| Mon 11 Jun 2012, 7:30 | | MIX - Mix Telematics Limited - Audited summary consolidated financial |
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MIX
MIX
MIX - Mix Telematics Limited - Audited summary consolidated financial
results for the year ended 31 March 2012
MIX TELEMATICS LIMITED
Incorporated in the Republic of South Africa.
Registration number 1995/013858/06
JSE code: MIX ISIN: ZAE000125316
("MiX" or "the Company" or "the Group")
AUDITED SUMMARY CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH
2012
Financial highlights
Revenue increased by 14,8% to R1 018 million
EPS increased by 44,0% to 15,7 cents per share
Adjusted HEPS increased by 33,3% to 18,8 cents per share
EBITDA increased by 19,0% to R238 million
Annuity revenue increased by 14,7% to R577 million
Net cash increased to R46 million
Dividend declared 8 cents per share, a 33% increase
Cash generated from operations R166 million
The audited consolidated financial results were prepared under the
supervision of M Pydigadu CA(SA) in her capacity as Financial Director of
the Group and were made available on 11 June 2012.
A WORD FROM THE CEO, STEFAN JOSELOWITZ
The 2012 financial year has been outstanding for the MiX Telematics Group
("MiX"). We broke through the billion-rand sales barrier for the first time,
while our after tax profits exceeded R100 million - two fantastic
milestones!
We maintained and improved on the momentum that we established in the first
half of the year and finished the year with headline earnings growth of over
40% - a great achievement! Adjusted HEPS grew 33,3% to 18,8 cents per share.
MiX is focused on all levels of vehicle telematics, combining vehicle
tracking and recovery, fleet management, driver and passenger safety and
compliance services. MiX services customers in 111 countries. In six of
those countries we own and manage regional operations and engage directly
with our customers. In the balance of the countries we deal through third-
party distributors. All of our distributors as well as our regional
operations source products and services from the business we call MiX
International - this operation, based in Stellenbosch, South Africa, is
responsible for the design, development and procurement of the MiX range of
products and services. In effect, MiX International is a central services
organisation that wholesales our product and services to our regional
operations and distributors. MiX International showed strong growth both at
the revenue and EBITDA level.
Most of our regional businesses performed ahead of plan:
- Our USA operation made great progress in the implementation of the mega-
deals that it won last year and showed top-line year-on-year growth of over
200%. This business finished in the green for the first time with EBITDA of
R13,5 million.
- Moving across the pond to our UK/European business, investors that review
our segmental analysis will observe that revenue at this business has
declined. Although an accurate observation, this does not paint a balanced
picture of the performance during the year and we in fact did deliver
reasonable subscriber growth even in the midst of very tricky trading
conditions. The declines at the revenue and EBITDA lines are due mainly to
one-off restructuring costs which can be summarised as follows:
- We disposed of the non-core vehicle conversion business called One Stop
Shop in the opening months of the year under review.
- We have concluded the conversion of those customers that were utilising
legacy Datatrak products onto our mainstream MiX platform (at a lower
revenue per subscriber which further skews the revenue comparison) and the
dilapidation and shutdown of the proprietary Datatrak network was completed
during the year.
These actions will lower overheads in this business moving forward and
allows our local leadership team to focus on our core objectives free of the
distraction of legacy issues.
- Our Middle East and Australasia business performed well through turbulent
conditions.
- The political upheaval in the Middle East region did cause our Dubai-based
outfit some disruptions yet despite this, the business showed top-line
growth and in the latter half of the year, signed two significant deals with
oil and gas multi-nationals which will contribute to earnings in future
years.
- Our operations in Australia have been ideally placed to take advantage of
the resource boom and we expect to see continued strong growth from this
region.
- In Africa, our Fleet and Consumer businesses have grown to a point where
dedicated focus on each sector is required. To accommodate this, I have made
some structural changes and have welcomed two new executives onto my team.
Brendan Horan is now heading up the Consumer business and Gert Pretorius is
running point on our African fleet operation. Both Brendan and Gert have
managed various portfolios within our Group over the past several years and
know the industry well. Riette Botha has a wealth of experience and is now
working on various projects including globalisation of our Consumer
business. Looking back at FY2012, the performances of our African businesses
were a mixed bag:
- Our African fleet business grew nicely at both a top-line and EBITDA
level.
