MiX Telematics Annual Report 2014

Transcription

Annual Report 2014
Profile
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MiX Telematics was founded in 1996 and
is a leading global provider of fleet and
mobile asset management solutions using
the Software-as-a-Service (“SaaS”) delivery
model. Customers in over 120 countries
and across six continents use the
actionable intelligence that we generate
to reduce fuel and other operating costs,
improve efficiency, enhance regulatory
compliance, promote driver and personal
safety, manage risk and mitigate theft. Our
solutions deliver a measurable return to a
wide range of customers, including large
enterprise fleets, small fleet operators and
consumers, by enabling them to manage,
optimize and protect their investments in
commercial fleets or personal vehicles.
MiX’s solutions rely on our proprietary,
highly scalable technology platform, which
allows us to collect, analyze and deliver
data from our customers’ vehicles and
presents this on an intuitive, web-based
interface so that our fleet customers can
access large volumes of historical and
real-time data, monitor the location and
status of their drivers and vehicles, and
view a wide selection of reports and key
performance indicator dashboards.
MiX actively manages over 450,000 mobile
assets, employs 1,039 people across
offices in South Africa, the United
Kingdom, the United States, Uganda,
Brazil, Australia and the United Arab
Emirates, and has a network of more than
130 fleet partners worldwide.
View further information about the Group
online: www.mixtelematics.com
MiX Telematics shares are publicly traded
on the Johannesburg Stock Exchange
(JSE: MIX) and on the New York Stock
Exchange (NYSE: MIXT) in the form of
American Depositary Shares (“ADSs”).
Overview
MiX Telematics ❯
Annual Report 2014
This report provides stakeholders with:
>>
>>
>>
>>
An overview of the MIX Group;
>>
A detailed review of the financial performance for
the 2014 financial year.
Business strategy and leadership;
A review of the governance performance;
Scope and boundary ❯ 1
Financial highlights ❯ 2
Non-financial highlights ❯ 3
Economic, environmental and social sustainability;
and
Business model ❯ 4
Vision and mission ❯ 4
Group structure ❯ 5
Stakeholders ❯ 6
Values ❯ 7
Governance and
accountability
Group executive and non-executive directors ❯ 7
Financial reports
In addition to this report, the Company is required, in
terms of the US Securities Exchange Act of 1934, as
amended, to file an annual report on Form 20-F with the
Securities and Exchange Commission (“the SEC’’). The
Form 20-F, as filed with the SEC, will be available on the
Company’s website (www.mixtelematics.com) before
the end of July 2014.
Sustainability review
The information included in the annual report has been
provided in accordance with International Financial
Reporting Standards (“IFRS”), the requirements of the
South African Companies Act 2008, the JSE Listings
Requirements and King III.
Profile ❯ inside front cover
Global presence and stats ❯ 2
Business strategy
and leadership
In line with the recommendations of the King Report on
Corporate Governance in South Africa (“King III”), MIX
has endeavored to integrate the financial and key nonfinancial aspects of its reporting to support the
information needs of all the Group’s stakeholders and to
provide a more holistic view of the year under review.
This report covers the activities of MIX for the 12 months
ended March 31, 2014, unless otherwise stated.
Overview
Scope and boundary
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Governance structures and systems ❯ 8
Social and ethics committee report ❯ 13
Key stats ❯ 14
Economic ❯ 14
Environmental, health and safety ❯ 16
Social ❯ 18
Statement of directors’ responsibility ❯ 25
Certificate of the Company Secretary ❯ 25
Directors’ report ❯ 26
Report of the audit and risk committee ❯ 29
Nominations and remuneration committee report ❯ 31
Independent auditors’ report ❯ 35
Consolidated statements of financial position ❯ 36
Consolidated income statements ❯ 37
Consolidated statements of comprehensive income ❯ 38
Consolidated statements of changes in equity ❯ 39
Consolidated statements of cash flows ❯ 40
MIX Telematics Limited and its subsidiaries are
collectively referred to as “the Group” or “MIX”
or “MIX Telematics”. MIX Telematics Limited is
referred to as “the Company”.
Notes to the annual financial statements ❯ 41
Company financial statements ❯ 100
Shareholder information ❯ 119
1
Overview
MiX Telematics ❯
Annual Report 2014
Financial highlights
The Company raised R650 million in proceeds before expenses through an initial public
offering of ADSs on the New York Stock Exchange.
