| Thu 17 Nov 2011, 8:00 | | MIX - MiX Telematics Limited - Unaudited Group interim financial results for the |
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MIX
MIX
MIX - MiX Telematics Limited - Unaudited Group interim financial results for the
six month period ended 30 September 2011
MiX TELEMATICS LIMITED
Mobile information exchange
Incorporated in the Republic of South Africa?
Registration number 1995/013858/06
JSE code: MIX
ISIN: ZAE000125316
("MiX" or "the Company" or "the Group")
www.mixtelematics.com
UNAUDITED GROUP INTERIM FINANCIAL RESULTS FOR THE SIX MONTH PERIOD ENDED 30
SEPTEMBER 2011
The unaudited financial results were prepared under the supervision of Howard
Scott in his capacity as a Director of the Group and were made available on 17
November 2011.
Highlights
* Revenue R469m increased 7,7%
* EPS 4,6 cps increased 28,1%
* EBITDA R90m increased 8,5%
* Annuity revenue R282m increased 11%
* Adjusted HEPS 6,5 cps increased 29,3%
* Cash from ops R76m decreased 5,6%
* Beam-e launched Revolutionary new low cost tracking
A WORD FROM THE CEO, STEFAN JOSELOWITZ
The strong foundations that we built during the latter part of last year have
certainly contributed to the strong showing that our team has delivered in this
latest period. I am delighted to report that the growth trend that we restored
in 2010 has not only continued but has in fact accelerated. Although trading
conditions remain challenging in most territories in which we operate, all of
our businesses have delivered performances ahead of plan for the year thus far.
Looking at the 6 months under review, we grew revenue to R469m (R436m for the
first half of last year) whilst adjusted HEPS grew 29,3% over the comparative
period to 6,5 cents per share.
As I alluded to in the June investor update, the focus on the Oil and Gas
industry by our USA operation has proved to be a sound strategy. In the closing
months of the past financial year, we signed mega-deals with two top-tier Oil
and Gas companies, both listed on the NYSE. This year, we have had our hands
full implementing these rollouts and, when concluded we expect these two deals
to yield an additional 12 000 subscriber vehicles; as this business unit is now
rapidly reaching critical mass, we have recruited an experienced industry
veteran to head it.
On the topic of "full hands", our UK and European team have ticked off all of
the major objectives that were set for the period; notably, we have disposed of
the non-core vehicle conversion business, One Stop Shop. Additionally we are
converting our customers from the legacy Datatrak network onto our core MiX
product platform and this process should be completed by December 2011. We will
then close down the Datatrak network, which will ultimately lower our overheads.
We have also enjoyed sales success in Europe, recently winning a bid to provide
our services for 1 800 buses in Belgium.
In Africa, we are in the process of a major new product and service launch,
branded Beam-e, that will position your group to compete in the high-volume low-
cost end of the stolen-vehicle-recovery market - a space that we haven`t
traditionally played in. We are incredibly excited about Beam-e. We have created
a proprietary technology with unique features that will give us a real
competitive edge, allowing us to aggressively grow our market share. Just some
of the advantages of Beam-e are that the low-cost device is completely wireless
thus dramatically cutting down on installation costs whilst at the same time
expanding on the concealment options within a vehicle. Additionally, with a
multi-year internal battery and no reliance on external power, the Beam-e market
is much broader than just motor vehicles; we envisage Beam-e protecting assets
such as trailers, containers, motorbikes and even bicycles. Watch this space!
At the risk of boring long-term investors in our business, I tend to stick to my
favorites when highlighting a few financial indicators:
Annuity revenue: This remains one of our key performance measures and we are
happy to yet again show strong growth in our recurring revenue. For the six
months under review, annuity revenue grew to R282m (up from R254m as at
September 2010) and it now represents a healthy 60% of total revenue.
Cash: The Group generated cash from operations of R76m for the half-year period.
Although marginally less than the 2010 comparative period, we are happy with
this performance for the following reasons: The number of mega-deals that we
have won has resulted in inflated accounts receivable and inventory during the
roll-out phase. We are also in the process of implementing dual supply
relationships for all key products as part of our ongoing risk management
process and this transition may further exacerbate the investment in inventory
in the second half.
