An explanation of non-IFRS measures used in this press release
is set out in the Non-IFRS financial measures section of
this press release. A reconciliation of these non-IFRS measures to
the most directly comparable IFRS measures is provided in the
financial tables that accompany this release.
References in this announcement to “R” are to South
African Rand and references to “U.S. Dollars” and “$”
are to United States Dollars. Unless otherwise stated MiX
Telematics has translated U.S. Dollar amounts from South African
Rand at the exchange rate of R15.1619 per $1.00, which was the R/$
exchange rate reported by Oanda.com as at September 30, 2019.
Highlights:
Second quarter fiscal 2020 (year over year):
- Subscription revenue of R471 million ($31.1 million), an
increase of 12.2% (10.7% on a constant currency basis)
- Net subscriber additions of over 22,600, bringing the total
base to over 789,000 subscribers, up 11%
- Adjusted EBITDA of R172 million ($11.3 million), up
12%
- Adjusted EBITDA margin of 31.9%, up 110 basis
points
- Diluted adjusted earnings per share of 12 South African
cents, or 19 U.S. cents per diluted ADS, up 20%
First half fiscal 2020 (year over year):
- Subscription revenue of R926 million ($61.1 million), an
increase of 14.3% (10.9% on a constant currency basis)
- Net subscriber additions of 39,100, compared to 37,100
additions in the first half of fiscal 2019
- Adjusted EBITDA of R326 million ($21.5 million), up
17%
- Adjusted EBITDA margin of 30.8%, up 150 basis
points
- Diluted adjusted earnings per share of 22 South African
cents, or 37 U.S. cents per diluted ADS, up 16%
- Free cash flow of R50 million ($3.3 million), up
35%
MiX Telematics Limited (NYSE: MIXT, JSE: MIX), a leading global
provider of fleet and mobile asset management solutions delivered
as Software-as-a-Service (SaaS), today announced financial results
for its second quarter and first half of fiscal 2020, which ended
on September 30, 2019.
“Our results were once again highlighted by double-digit
subscription revenue growth, solid subscriber additions as well as
continued EBITDA margin expansion and positive free cash flow” said
Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “Our
revised guidance reflects some caution around macro issues, which
are resulting in elongated sales cycles in certain verticals, as
well as strategic investments in sales and marketing. We remain
confident that our diversified global footprint and the unmatched
range and quality of our product portfolio will continue to support
our growth and profitability objectives.”
Financial performance for the three months ended September
30, 2019
Subscription revenue: Subscription revenue was R471.2
million ($31.1 million), an increase of 12.2% compared to R420.2
million ($27.7 million) for the second quarter of fiscal 2019.
Subscription revenue increased by 10.7% on a constant currency
basis. Subscription revenue benefited from a net increase of over
75,500 subscribers from October 2018 to September 2019,
representing an increase in the subscriber base of 10.6% during
that period.
Total revenue: Total revenue was R538.2 million ($35.5
million), an increase of 8.4% compared to R496.7 million ($32.8
million) for the second quarter of fiscal 2019. Hardware and other
revenue was R67.0 million ($4.4 million), a decrease of 12.5%
compared to R76.6 million ($5.1 million) for the second quarter of
fiscal 2019.
Gross Margin: Gross profit was R352.4 million ($23.2
million), compared to R336.6 million ($22.2 million) for the second
quarter of fiscal 2019. Gross profit margin was 65.5%, compared to
67.8% for the second quarter of fiscal 2019.
Operating Margin: Operating profit was R91.6 million
($6.0 million), compared to R86.7 million ($5.7 million) for the
second quarter of fiscal 2019. Operating margin was 17.0%, compared
to 17.5% for the second quarter of fiscal 2019. Operating expenses
of R260.6 million ($17.2 million) increased by R10.3 million ($0.7
million), or 4.1%, compared to the second quarter of fiscal 2019.
Operating expenses for the second quarter of fiscal 2020 include
share based payment costs of R5.3 million ($0.3 million) relating
to Performance Share Awards issued post the second quarter of
fiscal 2019 in terms of the MiX Telematics Limited Long Term
Incentive Plan. Operating expenses represented 48.4% of revenue
compared to 50.4% of revenue in the second quarter of fiscal
2019.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was
R171.5 million ($11.3 million), compared to R152.9 million ($10.1
million) for the second quarter of fiscal 2019. Adjusted EBITDA
margin, a non-IFRS measure, for the second quarter of fiscal 2020
was 31.9%, compared to 30.8% for the second quarter of fiscal
2019.
Profit for the period and earnings per share: Profit for
the period was R44.5 million ($2.9 million), compared to R54.4
million ($3.6 million) in the second quarter of fiscal 2019. Profit
for the period included a net foreign exchange loss of R0.5 million
($0.03 million) before tax. During the second quarter of fiscal
2019, profit for the period included a net foreign exchange gain of
R0.5 million ($0.03 million).
Diluted earnings per ordinary share were 8 South African cents,
compared to 9 South African cents in the second quarter of fiscal
2019. For the second quarter of fiscal 2020, the calculation was
based on diluted weighted average ordinary shares in issue of 570.0
million, compared to 587.6 million diluted weighted average
ordinary shares in issue during the second quarter of fiscal
2019.
The Company’s effective tax rate was 50.3%, compared to 37.7%
for the second quarter of fiscal year 2019. Ignoring the impact of
net foreign exchange gains and losses, and related tax
consequences, the tax rate which is used in determining adjusted
earnings below, was 30.0% compared to 29.4% in the second quarter
of fiscal 2019.
On a U.S. Dollar basis, using the September 30, 2019 exchange
rate of R15.1619 per U.S. Dollar, and a ratio of 25 ordinary shares
to one American Depositary Share (“ADS”), profit for the period was
$2.9 million, or 13 U.S. cents per diluted ADS compared to $3.6
million, or 15 U.S. cents per diluted ADS in the second quarter of
fiscal 2019.
Adjusted earnings for the period and adjusted earnings per
share: Adjusted earnings for the period, a non-IFRS measure,
were R66.9 million ($4.4 million) compared to R61.2 million ($4.0
million) for the second quarter of fiscal 2019. Adjusted earnings
per diluted ordinary share, also a non-IFRS measure, were 12 South
African cents, compared to 10 South African cents in the second
quarter of fiscal 2019.
On a U.S. Dollar basis, using the September 30, 2019 exchange
rate of R15.1619 per U.S. Dollar, and a ratio of 25 ordinary shares
to one ADS, adjusted earnings for the period were $4.4 million, or
19 U.S. cents per diluted ADS, compared to 17 U.S. cents per
diluted ADS in the second quarter of fiscal 2019.
Statement of Financial Position and Cash Flow: At
September 30, 2019, the Company had R253.1 million ($16.7 million)
of net cash and cash equivalents, compared to R353.2 million ($23.3
million) at March 31, 2019. The Company generated R137.7 million
($9.1 million) in net cash from operating activities for the three
months ended September 30, 2019 and invested R98.2 million ($6.6
million) in capital expenditures during the quarter (including
investments in in-vehicle devices of R70.5 million ($4.6 million)),
leading to free cash flow, a non-IFRS measure, of R39.5 million
($2.6 million) compared to free cash flow of R92.8 million ($6.1
million) for the second quarter of fiscal 2019. The Company
utilized R146.0 million ($9.6 million) in financing activities,
compared to R10.6 million ($0.7 million) utilized during the second
quarter of fiscal 2019. The cash utilized in financing activities
during the second quarter of fiscal 2020 mainly consisted of
dividends paid of R22.5 million ($1.5 million), share repurchases
of R119.5 million ($7.9 million) and the payment of lease
liabilities of R4.1 million ($0.3 million). The cash utilized in
financing activities during the second quarter of fiscal 2019
mainly consisted of dividends paid of R16.9 million ($1.1 million)
and payment of lease liabilities of R4.7 million ($0.3 million),
offset by the proceeds from the issuance of shares in respect of
employee share options of R11.1 million ($0.7 million).
Financial performance for the first half of fiscal
2020
Subscription revenue: Subscription revenue increased to
R926.2 million ($61.1 million), an increase of 14.3% compared to
R810.5 million ($53.5 million) for the first half of fiscal 2019.
On a constant currency basis, subscription revenue increased by
10.9%. Subscription revenue benefited from a net increase of over
75,500 subscribers from October 2018 to September 2019,
representing an increase in subscribers of 10.6% during that
period.
Total revenue: Total revenue was R1,060.0 million ($69.9
million), an increase of 11.2% compared to R953.6 million ($62.9
million) for the first half of fiscal 2019. Hardware and other
revenue was R133.8 million ($8.8 million), compared to R143.0
million ($9.4 million) for the first half of fiscal 2019.
Gross margin: Gross profit was R695.2 million ($45.9
million), an increase of 8.2% compared to R642.4 million ($42.4
million) for the first half of fiscal 2019. Gross profit margin was
65.6%, compared to 67.4% for the first half of fiscal 2019.
Operating margin: Operating profit was R173.4 million
($11.4 million), compared to R154.4 million ($10.2 million) in the
first half of fiscal 2019. The operating margin was 16.4%, compared
to 16.2% in the first half of fiscal 2019. Operating expenses of
R521.9 million ($34.4 million) increased by R33.5 million ($2.2
million), or 6.9%, compared to the first half of fiscal 2019.
Operating expenses for the first half of fiscal 2020 include share
based payment costs of R8.5 million ($0.6 million) relating to
Performance Share Awards issued post the first half of fiscal 2019
in terms of the MiX Telematics Limited Long Term Incentive Plan.