Revenue
854
687
1,272
800
577
200
0
0
(000)
500,000
451
0.20
150
0.16
0.15
360
200
Subscribers
0.20
0.16
0.15
’14
300
’12
’14
400
0.20
0.19
250
600
600
0.20
0.16
241
282
300
1,200
Adjusted earnings
per share – diluted (R)
Earnings per
share – diluted (R)
(Rm)
1,000
0.10
0.10
200,000
100
0.5
0.5
0
0
100,000
’14
’13
’
’12
’14
’13
’12
’14
’13
’12
’14
’13
’12
50
0
400,000
300,000
273
Adjusted EBITDA
’13
’12
’
1,500
900
67
● Annuity
291
1,171
1,018
33
%
Subscription
revenue (Rm)
(Rm)
’13
Subscription
revenue to total
revenue
Global presence and stats
Stellenbosch,
South Africa
Americas
Brazil
Africa
Europe
Middle East and
Australasia
Revenue
R359 million
R134 million
R12 million
R661 million
R161 million
R306 million
Adjusted
EBITDA
R103 million
(R7 million)
R7 million
R22 million
Offices
Stellenbosch,
South Africa
Boca Raton,
Florida and
Dallas, Texas,
USA
(R12 million)
R200 million
~
~
Sao Paulo, Brazil Midrand and
Stellenbosch,
South Africa
and Kampala,
Uganda
Birmingham
and Swindon,
England, UK
Dubai, UAE and
Perth, Melbourne
and Brisbane,
Australia
Activities
Research and
development,
hosting and
operations,
in-group supply
of hardware,
software and
marketing
Fleet solutions
Fleet solutions
Consumer
solutions and
fleet solutions
Fleet solutions
Fleet solutions
Employees
189
71
12
606
45
116
2
0
Overview
MiX Telematics ❯
Annual Report 2014
Non-financial highlights
Overview
> December 2013
MiX Telematics strengthens mobile offering with Mobitech acquisition.
> November 2013
Business strategy and leadership
MiX Telematics is proud to have achieved fourth place in the 2013 Sunday Times Top 100 Companies in South Africa.
> September 2013
MiX Telematics participated for the first time in the Australian Bus and Coach Show 2013 in Sydney.
> August 2013
MiX Telematics lists on the New York Stock Exchange.
> May 2013
Governance and accountability
MiX Telematics opens a regional office in S~
ao P~
aulo for MiX Telematics Brazil.
> April 2013
MiX Telematics launches the new MiX Rovi 5” display with enhanced functionality.
3
Financial reports
MiX Telematics ❯
Annual Report 2014
Business model
MiX Telematics delivers information and scalable services for a subscription fee by
making use of the Software-as-a-Service (“SaaS”) delivery model to deliver our
robust portfolio of features to cater for a full range of customer needs. This is
complemented by hardware sales, vehicle recovery, driver training and consulting
services. We grow our global connection base by giving customers real solutions to
their business issues. Through focused innovation, as well as global execution and
service delivery, we are able to create and deliver ongoing value for customers across
diverse industries.
OUR SOLUTIONS
Our business model is underpinned by:
>> Highly scalable solutions;
>> A robust portfolio of features addressing a full
range of customer needs;
>> Insightful business intelligence and reporting;
>> Easily accessible and intuitive applications;
and
>> SaaS architecture.
Vision and mission
Vision
MiX Telematics is committed to our vision to be
the leading global provider of information and
related services for mobile assets.
Growth strategy
We leverage our proven track record, global
footprint and cash generative, profitable business
to invest in ongoing growth through acquiring
new customers, increasing sales to existing
customers, expanding geographic presence,
broadening our customer segment focus,
introducing new innovative solutions and through
pursuing strategic acquisitions.
4
Fleet efficiency
Regulatory compliance
Safety and security
Driver behavior
➧
Insurance and risk management
➧ ➧
Sub
al
sc
rib
er
s
CUSTOMER BENEFITS
Improve driver and passenger safety
Cash
SaaS
generation
Reduce costs and improve profitability
OUR PLATFORM
Reduce environmental impact
Ensure compliance
Reduce impact of theft
Driver feedback monitoring and
scoring
Pr
of
ita
bili
ow
Gr
ty
Fewer accidents and lower claim rates
th
ob
Gl
Overview
MiX Telematics ❯
Annual Report 2014
Group CEO
Stefan
Joselowitz
Group
executive
Operating
segments
Group Financial
Director
Megan Pydigadu
Strategy,
mergers and
acquisition
Howard Scott
Special
projects
Riëtte Botha
Global fleet
solutions
Charles Tasker
Consumer
solutions
Brendan Horan
Africa fleet
solutions
Gert Pretorius
Central
services
Catherine Lewis
Americas
Charles Kinford
Europe
Tony English
Brazil
Luiz Munhoz
Middle East
and Australasia
Alan Hall
Africa
Gert Pretorius
5
Financial reports
Group structure
MiX Telematics ❯
Annual Report 2014
Stakeholders
The Group recognizes that it has various stakeholders who are defined as entities or individuals that can reasonably be expected
to be significantly affected by the Group’s activities and whose actions can reasonably be expected to affect the ability of the Group
to successfully implement its strategies and achieve its objectives. Dialogue with each of these stakeholder groups enables the
Group to identify issues that are of strategic importance to the ongoing success and sustainability of the business. Stakeholders
are engaged primarily on the basis of their impact on the Group.
The table below contains a summary of the Group’s key stakeholders and how we engage with them.
Key stakeholders
Engagement methods
Employees
Induction programs, policies and procedures, training and development programs, staff
satisfaction surveys, one-on-one employee interactions, annual performance assessments,
newsletters, intranet and email communication.
Shareholders, analysts,
investors and the media
Formally announced quarterly reporting calls, non-deal roadshows, general meetings and
investor events. All dialogue is held in a spirit of mutual understanding of the statutory, regulatory
and other directives prohibiting the dissemination of unpublished financial information. Financial
results and announcements are published in accordance with the requirements of the JSE, NYSE
and the SEC. Quarterly announcements of results, the annual report and Form 20-F are also
published on the MiX Telematics website. Shareholders have the opportunity to question the
Board at annual general meetings.