- Strong growth came from our Enterprise division which enjoys a BBBEE level
2 contributor status. This business services medium to large fleets in South
Africa and just one of the successes this year has been the ongoing rollout
of MiX systems and services into the Eskom fleet.
- Another initiative was the formation of an exclusive relationship with
Intellichain, which has developed an integrated supply-chain management
software platform. This technology dovetails perfectly with our current MiX
Telematics offerings and enhances our ability to further grow the Software
as a Service ("SaaS") component of our annuity stream.
- We are also starting to see payback from our efforts north of the borders
and are earning great orders from multi-national owned fleets operating in
East Africa. We recently opened a permanent sales office in Uganda to aid
our expansion plans in the region.
- Our consumer and stolen-vehicle-recovery ("SVR") business and home of the
leading Matrix brand was flat at the revenue line although the team did
deliver modest subscriber growth. The main reason for the EBITDA decline was
due to the investment in our major new product, "Beam-e", that we believe
will position the Group to compete in the high-volume low-cost end of the
SVR market - a space that we haven`t traditionally played in. As I reported
at the half-year, we are incredibly excited about Beam-e. It is a whole new
species of asset tracking with unique features, positioning 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 time and costs whilst at the same time
expanding on the concealment options within a vehicle. With a multi-year
internal battery (and absolutely 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!
As usual and again at the risk of boring long-term investors in our
business, I tend to stick to my perennial favourites 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 this area. For the 2012 financial
year, the Group added more than 40 000 new subscribers (after churn) and
annuity revenue grew to R577 million (up from R503 million for FY2011) and
represents over 56% of total revenue.
Foreign revenue: Foreign currency revenue grew to R482 million for the year
(up from R368 million for FY 2011) and represents over 47% of total revenue.
Cash: The Group generated cash from operations of nearly R166 million for
the year. Although less than the previous financial year, this performance
was in line with our expectations for the following reasons:
- The rollout phase of the mega-deals that we won increased working capital.
- We appointed dual manufacturers for most key products as part of our on-
going risk management. During the transition we ramped up our inventories to
ensure no interruption in supplies.
Despite the increased drain on cash, we improved our positive net cash
position by
R39 million and this was achieved after paying out dividends to shareholders
last year of R43 million (including STC)!
Arising out of the strong financial performance of the Group, the Board has
approved a final full year dividend of 8 cents per share. This is an
increase of 33% over FY2011 and takes into account the change in the South
African tax code`s treatment of dividends. The Board has also approved that
this dividend payment will be earlier than in the past, and should be paid
to shareholders in early July 2012. The Board has approved a change in
dividend policy resulting in an interim and final dividend going forward.
Interim dividends will be paid out in December.
During the year Afzal Patel, one of our long-standing non-executive
directors (and a personal friend), resigned due to ill health. We wish him
well in his recovery and we are grateful to him for all his efforts on the
Board over the past seven years.
MiX operates more globally now than ever and our industry remains highly
competitive. We have proved that we can compete successfully both locally
and abroad and our innovative product offerings, coupled with a strong
annuity base, position us well for future growth.
Our strong performance this past year is a tribute to all the people in the
business including our employees and partners; their hard work and
commitment to serving our loyal customers shows in these results. On behalf
of the Board of directors, I thank you all. To our non-executive directors,
thank you again for your time, effort and wise counsel. I look forward to
the year ahead and the challenges and rewards it will bring.