Operating expenses represented 49.2% of revenue compared to 51.2%
in the first half of fiscal 2019.
Adjusted EBITDA: Adjusted EBITDA was R326.3 million
($21.5 million) compared to R279.4 million ($18.4 million) for the
first half of fiscal 2019. Adjusted EBITDA margin was 30.8%,
compared to 29.3% in the first half of fiscal 2019.
Profit for the period and earnings per share: Profit for
the period was R111.2 million ($7.3 million), compared to R68.8
million ($4.5 million) in the first half of fiscal 2019. Profit for
the period included a net foreign exchange gain of R0.2 million
($0.01 million) before tax. During the first half of fiscal 2019, a
net foreign exchange gain of R0.3 million ($0.02 million) was
recorded.
Diluted earnings per ordinary share were 19 South African cents,
compared to 12 South African cents in the first half of fiscal
2019. For the first half of fiscal 2020, the calculation was based
on diluted weighted average ordinary shares in issue of 574.5
million, compared to 587.2 million diluted weighted average
ordinary shares in issue during the first half of fiscal 2019.
The Company’s effective tax rate was 35.5%, compared to 55.6%
for the first half of fiscal 2019. Ignoring the impact of net
foreign exchange gains and losses, and related tax consequences,
the effective tax rate, which is used in calculating adjusted
earnings, was 29.5% compared to 29.0% in the first half of fiscal
2019.
Adjusted earnings for the period and adjusted earnings per
share: Adjusted earnings for the period were R127.5 million
($8.4 million), compared to R109.9 million ($7.2 million) in the
first half of fiscal 2019. Adjusted earnings per diluted ordinary
share were 22 South African cents, compared to 19 South African
cents for the first half of fiscal 2019. The impact of foreign
exchange movements and the related tax effects on the Group's
effective tax rate is included in note 17 of the unaudited Group
interim financial results for the six months ended September 30,
2019.
On a U.S. Dollar basis, using the September 30, 2019 exchange
rate of R15.1619 per U.S. Dollar, and a ratio of 25 ordinary shares
to one ADS, adjusted earnings were $8.4 million, or 37 U.S. cents
per diluted ADS, compared to $7.2 million, or 31 U.S. cents per
diluted ADS in the first half of fiscal 2019.
Cash Flow: The Company generated R228.6 million ($15.1
million) in net cash from operating activities for the first half
of fiscal 2020 and invested R178.3 million ($11.8 million) in
capital expenditures during the period (including investments in
in-vehicle devices of R122.4 million ($8.1 million), leading to
free cash flow of R50.4 million ($3.3 million), compared to free
cash flow of R37.3 million ($2.5 million) for the first half of
fiscal 2019. Capital expenditures in the first half of fiscal 2019
were R164.2 million ($10.8 million) and included in-vehicle devices
of R119.2 million ($7.9 million).
The Company utilized R171.3 million ($11.3 million) in financing
activities, compared to R29.7 million ($2.0 million) utilized
during the first half of fiscal 2019. The cash utilized in
financing activities during the first half of fiscal 2020 mainly
consisted of dividends paid of R44.8 million ($3.0 million), share
repurchases of R119.5 million ($7.9 million) and the payment of
lease liabilities of R7.0 million ($0.5 million). The cash utilized
during the first half of fiscal 2019 consisted primarily of
dividends paid of R33.8 million ($2.2 million) and the payment of
lease liabilities of R6.9 million ($0.5 million).
Segment commentary for the first half of fiscal 2020
The segment results below are presented on an integral margin
basis. In respect of revenue, this method of measurement entails
reviewing the segmental results based on external revenue only. In
respect of Adjusted EBITDA (the non-IFRS profit measure identified
by the Group), the margin generated by our Central Services
Organization (“CSO”), net of any unrealized inter-company profit,
is allocated to the geographic region where the external revenue is
recorded by our Regional Sales Offices (“RSOs”).
CSO continues as a central services organization that wholesales
our products and services to our RSOs who, in turn, interface with
our end-customers and distributors. CSO is also responsible for the
development of our hardware and software platforms and provides
common marketing, product management, technical and distribution
support to each of our other operating segments. CSO’s operating
expenses are not allocated to each RSO.
Each RSO’s results reflect the external revenue earned, as well
as the Adjusted EBITDA earned (or loss incurred) by each operating
segment before the CSO and corporate cost allocations.
For further information in this regard, please refer to note 3
of the unaudited Group interim financial results for the six months
ended September 30, 2019.
Segment
Subscription Revenue Half-year
2020 R'000
Total Revenue Half-year 2020
R'000
Adjusted EBITDA Half-year 2020
R'000
Adjusted EBITDA Half-year %
change on prior period
Adjusted EBITDA Margin
Half-year 2020
Africa
516,654
557,597
246,193
6.9%
44.2%
Subscription revenue increased by 9.8% in
the segment as a result of a 10.6% increase in subscribers since
October 1, 2018. Total revenue increased by 9.9%. The region
reported an Adjusted EBITDA margin above 40%.
Americas
164,739
184,226
77,952
4.1%
42.3%
Subscription revenue growth on a constant
currency basis was 11.0%. Subscribers increased by 8.1% since
October 1, 2018. Subscription revenue continued to receive
assistance from the market’s ongoing preference for bundled deals
across new and existing customers. Total revenue improved by 12.0%
on a constant currency basis as hardware and other revenue
increased by 31.8%. The region reported an Adjusted EBITDA margin
above 40%.
Middle East and Australasia
124,646
171,808
80,916
19.4%
47.1%
Subscription revenue increased by 8.6% on
a constant currency basis. Subscribers increased by 9.8% since
October 1, 2018. Total revenue in constant currency improved by
5.1% following lower hardware revenues compared to fiscal 2019. The
region reported an Adjusted EBITDA margin of 47.1% (up from the
45.1% Adjusted EBITDA margin reported in fiscal 2019).
Europe
82,098
101,238
35,421
(5.3%)
35.0%
Subscription revenue growth on a constant
currency basis was 21.8%. However, total revenue decreased by 10.3%
on a constant currency basis following lower hardware revenues
compared to fiscal 2019. Subscribers increased by 8.6% since
October 1, 2018. The region reported an Adjusted EBITDA margin of
35.0% (up from the 32.3% Adjusted EBITDA margin reported in fiscal
2019).
Brazil
37,310
43,789
18,807
66.6%
42.9%
Subscription revenue increased by 21.8% on
a constant currency basis. The increase was due to an increase in
subscribers of 22.1% since October 1, 2018. On a constant currency
basis, total revenue increased by 36.9% following a significant
increase in hardware revenues. The segment reported an Adjusted
EBITDA margin of 42.9% (up from the 40.3% Adjusted EBITDA margin
reported in fiscal 2019).
Central Services Organization
740
1,303
(75,204)
8.6%
—
CSO is responsible for the development of
our hardware and software platforms and provides common marketing,
product management, technical and distribution support to each of
our other operating segments. The negative Adjusted EBITDA reported
arises as a result of operating expenses carried by the
segment.
Business Outlook
MiX Telematics has translated U.S. Dollar amounts in this
Business Outlook paragraph from South African Rand at the exchange
rate of R14.5750 per $1.00, which was the R/$ exchange rate
reported by Oanda.com as at October 28, 2019.
Based on information as of today, October 31, 2019, for the
third quarter of fiscal 2020, the Group expects subscription
revenue to be in the range of R475 million to R480 million ($32.6
million to $32.9 million) which would represent subscription
revenue growth of 8.2% to 9.4% compared to the third quarter of
fiscal 2019. On a constant currency basis, this would represent
subscription revenue growth of 7.8% to 9.0%.
Based on information as of today, October 31, 2019, the Group is
issuing the following financial guidance for the full 2020 fiscal
year:
- Subscription revenue - R1,886 million to R1,901 million ($129.4
million to $130.4 million), which would represent subscription
revenue growth of 11.4% to 12.3% compared to fiscal 2019. On a
constant currency basis, this would represent subscription revenue
growth of 9.3% to 10.2%.
- Total revenue - R2,119 million to R2,144 million ($145.4
million to $147.1 million), which would represent revenue growth of
7.2% to 8.5% compared to fiscal 2019. On a constant currency basis,
this would represent revenue growth of 5.2% to 6.4%.
- Adjusted EBITDA - R650 million to R665 million ($44.6 million
to $45.6 million), which would represent Adjusted EBITDA growth of
7.8% to 10.3% compared to fiscal 2019.
- Adjusted earnings per diluted ordinary share of 41.6 to 45.1
South African cents based on 570 million diluted ordinary shares in
issue, and based on an effective tax rate of 28.0% to 29.0%. At a
ratio of 25 ordinary shares to one ADS, this equates to adjusted
earnings per diluted ADS of 71.4 to 77.4 U.S. cents.
The key assumptions used in deriving the forecast are as
follows:
- Growth in subscription revenue and subscribers are based on
expected growth rates related to market conditions and takes into
account growth rates achieved previously.
- Achieving hardware sales according to expectations, as hardware
sales are dependent on the volumes of bundled solutions selected by
customers.
- An average forecast exchange rate for the 2020 fiscal year of
R14.5800 per $1.00.
The forecast is the responsibility of the Board of Directors and
has not been reviewed or reported on by the Group’s external
auditors. The Group’s policy is to give guidance on a quarterly
basis, if necessary, and does not update guidance between
quarters.
