| Mon 13 Jun 2011, 8:00 | | MIX - Mix Telematics Limited - Audited group financial results for the year |
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MIX
MIX
MIX - Mix Telematics Limited - Audited group financial results for the year
ended 31 March 2011
MIX TELEMATICS LIMITED
Incorporated in the Republic of South Africa
Registration number 1995/013858/06
JSE code: MIX
ISIN: ZAE000125316
("MiX Telematics" or "the Company" or "the Group")
AUDITED GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011
FINANCIAL HIGHLIGHTS
Annuity revenue increased to R503 million
Revenue increased to R887 million
EBITDAR increased to R200 million
Adjusted HEPS increased to 14,1 cents per share
Dividend declared increased by 20% to 6 cents per share
Cash generated from operations increased to R190 million
A WORD FROM THE CEO, STEFAN JOSELOWITZ
Firstly I am delighted to report that your Group is back on the growth track.
This was by no means an easy year but the signs of easing that we had observed
towards the end of the last financial year, improved even further as this latest
period progressed. At an adjusted HEPS level of 14.1 cents per share (12.8 cents
per share in 2010), we ended the year up 10.2% when comparing against the
previous reporting period.
As our investors are aware, we are a global group operating from 6 international
offices and serving dealers and customers in 135 countries. 41.5% of our total
revenue is earned in foreign currency but naturally, we report in South African
Rands. It is worth mentioning that we achieved fair growth despite the fact that
the Rand strengthened further this year against the global currencies in which
we invoice our offshore customers. A weaker Rand would certainly favour our
results.
Over and above good growth in adjusted HEPS, the following key performance
measures are also worth highlighting:
Annuity revenue: We grew total annuity revenue to R503 million (up from R477
million in 2010). This translates to 56.8% of our total revenue.
Foreign revenue reduced somewhat to R368 million (R379 million in 2010).
Ignoring the obvious factor of the currency exchange rate, revenue in our
European business was lower off the back of weaker trading in the region and
specifically the UK.
Cash: Strong cash generation remains a defining feature of the Group and again I
am happy to report that our operations did not disappoint. The Group generated
R190 million in cash from operations and reduced net debt by R54,6 million from
the previous year-end. The big news is that net-debt has been effectively
eliminated and we finished the year in a net-cash position. This feat was
achieved even after paying out dividends of R32,8 million to shareholders and
R56,9 million in capex (which includes product development costs). In light of
this strong cash flow the Board has approved a 20% increase in the dividend to 6
cents per share.
Significant new resources have been added in our design and product engineering
facility in Stellenbosch (for the benefit of our global investors, this is a
small university town near Cape Town). This will accelerate speed of new
products to market, improve innovation, and ultimately enhance our
competitiveness.
Trading conditions during the year under review were a mixed bag. As I reported
in November, last year`s world cup event in South Africa was certainly
entertaining but as per expectations, local sales for the period of the event
were disappointing. Despite this, I am happy with the performance of our African
operations during the year. Our local fleet business gave a strong showing in
the second half, with a number of new deals as well as implementation of some
large tender projects, most notably our fledgling contract with Eskom (the local
electricity utility).
Some of our other regions also traded quite strongly. Our Middle East operation
had a good year although political upheaval in the region did give us some
headaches and still remain a cause for concern.
Our USA operation, which services both North and South America, showed good
revenue growth and at an EBITDAR level showed a solid improvement over the
previous year. This business won two large deals in the closing months that
resulted in a forward-moving order pipeline of several thousand subscribers. It
is particularly gratifying that large global customers continue to demonstrate
their confidence in our product and service delivery and that we are able to win
major contracts against tough international competitors.
From our perspective, many of the world economies are still fragile and the UK
has been particularly hard hit resulting in disappointing results from our
operation based in Birmingham. This business unit services both the UK and
Europe and is a key hub for us. We are in the process of refocusing this unit
with the aim of returning it to profitability as soon as possible.
Our stated strategy is to leverage our strong cash flows to grow our high margin
annuity revenue base. We have executed well against this strategy during the
past year, growing our corporate subscriber base by over 40%. Additionally, we
launched a number of new products during the year, with another major release
scheduled for rollout early in the 2012 financial year. These initiatives augur
well for the future growth of the Group. We are confident that we are on track
to achieve our medium term objectives and remain vigilant for opportunities or
transactions that will enhance shareholder value.
I would like to extend my deep appreciation to the hardworking team at MiX who,
together with our loyal suppliers and customers, drive our growth and success.
To Richard Bruyns and our board of directors, thanks for all the wise counsel.
