An explanation of non-IFRS measures used in this press release
is set out in the Non-IFRS financial measures section. A
reconciliation of these non-IFRS measures to the most directly
comparable IFRS measures is provided in the financial tables below,
which accompany this press 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 R14.0840 per $1.00, which was the R/$
exchange rate reported by Oanda.com as of June 30, 2019.
First Quarter Highlights (year over
year):
- Subscription revenue of R455 million ($32.3 million), up
16.5% or 11.1% on a constant currency basis
- Net subscriber additions of over 16,400 bringing the total
base to over 766,000, up 11%
- Adjusted EBITDA of R155 million ($11.0 million), up
22%
- Adjusted EBITDA margin of 29.7%, up 200 basis
points
- Diluted adjusted earnings per share of 10 South African
cents, or 19 U.S cents per diluted ADS, up 25%
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 first quarter of fiscal year 2020, which ended June
30, 2019.
“MiX Telematics’ first quarter performance was a solid start to
fiscal 2020. Subscription revenue grew more than 11% on a constant
currency basis and adjusted EBITDA margin of 29.7% grew 200 basis
points year-over-year, which was ahead of our expectations,” said
Stefan Joselowitz, Chief Executive Officer of MiX Telematics. “With
the improved momentum we started experiencing towards the end of
quarter, we remain well positioned to achieve our financial
objectives. The recent addition of John Granara as our Chief
Financial Officer is an important step in the next phase of our
growth strategy, capitalizing on our robust product portfolio and
global footprint.”
Financial performance for the three
months ended June 30, 2019
Subscription revenue: Subscription revenue was R455.0
million ($32.3 million), an increase of 16.5% or 11.1% on a
constant currency basis compared with R390.4 million ($27.7
million) for the first quarter of fiscal year 2019. Subscription
revenue benefited from an increase of 75,000 subscribers,
representing an increase in subscribers of 10.8% from July 2018 to
June 2019.
Total revenue: Total revenue was R521.7 million ($37.0
million), an increase of 14.2% or 8.5% on a constant currency basis
compared to R456.8 million ($32.4 million) for the first quarter of
fiscal year 2019. Hardware and other revenue was R66.8 million
($4.7 million), an increase of 0.5% compared to R66.4 million ($4.7
million) for the first quarter of fiscal year 2019. On a constant
currency basis, hardware and other revenue decreased 6.3% year over
year.
Gross margin: Gross profit was R342.8 million ($24.3
million), compared to R305.8 million ($21.7 million) for the first
quarter of fiscal year 2019. Gross profit margin was 65.7%,
compared to 66.9% for the first quarter of fiscal year 2019.
Operating margin: Operating profit was R81.8 million
($5.8 million), compared to R67.7 million ($4.8 million) for the
first quarter of fiscal year 2019. Operating profit margin was
15.7%, compared to 14.8% for the prior year’s first quarter.
Despite the lower gross margin described above, the operating
margin expanded due to improved economies of scale and ongoing cost
management initiatives. Operating expenses of R261.3 million ($18.6
million) increased by R23.2 million ($1.7 million) compared to the
first quarter of fiscal 2019. Operating expenses represented 50.1%
of revenue compared to 52.1% of revenue in the first quarter of
fiscal year 2019.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was
R154.8 million ($11.0 million) compared to R126.4 million ($9.0
million) for the first quarter of fiscal year 2019. Adjusted EBITDA
margin, a non-IFRS measure, for the first quarter of fiscal year
2020 was 29.7%, compared to 27.7% for the first quarter of fiscal
year 2019.
Profit for the period and earnings per share: Profit for
the period was R66.7 million ($4.7 million), compared to R14.4
million ($1.0 million) for the first quarter of fiscal year 2019.
Earnings per diluted ordinary share were 12 South African cents,
compared to 2 South African cents in the first quarter of fiscal
year 2019. For the first quarter of fiscal year 2020, the
calculation was based on diluted weighted average ordinary shares
in issue of 579.2 million compared to 586.6 million diluted
weighted average ordinary shares in issue during the first quarter
of fiscal year 2019.