The Group provides earnings guidance only on a non-IFRS basis
and does not provide a reconciliation of forward-looking Adjusted
EBITDA and Adjusted Earnings per Diluted Ordinary Share guidance to
the most directly comparable IFRS financial measures because of the
inherent difficulty in forecasting and quantifying certain amounts
that are necessary for such reconciliations, including adjustments
that could be made for foreign exchange gains/(losses) and related
tax consequences, restructuring costs, share-based compensation
costs, and other charges reflected in the Group’s reconciliation of
historic non-IFRS financial measures, the amounts of which, based
on past experience, could be material.
The information disclosed in this “Business Outlook”
paragraph complies with the disclosure requirements in terms of
paragraph 8.38 of the JSE Listings Requirements which deals with
profit forecasts.
Quarterly Reporting Policy in respect of JSE Listings
Requirements
Following the listing of the Group’s ADSs on the New York Stock
Exchange, the Group has adopted a quarterly reporting policy. As a
result of such quarterly reporting the Group is, in terms of
paragraph 3.4(b)(ix) of the JSE Listings Requirements, not required
to publish trading statements in terms of paragraph 3.4(b)(i) to
(viii) of the JSE Listings Requirements.
Conference Call Information
MiX Telematics management will also host a conference call and
audio webcast at 8:00 a.m. (Eastern Daylight Time) and 2:00 p.m.
(South African Time) on October 31, 2019 to discuss the Group’s
financial results and current business outlook:
- The live webcast of the call will be available at the “Investor
Information” page of the Group’s website, http://investor.mixtelematics.com.
- To access the call, dial 1-877-451-6152 (within the United
States) or 0 800 983 831 (within South Africa) or 1-201-389-0879
(outside of the United States). The conference ID is 13695048.
- A replay of this conference call will be available for a
limited time at +1-844-512-2921 (within the United States) or
1-412-317-6671 (within South Africa or outside of the United
States). The replay conference ID is 13695048.
- A replay of the webcast will also be available for a limited
time at http://investor.mixtelematics.com.
About MiX Telematics Limited
MiX Telematics is a leading global provider of fleet and mobile
asset management solutions delivered as SaaS to customers managing
over 789,000 assets in approximately 120 countries. The Group’s
products and services provide enterprise fleets, small fleets and
consumers with solutions for safety, efficiency, risk and security.
MiX Telematics was founded in 1996 and has offices in South Africa,
the United Kingdom, the United States, Uganda, Brazil, Mexico,
Australia, Romania, Thailand and the United Arab Emirates as well
as a network of more than 130 fleet partners worldwide. MiX
Telematics shares are publicly traded on the Johannesburg Stock
Exchange (JSE: MIX) and MiX Telematics American Depositary Shares
are listed on the New York Stock Exchange (NYSE: MIXT). For more
information, visit www.mixtelematics.com.
Forward-Looking Statements
This press release includes certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, including without limitation, statements concerning our
financial guidance for the third quarter and full year of fiscal
2020, our position to execute on our growth strategy, and our
ability to expand our leadership position. These forward-looking
statements reflect our current views about our plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to us and on assumptions we have
made. Actual results may differ materially from those described in
the forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control including, without
limitation, those described under the caption “Risk Factors” in the
Group’s Annual Report on Form 20-F filed with the Securities and
Exchange Commission (the “SEC”) for the fiscal year ended March 31,
2019, as updated by other reports that the Company files with or
furnishes to the SEC. The Company assumes no obligation to update
any forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
Non-IFRS financial measures
Adjusted EBITDA
To provide investors with additional information regarding its
financial results, the Group has disclosed within this press
release, Adjusted EBITDA and Adjusted EBITDA margin. Adjusted
EBITDA and Adjusted EBITDA margin are non-IFRS financial measures,
and they do not represent cash flows from operations for the
periods indicated, and should not be considered an alternative to
net income as an indicator of the Group’s results of operations, or
as an alternative to cash flows from operations as an indicator of
liquidity. Adjusted EBITDA is defined as the profit for the period
before income taxes, net finance income/(costs) including foreign
exchange gains/(losses), depreciation of property, plant and
equipment including capitalized customer in-vehicle devices and
right-of-use assets, amortization of intangible assets including
capitalized in-house development costs and intangible assets
identified as part of a business combination, share-based
compensation costs, restructuring costs, profits/(losses) on the
disposal or impairments of assets or subsidiaries, insurance
reimbursements relating to impaired assets and certain litigation
costs.
The Group has included Adjusted EBITDA and Adjusted EBITDA
margin in this press release because they are key measures that the
Group’s management and Board of Directors use to understand and
evaluate its core operating performance and trends; to prepare and
approve its annual budget; and to develop short and long-term
operational plans. In particular, the exclusion of certain expenses
in calculating Adjusted EBITDA and Adjusted EBITDA margin can
provide a useful measure for period-to-period comparisons of the
Group’s core business. Accordingly, the Group believes that
Adjusted EBITDA and Adjusted EBITDA margin provide useful
information to investors and others in understanding and evaluating
its operating results.
The Group’s use of Adjusted EBITDA has limitations as an
analytical tool, and you should not consider this performance
measure in isolation from or as a substitute for analysis of our
results as reported under IFRS. Some of these limitations are:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and Adjusted EBITDA does not reflect cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, the Group’s working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive
impact of equity-based compensation;
- Adjusted EBITDA does not reflect tax payments or the payment of
lease liabilities that may represent a reduction in cash available
to the Group; and
- other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider Adjusted
EBITDA alongside other financial performance measures, including
operating profit, profit for the year and our other results.
Headline Earnings
Headline earnings is a profit measure required for JSE-listed
companies and is calculated in accordance with circular 4/2018
issued by the South African Institute of Chartered Accountants. The
profit measure is determined by taking the profit for the period
prior to certain separately identifiable re-measurements of the
carrying amount of an asset or liability that arose after the
initial recognition of such asset or liability net of related tax
(both current and deferred) and related non-controlling
interest.
Adjusted Earnings and Adjusted Earnings Per Share
Adjusted earnings per share is defined as profit attributable to
owners of the parent, MiX Telematics Limited, excluding net foreign
exchange gains/(losses) net of tax and share based compensation
costs related to Performance Share Awards net of tax, divided by
the weighted average number of ordinary shares in issue during the
period.
We have included Adjusted earnings per share in this press
release because it provides a useful measure for period-to-period
comparisons of the Group’s core business by excluding net foreign
exchange gains/(losses) from earnings, as well as share based
compensation costs related to Performance Share Awards. Performance
Share Awards were awarded under the MiX Telematics Long-Term
Incentive Plan for the first time in November 2018 and are aimed at
incentivising management to achieve cumulative subscription revenue
and Adjusted EBITDA targets for the 2019 and 2020 fiscal years.
Accordingly, we believe that Adjusted earnings per share
provides useful information to investors and others in
understanding and evaluating the Group's operating results.
Free cash flow
Free cash flow is determined as net cash generated from
operating activities less capital expenditure for investing
activities. We believe that free cash flow provides useful
information to investors and others in understanding and evaluating
the Group’s cash flows as it provides detail of the amount of cash
the Group generates or utilizes after accounting for all capital
expenditures including investments in in-vehicle devices and
development expenditure.
Constant currency and U.S. Dollar financial
information
Financial information presented in United States Dollars and
constant currency financial information presented as part of the
segment commentary constitute pro forma financial information under
the JSE Listings Requirements. Unless otherwise stated, MiX
Telematics has translated U.S. Dollar amounts from South African
Rand at the exchange rate of R15.1619 per $1.00, which was the R/$
exchange rate reported by Oanda.com as at September 30, 2019.
Constant currency information has been presented to illustrate
the impact of changes in currency rates on the Group’s results. The
constant currency information has been determined by adjusting the
current financial reporting period results to the prior period
average exchange rates, determined as the average of the monthly
exchange rates applicable to the period. The measurement has been
performed for each of the Group’s currencies, including the U.S.
Dollar and British Pound. The constant currency growth percentage
has been calculated by utilizing the constant currency results
compared to the prior period results.
This pro-forma financial information is the responsibility of
the Group’s Board of Directors and is presented for illustrative
purposes. Because of its nature, the pro-forma financial
information may not fairly present MiX Telematics’ financial
position, changes in equity, results of operations or cash flows.
The pro-forma financial information does not constitute pro-forma
information in accordance with the requirements of Regulation S-X
of the SEC or generally accepted accounting principles in the
United States. In addition, the rules and regulations related to
the preparation of pro-forma financial information in other
jurisdictions may also vary significantly from the requirements
applicable in South Africa. The pro-forma financial information
contained in this results announcement has not been reviewed by our
auditors.
CONDENSED CONSOLIDATED INCOME
STATEMENT
South African Rand
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Revenue
1,059,961
953,559
538,226
496,737
Cost of sales
(364,722
)
(311,168
)
(185,807
)
(160,107
)
Gross profit
695,239
642,391
352,419
336,630
Other income/(expenses) - net
58
423
(186
)
435
Operating expenses
(521,893
)
(488,383
)
(260,640
)
(250,359
)
-Sales and marketing
(97,775
)
(98,811
)
(46,286
)
(51,955
)
-Administration and other charges
(424,118
)
(389,572
)
(214,354
)
(198,404
)
Operating profit
173,404
154,431
91,593
86,706
Finance (costs)/income - net
(872
)
628
(1,942
)
473
-Finance income
6,710
5,970
3,254
3,524
-Finance costs
(7,582
)
(5,342
)
(5,196
)
(3,051
)
Profit before taxation
172,532
155,059
89,651
87,179
Taxation
(61,328
)
(86,274
)
(45,130
)
(32,829
)
Profit for the period
111,204
68,785
44,521
54,350
Attributable to:
Owners of the parent
111,204
68,786
44,520
54,350
Non-controlling interest
*
(1
)
1
*
111,204
68,785
44,521
54,350
Earnings per share
-basic (R)
0.20
0.12
0.08
0.10
-diluted (R)
0.19
0.12
0.08
0.09
Earnings per American Depositary Share
-basic (R)
4.98
3.04
2.01
2.40
-diluted (R)
4.84
2.93
1.95
2.31
Ordinary shares ('000)1
-in issue at September 30
550,118
569,756
550,118
569,756
-weighted average
558,401
565,249
554,781
566,025
-diluted weighted average
574,462
587,152
570,011
587,616
Weighted average American Depositary
Shares ('000)1
-in issue at September 30
22,005
22,790
22,005
22,790
-weighted average
22,336
22,610
22,191
22,641
-diluted weighted average
22,978
23,486
22,800
23,505
1
September 30, 2019 figure excludes
53,816,750 (September 30, 2018: 40,000,000) treasury shares held by
MiX Telematics Investments Proprietary Limited (“MiX Investments”),
a wholly owned subsidiary of the Group.