Foreign revenue grew to R214m for the half-year period (up from R185m as at
September 2010) and now represents over 45% of total revenue.
Clearly, we have enjoyed a good start to the year but I must confess that we
remain nervous about the economies in many of the key territories in which we
operate. We have invested heavily in new technology and our new product line-up
is compelling, boding well for the future. Our staff are highly motivated and
are determined to meet our medium-term objectives. Once again, I would like to
extend the Board`s and my deep appreciation to our talented executives and
employees for their superb efforts over the past six months.
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
This business 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. This was an exciting period
in terms of new initiatives. Some of the highlights include: the commercial
launch of the innovative new entry-level stolen vehicle recovery device, Beam-e;
the successful implementation of the first portion of the Eskom tender; the
relationship with a company called Intellichain, which includes an integrated
supply-chain management offering; and the establishment of an office in Uganda
to service the East African market. All these initiatives support Mix`s ongoing
focus on establishing and growing the annuity revenue base in all the sectors
and geographical locations it services.
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
development and release of extensions to fleet software platforms and mobile
applications, including MiX Track, MiX DriveTime and FM-Web, as well as the
launch of a new Matrix Internet Tracking application for South African customers
subscribing to MiX Africa`s premium stolen vehicle recovery services, and the
launch of Beam-e.
MiX Telematics UK
MiX Telematics UK provides fleet management products and solutions to customers
across the United Kingdom, Europe and North Africa. The UK and European markets
continue to be highly competitive, but with businesses under increased pressure
to reduce their cost base, the business is well poised to help them generate
tangible savings. Progress has been made in breaking into new vertical markets
in mainland Europe which has culminated in winning a number of large contracts,
one being with the largest bus company in Belgium. The first half also saw the
business extricating itself from non-core activities such as the vehicle
conversions business, and the operations team was heavily focused on migrating
existing customers to new MiX Group technology platforms.
MiX Telematics SDI Middle East
MiX Telematics SDI provides land transport solutions and driver safety training
to customers in the Middle East, Eastern Europe, South America and Australasia.
The business has retained its focus on providing safety-related services with a
principal focus on de-risking all forms of land transport. Sales into the Middle
East and Australasia continue to be strong year on year. New targeted areas for
growth include Russia, Iraq and other parts of Asia.
MiX Telematics North America
MiX Telematics North America provides driver safety, training and fleet
management solutions to customers throughout the Americas. During the first half
of the year, the business was focused on the rollout of two large Oil and Gas
contracts in the USA that have started to contribute greatly to a growing
annuity business. With an accelerating subscriber base, revenues finished above
the comparative trading period. The mission still remains to build an annuity
base with real critical mass in the North American and Latin American regions,
converting competitive opportunities through MiX`s value-added services.