Profit for the period included a net foreign exchange gain of
R0.7 million ($0.05 million) before tax. A net foreign exchange
loss of R0.2 million ($0.02 million) was recorded in the first
quarter of fiscal year 2019. The Group’s effective tax rate for the
quarter was 19.5%, compared to 78.7% for the first quarter of
fiscal year 2019. Ignoring the impact of net foreign exchange gains
and losses net of tax and share based compensation costs related to
Performance Share Awards net of tax, the tax rate which is used in
determining adjusted earnings below, was 29.1% compared to 28.4% in
the first quarter of fiscal year 2019. The tax impact in respect of
foreign exchange movements and share based compensation costs
related to Performance Share Awards is set out in the
reconciliation of adjusted earnings in the financial tables which
accompany this press release.
On a U.S. Dollar basis, and using the June 30, 2019 exchange
rate of R14.0840 per U.S. Dollar, and at a ratio of 25 ordinary
shares to one American Depositary Share (“ADS”), profit for the
period was $4.7 million, or 20 U.S. cents per diluted ADS.
Adjusted earnings for the period and adjusted earnings per
share: Adjusted earnings for the period, a non-IFRS measure,
was R60.6 million ($4.3 million), compared to R48.7 million ($3.5
million) for the first quarter of fiscal year 2019 and excludes a
net foreign exchange gain of R0.7 million ($0.05 million). During
the first quarter of fiscal year 2019, a net foreign exchange loss
of R0.2 million ($0.02 million) was recorded. Adjusted earnings per
diluted ordinary share, also a non-IFRS measure, were 10 South
African cents, compared to 8 South African cents in the prior year
comparative period.
On a U.S. Dollar basis, and using the June 30, 2019 exchange
rate of R14.0840 per U.S. Dollar, and at a ratio of 25 ordinary
shares to one ADS, adjusted earnings for the period was $4.3
million, or 19 U.S. cents per diluted ADS.
Statement of financial position and cash flow: At June
30, 2019, the Group had R323.9 million ($23.0 million) of net cash
and cash equivalents, compared to R353.2 million ($25.1 million) at
March 31, 2019. The Group generated R90.9 million ($6.5 million) in
net cash from operating activities for the three months ended June
30, 2019 and invested R80.0 million ($5.7 million) in capital
expenditures during the quarter, including investments in
in-vehicle devices of R51.8 million ($3.7 million), leading to
positive free cash flow, a non-IFRS measure, of R10.9 million ($0.8
million) for the first quarter of fiscal year 2020, compared with
negative free cash flow of R55.5 million ($3.9 million) for the
first quarter of fiscal year 2019. The Group utilized R25.2 million
($1.8 million) in financing activities in the first quarter of
fiscal 2020, which included the capital repayment of lease
liabilities of R2.9 million ($0.2 million) and dividends paid of
R22.3 million ($1.6 million). The Group utilized R19.1 million
($1.4 million) in financing activities in the first quarter of
fiscal 2019. The cash utilized in financing activities in the first
quarter of fiscal 2019 included the capital repayment of lease
liabilities of R2.2 million ($0.2 million) and dividends paid of
R16.9 million ($1.2 million).
Business Outlook
MiX Telematics has translated U.S. Dollar amounts in this
Business Outlook paragraph from South African Rand at the exchange
rate of R14.2275 per $1.00, which was the R/$ exchange rate
reported by Oanda.com as of July 29, 2019.
Based on information as of today, August 1, 2019, for the second
quarter of fiscal year 2020 the Group expects subscription revenue
to be in the range of R465 million to R471 million ($32.7 million
to $33.1 million) which would represent subscription revenue growth
of 10.7% to 12.1% compared to the second quarter of fiscal year
2019. On a constant currency basis, this would represent
subscription revenue growth of 10.4% to 11.8%.
The Group is maintaining its previously issued financial
guidance for the full 2020 fiscal year:
- Subscription revenue - R1,935 million to R1,955 million ($136.0
million to $137.4 million), which would represent subscription
revenue growth of 14.3% to 15.5% compared to fiscal year 2019. On a
constant currency basis, this would represent subscription revenue
growth of 12.8% to 14.0%.