CONDENSED GROUP INCOME STATEMENT
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Revenue 886 604 840 488
Cost of sales (340 168) (337 603)
Gross profit 546 436 502 885
Other income - net 4 877 1 547
Operating expenses (434 133) (394 577)
Operating profit (note 4) 117 180 109 855
Finance income 2 193 3 665
Finance cost (13 625) (19 994)
Share of joint venture losses - (529)
Profit before taxation 105 748 92 997
Taxation (34 247) (26 909)
Profit for the year attributable to 71 501 66 088
shareholders
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Profit for the year 71 501 66 088
Other comprehensive (losses)/income:
Exchange differences on translating foreign (3 872) (36 340)
operations
Fair value reserve on available-for-sale (167) 167
financial asset
Exchange differences on net investment in (2 547) (14 981)
foreign operations
Taxation relating to components of other - 1 752
comprehensive income
Other comprehensive loss for the year, net (6 586) (49 402)
of tax
Total comprehensive income for the year 64 915 16 686
attributable to shareholders
Ordinary shares (`000)
- in issue 657 000 657 000
- weighted average 657 000 657 000
- diluted weighted average 658 366 657 974
Attributable earnings per share (cents)
- basic 10,9 10,1
- diluted 10,9 10,0
RECONCILIATION OF HEADLINE EARNINGS AND ADJUSTED HEADLINE EARNINGS
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Profit for the year 71 501 66 088
Adjusted for:
Net loss on disposal of property, plant and 61 496
equipment
Impairment of available-for-sale financial 2 552 -
asset
Impairment of intangible assets 580 -
Exchange gain on settlement of net (174) -
investment in foreign operation
Taxation on the above components 22 (111)
Headline earnings 74 542 66 473
Headline earnings per share (cents)
- basic 11,3 10,1
- diluted 11,3 10,1
Headline earnings 74 542 66 473
Amortisation of intangible assets arising 21 405 20 801
out of business combinations
Tax effect on the amortisation of intangible (3 231) (3 217)
assets arising out of business combinations
Adjusted headline earnings 92 716 84 057
Adjusted headline earnings per share (cents)
- basic 14,1 12,8
- diluted 14,1 12,8
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 44 805 44 424
Intangible assets 647 013 653 171
Available-for-sale financial asset - 2 683
Deferred tax assets 11 302 8 209
Total non-current assets 703 120 708 487
Current assets
Inventory 34 549 29 691
Inventory held in client vehicles 28 039 24 809
Trade and other receivables 114 744 126 929
Taxation 1 897 1 857
Restricted cash 1 852 1 639
Cash and cash equivalents 110 007 155 011
Total current assets 291 088 339 936
Total assets 994 208 1 048 423
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13
Share premium 787 353 787 353
Retained earnings 75 413 36 762
Other reserves (179 844) (174 306)
Total equity 682 935 649 822
Non-current liabilities
Borrowings 36 070 96 056
Deferred tax liabilities 28 170 27 067
Provisions 1 092 14 703
Total non-current liabilities 65 332 137 826
Current liabilities
Trade and other payables 133 190 124 090
Borrowings 27 508 71 740
Taxation 4 669 3 964
Provisions 40 606 25 634
Bank overdraft 39 968 35 347
Total current liabilities 245 941 260 775
Total equity and liabilities 994 208 1 048 423
Net cash/(debt) (note 6) 6 461 (48 132)
Net asset value per share (cents) 103,9 98,9
Net tangible asset value per share (cents) 5,5 (0,5)
Capital expenditure
- incurred 56 929 45 658
- authorised but not spent 34 815 27 543
CONDENSED GROUP STATEMENT OF CASH FLOWS
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Operating acitivities
Cash generated from operations 189 781 174 529
Net financing costs (9 896) (15 178)
Taxation paid (35 577) (36 334)
Net cash generated from operating activities 144 308 123 017
Investing activities
Capital expenditure (56 929) (45 658)
Proceeds from disposal of property, plant 572 1 350
and equipment
Net cash utilised in investing activities (56 357) (44 308)
Financing activities
Net borrowings repaid (103 488) (33 312)
Dividends paid (32 812) (26 247)
Net cash utilised in financing activities (136 300) (59 559)
Net (decrease)/increase in cash and cash (48 349) 19 150
equivalents
Cash and cash equivalents at beginning of 119 664 112 363
the year
Exchange losses on cash and cash equivalents (1 276) (11 849)
Cash and cash equivalents at end of the year 70 039 119 664
ABBREVIATED SEGMENTAL ANALYSIS
Inter-
Total segment
revenue revenue EBITDA
R`000 R`000 R`000
12 months ended 31 March 2011
Africa Vehicle tracking and 342 795 (8 696) 71 758
recovery
Fleet management 199 922 (740) 56 015
United
Kingdom Fleet management 154 397 - (768)