For and on behalf of the board:
SR Bruyns SB Joselowitz
Midrand
17 November 2011
CONDENSED GROUP INCOME STATEMENT
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 468 974 435 575 886 604
Cost of sales (182 820) (171 137) (340 168)
Gross profit 286 154 264 438 546 436
Other income - net 3 148 463 4 877
Operating expenses (241 833) (220 565) (434 133)
Operating profit (note 3) 47 469 44 336 117 180
Finance income 865 1 532 2 193
Finance cost (3 373) (8 395) (13 625)
Profit before taxation 44 961 37 473 105 748
Taxation (14 751) (13 886) (34 247)
Profit for the period 30 210 23 587 71 501
attributable to shareholders
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit for the period 30 210 23 587 71 501
Other comprehensive
income/(losses):
Exchange differences on 32 304 (2 943) (3 872)
translating foreign operations
Fair value reserve on available- - 1 290 (167)
for-sale financial asset
Exchange differences on net (6 724) (2 068) (2 547)
investment in foreign
operations
Taxation relating to components - - -
of other comprehensive income
Other comprehensive 25 580 (3 721) (6 586)
income/(loss) for the period,
net of tax
Total comprehensive income for 55 790 19 866 64 915
the period attributable to
shareholders
Ordinary shares (`000)
- in issue 657 000 657 000 657 000
- weighted average 657 000 657 000 657 000
- diluted weighted average 660 841 660 394 658 366
Attributable earnings per share
(cents)
- basic 4,6 3,6 10,9
- diluted 4,6 3,6 10,9
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 44 070 42 765 44 805
Intangible assets 654 712 651 756 647 013
Available-for-sale financial - 3 903 -
asset
Deferred tax assets 15 584 13 586 11 302
Loans receivable (note 10) 5 738 - -
Total non-current assets 720 104 712 010 703 120
Current assets
Inventory 46 299 40 432 34 549
Inventory held in client 29 879 26 709 28 039
vehicles
Trade and other receivables 141 251 118 635 114 744
Taxation 1 441 1 503 1 897
Restricted cash 2 274 1 653 1 852
Cash and cash equivalents 113 367 104 065 110 007
Total current assets 334 511 292 997 291 088
Total assets 1 054 615 1 005 007 994 208
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13 13
Share premium 787 353 787 353 787 353
Retained earnings 66 203 27 499 75 413
Other reserves (153 316) (177 475) (179 844)
Total equity 700 253 637 390 682 935
Non-current liabilities
Borrowings 15 783 56 551 36 070
Deferred tax liabilities 25 892 28 035 28 170
Provisions - 15 290 1 092
Total non-current liabilities 41 675 99 876 65 332
Current liabilities
Trade and other payables 163 882 133 967 133 190
Borrowings 11 668 71 794 27 508
Taxation 7 651 3 239 4 669
Provisions 45 569 29 743 40 606
Bank overdraft 83 917 28 998 39 968
Total current liabilities 312 687 267 741 245 941
Total equity and liabilities 1 054 615 1 005 007 994 208
Net cash/(debt) (note 6) 1 999 (53 278) 6 461
Net asset value per share 106,6 97,0 103,9
(cents)
Net tangible asset value per 6,9 (2,2) 5,5
share (cents)
Capital expenditure
- incurred 24 047 27 103 56 929
- authorised but not spent 33 330 17 188 34 815
RECONCILIATION OF HEADLINE AND ADJUSTED HEADLINE EARNINGS
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit for the period 30 210 23 587 71 501
Adjusted for:
Net loss on disposal of 453 28 61
property, plant and equipment
Impairment of available-for- - - 2 552
sale financial asset
Impairment of intangible assets - - 580
Exchange gain on settlement of - - (174)
net investment in foreign
operation
Taxation on the above (4) (9) 22
components
Headline earnings 30 659 23 606 74 542
Headline earnings per share
(cents)
- basic 4,7 3,6 11,3
- diluted 4,6 3,6 11,3
Headline earnings 30 659 23 606 74 542
Amortisation of intangible 9 830 10 840 21 405
assets arising out of business
combinations
Trading loss from business unit 3 594 - -
disposed of during the period
(note 5)
Tax effect on the amortisation (1 618) (1 615) (3 231)
of intangible assets arising
out of business combinations
Adjusted headline earnings 42 465 32 831 92 716
Adjusted headline earnings per
share (cents)
- basic 6,5 5,0 14,1
- diluted 6,4 5,0 14,1
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained Total
capital premium reserves earnings R`000
R`000 R`000 R`000 R`000
Balance at 31 March 2010 13 787 353 (174 306) 36 762 649 822
Dividends declared of 5 - - - (32 850) (32 850)
cents per share (note 7)