- Total revenue - R2,182 million to R2,212 million ($153.4
million to $155.5 million), which would represent revenue growth of
10.4% to 12.0% compared to fiscal year 2019. On a constant currency
basis, this would represent revenue growth of 8.9% to 10.5%.
- Adjusted EBITDA - R680 million to R701 million ($47.8 million
to $49.3 million), which would represent an increase in Adjusted
EBITDA of 12.8% to 16.3% compared to fiscal year 2019.
- Adjusted earnings per diluted ordinary share of 45.1 to 50.2
South African cents based on 585 million diluted ordinary shares in
issue, and based on an effective tax rate of 28.0%. At a ratio of
25 ordinary shares to one ADS, this equates to adjusted earnings
per diluted ADS of 79.2 to 88.2 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. Hardware
sales are dependent on the volumes of bundled solutions selected by
customers.
- An average forecast exchange rate for the 2020 fiscal year of
R14.3000 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”
section complies with the disclosure requirements of paragraph 8.38
of the JSE Listings Requirements, which addresses profit
forecasts.
Quarterly Reporting Policy in respect
of JSE Listings Requirements
As a NYSE listed company, we have 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 Thursday, August 1, 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 +1-887-451-6152 (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 13692610.
- 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 13692610.
- 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 766,000 assets in more than 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 over 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 second 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 Group files with or
furnishes to the SEC. The Group 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.
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 expenditures 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
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 R14.0840 per $1.00, which was the R/$ exchange
rate reported by Oanda.com as at June 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.
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED INCOME
STATEMENT
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Revenue
521,735
456,822
37,045
32,436
Cost of sales
(178,914
)
(151,062
)
(12,703
)
(10,726
)
Gross profit
342,821
305,760
24,342
21,710
Other income/(expenses) - net
244
(12
)
17
(1
)
Operating expenses
(261,252
)
(238,024
)
(18,550
)
(16,900
)
-Sales and marketing
(51,488
)
(46,856
)
(3,656
)
(3,327
)
-Administration and other charges
(209,764
)
(191,168
)
(14,894
)
(13,573
)
Operating profit
81,813
67,724
5,809
4,809
Finance income/(costs) - net
1,070
155
76
11
-Finance income
3,972
2,678
282
190
-Finance costs
(2,902
)
(2,523
)
(206
)
(179
)
Profit before taxation
82,883
67,879
5,885
4,820
Taxation
(16,198
)
(53,445
)
(1,150
)
(3,795
)
Profit for the period
66,685
14,434
4,735
1,025
Attributable to:
Owners of the parent
66,684
14,434
4,735
1,025
Non-controlling interests
1
*
*
*
66,685
14,434
4,735
1,025
*
Amounts less than R1,000/$1,000
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
South African Rand
United States Dollar
June 30,
March 31,
June 30,
March 31,
Figures are in thousands unless otherwise
stated
2019
2019
2019
2019
Unaudited
Audited
Unaudited
Unaudited
ASSETS
Non-current assets
Property, plant and equipment
455,002
457,446
32,306
32,480
Intangible assets
958,034
955,646
68,023
67,853
Deferred tax assets
52,298
51,666
3,713
3,668
Capitalized commission assets
56,508
54,066
4,012
3,839
Total non-current assets
1,521,842
1,518,824
108,054
107,840
Current assets
Assets classified as held for sale (Note
7)
17,058
17,058
1,211
1,211
Inventory
52,665
51,263
3,739
3,640
Trade and other receivables
433,801
376,475