Existing and potential
customers
Direct interaction via telephone, email, face-to-face meetings and presentations, direct interaction
through dealer or distribution partners, newsletters, functions and events, social media
communication, advertisements, case studies, press releases and customer satisfaction surveys.
Partners
Partner conferences, newsletters, one-on-one interaction via telephone, email and face-to-face
meetings and regular meetings.
Suppliers
One-on-one interaction via telephone, email, face-to-face meetings and regular meetings.
Governments and regulators
Statutory reports.
Local communities
Direct engagement and involvement with local communities and local community projects.
Stakeholder concerns are raised in a number of different ways. They can be received as a formal concern or query lodged with the
Company, or raised in stakeholder forums. We either provide feedback informally in the forum or telephonically, and where
appropriate, we will respond in writing. We also consider the interests and expectations from stakeholder engagement initiatives
that have taken place during the year when preparing the content of our sustainability report.
Our approach to stakeholder engagement favors personal interaction, but where this is not possible other methods such as
surveys and call centers are used.
MiX has a number of geographically diverse businesses, each with its own unique features, stakeholders and operating
environments. It is the Group’s philosophy to empower local management who are best placed to identify and engage stakeholders
on virtually all levels and to ultimately make decisions within agreed guidelines.
For the benefit of stakeholders, the website also provides a wealth of information dealing with products, solutions, commercial
news and investor relations.
6
MiX Telematics ❯
Annual Report 2014
Values
Overview
Get things done, which reminds us that we will be accountable
for getting things done with a sense of urgency, while taking
care to do so for the best interest of the Company and its
stakeholders.
Group executive and
non-executive directors
MiX has a highly experienced and committed executive
management team and non-executive Board.
For more information on the individual members, kindly
refer to our website.
MiX has a strong set of corporate values, which guides all
aspects of our business from our day-to-day activities, and
stakeholder interactions to large corporate transactions and
initiatives. It is our aim to ensure that our values are reflected in
all that we do. Our “GET WISER” values are:
Encourage innovation means that we will encourage new and
creative ideas and different ways of doing things, be prepared
to listen to these ideas and avoid negative or dismissive
behavior.
Talk straight commits us to being straightforward and sincere
with one another and to encourage openness and impartiality.
Work smart means that we will always apply our minds to our
tasks to ensure that the desired outcome is achieved in an
optimal manner.
Integrity entails being open and honest with each other and to
conduct all our business in an ethical and trustworthy manner.
Service culture means that we undertake to deliver excellent
service that exceeds our customers’ expectations.
Entrepreneurial spirit makes us seek new commercial
opportunities and be prepared to change to take advantage of
them, without deviating from our core business.
7
7
Financial reports
Relationships with our colleagues, customers, suppliers and
other stakeholders are important to us and we undertake to
build and nurture lasting relationships with our stakeholders.
MiX Telematics ❯
Annual Report 2014
Governance structures and systems
Introduction
MiX Telematics is fully committed to ensuring adherence to the
strictest standards of ethical conduct, fair dealing and integrity
in its business practices. In support of this commitment, MiX
endorses the principles and recommendations of King III and
confirms that MiX Telematics is compliant with the principles
of King III in all material respects. A register of MiX’s
performance against the 75 King III principles and, where
applicable, the reasons for non-compliance with the Principles
of King III can be found on our website under investor relations
(www.mixtelematics.com). Mechanisms and policies
appropriate to the Group’s business have been established in
keeping with this commitment to best practices of corporate
governance and integrity, and to ensure compliance thereto.
Further to this, the Group has a Code of Ethics and Conduct
which all employees have to subscribe to and is underpinned
by MiX’s principles of honesty, equity, respect and dignity.
MiX’s shares are publicly traded on the Johannesburg Stock
Exchange (JSE: MiX) and MiX’s American Depositary Shares
are listed on the New York Stock Exchange (NYSE: MiXT).
Accordingly, the Company is subject to and has implemented
controls to provide reasonable assurance of its compliance
with all relevant requirements in respect of both listings. These
include the South African Companies Act 71 of 2008 (“the SA
Companies Act”), the JSE Listings Requirements, and the
Securities and Exchange Commission (“SEC”), the New York
Stock Exchange (“NYSE”) and US legal requirements such as
the Sarbanes-Oxley Act 2002 (“SOX”), insofar as they apply to
foreign companies listed on the NYSE.
MiX has compared its corporate governance practices to the
requirements followed by US companies listed on the NYSE.
We believe our established governance practices are in line
with the NYSE standards as they relate to foreign private
issuers and provide adequate protection to our shareholders.
Any differences will be set out in MiX’s annual report on Form
20-F which will be filed with the SEC.
Board of Directors and executives
Non-executive directors
Audit and risk
committee
member
Independent
director*
Richard Bruyns
(Chairman of the Board)1
Enos Banda2
Hubert Brody
Chris Ewing
Robin Frew
Fundiswa Roji3
Roy Shough4






Nominations and
remuneration
committee
member
Social and
ethics
committee
member





Anthony Welton


* Independent in terms of King III.
