| Mon 16 Nov 2009, 8:05 | | MIX - Mix Telematics - Group Unaudited Interim Financial Results For The Six |
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MIX
MIX
MIX - Mix Telematics - Group Unaudited Interim Financial Results For The Six
Months Ended 30 September 2009
MIX TELEMATICS LIMITED
Incorporated in the Republic of South Africa
Registration number 1995/013858/06
JSE code: MIX
ISIN : ZAE000125316
("MiX Telematics" or "the Company" or "the Group")
GROUP UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2009
Revenue R431 million
- R237 million annuity
- R213 million foreign currency
EBITDA R72 million (down 14% on 2008)
Adjusted HEPS 5,0 cents per share (down 25% on 2008)
Cash generated from operations - R80 million (2008: R64 million)
A WORD FROM THE CEO, S JOSELOWITZ ("JOSS")
For sake of continuity, I would like to start off this half-year update by
quoting from my closing remarks in the report that we published for the March
year-end:
"Forgive me for pointing out the obvious, but global trading conditions remain
tough and in some regions have deteriorated even further than last year. For
now, our focus will remain on weathering the storm whilst executing well on
the basics."
As the results show, the trading conditions for the six months under review
were exceedingly difficult. The Group was buffeted by a combination of poor
new vehicle sales worldwide, a strong Rand and decision inertia by corporate
clients unsure of their own prospects.
In the face of these conditions I am satisfied with the performance of the
Group for the period. By-and-large, we have weathered the storm and have
executed well on the basics. Most divisions have managed to contain costs
while continuing to develop the exciting new products and markets that are
vital to our future success.
Our positioning as a Rand-hedge investment is no secret so clearly a strong
Rand is not ideal for a Group that provides its technologies and services all
over the globe. Whilst we cannot do anything about the exchange rate, we are
working hard to land some mega-deals, the absence of which was a defining
feature of the past six months. Our efforts are starting to bear fruit and we
are proud to have recently concluded significant deals with both British Gas
and PDO (a large subsidiary of Shell based in the Middle East) - both of these
deals were concluded after the period under review. Even in the absence of any
mega-deals, our large annuity base helped limit the negative impact of
disappointing new sales and confirms the attractiveness of our business model.
Annuity revenue for the period was 55% of total revenue.
Our continued focus on cash generation was maintained and I am pleased to
report that the Group continued its stated path. Net debt was maintained at
the R89 million level notwithstanding paying a dividend of R26,3 million on
which STC of R2,6 million was paid.
Whilst it is too early to call off the storm-watch, I remain very excited
about the future of the Group and believe the next two years will deliver the
fruits of our current labours. I would like to thank all the executives and
employees for their efforts over the last six months.
Condensed group income statement
Six Six months 12 months
months
ended ended ended
30 30 September 31 March
September
2009 2008 2009
Unaudited Reviewed Audited
R`000 R`000 R`000
Revenue 431 292 432 446 958 139
Cost of sales (176 097) (178 406) (393 515)
Gross profit 255 195 254 040 564 624
Other income 4 323 3 807 10 210
Operating expenses (212 430) (193 956) (439 777)
Operating profit (note 2) 47 088 63 891 135 057
Net finance cost (note 4) (9 128) (11 438) (25 931)
Share of joint venture profit/(losses) 13 (416) (916)
Profit before tax 37 973 52 037 108 210
Income tax expense (14 221) (15 452) (39 125)
Profit for the period 23 752 36 585 69 085
Profit attributable to:
Equity holders of the Company 23 752 36 585 69 085
Condensed group statement of comprehensive income
Six Six months 12 months
months
ended ended ended
30 30 September 31 March
September
2009 2008 2009
Unaudited Reviewed Audited
R`000 R`000 R`000
Profit for the period 23 752 36 585 69 085
Other comprehensive income:
Exchange differences on translating (30 307) (12 840) (17 888)
foreign currencies
Fair value reserve on available-for-sale
financial asset