SUMMARY CONSOLIDATED INCOME STATEMENT
12 months 12 months
ended ended
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
Revenue 1 018 482 886 604
Cost of sales (390 926) (340 168)
Gross profit 627 556 546 436
Other income - net 7 008 4 877
Operating expenses (488 176) (434 133)
Operating profit (note 4) 146 388 117 180
Finance income 2 392 2 193
Finance cost (5 265) (13 625)
Profit before taxation 143 515 105 748
Taxation (40 275) (34 247)
Profit for the year attributable to 103 240 71 501
shareholders
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 months 12 months
ended ended
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
Profit for the year 103 240 71 501
Other comprehensive income/(losses):
Exchange differences on translating foreign 29 816 (3 872)
operations
Fair value reserve on available-for-sale - (167)
financial asset
Exchange differences on net investments in
foreign operations (6 718) (2 547)
Other comprehensive income/(loss) for the year, 23 098 (6 586)
net of tax
Total comprehensive income for the year 126 338 64 915
attributable to shareholders
Ordinary shares (`000)
- in issue 657 200 657 000
- weighted average 657 045 657 000
- diluted weighted average 662 322 658 366
Attributable earnings per share (cents)
- basic 15,7 10,9
- diluted 15,6 10,9
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 45 386 44 805
Intangible assets 643 086 647 013
Deferred tax assets 13 267 11 302
Total non-current assets 701 739 703 120
Current assets
Inventory 46 014 34 549
Inventory held in client vehicles 29 709 28 039
Trade and other receivables 163 125 114 744
Loans to external parties 6 001 -
Taxation - 1 897
Restricted cash 3 133 1 852
Cash and cash equivalents 118 695 110 007
Total current assets 366 677 291 088
Total assets 1 068 416 994 208
EQUITY AND LIABILITIES
Capital and reserves
Share capital 13 13
Share premium 787 589 787 353
Retained earnings 139 233 75 413
Other reserves (154 745) (179 844)
Total equity 772 090 682 935
Non-current liabilities
Borrowings - 36 070
Deferred tax liabilities 25 816 28 170
Provisions - 1 092
Total non-current liabilities 25 816 65 332
Current liabilities
Trade and other payables 157 038 133 190
Borrowings 22 941 27 508
Taxation 11 403 4 669
Provisions 28 963 40 606
Bank overdraft 50 165 39 968
Total current liabilities 270 510 245 941
Total equity and liabilities 1 068 416 994 208
Net cash (note 8) 45 589 6 461
Net asset value per share (cents) 117,5 103,9
Net tangible asset value per share (cents) 19,6 5,5
Capital expenditure
- incurred 50 740 56 929
- authorised but not spent 37 303 34 815
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained
capital premium reserves earnings Total
R`000 R`000 R`000 R`000 R`000
Balance at 13 787 353 (174 306) 36 762 649 822
31 March 2010
Dividends declared of - - - (32 850) (32 850)
5 cents per share
(note 10)
Total comprehensive - - (6 586) 71 501 64 915
(loss)/income for the
year
Share-based payments - - 1 048 - 1 048
Balance at 13 787 353 (179 844) 75 413 682 935
31 March 2011
Dividends declared of - - - (39 420) (39 420)
6 cents per share
(note 10)
Total comprehensive - - 23 098 103 240 126 338
income for the year
Shares issued in * 236 - - 236
relation to share
options exercised
Share-based payments - - 2 001 - 2 001
Balance at 31 March 13 787 589 (154 745) 139 233 772 090
2012
*Amount less than R1 000
SUMMARY SEGMENTAL ANALYSIS
Inter-
Total segment
revenue revenue EBITDA* Assets
R`000 R`000 R`000 R`000
12 months ended 31 March 2012
Africa - Consumer solutions 342 324 (8 546) 73 523 253 162
- Fleet solutions 232 542 (2 953) 79 040 79 082
Europe - Fleet solutions 126 782 - (6 541) 71 110
North America - Fleet 156 013 (298) 13 532 54 365
solutions
Middle East and Australasia - 131 393 - 14 528 72 333
Fleet solutions
International - Fleet 286 433 (245 208) 83 450 258 692
solutions and development
Total 1 275 487 (257 005) 257 532 788 744
Corporate and consolidation - - (19 980) 408 349
entries
Inter-segment elimination (257 005) 257 005 - (128 677)
Total 1 018 482 - 237 552 1 068 416
12 months ended 31 March 2011
Africa - Consumer solutions 342 795 (8 696) 90 368 246 560
- Fleet solutions 199 922 (740) 59 433 50 414
Europe - Fleet solutions 154 397 - (362) 87 744
North America - Fleet 51 698 - (1 309) 14 369
solutions
Middle East and Australasia - 109 953 - 15 469 51 475
Fleet solutions
International - Fleet 201 342 (164 067) 49 441 224 027
solutions 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 3)
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
12 months 12 months
ended ended
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