CONDENSED CONSOLIDATED INCOME
STATEMENT
United States Dollar
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Revenue
69,910
62,892
35,499
32,762
Cost of sales
(24,056
)
(20,523
)
(12,255
)
(10,560
)
Gross profit
45,854
42,369
23,244
22,202
Other income/(expenses) - net
4
28
(12
)
29
Operating expenses
(34,422
)
(32,211
)
(17,191
)
(16,513
)
-Sales and marketing
(6,449
)
(6,517
)
(3,053
)
(3,427
)
-Administration and other charges
(27,973
)
(25,694
)
(14,138
)
(13,086
)
Operating profit
11,436
10,186
6,041
5,718
Finance (costs)/income - net
(57
)
42
(128
)
31
-Finance income
443
394
215
232
-Finance costs
(500
)
(352
)
(343
)
(201
)
Profit before taxation
11,379
10,228
5,913
5,749
Taxation
(4,045
)
(5,690
)
(2,977
)
(2,164
)
Profit for the period
7,334
4,538
2,936
3,585
Attributable to:
Owners of the parent
7,334
4,538
2,936
3,585
Non-controlling interest
*
*
*
*
7,334
4,538
2,936
3,585
Earnings per share
-basic ($)
0.01
0.01
0.01
0.01
-diluted ($)
0.01
0.01
0.01
0.01
Earnings per American Depositary Share
-basic ($)
0.33
0.20
0.13
0.16
-diluted ($)
0.32
0.19
0.13
0.15
Ordinary shares ('000)1
-in issue at September 30
550,118
569,756
550,118
569,756
-weighted average
558,401
565,249
554,781
566,025
-diluted weighted average
574,462
587,152
570,011
587,616
Weighted average American Depositary
Shares ('000)1
-in issue at September 30
22,005
22,790
22,005
22,790
-weighted average
22,336
22,610
22,191
22,641
-diluted weighted average
22,978
23,486
22,800
23,505
*
Amounts less than $1,000
1
September 30, 2019 figure excludes
53,816,750 (September 30, 2018: 40,000,000) treasury shares held by
MiX Telematics Investments Proprietary Limited (“MiX Investments”),
a wholly owned subsidiary of the Group.
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
South African Rand
United States Dollar
Six months ended
Six months ended
Six months ended
Six months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Profit for the period
111,204
68,785
7,334
4,538
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss
Exchange differences on translating
foreign operations
18,292
96,206
1,206
6,345
- Attributable to owners of the parent
18,291
96,203
1,206
6,345
- Attributable to non-controlling
interest
1
3
*
*
Taxation relating to components of other
comprehensive income
(1
)
(262
)
*
(17
)
Other comprehensive income for the
period, net of tax
18,291
95,944
1,206
6,328
Total comprehensive income for the
period
129,495
164,729
8,540
10,866
Attributable to:
Owners of the parent
129,494
164,727
8,540
10,866
Non-controlling interest
1
2
*
*
Total comprehensive income for the
period
129,495
164,729
8,540
10,866
* Amounts less than $1,000
HEADLINE EARNINGS
Reconciliation of headline
earnings
South African Rand
United States Dollar
Six months ended
Six months ended
Six months ended
Six months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Profit for the period attributable to
owners of the parent
111,204
68,786
7,334
4,538
Adjusted for:
Profit on disposal of property, plant and
equipment and intangible assets
(711
)
(238
)
(47
)
(16
)
Impairment of product development costs
capitalized
421
51
28
3
Income tax effect on the above
components
1,806
53
119
3
Headline earnings attributable to
owners of the parent
112,720
68,652
7,434
4,528
Headline earnings
Headline earnings per share
-basic (R/$)
0.20
0.12
0.01
0.01
-diluted (R/$)
0.20
0.12
0.01
0.01
Headline earnings per American Depositary
Share
-basic (R/$)
5.05
3.04
0.33
0.20
-diluted (R/$)
4.91
2.92
0.32
0.19
ADJUSTED EARNINGS
Reconciliation of adjusted
earnings
South African Rand
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Profit for the period attributable to
owners of the parent
111,204
68,786
44,520
54,350
Net foreign exchange (gains)/losses
(167
)
(309
)
516
(540
)
IFRS 2 charge on performance share
awards
8,532
—
5,329
—
Income tax effect on the above
component
7,927
41,434
16,546
7,352
Adjusted earnings attributable to
owners of the parent
127,496
109,911
66,911
61,162
Reconciliation of earnings per share to
adjusted earnings per share
Basic earnings per share (R)
0.20
0.12
0.08
0.10
Net foreign exchange (gains)/losses
#
#
#
#
IFRS 2 charge on performance share
awards
0.02
—
#
—
Income tax effect on the above
component
0.01
0.07
0.03
0.01
Basic adjusted earnings per share
(R)
0.23
0.19
0.12
0.11
Adjusted earnings per share
-basic (R)
0.23
0.19
0.12
0.11
-diluted (R)
0.22
0.19
0.12
0.10
Adjusted earnings per American Depositary
Share
-basic (R)
5.71
4.86
3.02
2.70
-diluted (R)
5.55
4.68
2.93
2.60
# Amounts less than R0.01
United States Dollar
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Profit for the period attributable to
owners of the parent
7,334
4,538
2,936
3,585
Net foreign exchange (gains)/losses
(11
)
(20
)
34
(36
)
IFRS 2 charge on performance share
awards
563
—
351
—
Income tax effect on the above
component
523
2,733
1,091
485
Adjusted earnings attributable to
owners of the parent
8,409
7,251
4,412
4,034
Reconciliation of earnings per share to
adjusted earnings per share
Basic earnings per share ($)
0.01
0.01
0.01
0.01
Net foreign exchange (gains)/losses
#
#
#
#
IFRS 2 charge on performance share
awards
#
—
#
—
Income tax effect on the above
component
#
#
#
#
Basic adjusted earnings per share
($)
0.02
0.01
0.01
0.01
Adjusted earnings per share
-basic ($)
0.02
0.01
0.01
0.01
-diluted ($)
0.01
0.01
0.01
0.01
Adjusted earnings per American Depositary
Share
-basic ($)
0.38
0.32
0.20
0.18
-diluted ($)
0.37
0.31
0.19
0.17
# Amounts less than $0.01
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
South African Rand
United States Dollar
Figures are in thousands unless otherwise
stated
September 30,
March 31,
September 30,
March 31,
2019
2019
2019
2019
Unaudited
Audited
Unaudited
Unaudited
ASSETS
Non-current assets
Property, plant and equipment
560,805
457,446
36,988
30,171
Intangible assets
977,374
955,646
64,463
63,029
Capitalized commission assets
61,701
54,066
4,069
3,566
Loans to external parties
8,771
—
578
—
Deferred tax assets
57,603
51,666
3,799
3,408
Total non-current assets
1,666,254
1,518,824
109,897
100,174
Current assets
Assets classified as held for sale (Note
6)
—
17,058
—
1,125
Inventory
56,610
51,263
3,734
3,381
Trade and other receivables
443,203
376,475
29,231
24,830
Taxation
19,098
24,119
1,260
1,591
Restricted cash
21,473
20,187
1,416
1,331
Cash and cash equivalents
292,314
383,443
19,280
25,290
Total current assets
832,698
872,545
54,921
57,548
Total assets
2,498,952
2,391,369
164,818
157,722
EQUITY
Stated capital
667,154
786,633
44,002
51,882
Other reserves
106,547
83,212
7,028
5,489
Retained earnings
948,045
881,819
62,527
58,160
Equity attributable to owners of the
parent
1,721,746
1,751,664
113,557
115,531
Non-controlling interest
14
13
1
1
Total equity
1,721,760
1,751,677
113,558
115,532
LIABILITIES
Non-current liabilities
Deferred tax liabilities
162,590
139,049
10,724
9,171
Provisions
2,193
2,226
145
147
Recurring commission liability
913
1,798
60
119
Capitalized lease liability
100,064
31,183
6,600
2,057
Total non-current liabilities
265,760
174,256
17,529
11,494
Current liabilities
Trade and other payables
430,278
399,869
28,379
26,371
Capitalized lease liability
18,241
10,745
1,203
709
Taxation
3,840
2,511
253
166
Provisions
19,876
22,049
1,311
1,454
Bank overdraft
39,197
30,262
2,585
1,996
Total current liabilities
511,432
465,436
33,731
30,696
Total liabilities
777,192
639,692
51,260
42,190
Total equity and liabilities
2,498,952
2,391,369
164,818
157,722
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
South African Rand
United States Dollar
Six months ended
Six months ended
Six months ended
Six months ended
September 30,
September 30,
September 30,
September 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Cash flows from operating
activities
Cash generated from operations
269,019
221,187
17,743
14,588
Net financing income
1,987
4,133
131
273
Taxation paid
(42,360
)
(23,851
)
(2,794
)
(1,573
)
Net cash generated from operating
activities
228,646
201,469
15,080
13,288
Cash flows from investing
activities
Capital expenditure payments
(178,272
)
(164,192
)
(11,758
)
(10,829
)
Proceeds on sale of property, plant and
equipment and intangible assets
19,281
412
1,582
27
Loans advanced to external parties
(5,086
)
—
(645
)
—
Decrease in restricted cash
9,679
323
638
21
Increase in restricted cash
(10,858
)
(1,057
)
(716
)
(70
)
Net cash used in investing
activities
165,257
(164,514
)
(10,899
)
(10,851
)
Cash flows from financing
activities
Proceeds from issuance of ordinary
shares
—
11,070
—
730
Share repurchase
(119,479
)
—
(7,880
)
—
Repayment of capitalized lease
