| Mon 24 Nov 2008, 8:30 | | MIX - MiX Telematics Limited - Reviewed condensed consolidated financial |
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MIX
MIX
MIX - MiX Telematics Limited - Reviewed condensed consolidated financial
information and unaudited illustrative pro forma financial information of mix
telematics limited for the six months ended 30 September 2008
MiX TELEMATICS LIMITED
(Previously Telimatrix Limited)
Incorporated in the Republic of South Africa
Registration number 1995/013858/06
JSE code: MIX ISIN: ZAE000125316
(previously ISIN ZAE000104683)
("MiX" or "the company" or "the Group")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL INFORMATION AND UNAUDITED
ILLUSTRATIVE PRO FORMA FINANCIAL INFORMATION OF MIX TELEMATICS LIMITED FOR
THE SIX MONTHS ENDED 30 SEPTEMBER 2008
HIGHLIGHTS
- Adjusted HEPS of 6,7 cents per share
- Revenue of R432 million
- R192 million annuity based
- R177 million in foreign currency
- EBITDA margin of 19,5%
- Cash from operations at 76% of EBITDA
- 198 000 subscribers
A WORD FROM THE CEO, STEFAN JOSELOWITZ ("JOSS")
Just when I thought I had been in business long enough to have experienced
the full ambit of economic cycles, this latest crisis hits and reminds one
that over-confidence is for war-heroes and teenagers (of which I am neither).
Although I anticipated a tough trading cycle for the period under review, I
certainly underestimated the extent of the damage to the motor industry, both
locally and abroad. Having said this, your management team has weathered the
storm reasonably well and, despite choppy conditions in some sectors of the
business, we feel that we are well positioned to navigate through these
waters.
During the period we completed two new acquisitions, both of which present
the Group with additional high growth opportunities:
Tripmaster
We concluded the acquisition of Tripmaster, based in Dallas, USA. The
business has now been re-branded MiX Telematics North America, our product
range has been fully integrated into the operation and we have phased out
sales of the old Tripmaster legacy range. As with all of our businesses, the
emphasis has also been switched to an annuity revenue focus.
SDI
We opened initial discussion and then successfully concluded the acquisition
of the SafeDrive International Group, with offices in Australia and Dubai. We
have enjoyed a long standing relationship with the vendors of SDI, who have
been distributors and product integrators of our fleet management range for
many years - with particular success in the Middle East oil-and-gas sector.
This business also dovetails nicely with our efforts in the USA, with many
cross pollination opportunities becoming apparent.
Growth
We previously announced an expansion of our sales focus to include `mega-
fleets` and also announced the award of the Debis tender for almost 10 000
vehicles. Its implementation is proceeding well, with the initial start-up
costs carried in these results with little of the future annuity revenue
benefit coming through as yet, the bulk of which only starts to flow in the
second half of this financial year. Additionally we have landed some
significant wins internationally, including the Go Ahead Bus Company in the
UK, Baker Hughes in the USA and Chevron in the USA and Middle East - these
deals represent significant growth potential for MiX.
So, halfway through our first full year of operations as a merged and listed
entity, I can report that I am satisfied with the progress that the Group has
made toward achieving both our short and medium-term objectives.
BUSINESS OVERVIEW
MiX is a group that is focused on all levels of vehicle telematics, combining
vehicle tracking, driver/passenger safety and recovery services with a
complete range of fleet management products and services.
INCOME STATEMENT WITH PRO FORMA COMPARATIVE INFORMATION
The Income Statement below has been compiled for illustrative purposes using
the reviewed results for the six-months ended 30 September 2008 with the pro
forma Income Statement of the Group for the six-months ended 30 September
2007 and the pro forma Income Statement of the Group for the year ended 31
March 2008 as comparatives.