30,801
26,731
Taxation
14,592
24,119
1,036
1,713
Restricted cash
30,667
20,187
2,177
1,433
Cash and cash equivalents
344,655
383,443
24,471
27,225
Total current assets
893,438
872,545
63,435
61,953
Total assets
2,415,280
2,391,369
171,489
169,793
EQUITY
Stated capital
786,633
786,633
55,853
55,853
Other reserves
58,150
83,212
4,129
5,908
Retained earnings
926,026
881,819
65,750
62,611
Equity attributable to owners of the
parent
1,770,809
1,751,664
125,732
124,372
Non-controlling interest
12
13
1
1
Total equity
1,770,821
1,751,677
125,733
124,373
LIABILITIES
Non-current liabilities
Deferred tax liabilities
137,304
139,049
9,749
9,873
Provisions
2,105
2,226
149
158
Recurring commission liability
1,304
1,798
93
128
Capitalized lease liability
33,630
31,183
2,388
2,214
Total non-current liabilities
174,343
174,256
12,379
12,373
Current liabilities
Trade and other payables
407,533
399,869
28,934
28,391
Capitalized lease liability
9,396
10,745
667
763
Taxation
11,964
2,511
849
178
Provisions
20,515
22,049
1,457
1,566
Bank overdraft
20,708
30,262
1,470
2,149
Total current liabilities
470,116
465,436
33,377
33,047
Total liabilities
644,459
639,692
45,756
45,420
Total equity and liabilities
2,415,280
2,391,369
171,489
169,793
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 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
92,102
22,027
6,539
1,564
Net financing income
1,753
1,569
124
111
Taxation paid
(2,921
)
(838
)
(207
)
(60
)
Net cash generated from operating
activities
90,934
22,758
6,456
1,615
Cash flows from investing
activities
Capital expenditure
(80,047
)
(78,306
)
(5,684
)
(5,560
)
Proceeds on sale of property, plant and
equipment
415
41
29
3
Decrease in restricted cash
855
305
61
22
Increase in restricted cash
(11,444
)
(728
)
(813
)
(52
)
Net cash used in investing
activities
(90,221
)
(78,688
)
(6,407
)
(5,587
)
Cash flows from financing
activities
Dividends paid to Company’s shareholders
(Note 10)
(22,344
)
(16,906
)
(1,586
)
(1,200
)
Repayment of capitalized lease
liability
(2,896
)
(2,194
)
(206
)
(156
)
Net cash used in financing
activities
(25,240
)
(19,100
)
(1,792
)
(1,356
)
Net decrease in cash and cash
equivalents
(24,527
)
(75,030
)
(1,743
)
(5,328
)
Net cash and cash equivalents at the
beginning of the period
353,181
290,538
25,076
20,629
Exchange (losses)/gains on cash and cash
equivalents
(4,707
)
10,085
(332
)
717
Net cash and cash equivalents at the
end of the period
323,947
225,593
23,001
16,018
MIX TELEMATICS LIMITED
OTHER FINANCIAL AND OPERATING
DATA
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
Figures are in thousands except for
subscribers
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Total revenue
521,735
456,822
37,045
32,436
Subscription revenue
454,953
390,389
32,303
27,719
Hardware revenue
55,482
56,531
3,939
4,014
Driver training, installation and other
revenue
11,300
9,902
803
703
Adjusted EBITDA
154,755
126,442
10,989
8,978
Cash and cash equivalents
344,655
256,374
24,471
18,203
Net cash (1)
323,947
225,593
23,001
16,018
Capital expenditure incurred
81,622
82,744
5,796
5,875
Property, plant and equipment expenditure
(2)
53,205
64,123
3,778
4,553
Intangible asset expenditure
28,417
18,621
2,018
1,322
Total development costs incurred
33,595
34,108
2,385
2,421
Development costs capitalized
17,650
17,245
1,253
1,224
Development costs expensed within
administration and other charges
15,945
16,863
1,132
1,197
Subscribers (number)
766,888
691,922
766,888
691,922
(1)
Net cash is calculated as being net cash and cash equivalents,
excluding restricted cash.
(2)
Excludes non-cash additions related to right-of-use assets
recognized due to the application of IFRS 16 Leases. The
application of IFRS 16 during the quarter resulted in the
recognition of right-of-use assets of R5.3 million or $0.4 million
(first quarter of fiscal 2019 R7.2 million or $0.5 million).