Arising in the current year (40) (217) (1 211)
Charged to the income statement - - 1 728
Exchange differences on shareholder loan (11 932) (680) (2 105)
Income tax relating to components of 1 331 198 394
other comprehensive income
Net loss recognised in other (40 948) (13 539) (19 082)
comprehensive income
Total comprehensive (loss)/income for the (17 196) 23 046 50 003
period
Total comprehensive (loss)/income
attributable to:
Equity holders of the Company (17 196) 23 046 50 003
Ordinary shares (million)
- in issue 657 000 657 000 657 000
- weighted average 657 000 642 833 649 917
- diluted weighted average 657 000 642 833 649 917
Attributable earnings per share
- basic 3,6 5,7 10,6
- diluted 3,6 5,7 10,6
Reconciliation of headline earnings and adjusted headline earnings
Six Six months 12 months
months
ended ended ended
30 30 September 31 March
September
2009 2008 2009
Unaudited Reviewed Audited
R`000 R`000 R`000
Profit attributable to equity holders of 23 752 36 585 69 085
the Company
Adjusted for:
Loss on disposal of property, plant and 82 - 425
equipment
Impairment of available-for-sale - - 1 728
financial asset
Impairment of intangible assets - - 10 226
Negative goodwill - (1 581) (1 325)
Income tax effect on the above components - - (81)
Headline earnings 23 834 35 004 80 058
Headline earnings per share (cents)
- basic 3,6 5,4 12,3
- diluted 3,6 5,4 12,3
Headline earnings 23 834 35 004 80 058
Amortisation of IFRS3 intangible assets 10 806 11 155 26 798
Income tax effect on the amortisation of (1 626) (3 232) (3 229)
the IFRS3 intangible assets
Adjusted headline earnings 33 014 42 927 103 627
Adjusted headline earnings per share
(cents)
- basic 5,0 6,7 15,9
- diluted 5,0 6,7 15,9
Condensed group statement of financial position
30 30 September 31 March
September
2009 2008 2009
Unaudited Reviewed Audited
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 45 002 57 239 51 755
Intangible assets 664 439 721 354 693 345
Available-for-sale and other investments 3 198 5 321 3 675
Deferred income tax 16 680 12 457 13 481
Total non-current assets 729 319 796 371 762 256
Current assets
Inventory 32 397 68 114 40 544
Inventory held in client vehicles 23 306 23 439 23 456
Trade and other receivables 114 597 161 864 135 396
Current income tax asset 74 74 436
Cash and cash equivalents 86 283 30 568 140 095
Restricted cash 1 320 1 000 1 351
Total current assets 257 977 285 059 341 278
Total assets 987 296 1 081 430 1 103 534
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13 13
Share premium 787 353 787 353 787 353
Accumulated losses (5 574) (35 546) (3 046)
Other reserves (166 677) (122 394) (126 893)
Total equity 615 115 629 426 657 427
Non-current liabilities
Interest bearing borrowings 90 789 120 787 120 232
Deferred income tax 36 580 39 516 35 611
Provisions and other liabilities 15 077 18 792 17 886
Total non-current liabilities 142 446 179 095 173 729
Current liabilities
Trade and other payables 115 373 148 827 139 511
Interest bearing borrowings 52 248 79 170 81 170
Current income tax 10 884 27 371 10 603
Bank overdraft 32 548 8 678 27 732
Provisions and other liabilities 18 682 8 863 13 362
Total current liabilities 229 735 272 909 272 378
Total equity and liabilities 987 296 1 081 430 1 103 534
Net borrowings (note 5) (89 302) (178 067) (89 039)
Net asset value per share (cents) 93,6 95,8 100,1
Net tangible asset value per share (8) (14) (6)
(cents)
Capital expenditure
- incurred 19 310 17 651 30 250
- authorised but not spent 10 898 15 000 10 000
Condensed group statement of cash flows
Six Six months 12 months
months
ended ended ended
30 30 September 31 March
September
2009 2008 2009
Unaudited Reviewed Audited
R`000 R`000 R`000
Cash generated from operating activities 79 754 64 498 226 497
Net interest expense (note 4) (8 734) (11 438) (25 864)
Taxation paid (15 810) (15 762) (61 491)
Net cash generated from operating 55 210 37 298 139 142
activities
Investing activities
Capital expenditure (19 310) (17 651) (30 250)
Proceeds from disposal of property, plant - - 367
and equipment
Acquisition of subsidiary companies - (30 767) (31 045)
Net cash utilised in investing activities (19 310) (48 418) (60 928)
Financing activities
Net borrowings (repaid)/raised (58 177) 45 109 47 010
Dividends paid (26 280) (9 600) (9 600)