Operating activities
Cash generated from operations 165 751 189 781
Net financing costs (3 632) (9 896)
Taxation paid (35 769) (35 577)
Net cash generated from operating activities 126 350 144 308
Investing activities
Capital expenditure (50 739) (56 929)
Loans granted to external parties (5 486) -
Proceeds on sale of property, plant and
equipment and intangible assets 867 572
Net cash used in investing activities (55 358) (56 357)
Financing activities
Proceeds from share capital issued 236 -
Net borrowings repaid (41 548) (103 488)
Dividends paid (39 374) (32 812)
Net cash used in financing activities (80 686) (136 300)
Net decrease in cash and cash equivalents (9 694) (48 349)
Net cash and cash equivalents at beginning
of the year 70 039 119 664
Exchange gains/(losses) on cash and cash 8 185 (1 276)
equivalents
Net cash and cash equivalents at end of the 68 530 70 039
year
RECONCILIATION OF HEADLINE AND ADJUSTED HEADLINE EARNINGS
12 months 12 months
ended ended
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
Profit for the year 103 240 71 501
Adjusted for:
Net loss on disposal of property, plant and 430 61
equipment and intangible assets
Impairment of available-for-sale financial - 2 552
asset
Impairment of intangible assets 1 332 580
Exchange gain on settlement of net investment
in foreign operation - (174)
Tax effect on the above components (323) 22
Headline earnings 104 679 74 542
Headline earnings per share (cents)
- basic 15,9 11,3
- diluted 15,8 11,3
Headline earnings 104 679 74 542
Amortisation of intangible assets arising out 18 500 21 405
of business combinations
Trading loss from business unit disposed of
during the year (note 7) 3 509 -
Tax effect on the amortisation of intangible
assets arising out of business combinations (3 235) (3 231)
Adjusted headline earnings 123 453 92 716
Adjusted headline earnings per share (cents)
- basic 18,8 14,1
- diluted 18,6 14,1
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL RESULTS
1. Independent audit
These summary consolidated financial 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 summary consolidated financial statements have been derived from the
audited consolidated financial statements of MiX Telematics Limited for the
year ended 31 March 2012, and have been prepared in accordance with Section
8.57 of the Listings Requirements of the JSE Limited and the requirements of
the Companies Act of South Africa, as applicable to summary financial
statements. A copy of the full set of consolidated financial statements is
available for inspection at the Company`s registered office.
The accounting policies applied are consistent in all material respects with
those applied in the preparation of the consolidated annual financial
statements for the year ended 31 March 2011.
The Group has adopted all the new, revised or amended accounting
pronouncements as issued by the International Accounting Standards Board
("IASB") which were effective for the Group from 1 April 2011. None of the
adopted pronouncements had a material impact on the consolidated results for
the year ended 31 March 2012.
3. Operating segments
The MiX Telematics businesses are managed primarily on a geographic and also
on a product basis. During the year 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 year. 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 4.
4. Operating profit and EBITDA
12 months 12 months
ended ended
31 March 31 March
2012 2011
Audited Audited
R`000 R`000
Operating profit 146 388 117 180
Add: depreciation, amortisation and
impairments (note 5) 91 164 82 963
EBITDA per segmental analysis 237 552 200 143
5. Depreciation, amortisation and impairment
Depreciation and amortisation 48 083 37 427
Amortisation of intangible assets arising out
of business combinations 18 500 21 405
Impairment of available-for-sale financial
asset - 2 552
Impairment of intangible assets 1 332 580
Inventory in client vehicles amortised 23 249 20 999
Total 91 164 82 963
6. Effective tax rate
The effective tax rate reduced from 32,4% in the prior year to 28,1% in the
current year primarily as a result of MiX North America now being profitable
and utilising assessed losses for which deferred tax had not been recognised
in the past.
7. Related party transactions
In June 2011, MiX Telematics Europe Limited 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 Europe Limited`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 Non-current
Assets Held for Sale and Discontinued Operations, has been added back in
determining adjusted headline earnings. No other significant related party
transactions were concluded during the year.