Notes to condensed consolidated income statement, statement
of financial position, statement of cash flows and other financial
and operating data
1. Accounting policies
The condensed consolidated statement of financial position,
income statement and statement of cash flows included in these
financial results have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) accounting
policies. The accounting policies are consistent in all material
respects with those applied in the preparation of the consolidated
financial statements for the year ended March 31, 2019.
The results have not been audited or reviewed by the Group’s
external auditors.
2. Presentation currency and convenience translation
The Group’s presentation currency is South African Rand. In
addition to presenting these condensed consolidated financial
results for the quarter ended June 30, 2019 in South African Rand,
supplementary information in U.S. Dollars has been prepared for the
convenience of users of these financial results. Unless otherwise
stated, the Group has translated U.S. Dollar amounts from South
African Rand at the exchange rate of R14.0840 per $1.00, which was
the R/$ exchange rate reported by Oanda.com as of June 30, 2019.
The U.S. Dollar figures may not compute as they are rounded
independently.
3. Earnings per share/ADS data
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Earnings per share
Basic (R/$)
0.12
0.03
0.01
#
Diluted (R/$)
0.12
0.02
0.01
#
Earnings per American Depositary Share
Basic (R/$)
2.97
0.64
0.21
0.05
Diluted (R/$)
2.88
0.62
0.20
0.04
Adjusted earnings per share
Basic (R/$)
0.11
0.09
0.01
0.01
Diluted (R/$)
0.10
0.08
0.01
0.01
Adjusted earnings per American Depositary
Share
Basic (R/$)
2.69
2.16
0.19
0.15
Diluted (R/$)
2.61
2.08
0.19
0.15
Ordinary shares ('000)(1)
In issue at June 30
562,471
564,625
562,471
564,625
Weighted average
562,060
564,465
562,060
564,465
Diluted weighted average
579,241
586,627
579,241
586,627
American Depositary Shares ('000)(1)
In issue at June 30
22,499
22,585
22,499
22,585
Weighted average
22,482
22,579
22,482
22,579
Diluted weighted average
23,170
23,465
23,170
23,465
#
Amounts less than $0.01
(1)
June 30, 2019 and June 30, 2018 figures
exclude 40,000,000 treasury shares held by MiX Telematics
Investments Proprietary Limited (“MiX Investments”), a wholly owned
subsidiary of the Group.
4. Reconciliation of Adjusted Earnings
Reconciliation of Adjusted Earnings to
Profit for the Period
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Profit for the period attributable to
owners of the parent
66,684
14,434
4,735
1,025
Net foreign exchange (gains)/losses
(683
)
231
(48
)
16
IFRS 2 charge on performance share
awards
3,203
—
227
—
Income tax effect on the above
components
(8,619
)
34,082
(612
)
2,420
Adjusted earnings attributable to
owners of the parent
60,585
48,747
4,302
3,461
Reconciliation of earnings per share to
adjusted earnings per share
Basic earnings per share (R/$)
0.12
0.03
0.01
#
Net foreign exchange (gains)/losses
#
#
#
#
IFRS 2 charge on performance share
awards
0.01
—
#
—
Income tax effect on the above
components
(0.02
)
0.06
#
#
Basic adjusted earnings per share
(R/$)
0.11
0.09
0.01
0.01
Adjusted earnings per share
-basic (R/$)
0.11
0.09
0.01
0.01
-diluted (R/$)
0.10
0.08
0.01
0.01
Adjusted earnings per American Depositary
Share
-basic (R/$)
2.69
2.16
0.19
0.15
-diluted (R/$)
2.61
2.08
0.19
0.15
#
Amount less than R0.01/$0.01
5. Reconciliation of Adjusted EBITDA to Profit for the
Period
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Adjusted EBITDA
154,755
126,442
10,989
8,978
Add:
Net profit on sale of property, plant and
equipment and intangible assets
76
22
5
2
Decrease in restructuring costs
provision
—
22
—
2
Less:
Depreciation (1)
(51,011
)
(40,659
)
(3,622
)
(2,887
)
Amortization (2)
(17,211
)
(16,095
)
(1,222
)
(1,143
)
Equity-settled share-based compensation
costs
(4,796
)
(2,008
)
(341
)
(143
)
Operating profit
81,813
67,724
5,809
4,809
Add: Finance income/(costs) - net
1,070
155
76
11
Less: Taxation
(16,198
)
(53,445
)
(1,150
)
(3,795
)
Profit for the period
66,685
14,434
4,735
1,025
(1)
Includes depreciation of property, plant
and equipment (including in-vehicle devices and right-of-use
assets).