North
America Fleet management 51 698 - (1 309)
Middle
East Fleet management 109 953 - 15 469
International Fleet management and 201 342 (164 067) 49 441
development
Total 1 060 107 (173 503) 190 606
Corporate and - - (11 462)
consolidation
entries
Inter-segment (173 503) 173 503 -
elimination
Total 886 604 - 179 144
12 months ended 31 March 2010
Africa Vehicle tracking and 328 221 (5 115) 76 871
recovery
Fleet management 160 534 (7 383) 32 484
United
Kingdom Fleet management 204 924 (1 978) 6 368
North
America Fleet management 23 920 (9) (11 031)
Middle
East Fleet management 108 281 (6 036) 9 550
International Fleet management and 156 812 (121 683) 50 476
development
Total 982 692 (142 204) 164 718
Corporate and - - (4 489)
consolidation
entries
Inter-segment (142 204) 142 204 -
elimination
Total 840 488 - 160 229
EBITDAR Assets
R`000 R`000
12 months ended 31 March 2011
Africa Vehicle tracking and 90 368 246 560
recovery
Fleet management 59 433 50 414
United
Kingdom Fleet management (362) 87 744
North
America Fleet management (1 309) 14 369
Middle
East Fleet management 15 469 51 475
International Fleet management and 49 441 224 027
development
Total 213 040 674 589
Corporate and (12 897) 430 104
consolidation
entries
Inter-segment - (110 485)
elimination
Total 200 143 994 208
12 months ended 31 March 2010
Africa Vehicle tracking and 94 448 272 194
recovery
Fleet management 33 802 72 301
United
Kingdom Fleet management 6 368 112 424
North
America Fleet management (11 031) 11 770
Middle
East Fleet management 9 550 60 748
International Fleet management and 50 476 259 393
development
Total 183 613 788 830
Corporate and (4 584) 506 464
consolidation
entries
Inter-segment - (246 871)
elimination
Total 179 029 1 048 423
Condensed group statement of changes in equity
for the 12 months ended 31 March 2011
Share Share Other
capital premium reserves
R`000 R`000 R`000
Balance at 31 March 2009 13 787 353 (126 893)
Dividends declared of 4 cents per share - - -
(note 7)
Total comprehensive income for the - - (49 402)
period
Share-based payments - - 1 989
Balance at 31 March 2010 13 787 353 (174 306)
Dividends declared of 5 cents per share - - -
(note 7)
Total comprehensive income for the - - (6 586)
period
Share-based payments - - 1 048
Balance at 31 March 2011 13 787 353 (179 844)
Retained earnings/
(accumulated losses) Total
R`000 R`000
Balance at 31 March 2009 (3 046) 657 427
Dividends declared of 4 cents per share (26 280) (26 280)
(note 7)
Total comprehensive income for the 66 088 16 686
period
Share-based payments - 1 989
Balance at 31 March 2010 36 762 649 822
Dividends declared of 5 cents per share (32 850) (32 850)
(note 7)
Total comprehensive income for the 71 501 64 915
period
Share-based payments - 1 048
Balance at 31 March 2011 75 413 682 935
NOTES TO THE CONDENSED GROUP FINANCIAL RESULTS
1. Audit opinion
These condensed consolidated results have been audited by our independent
auditors, PricewaterhouseCoopers Inc., who have performed their audit in
accordance with the International Standards on Auditing. A copy of their
unqualified audit report is available for inspection at the Company`s registered
office.
2. Basis of preparation and accounting policies
These condensed group 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 AC500 Standards as issued by the Accounting Practices Board or
its successor, the Listings Requirements of the JSE Limited and the South
African Companies Act.
The accounting policies applied are consistent with those followed in the
preparation of the group financial statements for the year ended 31 March 2010,
except where the Group has changed its accounting policies (as outlined below)
or adopted new or revised accounting standards.
The Group has adopted the following new or revised accounting standards in the
current period, which had no impact on the Group`s results:
- IFRS 3 (revised 2008) Business Combinations
- IAS 27 (revised 2008) Consolidated and Separate Financial Statements
- IFRS 8 (amendment 2009) Operating Segments
- IAS 36 (amendment 2009) Impairment of Assets
- IAS 38 (amendment 2009) Intangible Assets
In addition, the Group has changed its accounting policy with regard to revenue
recognition on hardware cash sales of vehicle tracking and recovery ("SVR")
units. Previously, the Group deferred the hardware revenue (together with the
related expenditure) over the estimated life of a SVR contract. The Group now
recognises the hardware revenue (and the related expenditure) upfront once risks
and rewards have transferred and continues to recognise the service revenue on a
month to month basis as the service is performed.