liability
(6,976
)
(6,914
)
(460
)
(456
)
Dividends paid to Company’s owners
(44,812
)
(33,822
)
(2,956
)
(2,231
)
Net cash used in financing
activities
(171,267
)
(29,666
)
(11,296
)
(1,957
)
Net (decrease)/increase in cash and
cash equivalents
(107,877
)
7,289
(7,115
)
480
Net cash and cash equivalents at the
beginning of the period
353,181
290,538
23,294
19,162
Exchange gains on cash and cash
equivalents
7,813
14,449
516
951
Net cash and cash equivalents at the
end of the period
253,117
312,276
16,695
20,593
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Attributable to owners of the
parent
South African Rand Figures are in
thousands unless otherwise stated
Stated capital
Other reserves
Retained earnings
Total
Non- controlling
interest
Total equity
Balance at April 1, 2018
(Audited)
846,405
(51,614
)
747,055
1,541,846
10
1,541,856
Total comprehensive income
—
95,941
68,786
164,727
2
164,729
Profit for the period
—
—
68,786
68,786
(1
)
68,785
Other comprehensive income
—
95,941
—
95,941
3
95,944
Transactions with owners
11,070
6,772
(33,873
)
(16,031
)
—
(16,031
)
Shares issued in relation to share options
exercised
11,070
—
—
11,070
—
11,070
Share-based payment transaction
—
4,167
—
4,167
—
4,167
Share-based payment - change in excess tax
benefit
—
2,605
—
2,605
—
2,605
Dividends declared
—
—
(33,873
)
(33,873
)
—
(33,873
)
Balance at September 30, 2018
(Unaudited)
857,475
51,099
781,968
1,690,542
12
1,690,554
Total comprehensive income
—
19,803
133,550
153,353
1
153,354
Profit for the period
—
—
133,550
133,550
1
133,551
Other comprehensive income
—
19,803
—
19,803
—
19,803
Transactions with owners
(70,842
)
12,310
(33,699
)
(92,231
)
—
(92,231
)
Shares issued in relation to share options
exercised
2,706
—
—
2,706
—
2,706
Share-based payment transaction
—
7,973
—
7,973
—
7,973
Share-based payment - change in excess tax
benefit
—
4,337
—
4,337
—
4,337
Dividends declared
—
—
(33,699
)
(33,699
)
—
(33,699
)
Share repurchase (note 8)
(73,548
)
—
—
(73,548
)
—
(73,548
)
Balance at March 31, 2019
(Audited)
786,633
83,212
881,819
1,751,664
13
1,751,677
Total comprehensive income
—
18,291
111,204
129,495
1
129,496
Profit for the period
—
—
111,204
111,204
—
111,204
Other comprehensive income
—
18,291
—
18,291
1
18,292
Transactions with owners
(119,479
)
5,044
(44,978
)
(159,413
)
—
(159,413
)
Share-based payment transaction
—
12,730
—
12,730
—
12,730
Share-based payment - change in excess tax
benefit
—
(7,686
)
—
(7,686
)
—
(7,686
)
Dividends declared (note 9)
—
—
(44,978
)
(44,978
)
—
(44,978
)
Share repurchase (note 8)
(119,479
)
—
—
(119,479
)
—
(119,479
)
Balance at September 30, 2019
(Unaudited)
667,154
106,547
948,045
1,721,746
14
1,721,760
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Attributable to owners of the
parent
United States Dollar
Figures are in thousands unless otherwise
stated
Stated capital
Other reserves
Retained earnings
Total
Non- controlling
interest
Total equity
Balance at April 1, 2018
(Unaudited)
55,825
(3,404
)
49,272
101,693
1
101,694
Total comprehensive income
—
6,328
4,537
10,865
—
10,865
Profit for the period
—
—
4,537
4,537
—
4,537
Other comprehensive income
—
6,328
—
6,328
—
6,328
Transactions with owners
730
447
(2,234
)
(1,057
)
—
(1,057
)
Shares issued in relation to share options
exercised
730
—
—
730
—
730
Share-based payment transaction
—
275
—
275
—
275
Share-based payment - change in excess tax
benefit
—
172
—
172
—
172
Dividends declared
—
—
(2,234
)
(2,234
)
—
(2,234
)
Balance at September 30, 2018
(Unaudited)
56,555
3,371
51,575
111,501
1
111,502
Total comprehensive income
—
1,306
8,808
10,114
—
10,114
Profit for the period
—
—
8,808
8,808
—
8,808
Other comprehensive income
—
1,306
—
1,306
—
1,306
Transactions with owners
(4,673
)
812
(2,223
)
(6,084
)
—
(6,084
)
Shares issued in relation to share options
exercised
178
—
—
178
—
178
Share-based payment transaction
—
526
—
526
—
526
Share-based payment - change in excess tax
benefit
—
286
—
286
—
286
Dividends declared
—
—
(2,223
)
(2,223
)
—
(2,223
)
Share repurchase (note 8)
(4,851
)
—
—
(4,851
)
—
(4,851
)
Balance at March 31, 2019
(Unaudited)
51,882
5,489
58,160
115,531
1
115,532
Total comprehensive income
—
1,206
7,334
8,540
—
8,540
Profit for the period
—
—
7,334
7,334
—
7,334
Other comprehensive income
—
1,206
—
1,206
—
1,206
Transactions with owners
(7,880
)
333
(2,967
)
(10,514
)
—
(10,514
)
Share-based payment transaction
—
840
—
840
—
840
Share-based payment - change in excess tax
benefit
—
(507
)
—
(507
)
—
(507
)
Dividends declared (note 9)
—
—
(2,967
)
(2,967
)
—
(2,967
)
Share repurchase (note 8)
(7,880
)
—
—
(7,880
)
—
(7,880
)
Balance at September 30, 2019
(Unaudited)
44,002
7,028
62,527
113,557
1
113,558
NOTES TO CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Basis of preparation and accounting policies
Condensed unaudited Group interim financial results for the half
year ended September 30, 2019
These condensed unaudited Group interim financial results for
the half year ended September 30, 2019 have been prepared in
accordance with International Financial Reporting Standard
(“IFRS”), IAS 34: Interim financial reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee,
Financial Pronouncements as issued by the Financial Reporting
Standards Council (“FRSC”), the JSE Listings Requirements and the
requirements of the South African Companies Act, No. 71 of 2008.
The interim financial results have not been audited or reviewed by
the Group’s external auditors.
The condensed unaudited Group interim financial results do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group’s annual financial statements for the year ended March 31,
2019, which have been prepared in accordance with IFRS.
The preparation of interim financial results requires management
to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. In preparing these
condensed interim financial results, the significant judgment made
by management in applying the Group’s accounting policies and the
key sources of estimation and uncertainty were the same as those
applied to the consolidated financial statements for the year ended
March 31, 2019.
The condensed unaudited Group interim financial results were
prepared under the supervision of the Chief Financial Officer, John
Granara. These results were made available on October 31, 2019.
Financial results for the second quarter of fiscal 2020
In addition to the condensed unaudited Group interim financial
results for the half year ended September 30, 2019, additional
financial information in respect of the second quarter of fiscal
2020 has been presented together with the relevant comparative
information. The quarterly information comprises a condensed
consolidated income statement, a reconciliation of adjusted
earnings to profit for the period, a reconciliation of Adjusted
EBITDA to profit for the period (note 4), a reconciliation of free
cash flow to net cash generated from operating activities (note 7),
other operating and financial data (note 11) and development costs
historical data (note 16).
The quarterly financial results have not been audited or
reviewed by the Group’s external auditors.
Presentation currency and convenience translation
The Group’s presentation currency is South African Rand. In
addition to presenting these interim financial results in South
African Rand, supplementary information in U.S. Dollars has been
prepared for the convenience of users of the Group interim
financial results. Unless otherwise stated, the Group has
translated U.S. Dollar amounts from South African Rand at the
exchange rate of R15.1619 per $1.00, which was the R/$ exchange
rate reported by Oanda.com as at September 30, 2019. The U.S.
Dollar figures may not compute as they are rounded
independently.
The supplementary information prepared in U.S. Dollars
constitutes pro forma financial information under the JSE Listings
Requirements. This pro forma financial information is the
responsibility of the Group’s Board of Directors and is presented
for illustrative purposes. Because of its nature, the pro forma
financial information may not fairly present MiX Telematics’
financial position, changes in equity, results of operations or
cash flows. The pro forma financial information does not constitute
pro forma information in accordance with the requirements of
Regulation S-X of the SEC or generally accepted accounting
principles in the United States. In addition, the rules and
regulations relating to the preparation of pro forma financial
information in other jurisdictions may also vary significantly from
the requirements applicable in South Africa.