(2)
Includes amortization of intangible assets
(including product development costs and intangible assets
identified as part of a business combination).
6. Reconciliation of Adjusted EBITDA Margin to Profit for the
Period Margin
Three months
Three months
ended
ended
June 30,
June 30,
2019
2018
Unaudited
Unaudited
Adjusted EBITDA margin
29.7%
27.7%
Add:
Net profit on sale of property, plant and
equipment and intangible assets
0.0%
0.0%
Decrease in restructuring costs
provision
—
0.0%
Less:
Depreciation
(9.8%)
(9.0%)
Amortization
(3.3%)
(3.5%)
Equity-settled share-based compensation
costs
(0.9%)
(0.4%)
Operating profit margin
15.7%
14.8%
Add: Finance income/(costs) - net
0.2%
0.0%
Less: Taxation
(3.1%)
(11.6%)
Profit for the period margin
12.8%
3.2%
7. Assets Classified as Held for Sale
The assets classified as held for sale relate to the property
owned by the Central Services Organization, a division of MiX
Telematics International Proprietary Limited. No impairment loss
was recognized on reclassification of the property as held for sale
as the fair value (estimated based on the recent market prices of
similar properties in similar locations) less costs to sell is
higher than the carrying amount. MiX Telematics has concluded
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 of this property will
be recognized during the second quarter of fiscal 2020 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 ($3.1 million) from TPF
Investments (Pty) Ltd (“TPF”), which Midrand property is currently
being leased from TPF. TPF is an associate of Robin Frew, the
non-executive Chairperson of MiX Telematics and therefore the
acquisition is a small related party transaction under the JSE
Listings Requirements.
- In a back-to-back transaction, selling the Midrand property for
R44.0 million ($3.1 million), as well as the Group’s property in
Stellenbosch currently classified as held for sale (discussed
above) for R23.5 million ($1.7 million) to Black Industrialists
Group Property Management Company (Pty) Ltd (“BIG”). The Group will
also provide loan funding to BIG for R9.0 million ($0.6 million).
R4.3 million ($0.3 million) of the loan funding relates to the
Midrand property. Since the terms of the loan are not
market-related, the fair value of the loan on day one will be less
than its face value, resulting in a day one loss of R1.0 million
($0.1 million). This loss has been recognized in Q1 2020 as the
conditions precedent have been fulfilled and the Group has a firm
commitment to provide the loan funding. The remaining R4.7 million
($0.3 million) of the loan funding relates to 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 years
period.
No accounting loss is anticipated on the sale and leaseback of
the Stellenbosch property, which will be recognized during the
second quarter of fiscal 2020 as the transfer of this property to
BIG was concluded on July 25, 2019.
8. Reconciliation of Free Cash Flow to
Net Cash Generated from Operating Activities
South African Rand
United States Dollar
Three months
Three months
Three months
Three months
ended
ended
ended
ended
June 30,
June 30,
June 30,
June 30,
Figures are in thousands unless otherwise
stated
2019
2018
2019
2018
Unaudited
Unaudited
Unaudited
Unaudited
Net cash generated from operating
activities
90,934
22,758
6,456
1,615
Capital expenditure
(80,047
)
(78,306
)
(5,684
)
(5,560
)
Free cash flow
10,887
(55,548
)
772
(3,945
)
9. Share Repurchase
As of May 23, 2017, the MiX Telematics Board approved a share
repurchase program of up to R270 million ($19.2 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 in 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.
No purchases were made under the share repurchase program during
the first quarter of fiscal year 2020.