Management resolved to change the previously applied accounting policy due to
the existence of a separate market for the hardware units thereby establishing
fair value for the units on a standalone basis.
This change in accounting policy resulted in an increase in profit before tax
for the current financial year of R2,3 million consisting of increases in
revenue and cost of sales of R8,5 million and R6,2 million respectively; and an
increase in profit after tax of R1,6 million, and an increase in earnings and
headline earnings per share of 0,2 cents per share.
The effect on the prior year is considered to be immaterial and therefore the
change in accounting policy has not been applied retrospectively resulting in
the comparative amounts remaining unchanged.
3. Operating segments
The MiX Telematics businesses are managed primarily on a geographic and also on
a product basis. During the current year, together with profit measures
previously used, a new additional measure of profit performance of the operating
segments has been introduced being: earnings before interest, tax, depreciation,
amortisation, impairment of assets, negative goodwill and the amortisation of
inventory held in client vehicles recognised over the contract period
("EBITDAR"). A reconciliation of EBITDAR to operating profit for the current and
comparative year is set out in note 4.
4. Operating profit, EBITDA and EBITDAR
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Operating profit 117 180 109 855
Add depreciation, amortisation and impairments 61 964 50 374
(note 5)
EBITDA per segmental analysis 179 144 160 229
Add inventory in client vehicles amortised 20 999 18 800
EBITDAR per segmental analysis 200 143 179 029
5. Depreciation, amortisation and impairments
12 months 12 months
ended ended
31 March 31 March
2011 2010
Audited Audited
R`000 R`000
Depreciation and amortisation 37 427 29 573
Amortisation of intangible assets arising out 21 405 20 801
of business combinations
Impairment of available-for-sale financial 2 552 -
asset
Impairment of intangible assets 580 -
Sub total 61 964 50 374
Inventory in client vehicles amortised 20 999 18 800
Total 82 963 69 174
6. Net cash/(debt)
Net cash/(debt) is calculated as being net cash and cash equivalents, excluding
restricted cash less interest bearing borrowings.
7. Dividends
A dividend of R32,9 million (2010: R26,3 million) was paid during the year under
review. Using shares in issue of 657 million (2010: 657 million) this equates to
a dividend of 5,0 (2010: 4,0) cents per share.
8. Contingent liabilities
Connection incentives
The Group receives connection/upgrade incentives from Mobile Telephone Networks
(Proprietary) Limited for connecting subscribers to their network. In the event
that a subscriber contract is terminated during the contract period, the full
amount of the connection/upgrade incentive received for this subscriber contract
becomes repayable. In the unlikely event that every subscriber contract is
terminated prematurely, the potential liability would amount to R75,4 million
(31 March 2010: R79,6 million). Any loss incurred in terms of this arrangement
is considered minimal.
9. Exchange rates
31 March 31 March
2011 2010
The following major rates of
exchange were used:
SA Rand: United States Dollar - closing 6,83 7,37
- average 7,21 7,85
SA Rand: British Pound - closing 10,95 11,10
- average 11,21 12,51
10. Subsequent events
Other than the dividend declared, the transaction entered into with Intellichain
(Proprietary) Limited ("Intellichain") and the closure of One Stop Shop detailed
below, the directors are not aware of any matter material or otherwise arising
since 31 March 2011 and up to the date of this report, not otherwise dealt with
herein.
Dividend declared
Subsequent to year end, the Board declared a dividend of 6 cents per share.
Intellichain
Intellichain is a software solution company that focuses on fleet management and
supply execution. Effective 1 April 2011, MiX Telematics Africa advanced a
convertible loan of R5,5 million to Intellichain; convertible at the option of
the lender from 31 March 2012 onwards. In terms of the agreement entered into,
MiX Telematics Africa also has call options to take up additional shareholding
in Intellichain, from April 2012 onwards with the ultimate ability to own 100%
of the company.
One Stop Shop
Subsequent to year end, the Group resolved to close down One Stop Shop, the
vehicle conversion business unit forming part of MiX Telematics UK. The closing
down of this business unit is not considered to have a material impact on the
Group.