Total comprehensive - - (3 721) 23 587 19 866
income for the period
Share-based payments - - 552 - 552
Balance at 30 September 13 787 353 (177 475) 27 499 637 390
2010
Total comprehensive - - (2 865) 47 914 45 049
income for the period
Share-based payments - - 496 - 496
Balance at 31 March 2011 13 787 353 (179 844) 75 413 682 935
Dividends declared of 6 - - - (39 420) (39 420)
cents per share (note 7)
Total comprehensive - - 25 580 30 210 55 790
income for the period
Share-based payments - - 948 - 948
Balance at 30 September 13 787 353 (153 316) 66 203 700 253
2011
CONDENSED GROUP STATEMENT OF CASH FLOWS
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating activities
Cash generated from operations 75 758 80 282 189 781
Net financing costs (2 339) (5 800) (9 896)
Taxation paid (17 690) (18 676) (35 577)
Net cash generated from 55 729 55 806 144 308
operating activities
Investing activities
Capital expenditure (24 047) (27 103) (56 929)
Loans receivable (5 485) - -
Proceeds from disposal of 429 205 572
property, plant and equipment
Net cash utilised in investing (29 103) (26 898) (56 357)
activities
Financing activities
Net borrowings repaid (36 884) (39 449) (103 488)
Dividends paid (39 370) (32 810) (32 812)
Net cash utilised in financing (76 254) (72 259) (136 300)
activities
Net decrease in cash and cash (49 628) (43 351) (48 349)
equivalents
Net cash and cash equivalents at 70 039 119 664 119 664
beginning of the period
Exchange gains/(losses) on cash 9 039 (1 246) (1 276)
and cash equivalents
Net cash and cash equivalents at 29 450 75 067 70 039
end of the period
CONDENSED SEGMENTAL ANALYSIS
Total Inter- EBITDA* Assets
revenue segment R`000 R`000
R`000 revenue
R`000
Six months ended 30 September 2011
(Unaudited)
Africa Vehicle tracking 166 831 (4 342) 35 205 246 473
and recovery
Fleet management 109 870 (1 195) 32 304 58 257
United Kingdom Fleet management 64 882 - (5 826) 83 787
North America Fleet management 57 412 - 2 771 47 138
Middle East Fleet management 56 390 - 5 648 60 164
International Fleet management 129 813 (110 687) 32 012 257 292
and development
Total 585 198 (116 224) 102 114 753 111
Corporate and consolidation - - (11 969) 429 309
entries
Inter-segment elimination (116 224) 116 224 (127 805)
Total 468 974 - 90 145 1 054 615
Six months ended 30 September 2010
(Unaudited)
Africa Vehicle tracking 168 914 (2 748) 43 292 243 322
and recovery
Fleet management 93 693 (462) 23 441 56 071
United Kingdom Fleet management 82 649 - (231) 101 987
North America Fleet management 23 987 - (2 496) 12 704
Middle East Fleet management 54 737 - 8 522 47 282
International Fleet management 96 416 (81 611) 19 770 232 786
and development
Total 520 396 (84 821) 92 298 694 152
Corporate and consolidation - - (9 242) 510 574
entries
Inter-segment elimination (84 821) 84 821 - (199 719)
Total 435 575 - 83 056 1 005 007
12 months ended 31 March 2011
(Audited)
Africa Vehicle tracking 342 795 (8 696) 90 368 246 560
and recovery
Fleet management 199 922 (740) 59 433 50 414
United Kingdom Fleet management 154 397 - (362) 87 744
North America Fleet management 51 698 - (1 309) 14 369
Middle East Fleet management 109 953 - 15 469 51 475
International Fleet management 201 342 (164 067) 49 441 224 027
and development
Total 1 060 107 (173 503) 213 040 674 589
Corporate and consolidation - - (12 897) 430 104
entries
Inter-segment elimination (173 503) 173 503 - (110 485)
Total 886 604 - 200 143 994 208
* Previously EBITDAR (note 2)
Notes to the condensed group financial results
1. Basis of preparation and accounting policies
These condensed unaudited Group financial results for the half year ended 30
September 2011 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 AC 500 Standards
as issued by the Accounting Practices Board, the Listings Requirements of the
JSE Limited and the South African Companies Act. The interim financial results
have not been audited or reviewed by the Group`s auditors.
The condensed unaudited 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 2011, which have been prepared in accordance with IFRS.
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 2011, except where the Group has adopted new or revised accounting
standards.
The Group has adopted the required new or revised accounting standards in the
current period, none of which had a material impact on the Group`s results.