1
Appointed to the social and ethics committee from May 13, 2013.
2
Appointed to the Board and audit and risk committee from May 13, 2013.
3
Resigned as a non-executive director from the Board and has been appointed as an alternate director to H Brody with effect from May 13, 2013. F Roji
remains a member of the social and ethics committee.
4
Resigned as a member of the Board on August 9, 2013.
Executive committee
Executive
Director
Stefan Joselowitz (CEO)
Riëtte Botha5, 6
Terry Buzer6, 7
Brendan Horan
Catherine Lewis8
Gert Pretorius
Megan Pydigadu
Howard Scott6









Charles Tasker


Member of the social and ethics committee.
6
Resigned from the Board with effect from August 9, 2013.
7
Retired March 31, 2014.
8
Appointed to executive committee on December 1, 2013.
5
8

MiX Telematics ❯
Annual Report 2014
An executive committee is in place that is responsible for
devising the Group strategy for recommendation to the Board
and to implement the strategies and policies approved by
the Board. The executive committee is also responsible for the
day-to-day business and affairs of the Group.
The Chairman reviews the Board’s performance informally on
an ongoing basis; this includes monitoring the contribution of
individual directors. This is considered sufficient at this time.
In line with its annual meeting plan, the Board meets at least
quarterly. The Board has adopted a charter which clearly
defines the responsibilities of the Board. The Board’s primary
responsibilities are to create sustainable shareholder value and
to provide effective governance over the Company’s affairs.
The Company’s non-executive directors provide an
independent perspective and complement the skills and
experience of the executive directors, assessing strategy,
financial plans, performance, resources, transformation,
compliance, risk, key performance areas and conduct. A copy
of the Board charter may be obtained from the Company
Secretary and is available on the Company’s website.
The Board has developed an approvals framework, which
delegates specific powers and delegations of authorities to
operating management. This approvals framework is updated
annually. At Board level, there is a clear balance of power and
authority which ensures that no single director has unfettered
powers of decision making.
The information needs of the Board and committees are
regularly assessed and comprehensive and timely information
is provided in order that they may discharge their duties
effectively. Directors have unrestricted access to all Company
information, records and documents. All directors may seek
the advice of the Company Secretary or other independent
professional advice as necessary, at the Company’s expense.
MiX has combined the audit and risk committee into one
committee. Members consist only of independent
non‑executive directors, one of whom is appointed Chairman.
A quorum consists of the majority of the members.
The Chairman of the Board is a member of the audit and risk
committee and this dual role will be put forward to shareholders
for approval at the upcoming annual general meeting.
Representatives from the outsourced internal audit function
and the external auditors attend meetings. The Chairman of
the social and ethics committee is also invited to attend
meetings due to the close working relationship required
between the two committees. The Group Financial Director
attends all meetings, with the Chief Executive Officer attending
the meetings where the quarterly results are reviewed.
The committee meets at least six times a year, with two
meetings a year focused on risk management.
The duties and operations of the committee are set out in the
audit and risk committee report on page 29.
Nominations and remuneration committee
From May 13, 2013 the committee has been chaired by R Frew.
R Bruyns, who chaired the committee prior to R Frew, continues
to chair all matters relating to the nomination and appointment
of new directors. The nominations and remuneration committee
includes two other non-executive directors as members.
A quorum consists of the majority of the members. The Chief
Executive Officer is invited to attend meetings.
The committee meets at least four times a year. The duties and
operations of the committee are set out in the nominations
and remuneration committee report on page 31.
The nominations and remunerations committee charter is
available on the website.
Overview
The Board currently comprises six non-executive directors and
three executive directors. Three of the non-executive directors,
including the Chairman, are independent.
Audit and risk committee
At least one-third of the non-executive directors retire by
rotation each year and stand for re-election at the annual
general meeting in accordance with the Memorandum of
Incorporation. Directors’ appointments during the year are
ratified at the annual general meeting.
In the execution of its duties, the Board is assisted by various
committees to which specific responsibilities have been
assigned. The committees operate in accordance with
approved charters (these are available on request from the
Company Secretary and are also available on the Company’s
website) and report to the Board on their activities. An
evaluation of the committees’ performance is done on an
annual basis.
Directors are appointed on the basis of skill, experience and
their contribution and impact on the Group’s activities. The
Board decides on the appointment of directors based on
recommendations from the nominations and remuneration
committee. The Board appoints the independent non-executive
Chairman and Chief Executive Officer. The roles of the
Chairman and the Chief Executive Officer are distinct.
Board committees
Social and ethics committee
The social and ethics committee includes three non-executive
directors, one alternate director and one group executive as
members. A quorum consists of the majority of members. The
Chief Executive Officer and Group Financial Director are invited
to attend meetings.
The committee meets at least three times a year. The duties
and operation of the committee are set out in the social and
ethics committee report on page 13 and are further reported
back to shareholders at the annual general meeting.
9
Financial reports
The MiX Telematics Board is the focal point and custodian of
corporate governance for the Group. Board members are
expected to act in the best interest of the Company and the
Group and the Company Secretary maintains a register of
directors’ interests as required by law.