Fiscal 2018
During fiscal 2018, the following purchases were made under the
share repurchase program:
Figures are in thousands unless otherwise
stated
South African Rand
Period
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
Maximum value of shares that
may yet be purchased under the program
Month
June 2017
5,015,660
3.72
5,015,660
18,666
251,334
5,015,660
5,015,660
18,666
251,334
Figures are in thousands unless otherwise
stated
United States Dollar
Period
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
Maximum value of shares that
may yet be purchased under the program
Month
June 2017
5,015,660
0.26
5,015,660
1,325
17,845
5,015,660
5,015,660
1,325
17,845
Fiscal 2019
During fiscal 2019, the following purchases were made under the
share repurchase program:
Figures are in thousands unless otherwise
stated
South African Rand
Period
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
Maximum value of shares that
may yet be purchased under the program
Month
October 2018
9,157,695
8.03
9,157,695
73,548
177,786
9,157,695
9,157,695
73,548
177,786
Figures are in thousands unless otherwise
stated
United States Dollar
Period
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
Maximum value of shares that
may yet be purchased under the program
Month
October 2018
9,157,695
0.57
9,157,695
5,222
12,623
9,157,695
9,157,695
5,222
12,623
(1) Including transaction costs.
Subsequent to the repurchase, the shares were delisted and now
form part of the authorized unissued share capital of the
Company.
10. Dividend Paid
In respect of the fourth quarter of fiscal year 2019 which ended
on March 31, 2019, a dividend of 4 South African cents (0.3 U.S.
cents) per ordinary share was declared during the period and paid
on June 3, 2019. In respect of the fourth quarter of fiscal year
2018, a dividend of 3 South African cents or 0.2 U.S. cents per
share was paid on June 4, 2018.
11. 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 R37.9 million ($2.7 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.
12. 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 R25.4 million ($1.8
million) in respect of S11D deductions, of which R1.1 million ($0.1
million) was recognized in the quarter ended June 30, 2019. R22.6
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 June 30,
2019.
13. Dividend Declared
The Board declared in respect of the first quarter of fiscal
year 2020, which ended on June 30, 2019, a dividend of 4 South
African cents (0.3 U.S. cents) per ordinary share to be paid on
Monday, August 26, 2019.
The details with respect to the dividends
declared for ordinary shareholders are as follows:
Last day to trade cum dividend Tuesday, August 20, 2019 Securities
trade ex dividend Wednesday, August 21, 2019 Record date Friday,
August 23, 2019 Payment date Monday, August 26, 2019
Share certificates may not be dematerialized or rematerialized
between Wednesday, August 21, 2019 and Friday, August 23, 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
602,470,584 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, August 22, 2019
Record date
Friday, August 23, 2019
Approximate date of currency conversion
Monday, August 26, 2019
Approximate dividend payment date
Tuesday, September 10, 2019
14. Development costs historical data
The table below sets out development costs incurred and
capitalized for each of the last eight quarters including the
period ending June 30, 2019.
South African Rand
Three months ended
Figures are in thousands (Unaudited)
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
September 30,
2019
2019
2018
2018
2018
2018
2017
2017
Total development costs incurred
33,595
31,543
32,707
33,983
34,108
30,488
32,336
34,167
Development costs capitalized
17,650
17,189
17,907
17,571
17,245
16,543
15,996
16,148
Development costs expensed within
administration and other charges
15,945
14,354
14,800
16,412
16,863
13,945
16,340
18,019
United States Dollar
Three months ended
Figures are in thousands (Unaudited)
June 30,
March 31,
December 31,
September 30,
June 30,
March 31,
December 31,
September 30,
2019
2019
2018
2018
2018
2018
2017
2017
Total development costs incurred
2,385
2,239
2,322
2,413
2,421
2,165
2,296
2,426
Development costs capitalized
1,253
1,220
1,271
1,248
1,224
1,175
1,136
1,147
Development costs expensed within
administration and other charges
1,132
1,019
1,051
1,165
1,197
990
1,160
1,279
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.
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, AR Welton*# *
Non-executive # Independent
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005076/en/
Investors: Brian Denyeau ICR for MiX Telematics
ir@mixtelematics.com +1-855-564-9835
August 1, 2019
JSE sponsor Java Capital
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