2. Accounting policies
The accounting policies used in preparing these financial
results are in terms of IFRS and are consistent in all material
respects with those applied in the preparation of the Group’s
annual financial statements for the year ended March 31, 2019.
3. Segment information
Our operating segments are based on the geographical location of
our Regional Sales Offices (“RSOs”) and also include our Central
Services Organization (“CSO”). CSO is our central services
organization that wholesales our products and services to our RSOs
who, in turn, interface with our end-customers, distributors and
dealers. CSO is also responsible for the development of our
hardware and software platforms and provides common marketing,
product management, technical and distribution support to each of
our other operating segments.
The chief operating decision maker (“CODM”) reviews the segment
results on an integral margin basis as defined by management. The
CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified
collectively as the executive committee and the Chief Executive
Officer who make strategic decisions. In respect of revenue, this
method of measurement entails reviewing the segmental results based
on external revenue only. In respect of Adjusted EBITDA (the profit
measure identified by the CODM), the margin generated by CSO, net
of any unrealized intercompany profit, is allocated to the
geographic region where the external revenue is recorded by our
RSOs. The costs remaining in CSO relate mainly to research and
development of hardware and software platforms, common marketing,
product management and technical and distribution support to each
of the RSOs. CSO is a reportable segment of the Group because it
produces discrete financial information which is reviewed by the
CODM and has the ability to generate external revenues.
Each RSO’s results therefore reflect the external revenue
earned, as well as the Adjusted EBITDA earned (or loss incurred) by
each operating segment before the remaining CSO and corporate costs
allocations. Segment assets are not disclosed as segment
information is not reviewed on such a basis by the CODM.
3. Segment information (continued)
South African Rand Figures are in
thousands unless otherwise stated
Subscription revenue
Hardware and other
revenue
Total revenue
Adjusted EBITDA
Six months ended September 30, 2019
(Unaudited)
Africa
516,654
40,943
557,597
246,193
Europe
82,098
19,140
101,238
35,421
Americas
164,739
19,487
184,226
77,952
Middle East and Australasia
124,646
47,162
171,808
80,916
Brazil
37,310
6,479
43,789
18,807
Total Regional Sales Offices
925,447
133,211
1,058,658
459,289
Central Services Organization
740
563
1,303
(75,204
)
Total Segment Results
926,187
133,774
1,059,961
384,085
Corporate and consolidation entries
—
—
—
(57,792
)
Total
926,187
133,774
1,059,961
326,293
Six months ended September 30, 2018
(Unaudited)
Subscription revenue
Hardware and other revenue
Total revenue
Adjusted EBITDA
Africa
470,565
37,031
507,596
230,200
Europe
64,784
43,624
108,408
37,403
Americas
136,223
14,786
151,009
74,858
Middle East and Australasia
109,168
46,280
155,448
67,762
Brazil
29,417
1,290
30,707
11,292
Total Regional Sales Offices
810,157
143,011
953,168
421,515
Central Services Organization
385
6
391
(82,283
)
Total Segment Results
810,542
143,017
953,559
339,232
Corporate and consolidation entries
—
—
—
(59,879
)
Total
810,542
143,017
953,559
279,353
3. Segment information (continued)
United States Dollar Figures are in
thousands unless otherwise stated
Subscription revenue
Hardware and other
revenue
Total revenue
Adjusted EBITDA
Six months ended September 30, 2019
(Unaudited)
Africa
34,076
2,701
36,777
16,238
Europe
5,415
1,262
6,677
2,336
Americas
10,865
1,286
12,151
5,141
Middle East and Australasia
8,221
3,111
11,332
5,337
Brazil
2,461
427
2,888
1,240
Total Regional Sales Offices
61,038
8,787
69,825
30,292
Central Services Organization
48
37
85
(4,960
)
Total Segment Results
61,086
8,824
69,910
25,332
Corporate and consolidation entries
—
—
—
(3,811
)
Total
61,086
8,824
69,910
21,521
Six months ended September 30, 2018
(Unaudited)
Subscription revenue
Hardware and other revenue
Total revenue
Adjusted EBITDA
Africa
31,036
2,442
33,478
15,183
Europe
4,273
2,877
7,150
2,467
Americas
8,985
975
9,960
4,937
Middle East and Australasia
7,200
3,053
10,253
4,469
Brazil
1,940
85
2,025
745
Total Regional Sales Offices
53,434
9,432
62,866
27,801
Central Services Organization
25
1
26
(5,427
)
Total Segment Results
53,459
9,433
62,892
22,374
Corporate and consolidation entries
—
—
—
(3,950
)
Total
53,459
9,433
62,892
18,424
4. Reconciliation of Adjusted EBITDA to
Profit for the Period
South African Rand
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Adjusted EBITDA
326,293
279,353
171,540
152,910
Add:
Decrease in restructuring cost
provision
8
—
8
—
Net profit on sale of property, plant and
equipment and intangible assets
711
238
635
217
Less:
Depreciation (1)
(106,275
)
(86,180
)
(55,264
)
(45,522
)
Amortization (2)
(34,182
)
(32,454
)
(16,971
)
(16,359
)
Impairment of product development costs
capitalized
(421
)
(51
)
(421
)
(51
)
Equity-settled share-based compensation
costs
(12,730
)
(4,167
)
(7,934
)
(2,159
)
Increase in restructuring cost
provision
—
(2,308
)
—
(2,330
)
Operating profit
173,404
154,431
91,593
86,706
Add: Finance (costs)/income - net
(872
)
628
(1,942
)
473
Less: Taxation
(61,328
)
(86,274
)
(45,130
)
(32,829
)
Profit for the period
111,204
68,785
44,521
54,350
(1)
Includes depreciation of property, plant
and equipment (including in-vehicle devices).
(2)
Includes amortization of intangible assets
(including product development costs and intangible assets
identified as part of a business combination).
4. Reconciliation of Adjusted EBITDA to
Profit for the Period (continued)
United States Dollar
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands unless otherwise
stated
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Adjusted EBITDA
21,521
18,424
11,313
10,085
Add:
Decrease in restructuring cost
provision
1
—
1
—
Net profit on sale of property, plant and
equipment and intangible assets
47
16
42
13
Less:
Depreciation (1)
(7,009
)
(5,684
)
(3,645
)
(3,002
)
Amortization (2)
(2,254
)
(2,140
)
(1,119
)
(1,079
)
Impairment of product development costs
capitalized
(30
)
(3
)
(28
)
(3
)
Equity-settled share-based compensation
costs
(840
)
(275
)
(523
)
(142
)
Increase in restructuring cost
provision
—
(152
)
—
(154
)
Operating profit
11,436
10,186
6,041
5,718
Add: Finance (costs)/income - net
(57
)
42
(128
)
31
Less: Taxation
(4,045
)
(5,690
)
(2,977
)
(2,164
)
Profit for the period
7,334
4,538
2,936
3,585
(1)
Includes depreciation of property, plant
and equipment (including in-vehicle devices).
(2)
Includes amortization of intangible assets
(including product development costs and intangible assets
identified as part of a business combination).
5. Reconciliation of Adjusted EBITDA
margin to Profit for the Period margin
Six months ended
Six months ended
Three months ended
Three months ended
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Adjusted EBITDA margin
30.8
%
29.3
%
31.9
%
30.8
%
Add:
Decrease in restructuring cost
provision
0.0
%
—
0.0
%
—
Net profit on sale of property, plant and
equipment and intangible assets
0.1
%
0.0
%
0.1
%
0.0
%
Less:
Depreciation
(10.0
%)
(9.0
%)
(10.2
%)
(9.1
%)
Amortization
(3.2
%)
(3.5
%)
(3.2
%)
(3.3
%)
Impairment of product development costs
capitalized
(0.1
%)
(0.0
%)
(0.1
%)
(0.0
%)
Equity-settled share-based compensation
costs
(1.2
%)
(0.4
%)
(1.5
%)
(0.4
%)
Increase in restructuring cost
provision
—
(0.2
%)
—
(0.5
%)
Operating profit margin
16.4
%
16.2
%
17.0
%
17.5
%
Add: Finance (costs)/income - net
(0.1
%)
0.1
%
(0.3
%)
0.1
%
Less: Taxation
(5.8
%)
(9.1
%)
(8.4
%)
(6.7
%)
Profit for the period margin
10.5
%
7.2
%
8.3
%
10.9
%
6. Assets Classified as Held for Sale
The assets previously classified as held for sale in the
comparative period and Q1 2020, related to the property owned by
the Central Services Organization, a division of MiX Telematics
International Proprietary Limited. MiX Telematics entered into
agreements pertaining to a Broad-Based Black Economic Empowerment
(“B-BBEE”) transaction, in which the sale of this property is
included. Refer below for additional information. The transaction
was subject to certain conditions precedent which were fulfilled on
May 17, 2019. The sale and leaseback of this property was
recognized during the current quarter as the transfer of this
property was concluded on July 25, 2019.
B-BBEE Property Transaction
MiX has concluded a B-BBEE transaction which involves the
following:
- Acquiring Erf 1335 Vorna Valley Extension 21 Township,
Registration Division IR, Province of Gauteng situated in Midrand
(“the Midrand property”) for R44.0 million ($2.9 million) from TPF
Investments (Pty) Ltd (“TPF”), which Midrand property was
previously leased from TPF. TPF is an associate of Robin Frew, the
non-executive Chairperson of MiX Telematics and therefore the
acquisition was a small related party transaction under the JSE
Listings Requirements.