MiX Telematics ❯
Annual Report 2014
Members’ attendance at meetings
Executive
committee
and Manco
Nominations
and
Audit
and risk remuneration
committee
committee
Social
and
ethics
committee
Board:
regular
meetings
Board:
strategy
meeting
Number of meetings during
the year
5
1
6
12
4
3
Richard Bruyns
5
1
—
12
4
2
Stefan Joselowitz
5
1
6
2*
Enos Banda1
5
1
—
8
—
Riëtte Botha2
5(3*)
1*
6
—
—
Hubert Brody
4
1
—
—
Terry Buzer2
4(3*)
1*
6
—
—
—
Chris Ewing
5
1
—
11
—
—
Robin Frew
5
1
—
—
4
—
Brendan Horan
5*
1*
6
—
—
2*
3*
3*
—
—
3
—
Catherine Lewis
3*
1*
6*
—
—
—
Gert Pretorius
5*
1*
6
—
—
—
Megan Pydigadu
5
1
6
11*
—
—
Fundiswa Roji4
2
1
—
—
—
3
Howard Scott
4(2*)
6
—
—
—
Roy Shough5
2
—
—
6
—
—
Charles Tasker
5
1
6
—
—
—
Anthony Welton
5
1
—
11*
4
3
3
2
1*
* Attended as invitee.
1
Appointed to the Board with effect from May 13, 2013.
2
Resigned as a member of the Board on August 9, 2013. Remained a member of the executive committee.
Appointed to the executive committee from December 1, 2013.
3
Resigned as a non-executive director from the Board and has been appointed as an alternate director to H Brody with effect from May 13, 2013.
Remained a member of the social and ethics committee.
4
Resigned as a member of the Board on August 9, 2013.
5
Company Secretary
The company secretarial function is outsourced to Java Capital
Trustees and Sponsors Proprietary Limited (“Java”), which
provides an independent company secretarial service. The
Board has considered the competence, qualifications and
experience of the individual at Java who is responsible for the
performance of all company secretarial duties to MiX and is
satisfied that the individual, who is an attorney with more than
nine years’ company secretarial experience, has the necessary
qualifications and skills to undertake the role. Furthermore, the
Board is satisfied that an arm’s-length relationship is maintained
10
between the Company and Java through the provisions of
the service agreement entered into between Java and the
Company which limits the duties of the Company Secretary to
only those related to the corporate governance of the Company
and the administration of company secretarial documentation.
Java provides the Board as a whole, and directors individually,
with detailed guidance on discharging their responsibilities.
Java ensures that proceedings and affairs of the Board are
properly administered in accordance with pertinent laws and in
compliance with the JSE Listings Requirements.
MiX Telematics ❯
Annual Report 2014
The directors acknowledge that they are responsible for
instituting internal control systems that provide reasonable
assurance on safeguarding assets and preventing their
unauthorized use or disposal, as well as maintenance of proper
accounting records that give reasonable assurance on the
reliability of financial information produced.
Internally, management, with the assistance of Ernst & Young,
has reviewed the controls over financial reporting, including
disclosure controls and procedures, and presented its findings
to the audit and risk committee. Based on this review, nothing
has come to the attention of the committee to indicate
that significant internal financial controls have not operated
as intended.
Internal audit
The internal audit function is outsourced to Deloitte. The
outsourced internal audit function works closely with the Group
Financial Director but reports to the audit and risk committee.
The outsourced internal audit function has unrestricted access
to the Chairman and members of the audit and risk committee.
The audit plan for the Group is developed using a risk-based
approach and is approved by the audit and risk committee.
Financial reporting
MiX has a comprehensive system for reporting financial
information to the Board. Each operation is responsible
for preparing an annual forecast and three-year plan which
are approved by the Board. Management accounts, which are
submitted to the Board on a quarterly basis, are reviewed and
compared to forecast with large variances explained.
Quarterly forecasts are performed during the financial year
and circulated to the Board.
Standard Group accounting policies are in place, with which all
operations comply.
Overview
Dealings in securities
Directors’ dealings in the Company’s shares are strictly
controlled in terms of JSE regulations and US law including
SEC rules. The Board charter, in compliance with the Financial
Markets Act, JSE Listings Requirements and the SEC regulations,
prohibits directors, officers and selected employees from
dealing in the Company’s shares during designated periods
preceding the announcement of the Group’s financial results
and for two business days thereafter, any period while the
Company is trading under a cautionary announcement and at
any other time deemed necessary by the Board. Permitted
dealings by directors are reported to the Chairman and
Company Secretary and are published on SENS and a
Form 6-K within 48 hours of the dealing.
An Insider Trading Policy, which addresses both the JSE
and SEC regulations, has also been approved by the Board
and communicated to all directors, officers and employees of
the Group.
Compliance with laws and
regulations
There has been nothing that has come to our attention where
we have not complied with laws and regulations in the
jurisdictions within which we operate. During the year under
review, we have not paid any material fines for non-compliance
with laws and regulations.
Internal controls
The Board takes overall responsibility for IT governance. This
has not been delegated to the audit and risk committee nor
has a separate Board committee been established. The
responsibility for IT governance is a specific executive
committee portfolio and is reported on at Board meetings.