Net cash (utilised in)/generated from (84 457) 35 509 37 410
financing activities
Net (decrease)/increase in cash and cash (48 557) 24 389 115 624
equivalents
Cash and cash equivalents at beginning of 112 363 (1 666) (1 666)
period
Exchange losses on cash and cash (10 071) (833) (1 595)
equivalents
Cash and cash equivalents at end of 53 735 21 890 112 363
period
Abbreviated segmental analysis
Total
revenue
Six months ended September 2009 R`000
Africa Stolen vehicle recovery 163 096
Fleet management 77 951
United Kingdom Fleet management 120 492
North America Fleet management 9 759
Middle East Fleet management 54 086
International Fleet management and development 72 449
All other segments 2 747
Group Goodwill and IFRS 3intangible -
assets
Inter-segment elimination (69 288)
Total 431 292
Six months ended September 2008
Africa Stolen vehicle recovery 163 537
Fleet management 99 682
United Kingdom Fleet management 129 182
North America Fleet management 4 554
Middle East Fleet management 6 555
International Fleet management and development 93 260
All other segments -
Group Goodwill and IFRS 3intangible -
assets
Inter-segment elimination (64 324)
Total 432 446
12 months ended March 2009
Africa Stolen vehicle recovery 334 351
Fleet management 156 106
United Kingdom Fleet management 264 494
North America Fleet management 39 112
Middle East Fleet management 83 665
International Fleet management and development 205 568
All other segments -
Group Goodwill and IFRS 3intangible -
assets
Inter-segment elimination (125 157)
Total 958 139
Inter-segment
revenue EBITDA Assets
Six months ended September 2009 R`000 R`000 R`000
Africa (2 201) 37 668 239 404
(2 936) 15 119 66 391
United Kingdom (823) 6 965 122 961
North America (10) (5 989) 15 790
Middle East (3 381) 6 060 49 582
International (59 541) 17 860 230 375
All other segments (396) (5 445) 142 561
Group - - 434 120
Inter-segment elimination 69 288 - (313 888)
Total - 72 238 987 296
Six months ended September 2008
Africa - 36 933 261 987
- 18 331 59 931
United Kingdom (2 395) 3 422 174 664
North America - (1 241) 8 840
Middle East (239) 766 32 975
International (61 690) 29 875 126 749
All other segments - (3 694) 105 986
Group - - 469 212
Inter-segment elimination 64 324 - (158 914)
Total - 84 392 1 081 430
12 months ended March 2009
Africa (1 433) 78 487 284 762
- 27 047 86 309
United Kingdom (5 863) 5 464 137 325
North America - (949) 13 081
Middle East (4 262) 17 838 53 586
International (113 599) 82 310 180 007
All other segments - (12 817) 139 412
Group - - 462 863
Inter segment elimination 125 157 - (253 811)
Total - 197 380 1 103 534
Condensed statement of changes in equity
Stated Share Other
capital premium reserves
R`000 R`000 R`000
Balance at 31 March 2008 13 770 353 (109 817)
Dividends paid - - -
Total comprehensive income for the period - - (13 539)
Share-based payments - - 962
Shares issued on business combination - 17 000 -
Balance at 30 September 2008 13 787 353 (122 394)
Total comprehensive income for the period - - (5 543)
Share-based payments - - 1 044
Balance at 31 March 2009 13 787 353 (126 893)
Dividends paid (note 6) - - -
Total comprehensive loss for the period - - (40 948)
Share-based payments - - 1 164
Balance at 30 September 2009 13 787 353 (166 677)
Accumulated
losses Total
R`000 R`000
Balance at 31 March 2008 (62 531) 598 018
Dividends paid (9 600) (9 600)
Total comprehensive income for the period 36 585 23 046
Share-based payments - 962
Shares issued on business combination - 17 000
Balance at 30 September 2008 (35 546) 629 426
Total comprehensive income for the period 32 500 26 957
Share-based payments - 1 044
Balance at 31 March 2009 (3 046) 657 427
Dividends paid (note 6) (26 280) (26 280)
Total comprehensive loss for the period 23 752 (17 196)
Share-based payments - 1 164
Balance at 30 September 2009 (5 574) 615 115
Notes to the condensed group interim financial results
1. Basis of preparation and accounting policies
These condensed group interim financial results have been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards ("IFRS") and are in compliance with IAS 34:
Interim Financial Reporting, the Listings Requirements of the JSE Limited and
the South African Companies Act (1973), as amended. These interim financial
results have not been audited or reviewed by the Company`s auditors.
