 million ($0.2 million) relates to an uncertain tax position in respect of projects where approvals have not yet been received from the DST. If the Group is unsuccessful in this regard, the Group will not recover the R2.8 million ($0.2 million) raised at September 30, 2017.
Impact of foreign exchange movements
The impact of foreign exchange movements and the related tax effects on the Group's effective tax rate is shown below:
South African Rand | Six months ended September 2017 | Six months ended September 2016 | ||||||||||||||||
Unaudited | Unaudited | |||||||||||||||||
Profit for |
Foreign |
Adjusted |
Profit for the |
Foreign |
Adjusted |
|||||||||||||
Profit before tax | 88,085 | 1,784 | 89,869 | 68,091 | (11,496 | ) | 56,595 | |||||||||||
Taxation | (29,941 | ) | 1,692 | (28,249 | ) | (12,973 | ) | (6,381 | ) | (19,354 | ) | |||||||
Profit after tax | 58,144 | 3,476 | 61,620 | 55,118 | (17,877 | ) | 37,241 | |||||||||||
Attributable to: | ||||||||||||||||||
Owners of the parent | 58,084 | 3,476 | 61,560 | 55,130 | (17,877 | ) | 37,253 | |||||||||||
Non-controlling interests |
60 | — | 60 | (12 | ) | — | (12 | ) | ||||||||||
58,144 | 3,476 | 61,620 | 55,118 | (17,877 | ) | 37,241 | ||||||||||||
Effective tax rate | 34.0 | % | — |
31.4 |
% |
|
19.1 |
% |
— | 34.2 | % |
United States Dollar | Six months ended September 2017 | Six months ended September 2016 | ||||||||||||||||
Unaudited | Unaudited | |||||||||||||||||
Profit for |
Foreign |
Adjusted |
Profit for the |
Foreign |
Adjusted |
|||||||||||||
Profit before tax | 6,495 | 132 | 6,627 | 5,020 | (848 | ) | 4,172 | |||||||||||
Taxation | (2,208 | ) | 125 | (2,083 | ) | (957 | ) | (471 | ) | (1,428 | ) | |||||||
Profit after tax | 4,287 | 257 | 4,544 | 4,063 | (1,319 | ) | 2,744 | |||||||||||
Attributable to: | ||||||||||||||||||
Owners of the parent | 4,283 | 257 | 4,540 | 4,064 | (1,319 | ) | 2,745 | |||||||||||
Non-controlling interests |
4 | — | 4 | (1 | ) | — | (1 | ) | ||||||||||
4,287 | 257 | 4,544 | 4,063 | (1,319 | ) | 2,744 | ||||||||||||
Effective tax rate | 34.0 | % | — |
31.4 |
% |
|
19.1 | % | — | 34.2 | % | |||||||
Excluding the impact of foreign exchange gains and losses and its related tax consequences, the effective tax rate is 2.8% lower than the first six months of fiscal 2017.
For and on behalf of the Board: | |||||
RA Frew | SB Joselowitz | ||||
Midrand | |||||
October 31, 2017 | |||||
For more information please visit our website at: www.mixtelematics.com
MiX Telematics Limited |
(Incorporated in the Republic of South Africa) |
(Registration number: 1995/013858/06) |
JSE share code: MIX NYSE code: MIXT ISIN: ZAE000125316 |
(“MiX Telematics” or “the Company” or “the Group”) |
Registered office |
Matrix Corner, Howick Close, Waterfall Park, Midrand |
Directors |
RA Frew* (Chairman), SB Joselowitz (CEO), EN Banda*, SR Bruyns* (Lead Independent Director), PM Dell, CH Ewing*, IV Jacobs*, F Roji-Maplanka*, CWR Tasker, AR Welton* |
* Non-executive |
Company secretary |
Java Capital Trustees and Sponsors Proprietary Limited |
Auditors |
Deloitte & Touche |
Sponsor |
Java Capital Trustees and Sponsors Proprietary Limited |
November 2, 2017