The audit and risk committee considers the facts and
assumptions used in the assessment of the going concern
status of the Group and the Company at financial year-end so
as to make a statement with regards to the preparation of the
financial statements on the going concern basis. The Group’s
annual forecast and three-year plan form the basis of the
Board’s conclusion on the going concern principle.
IT governance
Business integrity and ethics
In support of the requirements of the King III recommendations,
MiX has formalized its business ethics process. A formal Code
of Ethics and Conduct has been adopted which is applicable
to all directors and employees of the Group.
The Code provides, inter alia:
>>
>>
Corrupt or illegal practices will not be tolerated.
>>
All business transactions will be completely and properly
recorded.
Going concern
MiX will observe the laws of any country in which its
business is transacted.
11
Financial reports
Accountability
MiX Telematics ❯
Annual Report 2014
>>
Customers and their information will be treated with the
utmost confidentiality.
>>
MiX does not participate in any illegal anti-competitive
activity.
>>
>>
MiX is non-political.
>>
Business gifts and other offers of hospitality can only be
accepted in compliance with the MiX Telematics AntiBribery and Corruption Policy and are recorded accordingly.
>>
MiX does not discriminate against any employee, third
party, customer or member of the public on the grounds
of race, color, gender, sexual orientation, age, religion
or creed.
>>
MiX requires timeous dissemination of transparent, honest
and accurate information both internally and to outside
stakeholders and investors.
>>
MiX fosters a work ethic based on non-discrimination and
opportunity for all.
>>
MiX will observe and comply with sound environmental
practices.
MiX’s business dealings (including use of company assets)
should be conducted at normal arm’s-length terms, in the
interest of MiX.
Effective communication of the Code of Ethics and Conduct is
an ongoing process.
MiX has also established an Anti-Bribery and Corruption Policy
together with a Whistleblowing Policy (incorporating the Audit
Committee Complaints Procedure). A hotline has also been set
up offering a confidential and safe system by which employees or
other parties can report unethical or risky behavior. Such reports
can be submitted to [email protected].
12
MiX Telematics ❯
Annual Report 2014
Social and ethics committee report
F Roji
R Bruyns (appointed May 13, 2013)
R Botha (Group executive responsible for social and ethics)
Chris Ewing was appointed as the Chairman of the committee
with effect from April 3, 2014.
The regulations prescribe that the committee should consist of
not less than three directors or prescribed officers of
the Company, one of whom must not have been involved in the
day-to-day management of the Company’s business within
the prior three financial years. The committee complies with
this requirement.
Focus for the year
During this reporting period, the committee focused on the
implementation of an anti-bribery and corruption program,
commencing with compulsory training on all relevant policies
and principles for all staff members. The Board, Group
executive and regional management received additional
training on the Foreign Corrupt Practices Act (“FCPA”). The
committee developed a Partner Code of Ethics and Conduct
(“PCoC”) and each of our dealer and distribution partners
are required to confirm acceptance thereof, unless the partner
has an acceptable code of ethics and conduct in place and
in practice.
Summary of the committee’s
functions as prescribed by the Act
Policy review
>>
>>
Good corporate citizenship;
Meetings and Board feedback
>>
Consumer relationships, including advertising, public
relations and compliance with consumer protection laws;
and
It is the obligation of the committee to monitor the Group’s
activities, having regard to relevant legislation, other legal
requirements or prevailing codes of best practice, relating to:
>> Social and economic development;
>>
The environment, health and public safety, inclusive of the
impact of the Company’s activities, products and services
thereon;
Labor and employment.
The committee must, as the occasion dictates, bring matters
within its mandate to the attention of the Board and a committee
member must report on matters within that mandate to the
shareholders at the Company’s annual general meeting.
The role of the committee includes but is not limited to
monitoring the compliance of the Company with the
10 principles set out in the United Nations Global Compact
Principles, the OECD recommendations regarding corruption
and the International Labor Organization Protocol in terms of
certain of the items to be monitored.
During the period under review, the Group’s Code of Ethics and
Conduct and the Anti-Bribery and Corruption Policy was
updated. The Whistleblowing Policy was amended to include
the audit committee complaints procedure. This policy was
then transferred to the audit and risk committee.
Overview
>>
>>
>>
During the year under review, the social and ethics committee
members were:
>> A Welton (Chairperson April 1, 2013 to March 31, 2014)
Bearing in mind that the operations of MiX are spread over
numerous geographies and that MiX sells extensively through
a worldwide network of dealer and distribution partners, the
committee uses two sets of questionnaires to monitor the
items under its mandate. Both sets of questionnaires are
distributed annually. Each MiX operation is required to
complete the Social and Ethics Questionnaire, while a second
set of questionnaires is sent to each of the MiX dealer and
distribution partners. Results of the questionnaires are, where
relevant, reported to the Board and incorporated into the
report for the annual general meeting. The committee is satisfied
with the Group’s performance in each of the areas listed above.
Kindly refer to the sustainability review for more detail on
certain of these aspects.
The committee charter was amended and approved by the
Board in May 2013.
The policies and the committee charter are available on the
MiX website.
Three formal meetings were held during the year. There is a
close working relationship between the audit and risk committee
and the committee and during the year two members of the
audit and risk committee also served as members of the social
and ethics committee.