11. Changes to the Board
As previously announced, Mr Anthony Welton resigned as interim executive
financial director and resumed the role of non-executive director on 31 July
2010. On 1 August 2010, Mrs Megan Pydigadu was appointed as executive financial
director, Mr Afzal Patel relinquished his role of audit committee chair, Mr
Anthony Welton resumed the role of chair of the audit committee and Mr Hubert
Brody was appointed as non-executive director. On 11 November 2010, Ms Fundiswa
Roji, previously an alternate board member to Mr Afzal Patel, was appointed as a
non-executive director and Mr Howard Scott was appointed as an executive
director.
On 27 May 2011, Mr Anthony Welton stepped down as chairman and member of the
audit committee. He remains a non-executive director. Mr Richard Bruyns has now
been appointed as chairman of the audit committee.
COMMENTARY
1. Nature of business
MiX Telematics is a group that is focused on all levels of vehicle telematics,
combining vehicle tracking and recovery, fleet management, driver and passenger
safety and compliance services.
2. Operations
MiX Telematics Africa
MiX Telematics Africa comprises Matrix, the vehicle tracking and recovery
business and the fleet business which focuses on providing both large scale
enterprise solutions as well as fleet management solutions to clients in South
Africa, other SADC countries and in East and West Africa. Large local fleet
deals as well as continued growth from the Africa expansion plan resulted in
strong growth in the revenue and subscriber base of the Fleet Management
business. The vehicle tracking and recovery revenue and subscriber numbers
showed some improvement due to improved new vehicle sales volumes. The MiX brand
benefitted from strong marketing spend during the Soccer World Cup early in this
financial year.
MiX Telematics International
MiX Telematics International (based in Stellenbosch) develops fleet management
and vehicle tracking and recovery products for Group subsidiary companies and is
the Group`s global technology and development centre. The half year saw the
launch of MiX Track - an entry level vehicle tracking and fleet management
service for the UK market - as well as extensions to FM-Web, MiX Telematics`
secure web application for online driver and vehicle management.
MiX Telematics UK
MiX Telematics UK provides fleet management products and solutions to customers
across the United Kingdom, Europe and North Africa. These solutions have
provided major quantifiable running costs, safety and carbon emission benefits
to customers operating in an environment in which legislative controls are
becoming more stringent. The United Kingdom and Europe are slowly emerging from
an extended recession but the MiX Telematics base is still expanding with some
exciting new products launched into the European market at the end of the
period. These products and services have helped us regain momentum into mainland
Europe and we are encouraged by our prospects at the year-end. We finished a
difficult year with an increased base of connected clients.
MiX Telematics SDI Middle East
MiX Telematics SDI provides driver safety training and management solutions to
customers in the Middle East, Eastern Europe, South America and Australasia. The
Company has retained its focus on providing safety-related services with growth
in the Middle East and Australia.
MiX Telematics North America
MiX Telematics North America provides driver safety, training and fleet
management solutions to customers throughout the Americas. The first half of the
year started significantly better than last for this business with repeat orders
flowing from existing Oil and Gas customers. A new focus into South America has
also started delivering value and this region is becoming a real contributor to
the business. Revenues this year finished significantly up over the comparative
trading period. The mission still remains to build an annuity base with real
critical mass in this region. The signing of two large deals in the closing
months of the year has resulted in a forward-moving order pipeline of several
thousand subscribers which puts us well on track towards achieving this
objective.
For and on behalf of the board:
SR Bruyns SB Joselowitz
Midrand
8 June 2011
NOTICE OF DIVIDEND DECLARATION NUMBER 4 AND SALIENT FEATURES
Notice is hereby given that the directors have declared a cash dividend of 6
cents per share for the year ended 31 March 2011. The salient dates are as
follows:
- Last date to trade cum dividend Friday, 22 July 2011
- Trading ex dividend commences Monday, 25 July 2011
- Record date Friday, 29 July 2011
- Payment date Monday, 1 August 2011
Share certificates may not be dematerialised or rematerialised between Monday,
25 July 2011 and Friday, 29 July 2011, both dates inclusive.
On behalf of the board
Probity Business Services (Proprietary) Limited
(Company Secretary)
8 June 2011
Registered office:
Matrix Corner, Howick CloseWaterfall Park, Midrand
Directors:
SR Bruyns* (Chairman)
SB Joselowitz (CEO)
R BothaHR Brody*
TE BuzerRA Frew*
R Friedman*
A Patel*
ML Pydigadu
F Roji*
HG Scott
CWR Tasker
AR Welton*
*Non-executive
Company secretary:
Probity Business Services (Proprietary) Limited
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Java Capital
For more information on our final results, please visit our website at
www.mixtelematics.com
13 June 2011
Date: 13/06/2011 08:00:01 Produced by the JSE SENS Department.
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