2. Operating segments
The MiX Telematics businesses are managed primarily on a geographic and also on
a product basis. During the period under review, the profit measures previously
applied (EBITDA and EBITDAR) were reduced to only include EBITDAR as previously
defined as earnings before interest, tax, depreciation, amortisation, impairment
of assets, negative goodwill and the amortisation of inventory held in client
vehicles recognised during the current period. In addition, although the
definition remained consistent, the acronym used was changed from EBITDAR to
EBITDA. This is in accordance with the profit measures as evaluated by the chief
operating decision maker of the Group. A reconciliation of EBITDA to operating
profit is set out in note 3.
3. Operating profit and EBITDA
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Operating profit and EBITDA
Operating profit 47 469 44 336 117 180
Add depreciation, amortisation 42 676 38 720 82 963
and impairments (note 4)
EBITDA per segmental analysis 90 145 83 056 200 143
4. Depreciation, amortisation and impairment
Six months Six months 12 months
ended ended ended
30 September 30 September 31 March
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Depreciation, amortisation and
impairments
Depreciation and amortisation 21 953 16 565 37 427
Amortisation of intangible 9 830 10 840 21 405
assets arising out of business
combinations
Impairment of available-for-sale - - 2 552
financial asset
Impairment of intangible assets - - 580
Inventory in client vehicles 10 893 11 315 20 999
amortised
Total 42 676 38 720 82 963
5. Related party transactions
In June 2011 MiX Telematics UK and Imperial Commercials Limited, a subsidiary of
a significant shareholder, entered into an agreement whereby Imperial
Commercials Limited purchased the business and assets of MiX Telematics UK`s
vehicle conversion business, One Stop Shop. The business and related assets were
sold to Imperial Commercials Limited for R2,3 million. The trading loss from
this business, which is not considered to be a discontinued operation in terms
of IFRS 5, has been added back in determining adjusted headline earnings. No
other significant related party transactions were concluded during the interim
period.
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
No interim dividend was declared as per our policy. A final dividend of R39,4
million (2011: R32,9 million) was declared during the period under review. Using
shares in issue of 657 million (2011: 657 million), this equates to a dividend
of 6,0 (2011: 5,0) 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 R74,2 million
(30 September 2010: R76,8 million and 31 March 2011: R75,4 million). No loss is
expected under this arrangement.
9. Exchange rates
30 September 30 September 31 March
2011 2010 2011
Exchange rates
The following major rates of
exchange were used:
SA Rand: 7,91 6,95 6,83
United States Dollar - closing
- average 6,94 7,46 7,21
SA Rand: British Pound - closing 12,36 10,98 10,95
- average 11,24 11,34 11,21
10. Significant events
Internal restructuring
During the period under review, the Group commenced with an internal
restructuring process whereby the investments, held via an offshore intermediary
holding company, were transferred and are now directly held by the parent
company. The restructuring has had no impact on operations and no financial
impact on the consolidated interim results of the Group for the period under
review. In accordance with IFRS, the Group has elected an accounting policy in
terms of which the recycling of cumulative exchange differences are deferred up
until the date of disposal, change in control or liquidation. At that time the
deferred cumulative amount will be finally determined by the prevailing exchange
rates and recognised in profit or loss.
Intellichain
As mentioned under subsequent events in our 31 March 2011 results, MiX
Telematics Africa advanced a convertible loan of R5,5 million to Intellichain
during the period. MiX Telematics Africa also has call options exercisable at
future dates in terms of which it can ultimately own 100% of the company.
11. Subsequent events
The directors are not aware of any matter material or otherwise arising since
the period end and up to the date of this report, not otherwise dealt with
herein.
Registered office:
Matrix Corner, Howick Close, Waterfall Park, Midrand
Directors: SR Bruyns* (Chairman); SB Joselowitz (CEO); R Botha;
HR Brody*; TE Buzer; RA 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
17 November 2011
Sponsor: Java Capital
Date: 17/11/2011 08:00:08 Produced by the JSE SENS Department.
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