The condensed group interim financial results do not include all the
information and disclosures required in the annual financial results and
should be read in conjunction with the Group`s annual financial statements for
the year ended 31 March 2009.
The accounting policies applied are consistent with those followed in the
preparation of the Group`s annual financial statements for the year ended 31
March 2009, except where the Group has adopted new or revised accounting
standards.
The Group adopted all IFRS and interpretations which became effective during
the period under review and which were deemed applicable to the Group,
including IAS 1 - Revised Presentation of Financial Statements and IFRS 8 -
Operating Segments, none of which had any material impact on the Group`s
results.
MiX Telematics` businesses are managed primarily on a geographic and also on a
product basis. In accordance with IFRS 8 - Operating Segments, MiX Telematics
has revised the disclosure of its segments. In addition, the assessment of the
profit performance of the operating segments has been amended and is now
measured at the earnings before interest, tax, depreciation and amortisation
("EBITDA") level. This measurement provides a greater comparison of
performance across all segments. All comparative figures have been reworked in
accordance with this revised disclosure. The reconciliation of EBITDA to
operating profit is set out in note 2.
2. Operating profit and EBITDA (R`000)
Six months Six months 12 months
ended ended Ended
2009 2008 2009
Operating profit 47 088 63 891 135 057
Add depreciation, amortisation and other 25 150 20 501 62 323
(note 3)
EBITDA per segmental analysis 72 238 84 392 197 380
3. Depreciation, amortisation, impairment
and other (R`000)
Six months Six months 12 months
ended ended ended
2009 2008 2009
Depreciation and amortisation 14 344 10 927 24 896
Amortisation of IFRS3 intangible assets 10 806 11 155 26 798
Impairment of available-for-sale - - 1 728
financial asset
Impairment of intangible assets - - 10 226
Negative goodwill - (1 581) (1 325)
Total 25 150 20 501 62 323
4. Net finance cost(R`000)
Six months Six months 12 months
Ended Ended Ended
2009 2008 2009
Interest expense on borrowings 17 432 11 941 26 887
Interest received on surplus cash (8 698) (503) (1 023)
Net interest expense 8 734 11 438 25 864
Discount adjustment on non-current 394 - 67
provisions
Total 9 128 11 438 25 931
5. Net borrowings
Net borrowings are comprised of the sum of all interest bearing borrowings and
bank overdraft less cash and cash equivalents, but excluding restricted cash.
6. Dividends
A dividend of R26,3 million (2008: R9,6 million) was paid during the six
months under review. Using shares in issue of 657 million (2008: 640 million)
this equates to a dividend of 4,0 (2008: 1,5) cents per share. STC of R2,7
million was paid on the R26 million dividend.
7. Contingent liabilities
7.1. Connection incentives
The Group has received connection and upgrade incentives from Mobile Telephone
Networks (Proprietary) Limited for connecting subscribers to their network. In
the event that a subscriber contract is terminated during the contract period,
the full amount of the connection/upgrade incentive received for this
subscriber contract becomes repayable. In the unlikely event that all
subscriber contracts are terminated prematurely, the potential liability would
amount to R76 million (31 March 2009: R79 million). No loss is expected under
this arrangement.
7.2. Vehicle Security Association of South Africa ("VESA")
Since the last report, the Competition Tribunal of South Africa has now held
hearings following the complaint that VESA (of which MiX Telematics Africa
(Proprietary) Limited was a member) had engaged in anti-competitive behaviour
in the period ended in June 2003. The Competition Tribunal has not yet issued
its ruling on this matter. Due to the nature of the complaint, even an adverse
finding should result in no monetary fine being imposed by the Competition
Tribunal. However, in the advent of an adverse finding, there is the risk that
the Company may be sued by third parties who believe they suffered prejudice.