8. Net cash
Net cash/(debt) is calculated as being net cash and cash equivalents,
excluding restricted cash less interest-bearing borrowings.
9. Borrowings
Borrowings decreased from R63,6 million at the end of the prior year to
R22,9 million at the end of the current year. This decrease in borrowings
primarily contributed to the decrease in finance costs from R13,6 million in
the prior financial year to R5,3 million during the current financial year.
10. Dividends
A final dividend of R39,4 million (2011: R32,9 million) was declared during
the year under review and paid on 1 August 2011. Using shares in issue of
657 million (2011: 657 million) this equates to a dividend of 6,0 (2011:
5,0) cents per share.
11. 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 R70,1 million
(31 March 2011: R75,4 million). No loss is expected under this arrangement.
Taxation
MiX Telematics Africa Proprietary Limited, one of the subsidiaries of the
Group, received a query and a subsequent reassessment of their tax liability
relating to the claiming of tax allowances in terms of section 24C of the
Income tax Act of 1962. In terms of this assessment, the South African
Revenue Services ("SARS") have disallowed the S24C allowance going back to
2008 and has charged interest thereon amounting to R4 million. MiX
Telematics Africa Proprietary Limited has been claiming the S24C allowance
on the basis of legal opinion obtained from a prominent law firm. The S24C
allowance had always been fully disclosed in the tax return and has been
previously allowed by SARS. MiX Telematics Africa Proprietary Limited is
disputing this and has already formally responded to SARS in this regard. If
the Group is unsuccessful in defending the matter, it will result in a
reclassification from non-current deferred tax liabilities to current
taxation liabilities of approximately R10 million. In addition, the claim
for interest referred to above has not been provided for.
12. Exchange rates
31 March 31 March
2012 2011
R`000 R`000
The following major rates of exchange were used:
SA Rand : United States Dollar - closing 7,69 6,83
- average 7,43 7,21
SA Rand : British Pound - closing 12,29 10,95
- average 11,84 11,21
13. Events after reporting period
Other than the dividend declared, appointment of R Shough (note 14) and the
transaction entered into with Intellichain Proprietary Limited
("Intellichain") further explained below, the directors are not aware of any
matters material or otherwise arising since 31 March 2012 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 8 cents per share.
Acquisition of Intellichain
On 1 May 2012, the Group acquired the business of Intellichain for an amount
equal to the outstanding balance of the loan provided to Intellichain by the
Group on the effective date of the transaction approximating R6 million.
Due to the transaction only becoming effective shortly prior to the release
of the annual results the identification and allocation of fair values to
the assets and liabilities acquired have not yet been finalised. This
process will be completed within 12 months after transaction date, as
allowed in accordance with International Financial Reporting Standards
("IFRS").
14. Changes to the Board
On 10 January 2012, Afzal Patel, an independent non-executive director,
resigned from the Board of MiX. Chris Ewing was appointed as an independent
non-executive director to the Board and as a member of the Audit and Risk
Committee in Afzal`s place.
On 1 June 2012, Roy Shough was appointed as an independent non-executive
director to the Board and as a member and Chairman of the Audit and Risk
Committee. Richard Bruyns, the current Chairman of the Audit and Risk
Committee, will step down as Chairman of the Audit and Risk Committee but
will remain on the Audit and Risk Committee as a member.
For and on behalf of the Board:
SR Bruyns SB Joselowitz
Midrand
7 June 2012
Registered office: Matrix Corner, Howick Close, Waterfall Park, Midrand
Directors: SR Bruyns* (Chairman); SB Joselowitz (CEO); R Botha; HR Brody*;
TE Buzer; C Ewing*; RA Frew*; R Friedman*; ML Pydigadu; F Roji*; HG Scott;
RA Shough*; CWR Tasker; AR Welton*, *Non-executive
Company secretary: Probity Business Services Proprietary Limited
Auditors: PricewaterhouseCoopers Inc.
Sponsor: Java Capital
11 June 2012
Date: 11/06/2012 07:30:01 Produced by the JSE SENS Department.
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