- In a back-to-back transaction, sold the Midrand property for
R44.0 million ($2.9 million), as well as the Group’s property in
Stellenbosch which previously was classified as held for sale
(discussed above) for R23.5 million ($1.5 million) to Black
Industrialists Group Property Management Company (Pty) Ltd
(“BIG”).
- The Group funding R4.3 million ($0.3 million) of the sales
proceeds of the Midrand property; and R4.7 million ($0.3 million)
of the Stellenbosch property.
- Leasing both properties from BIG for an initial period of 5
years with an option to renew the lease for a further 5 year
period.
The terms of the loan funding provided to BIG are not
market-related. As a result, the fair value of the loans on initial
recognition are less than their face value.
The back-to-back purchase and sale of the Midrand property has
been accounted for simply as a loan to BIG because of the
inter-dependent nature of the transactions and the simultaneous
flow of cash. A firm commitment to provide this off-market loan was
recognised in Q1 2020, as the conditions precedent had been
fulfilled, resulting in the recognition of a loss of R1.0 million
($0.07 million). This loss was recognised in administration
expenses. Accounting for the lease of the Midrand property resulted
in the initial recognition of a right-of-use asset and
corresponding lease liability of R47.5 million ($3.1 million).
A profit of R0.7 million ($0.05 million) was recognised on the
sale and leaseback of the Stellenbosch property during the current
quarter of fiscal 2020. The accounting for the sale and leaseback
reflected the initial fair value of the loan to BIG being R1.1
million ($0.07 million) less than its face value, the right-of-use
asset being recognised initially at a proportion of the previous
book value of the Stellenbosch property of R14.6 million ($1.0
million) and raising a lease liability of R19.2 million ($1.3
million).
The loans to BIG have been recognised as non-current since there
will be no cash flows during the first three years of the
loans.
7. Reconciliation of Free Cash Flow to
Net Cash generated from Operating Activities
Six months ended
Six months ended
Three months ended
Three months ended
South African Rand
September 30,
September 30,
September 30,
September 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Net cash generated from operating
activities
228,646
201,469
137,712
178,711
Capital expenditure payments
(178,273
)
(164,192
)
(98,226
)
(85,886
)
Free cash flow
50,373
37,277
39,486
92,825
Six months ended
Six months ended
Three months ended
Three months ended
United States Dollar
September 30,
September 30,
September 30,
September 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Net cash generated from operating
activities
15,080
13,288
9,083
11,787
Capital expenditure payments
(11,758
)
(10,829
)
(6,478
)
(5,665
)
Free cash flow
3,322
2,459
2,605
6,122
8. Share Repurchase
On May 23, 2017, the MiX Telematics Board approved a share
repurchase program of up to R270 million ($17.8 million) under
which the Company may repurchase its ordinary shares, including
American Depositary Shares (“ADSs”). The Company may repurchase its
shares from time to time at its discretion through open market
transactions and block trades, based on ongoing assessments of the
capital needs of the Company, the market price of its securities
and general market conditions. This share repurchase program may be
discontinued at any time by the Board of Directors, and the Company
has no obligation to repurchase any amount of its securities under
the program. The repurchase program will be funded out of existing
cash resources.
The following purchases had been made under the share repurchase
program during fiscal 2020:
South African Rand
Total number of shares
repurchased
Average price paid per share
(R)(1)
Shares canceled under the
share repurchase program
Total value of shares
purchased as part of publicly announced program (R'000)
Maximum value of shares that
could be purchased under the program (R'000)
Opening balance April 1, 2019
14,173,355
6.51
14,173,355
92,214
177,786
Transactions per quarter
13,816,750
8.62
—
119,125
58,661
ended June 30, 2019
—
—
—
—
177,786
ended September 30, 2019
13,816,750
8.62
—
119,125
58,661
Closing balance September 30,
2019
27,990,105
7.55
14,173,355
211,339
58,661
United States Dollar
Total number of shares
repurchased
Average price paid per share
($)(1)
Shares canceled under the
share repurchase program
Total value of shares
purchased as part of publicly announced program ($'000)
Maximum value of shares that
could be purchased under the program ($'000)
Opening balance April 1, 2019
14,173,355
0.43
14,173,355
6,082
11,726
Transactions per quarter
13,816,750
0.57
—
7,857
3,869
ended June 30, 2019
—
—
—
—
11,726
ended September 30, 2019
13,816,750
0.57
—
7,857
3,869
Closing balance September 30,
2019
27,990,105
0.50
14,173,355
13,939
3,869
(1) Including transaction costs.
Purchases made in fiscal 2019 and fiscal 2018 are detailed in
item 18, financial statements of the Form 20-F filed for fiscal
2019. This is also included in the Group’s published annual
financial statements for fiscal 2019.
9. Dividends Paid
The following dividends were declared by the Company during the
six months ended September 30, 2019 (excluding dividends paid on
treasury shares):
- In respect of the fourth quarter of fiscal year 2019, a
dividend of R22.5 million ($1.5 million) was declared on May 7,
2019 and paid on May 31, 2019. Using shares in issue of 561,455,639
(excluding 40,000,000 treasury shares), this equated to a dividend
of 4 South African cents or 0.3 U.S. cents per ordinary share;
and
- In respect of the first quarter of fiscal 2020, a dividend of
R22.5 million ($1.5 million) was declared on July 30, 2019 and paid
on August 26, 2019. Using shares in issue of 548,720,519 (excluding
53,816,750 treasury shares), this equated to a dividend of 4 South
African cents or 0.3 U.S. cents per share.
10. Contingent Liabilities
Service agreement
In terms of an amended network services agreement with Mobile
Telephone Networks Proprietary Limited (“MTN”), MTN is entitled to
claw back payments from MiX Telematics Africa Proprietary Limited
in the event of early cancellation of the agreement or certain base
connections not being maintained over the term of the agreement. No
connection incentives will be received in terms of the amended
network services agreement. The maximum potential liability under
the arrangement is R36.8 million or $2.4 million. No loss is
considered probable under this arrangement.
Competition Commission of South Africa matter
On April 15, 2019 the Competition Commission of South Africa
(“Commission”) referred a matter to the Competition Tribunal of
South Africa (“Tribunal”). The Commission contends that the Group
and a number of our channel partners have engaged in market
division. Should the Tribunal rule against MiX Telematics, the
Group may be liable to an administrative penalty in terms of the
Competition Act, No. 89 of 1998. The Group had cooperated fully
with the Commission during its preliminary investigation. We cannot
predict the timing of a resolution or the ultimate outcome of the
matter. However, the Group and our external legal advisers continue
to believe that we have consistently adhered to all applicable laws
and regulations and that the referral from the Commission is
without merit. We have therefore not made any provisions for this
matter as yet.
11. Other Operating and Financial
Data
South African Rand
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands except for
subscribers
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Total revenue
1,059,961
953,559
538,226
496,737
Subscription revenue
926,187
810,542
471,234
420,152
Hardware revenue
110,915
122,900
55,434
66,369
Driver training, installation and other
revenue
22,859
20,117
11,558
10,216
Adjusted EBITDA
326,293
279,353
171,540
152,910
Cash and cash equivalents
292,314
347,253
292,314
347,253
Net cash (1)
253,117
312,276
253,117
312,276
Capital expenditure incurred
178,175
168,093
96,553
85,349
Property, plant and equipment expenditure
(2)
122,946
125,368
69,741
61,245
Intangible asset expenditure
55,229
42,725
26,812
24,104
Capital expenditure authorized but not
spent
57,936
48,389
57,936
48,389
Total development cost incurred
66,255
68,091
32,660
33,983
Development cost capitalized
34,823
34,816
17,173
17,571
Development cost expensed within
administration and other charges
31,432
33,275
15,487
16,412
Subscribers
789,559
714,011
789,559
714,011
South African Rand
September 30,
March 31,
2019
2019
Unaudited
Audited
Net asset value per share
3.13
3.12
Net tangible asset value per share
1.24
1.32
(1)
Net cash is calculated as being net cash
and cash equivalents, excluding restricted cash.
(2)
Excludes non-cash additions related to the
right-of-use assets arising from IFRS 16 Leases.
United States Dollar
Six months ended
Six months ended
Three months ended
Three months ended
Figures are in thousands except for
subscribers
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Total revenue
69,910
62,892
35,499
32,762
Subscription revenue
61,086
53,459
31,080
27,711
Hardware revenue
7,315
8,106
3,656
4,377
Driver training, installation and other
revenue
1,509
1,327
763
674
Adjusted EBITDA
21,521
18,424
11,313
10,085
Cash and cash equivalents
19,280
22,903
19,280
22,903
Net cash(1)
16,694
20,596
16,694
20,596
Capital expenditure incurred
11,752
11,087
6,368
5,629
Property, plant and equipment expenditure
(2)
8,109
8,269
4,600
4,039
Intangible asset expenditure
3,643
2,818
1,768
1,590
Capital expenditure authorized but not
spent
3,821
3,191
3,821
3,191
Total development cost incurred
4,370
4,491
2,154
2,241
Development cost capitalized
2,297
2,296
1,133
1,159
Development cost expensed within
administration and other charges
2,073
2,195
1,021
1,082
Subscribers
789,559
714,011
789,559
714,011
United States Dollar
September 30,
March 31,
2019
2019
Unaudited
Unaudited
Net asset value per share
0.21
0.21
Net tangible asset value per share
0.08
0.09
(1)
Net cash is calculated as being net cash
and cash equivalents, excluding restricted cash.
(2)
Excludes non-cash additions related to the
right-of-use assets arising from IFRS 16 Leases.