It should be noted that the complainant in this matter has acknowledged that
they did not suffer any damages as their venture was not capable of commercial
launch during the period in question.
7.3. Net working capital dispute
Post 30 September 2009, the Group settled the dispute with the vendors of
OmniBridge RSA and OmniBridge Europe regarding the fair value of net working
capital in the businesses at the effective date of acquisition. The settlement
is not material and will have no impact on earnings.
8. Exchange rates
30 September 30 September 31 March
2009 2008 2009
The following major rates of exchange
were used:
SA Rand: United States - Dollar closing 7,43 8,20 9,72
- weighted average 8,19 7,94 9,05
SA Rand: British Pound - closing 11,83 14,90 13,82
- weighted average 12,43 15,06 14,73
9. Events after the reporting period
The directors are not aware of any matter material or otherwise arising since
the end of the period and up to the date of this report, not otherwise dealt
with in this report.
COMMENTARY
1. Nature of business
MiX Telematics is a Group that is focused on all levels of vehicle telematics,
combining vehicle tracking, driver and passenger safety and recovery services,
a complete range of fleet management products and services and driver training
services.
2. Operations
MiX Telematics Africa: R Botha
MiX Telematics Africa comprises Matrix, the stolen vehicle recovery business;
and Enterprise and RSA Fleet, which provide fleet management solutions to
clients in SADC countries and east and west Africa. Recent trading conditions
in South Africa have been dreadful but despite this, the businesses held
market share and produced solid results.
MiX Telematics International: C Tasker
MiX Telematics International provides fleet management services to Group
subsidiaries and to global customers not served by MiX Telematics offshore
companies. This business also forms the core of the Group`s research and
development activities. The business`s results suffered due to Rand strength
during the six months under review and the world-wide economic recession which
impacted adversely on many of the Group`s global customers.
MiX Telematics UK: T Buzer
MiX Telematics UK provides fleet management solutions to customers across the
United Kingdom and Europe. Whilst trading conditions were tough, our
restructuring efforts in this business are starting to flow through to the
bottom line as evident in an improved EBITDA profit. The 3 500 vehicle Go
Ahead Bus fleet has been fully installed and has demonstrated the company`s
ability to service large international clients and fleets. The company has
recently been awarded the fleet contract for British Gas and other large
trials are currently in the adjudication process.
MiX Telematics SDI Middle East: C Tasker
Acquired in September 2008, SDI operates in Dubai and Australia, supplying
fleet management products and driver training services primarily to the oil
and gas sectors in the Middle East and Eastern Europe. This sector has seen
considerable contraction following the global economic meltdown and
specifically the chaos caused to our target market by the recent volatility in
the oil price. Thankfully, signs of life are starting to appear in the oil-and-
gas sector and MiX SDI has recently won a significant tender for driving
training services to PDO (a Shell operating company) in Oman.
MiX Telematics North America: S Joselowitz
Acquired in August 2008, this Dallas based business has been fully integrated
into the Group, supplying fleet management solutions to its US customers. In
the second half of the previous financial year, the business was successful in
winning the Baker-Hughes and Chevron contracts. Like SDI, this business is
heavily focused on the oil-and-gas sector where spending activity all but
dried up during the period under review. Again like SDI, we are starting to
see increased interest from potential customers and have recently been
contracted to open a small Journey Management Center for Schlumberger in the
USA.
3. Changes to the Board
As previously announced on 24 July 2009, Mr S Evans resigned as finance
director. Mr A Welton, previously a non-executive director and chairman of the
audit committee, assumed the position of financial director pending a
permanent appointment.
Midrand12 November 2009
Registered office:
Matrix Corner, Howick Close, Waterfall Park, Midrand
Directors:
SR Bruyns* (Chairman)
SB Joselowitz (CEO)
R Botha
TE Buzer
RA Frew*
R Friedman*
A Patel*
CWR Tasker
AR Welton
F Roji*(alternate)
*non-executive director
Company secretary:
Probity Business Services (Proprietary) Limited
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Java Capital (Proprietary) Limited
For more information on our interim results, please visit our website at
www.mixtelematics.co.za/page/investor-results/
www.mixtelematics.com
Date: 16/11/2009 08:05:01 Produced by the JSE SENS Department.
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