PRO FORMA CONSOLIDATED INCOME STATEMENTS
Pro forma Pro forma
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Revenue 432 446 321 929 687 547
Cost of sales (178 406) (113 772) (258 255)
Gross profit 254 040 208 158 429 292
Other income 3 807 2 830 11 059
Other operating expenses (173 455) (135 042) (280 110)
Earnings before interest, tax, 84 392 75 946 160 241
depreciation and amortisation
(`EBITDA`)
Depreciation and amortisation (10 927) (9 204) (20 070)
Amortisation arising from the (11 155) (10 722) (21 939)
purchase price allocation
required by IFRS3
Negative goodwill 1 581 - -
Earnings before interest and tax 63 891 56 020 118 232
(`EBIT`)
Finance income 503 742 1 714
Finance costs (11 941) (12 160) (24 623)
Share of joint venture losses (416) - -
Profit before tax 52 037 44 602 95 323
Taxation expense (15 452) (20 298) (33 120)
Profit for the period 36 585 24 304 62 203
Profit on fixed assets (after - - (34)
tax)
Negative goodwill (after tax) (1 581) - -
Headline earnings 35 004 24 304 62 169
Amortisation arising from the 7 923 7 562 15 471
purchase price allocation of
Omnibridge merger as required by
IFRS3 (after tax)
Impact of tax rate reductions - - (1 651)
arising from the above purchase
price allocations
One-off adjustments resulting
from
Omnibridge business combination - 5 823 5 265
Adjusted headline earnings 42 927 37 689 81 254
Total weighted average shares in 642 833 640 000 640 000
issue (000`s)
Earnings per share (cents) 5,7 3,8 9,7
Headline earnings per share 5,4 3,8 9,7
(cents)
Adjusted headline earnings per 6,7 5,9 12,7
share (cents)
Note to the Pro Forma Comparative Income Statements
The comparative pro forma Income Statements have been prepared by management
in an effort to provide a meaningful basis of comparison for users of the
Group`s financial information and are the responsibility of the directors of
MiX. By its nature, the pro forma comparative information may not fairly
reflect the financial results of the Group after the acquisitions of
OmniBridge RSA and Omnibridge Europe on 1 October 2007.
An unqualified reporting accountant`s report was issued on the pro forma
Income Statement of the Group for the six-months ended 30 September 2007.
The pro forma Income Statement of the Group for the six-months ended 30
September 2007 was revised to reflect the reversal of the negative goodwill
(R4,4 million) and tax thereon (R2,9 million) that was included on a pro
forma provisional basis at 30 September 2007. This negative goodwill and the
tax thereon had been determined on a provisional basis and on review of the
initial accounting for the business combination at 31 March 2008, it was
determined that no negative goodwill existed in Omnibridge Europe and
accordingly the pro forma results were revised.
Consolidated Interim Financial Information of MiX Telematics for the six
months ended 30 September 2008
CONDENSED CONSOLIDATED BALANCE SHEETS
Reviewed Reviewed Audited
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Assets
Non-current assets
Property, plant and equipment 57 239 11 598 52 036
Intangible assets 721 354 3 347 695 917
Available for sale and other 5 321 - 5 024
investments
Deferred income tax asset 12 457 - 10 337
Total non-current assets 796 371 14 945 763 314
Current assets
Inventory - other 68 114 14 383 59 406
Inventory held in client vehicles 23 439 20 886 24 000
Trade and other receivables 161 864 29 442 121 540
Loans to related parties - 31 575 -
Current income tax asset 74 - 79
Cash and cash equivalents 30 568 2 424 29 590
Restricted cash 1 000 1 000 1 000
Total current assets 285 059 99 710 235 615
Total assets 1 081 430 114 655 998 929
Equity and liabilities
Capital and reserves
Share capital 13 16 13
Share premium 787 354 - 770 353
Accumulated losses (35 546) (100 431) (62 531)
Other reserves (122 395) - (109 817)
Total capital and reserves 629 426 (100 415) 598 018
attributable to equity holders of
the company
Minority interest - 17 408 -
Total equity 629 426 (83 007) 598 018
Non-current liabilities
Interest bearing borrowings 120 787 41 925 95 127
Deferred income tax liabilities 39 516 9 414 40 043
Provisions and other liabilities 18 792 - 19 066
Total non-current liabilities 179 095 51 339 154 236
Current liabilities
Trade and other payables 148 827 70 233 124 702
Current income tax liabilities 27 371 20 667 25 287
Bank overdraft 8 678 2 347 31 256
Interest bearing borrowings 79 170 53 075 56 827
Provisions and other liabilities 8 863 - 8 603
Total current liabilities 272 909 146 322 246 675
Total equity and liabilities 1 081 430 114 655 998 929
Net asset value per share (cents) 95,8 (41,8) 93,4
Net tangible asset value per share (14,0) (43,2) (15,3)
(cents)
CONDENSED CONSOLIDATED INCOME STATEMENTS
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Revenue 432 446 138 872 504 490
Cost of sales (178 406) (55 045) (204 885)
Gross profit 254 040 83 827 299 605
Other income 3 807 - 8 229
Other operating expenses (193 956) (48 148) (209 942)
Operating profit 63 891 35 679 97 892
Finance income 503 270 1 242
Finance costs (11 941) (4 316) (16 779)