During the 2014 financial year, the committee complied with and
met its obligations to monitor those items under its mandate.
Members of the committee
Monitoring approach
Signed on and behalf of the social and ethics committee
C Ewing
Chairman of the committee
Midrand
June 3, 2014
13
Financial reports
During the period under review, the social and ethics committee
(“committee”) complied with the mandate given by the Board
in accordance with the Companies Act 71 of 2008 (“Act”)
as set out in regulation 43 of the Companies Regulations
(“regulations”). The committee executes its responsibility in
terms of its prescribed functions as well as the rules governing
the composition and conduct of the committee and in terms of
the regulations, the committee also acts as the social and
ethics committee for the South African subsidiaries of MiX.
MiX Telematics ❯
Annual Report 2014
The MiX Group lives by a strong set of core values and a nonnegotiable Code of Ethics and Conduct that guide our Group
strategies, general conduct and interaction with all of our
stakeholders. MiX is committed to contribute value not only to
our shareholders but also to our employees, customers,
business partners and communities and this sustainability
report highlights some of the key successes, opportunities
and challenges we have met during this reporting period.
As a good corporate citizen with a keen interest in social,
environmental and economic sustainability, our global business
strategy is underpinned by the idea that greater sustainability
is integral to improving business performance, and that
achievements in one area contribute towards achievements in
another. This is why sustainable development in fields ranging
from enterprise development, health and safety, human capital
development and other areas has remained a key focus area
for the Group.
Throughout this report we will also illustrate how many of the
drivers of MiX’s commercial success support the environmental,
health and safety, and staff wellness objectives of our
worldwide customer base.
Refer to our Code of Ethics and Conduct and other relevant
policies at:
Key stats
Economic
Number of people employed
Enterprise development spend*
Value of vehicles recovered
Environmental
Carbon emissions
Credits purchased
Net neutral
Social
Total salaries, wages and other**
Training spend
Social responsibility spend
2014
2013
2012
1,039
R2,2m
R363m
937
R2,4m
R264m
824
R2m
R225m
3,304 tons
3,304 tons
0
3,054 tons
3,054 tons
0
3,560 tons
3,560 tons
0
R455m
R2,795k
R347m
R4,172k
R295m
R4,557k
R1,322k
R522k
R476k
*Refer to page 16 for further commentary on enterprise development.
**Restated to include share-based payments and pension costs.
Economic
The MiX Group provides direct employment to 1,039
employees across seven countries around the world. This is an
increase of 102 people from the previous year. An amount of
R2.2 million was spent on enterprise development and another
1,850 vehicles were recovered and returned to their rightful
owners during this year.
Recovery operation
An estimated 140,000 vehicles are stolen in South Africa every
year, costing the insurance industry alone up to R1.5 billion in
claims. MiX Telematics Africa, the stolen vehicle recovery arm
of the Group, increased the direct saving to the South African
economy by returning vehicles to the value of R363 million to
their rightful owners during the reporting year. This is a 38%
increase from the previous reporting year (R264 million).
These amounts exclude the indirect costs related to the
process and cost of replacing a vehicle as well as the loss of
productivity, and, in the case of a commercial fleet, the lost
14
revenue from not having these vehicles available – in some
instances for an extended period of time.
Greater cooperation with the SAPS (South African Police
Service), smarter crime intelligence coupled with analytics of
incident patterns and the current generation of MiX-engineered
recovery technology have contributed significantly to the
recovery division’s success during the reporting period. This
success has effects on the South African economy and
contributes to our customers’ personal safety.
Fleet operation
As a fleet management and telematics provider, the Group
enables both large and small fleet operators across numerous
industries to lower their operating and maintenance costs,
improve driver safety and behavior, and reduce fuel
consumption and carbon emissions. We collect and analyze
our customers’ driving hours, fuel usage, distances, routes,
trip durations, driving speeds and various other parameters,
and present our customers with meaningful data that enables
more informed business decisions and improved sustainability.
MiX Telematics ❯
Annual Report 2014
Return on investment
Overview
MiX products and solutions are designed to equip our customers with the tools and know-how to manage their mobile
assets and take charge of driver behavior, resulting in a return on investment and long-term savings while facilitating
greater sustainability in terms of road safety, the environment and human capital development.
A large majority of MiX’s fleet management customers have reduced their fuel consumption and achieved operating cost
savings despite the rising cost of fuel. Better route management and delivery schedules thanks to up‑to‑the-minute
vehicle data have improved vehicle utilization and our customers’ productivity. The identification and correction of poor
driver behavior, such as harsh acceleration, over-speeding and excessive idling, has further developed our customers’
drivers, resulting in reduced vehicle wear and tear, fuel consumption, accident rates and even insurance premiums.
Case studies
Customer results
By installing the MiX Telematics RIBAS (revving,
idling, braking, accelerating and speeding) warning
indicator and a complete vehicle tracking solution,
the 100-vehicle distribution company, Solstor UK
Limited, was able to reduce its fuel consumption
and carbon emissions by 12% – achieving a direct
cost saving while improving sustainability.
Using the Fleet Manager solution, MiX helped the logistics company, ETS Distribution Limited, achieve maximum
utilization of its 24-vehicle fleet. Up-to-the-minute vehicle information has further optimized delivery times and has
increased the company’s fuel efficiency by 10.3%.