11. Other operating and financial data
(continued)
Six months ended
Six months ended
Three months ended
Three months ended
September 30,
September 30,
September 30,
September 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Exchange Rates
The following major rates of exchange were
used:
South African Rand: United States
Dollar
-closing
15.16
14.14
15.16
14.14
-average
14.53
13.34
14.68
14.07
South African Rand: British Pound
-closing
18.59
18.43
18.59
18.43
-average
18.29
17.75
18.10
18.33
12. Fair Value of Financial Assets and Liabilities Measured
at Amortized Cost
The fair values of trade and other receivables, restricted cash,
cash and cash equivalents, trade payables, accruals, bank overdraft
and other payables approximate their book values as the impact of
discounting is not considered material due to the short-term nature
of both the receivables and payables.
13. Events after the reporting dates
The directors are not aware of any matter material or otherwise
arising since September 30, 2019 and up to the date of this report,
not otherwise dealt with herein.
14. Dividend Declared
The Board declared in respect of the second quarter of fiscal
year 2020, which ended on September 30, 2019, a dividend of 4 South
African cents (0.3 U.S. cents) per ordinary share to be paid on
Monday, November 25, 2019.
The details with respect to the dividends
declared for ordinary shareholders are as follows:
Last day to trade cum dividend
Tuesday, November 19, 2019
Securities trade ex dividend
Wednesday, November 20, 2019
Record date
Friday, November 22, 2019
Payment date
Monday, November 25, 2019
Share certificates may not be dematerialized or rematerialized
between Wednesday, November 20, 2019 and Friday, November 22, 2019,
both days inclusive.
Shareholders are advised of the following additional
information:
- the dividend has been declared out of income reserves;
- the local dividends tax rate is 20%;
- the gross local dividend amounts to 4 South African cents per
ordinary share;
- the net local dividend amount is 3.2 South African cents per
ordinary share for shareholders liable to pay dividends tax;
- the issued ordinary share capital of MiX Telematics is
603,934,955 ordinary shares of no par value; and
- the Company’s tax reference number is 9155/661/84/7.
The details with respect to the dividends
declared for holders of our ADSs are as follows:
Ex dividend on New York Stock Exchange
(NYSE)
Thursday, November 21, 2019
Record date
Friday, November 22, 2019
Approximate date of currency
conversion
Monday, November 25, 2019
Approximate dividend payment date
Tuesday, December 10, 2019
15. Changes to the Board
John Granara has been appointed as Chief Financial Officer
(“CFO”) and Executive Vice President, effective July 8, 2019. John
Granara will succeed Paul Dell, who has filled the role of interim
CFO since early 2017 and who resigned from the Board as interim CFO
and Director of the Company with effect from July 8, 2019. Paul
will continue at MiX Telematics in an alternative senior role.
Anthony (Tony) Welton retired with effect from September 30,
2019. Following Tony’s retirement, the Board of Directors has
elected Fundiswa (Fundi) Roji-Maplanka, an independent
non-executive Director and a member of the Audit and Risk
Committee, as chairperson of the Audit and Risk Committee. Fikile
Futwa, an independent non-executive Director, assumed the role of
chairperson of the Social and Ethics Committee with effect from
October 1, 2019.
16. Development costs historical data
The table below sets out development costs incurred and
capitalized for each of the last eight quarters including the
period ended September 30, 2019.
South African Rand
Figures are in thousands (Unaudited)
Three months ended
September 30,
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
2019
2019
2019
2018
2018
2018
2018
2017
Total development costs incurred
32,660
33,595
31,543
32,707
33,983
34,108
30,488
32,336
Development costs capitalized
17,173
17,650
17,189
17,907
17,571
17,245
16,543
15,996
Development costs expensed within
administration and other charges
15,487
15,945
14,354
14,800
16,412
16,863
13,945
16,340
United States Dollar
Figures are in thousands (Unaudited)
Three months ended
September 30,
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
2019
2019
2019
2018
2018
2018
2018
2017
Total development costs incurred
2,154
2,216
2,081
2,157
2,241
2,249
2,011
2,133
Development costs capitalized
1,133
1,164
1,134
1,181
1,159
1,137
1,091
1,055
Development costs expensed within
administration and other charges
1,021
1,052
947
976
1,082
1,112
920
1,078
17. Taxation
Section 11D Allowances relating to tax assets recognized
MiX Telematics International Proprietary Limited (“MiX
International”), a subsidiary of the Group, historically claimed a
150% allowance for research and development spend in terms of
section 11D (“S11D”) of the South African Income Tax Act No. 58 of
1962 (“the Act”). As of October 1, 2012, the legislation relating
to the allowance was amended. The amendment requires pre-approval
of development project expenditure on a project specific basis by
the South African Department of Science and Technology (“DST”) in
order to claim a deduction of the additional 50% over and above the
expenditure incurred (150% allowance). Since the amendments to S11D
of the Act, MiX International had been claiming the 150% deduction
resulting in a recognized tax benefit. MiX International has
complied with the amended legislation by submitting all required
documentation to the DST in a timely manner, commencing in October
2012.
In June 2014, correspondence was received from the DST
indicating that the research and development expenditure on certain
projects for which the 150% allowance was claimed in the 2013 and
2014 fiscal years did not, in the DST’s opinion, constitute
qualifying expenditure in terms of the Act. MiX International,
through due legal process, had formally requested a review of the
DST’s decision not to approve this expenditure. While approvals
were obtained for a portion of this project expenditure as a result
of a further review performed by the DST in February 2017, we
continue to seek approval for the remaining projects and as such
the legal process is ongoing. In addition to the approvals that
were subject to the legal process, further approvals have been
obtained for certain project expenditure, relating to both current
and prior financial years. However, at period end, an uncertain tax
position remains in relation to S11D deductions in respect of which
approvals remain pending.
Since the introduction of the DST pre-approval process, the
Group has recognized in the income statement cumulative tax
incentives in addition to the incurred cost of R26.5 million
($1.7million) in respect of S11D deductions, of which R2.2 million
($0.1 million) was recognized during the six months ended September
30, 2019. R23.7 million ($1.6 million) relates to deductions in
respect of development project expenditure which has been approved
by the DST. R2.8 million ($0.2 million) relates to an uncertain tax
position in respect of projects where approvals have not yet been
received from the DST. If the Group is unsuccessful in this regard,
the Group will not recover the R2.8 million ($0.2 million) raised
at September 30, 2019.
Impact of foreign exchange movements
The impact of foreign exchange movements and the related tax
effects on the Group's effective tax rate is shown below:
South African Rand
Six months ended September
2019
Six months ended September
2018
Unaudited
Unaudited
Profit for the period
Foreign exchange
losses
Share-based compensation
costs
Adjusted earnings
Profit for the period
Foreign exchange
losses
Share-based compensation
costs
Adjusted earnings
Profit before tax
172,532
(168
)
8,532
180,896
155,059
(309
)
—
154,750
Taxation
(61,328
)
8,893
(965
)
(53,400
)
(86,274
)
41,434
—
(44,840
)
Profit after tax
111,204
8,725
7,567
127,496
68,785
41,125
—
109,910
Attributable to:
Owners of the parent
111,204
8,725
7,567
127,496
68,786
41,125
—
109,911
Non-controlling interest
—
—
—
—
(1
)
—
—
(1
)
111,204
8,725
7,567
127,496
68,785
41,125
—
109,910
Effective tax rate
35.5
%
—
11.3
%
29.5
%
55.6
%
—
—
29.0
%
United States Dollar
Six months ended September
2019
Six months ended September
2018
Unaudited
Unaudited
Profit for the period
Foreign exchange
losses
Share-based compensation
costs
Adjusted earnings
Profit for the period
Foreign exchange
losses
Share-based compensation
costs
Adjusted earnings
Profit before tax
11,379
(11
)
563
11,931
10,228
(20
)
—
10,208
Taxation
(4,045
)
587
(64
)
(3,522
)
(5,690
)
2,733
—
(2,957
)
Profit after tax
7,334
576
499
8,409
4,538
2,713
—
7,251
Attributable to:
Owners of the parent
7,334
576
499
8,409
4,538
2,713
—
7,251
Non-controlling interest
—
—
—
—
—
—
—
—
7,334
576
499
8,409
4,538
2,713
—
7,251
Effective tax rate
35.5
%
—
—
29.5
%
55.6
%
—
—
29.0
%
Excluding the impact of foreign exchange gains and losses and
its related tax consequences, the effective tax rate is 0.5% higher
than the first six months of fiscal 2019.
For and on behalf of the Board:
RA Frew
SB Joselowitz
Midrand
October 31, 2019
For more information, please visit our website at:
www.mixtelematics.com
MiX Telematics Limited (Incorporated in the Republic of
South Africa) (Registration number: 1995/013858/06) JSE share code:
MIX NYSE code: MIXT ISIN: ZAE000125316 (“MiX Telematics” or “the
Company” or “the Group”)
Registered office Matrix Corner, Howick Close, Waterfall
Park, Midrand
Directors RA Frew* (Chairman), SB Joselowitz (CEO), SR
Bruyns*#(Lead Independent Director), JR Granara (CFO), F Futwa*#,
IV Jacobs*#, F Roji‑Maplanka*#, CWR Tasker * Non-executive #
Independent
Company secretary Statucor Proprietary Limited
Auditors Deloitte & Touche
Sponsor Java Capital
October 31, 2019
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005097/en/
Investors Brian Denyeau ICR for MiX Telematics
ir@mixtelematics.com +1-855-564-9835
JSE Sponsor Java Capital
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