Share of joint venture losses (416) - -
Profit before tax 52 037 31 633 82 355
Taxation expense (15 452) (12 428) (25 250)
Profit for the period 36 585 19 205 57 105
Attributable to:
- Equity shareholders 36 585 14 604 52 504
- Minority shareholders - 4 601 4 601
36 585 19 205 57 105
Earnings per share (cents) 5,7 6,1 11,9
Diluted earnings per share (cents) 5,7 6,1 11,9
Dividend per share (cents) 1,5 6,5 6,5
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Net cash from operating activities 27 698 27 082 86 890
Net cash used in investing (48 418) (1 902) (1 958)
activities
Net cash from/(used in) financing 45 109 (32 833) (97 003)
activities
Net change in cash and cash 24 389 (7 653) (12 071)
equivalents
Exchange gains on cash and cash (833) - 2 673
equivalents
Cash and cash equivalents at (1 666) 7 731 7 732
beginning of the period
Cash and cash equivalents at end of 21 890 77 (1 666)
the period
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Opening balance 598 018 (81 546) (81 546)
Attributable net profit for the 36 585 14 604 52 504
period
Minority interest - 4 601 4 601
Dividends paid
- paid to equity holders (9 600) (15 500) (15 500)
- paid to minority - (5 167) (5 167)
Share based payments 962 - 155
Minority share acquisition
- Shares issued - - 155 302
- Minority interest acquired - - (17 408)
- Transaction with minority - - (137 894)
Shares issued on business 17 000 - 615 048
combination, net of listing costs
Foreign currency translation (12 840) - 27 569
differences
Revaluation of shareholder loan (482) - 871
Fair value reserve on available for (217) - (517)
sale financial asset
Closing balance 629 426 (83 007) 598 018
Notes to the condensed consolidated financial information
1. Basis of preparation
The condensed consolidated financial information ("financial
information") of the Group for the six-months ended 30 September 2008
has been prepared in accordance with International Financial Reporting
Standards ("IFRS"), International Accounting Standard 34, the Listings
Requirements of the JSE Limited and the South African Companies Act
(1973) as amended. The principal accounting policies have been
consistently applied for all periods and are consistent with those used
in the preparation of the latest audited financial statements.
2. Business combinations
Effective 1 August 2008 MiX acquired 100% of the issued share capital of
Tripmaster (a US registered company), subsequently renamed MiX
Telematics North America, for a nominal consideration.
Effective 1 September 2008 MiX acquired the SDI Group of companies
("SDI") - comprising 100% of the issued share capital of SafeDrive
International (an Australian registered company), 100% of the issued
share capital of Safe Drive FZE (a UAE registered company), and a 49%
interest in Driver Training International Middle East and Africa (a UAE
registered entity) - for a total purchase consideration of AUD6 million
and 17 million ordinary shares, which will be issued at R1,00 each.
Had these acquisitions both been effective from 1 April 2008, the
Group`s revenue for the period would have increased by R50,4 million and
the profit after tax for the period would have increased by R2,6
million. Tripmaster and SDI contributed combined revenues of R11,1
million to the Group for the period and a combined net loss after tax of
R0,8 million to the Group for the period. These amounts have been
calculated using the Group`s accounting policies.
Details of the net assets acquired are as follows:
SDI Tripmaster
(R`000s) Provisional values Provisional values
Property, plant and equipment 2 498 678
Intangible assets - 489
Inventory - other 4 179 3 086
Trade and other receivables 17 791 1 476
Cash and cash equivalents 6 317 2 458
Borrowings (1 774) (170)
Trade and other payables (11 419) (1 726)
Provisions and other (1 344) (4 710)
liabilities
Net asset value 16 248 1 581
Purchase consideration 56 928 -
Provisional negative goodwill - 1 581
credited to income statement
Provisional net asset value (16 248) (1 581)
acquired
Provisional goodwill, 40 680 -
included in intangible assets
Provisional purchase (56 928) -
consideration
Add: Settled through equity 17 000 -
issue
Add: Cash acquired 6 317 2 458
Net cash effect of business (33 611) 2 458
combination
The initial accounting for the business combination has been determined
on a provisional basis as the determination of fair values of all
tangible assets and liabilities and the valuation of underlying
intangible assets is still being finalised. With the acquisitions having
been concluded in the months close to the period end it was not possible
to have the initial accounting finalised for the period end. The
provisionally determined goodwill is expected to change once the fair
values of both the tangible and intangible assets and liabilities have
been finally determined. It should be noted that the negative goodwill
credited to the income statement has also been determined on a
provisional basis, accordingly this amount could change with the final
determination of the initial accounting for the business combination.
3. Changes to share capital
During the period under review the company agreed to issue 17 million
ordinary shares as part of the purchase consideration for the
acquisition of SDI - refer note 2. These shares had not been issued at
30 September 2008, however the share capital and the premium thereon has
been accounted for effective 1 September 2008, being the effective date
of acquisition for accounting purposes. The shares were included in the
weighted average number of shares in issue for the period.
4. Borrowings
During the period under review, the total borrowings increased to R200
million (31 March 2008: R152 million), R41 million of this increase is
attributable to the acquisition of SDI (refer note 2) and was raised in
September 2008.
5. Segmental analysis
The Group has the following primary reporting segments:
- Vehicle tracking (comprising MiX Telematics Africa)
- Fleet management (comprising MiX Telematics International, UK, North
America and SDI)
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Segmental analysis
Revenue
- Vehicle Tracking 163 538 138 872 300 877
- Fleet Management 268 908 - 203 613
Revenue 432 446 138 872 504 490
Segment result
- Vehicle Tracking 33 656 35 679 75 733
- Fleet Management 34 137 - 23 706
- Unallocated (3 902) - (1 547)
Operating profit before 63 891 35 679 97 892
interest and tax
6. Attributable, headline, diluted attributable and diluted headline
earnings per share
Reviewed Reviewed Audited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
(R`000s) 2008 2007 2008
Reconciliation of headline
earnings
Attributable earnings 36 586 14 604 52 504
Profit on fixed assets - - (34)
(after tax)
Negative goodwill (after (1 581) - -
tax)
Headline earnings 35 004 14 604 52 470
Total shares in issue 657 000 240 000 640 000
(000`s)
Weighted average shares in 642 833 240 000 440 000
issue (000`s)
Weighted average dilutive 642 833 240 000 440 155
shares in issue (000`s)
Headline earnings per share 5,4 6,1 11,9
Diluted headline earnings 5,4 6,1 11,9
per share
7. Dividends
A dividend of R9,6 million (2007: R15,5 million) was paid during the six
months under review. Using shares in issue of 640 million (2007: 240
million) this equates to a dividend of 1,5 (2007: 6,5) cents per share.
8. Contingent liabilities
8.1 Connection incentives
The Group has received connection/upgrade incentives from Mobile
Telephone Networks (Proprietary) Limited for connecting subscribers
to their network. In the event that the subscriber contract is
terminated during the two year service contract period, the full
amount of the connection/upgrade incentive received for this
subscriber contract becomes repayable. In the unlikely event that
all subscriber contracts were terminated prematurely, the potential
liability would amount to R79 million (31 March 2008: R77,6
million). No loss is expected under this arrangement.
8.2 Vehicle Security Association of South Africa ("VESA")
As previously reported, the Competition Commission has referred a
complaint that VESA (of which MiX Telematics Africa was a member)
had engaged in anti-competitive behaviour. This complaint will be
heard by the Competition Tribunal in the next few months. The
company has been advised that, due to the nature of the complaint,
there should be no monetary damages in the unlikely event of an
adverse finding. The company will continue to incur costs
associated with defending this matter.
8.3 Net working capital dispute
The Group is in dispute with the vendors of OmniBridge RSA and
OmniBridge Europe regarding the fair value of net working capital
in the businesses at the effective date of acquisition. The dispute
is being resolved in terms of the sale of shares agreement. Any
award made will have no material impact on earnings and the Group
has not accounted for any of the amounts claimed by it in the
dispute. In the event the award is not in the Group`s favour,
management does not expect the impact of this to be material.
9. Capital commitments
At 30 September 2008, capital commitments authorised but not yet
contracted for the six months ahead amounted to R15 million.
10. Independent review
The condensed consolidated interim financial information has been
reviewed by our auditors, PricewaterhouseCoopers Inc., who have
performed their review in accordance with the International Standard on
Review Engagements 2410. A copy of their unqualified review report is
available for inspection at the registered office of the company.
MIX TELEMATICS LIMITED
Registered Office:
Matrix Corner, Howick Close, Waterfall Park, Midrand.
Directors:
SR Bruyns (Chairman); SB Joselowitz (CEO); R Botha; TE Buzer; SPJ Evans; RA
Frew; R Friedman; A Patel; CWR Tasker;
AR Welton; F Roji (alternate)
Company Secretary:
Probity Business Services (Proprietary) Limited.
Reporting Accountants:
PricewaterhouseCoopers Advisory Services (Proprietary) Limited.
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Java Capital (Proprietary) Limited
Date: 24/11/2008 08:30:01 Produced by the JSE SENS Department.
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