Keystone Distribution UK Limited, the dedicated logistics operator for the McDonald’s restaurant chain in the UK,
reinforced its environmental strategy using the MiX Fleet Management solution and achieved a fuel efficiency improvement
of 10% across its fleet of 130 vehicles. The company’s wear and tear was reduced by 15%, and the accident rate
improved by 70%.
One of the City of London’s major public transport operators, Go-Ahead London, has achieved a 12% improvement in
fuel consumption across its fleet of 1,500 buses with the help of the MiX Fleet Manager and FM-Web solution. The
solution provides drivers with up-to-the-minute efficiency targets, while a “green” driving incentive program continues to
encourage more sustainable driver behavior.
15
15
Financial reports
In addition, the MiX R2MS solution helps fleet operators in South Africa deal with all aspects relating to AARTO, the
impending Administrative Adjudication of Road Traffic Offences Act designed to encourage the payment of fines and
persuade drivers to obey the rules of the road. The new Act will serve to lighten the load on South African courts, and fleet
owners who are not prepared to deal with the bureaucratic implications of AARTO, will inevitably find their operations
losing significant amounts of time and money.
MiX Telematics ❯
Annual Report 2014
Enterprise development
“Enterprise development” is defined in the Broad-Based Black
Economic Empowerment (“B-BBEE”) Act 53 of 2003 as
monetary or non-monetary contributions carried out for the
benefit of entities with an annual turnover of less than
R5 million, small enterprises which are 50% black-owned or
black women-owned, and any other entity which is at least
25% black-owned or black women-owned and has a BEE
status of between level 1 and level 6 in terms of the old B-BBEE
Codes of Good Practice. The objective of these enterprise
development initiatives must be to contribute to the
development, sustainability, financial and operational
independence of the beneficiaries as defined above.
MiX contributed R2.2 million to enterprise development during
this year in the form of monetary and non-monetary
contributions. The major benefactor was MiX Telematics Fleet
Support, which received over R1 million worth of benefits. The
main focus of this business is to do installations and
maintenance on client vehicles and take the lead in the initial
phases of national implementation projects. It is now in its fifth
year of operation, remains well managed with good corporate
governance structures in place and has continued to show
strong economic growth. In 2011, MiX Fleet Support had
25 staff members, which has grown to 53 staff members
currently, of whom 33 are technical staff. With humble
beginnings in Midrand, this business now also services the
complete Western Cape province from Knysna to Vredendal
and has plans in place to expand to other areas in the
near future.
MiX Fleet Support is 51% owned by an employee trust with
previously disadvantaged employees as the beneficiaries. MiX
Telematics Enterprise SA owns the other 49%. During the
financial year, the beneficiaries of the MiX Telematics Fleet
Support Employee Trust received a distribution of R0.5 million,
which brings the total distribution to R1.2 million since
inception in 2010. MiX Enterprise, which provided the initial
start-up capital, equipment and expertise for this venture,
continues to dedicate time, money and expertise to ensure the
long-term growth and sustainability of this venture.
MiX Telematics International, based in Stellenbosch,
introduced a new enterprise development initiative this year by
making early payments to one of our empowered manufacturing
partners, to good effect.
Environmental, health and safety
Environment
In recent years, MiX has demonstrated a commitment to
improved environmental management for both the Group and
our customers alike. Having been the world’s first telematics
company to become carbon neutral, MiX further helped to
facilitate a global climate change analysis by voluntarily
submitting the Group’s footprint data to the Carbon Disclosure
Project.
the regions in which it operates. In addition, MiX is a proud
member of the Carbon Protocol in South Africa and a senior
sponsor of the World Wildlife Fund (“WWF”).
MiX maintained its carbon neutral status this year by
purchasing 3,304 tonnes of carbon credits to the value of
R0.2 million from the Reliance Group Trading Proprietary
Limited, which trades as Reliance Compost. Reliance Compost
converts organic waste that would otherwise have gone to
landfill sites, into organic compost.
MiX’s carbon footprint increased by just over 8% from the
previous reporting period which is acceptable in context of
the increased activity required to drive the Group’s organic
revenue growth of 8.6% for the year. MiX has continued to
monitor and reduce internal carbon utilization throughout
our various operations. Employees in our large South African
operations actively monitor and adjust their energy
consumption with the help of electricity monitoring devices,
while internal campaigns run by each operating division help
to recycle any reusable material. Green purchasing remains
a priority.
MiX Telematics Europe has maintained its ISO 14001
certification for environmental management in the UK, and the
Group complies with all relevant environmental legislation in
16
16
The true measure of MiX’s commitment and contribution to
environmental sustainability, is illustrated by the value the MiX
fleet customers derive from utilizing MiX technology and
actionable intelligence to improve fuel efficiency and fleet
utilization to have a direct and positive impact on their carbon
emissions.
MiX Telematics ❯
Annual Report 2014
The “green” in MiX Telematics
Overview
While MiX is well known for helping fleet operators to significantly reduce their fuel consumption, an important benefit that
results from using less fuel is of course lowered carbon emissions. Our customers therefore participate in the creation of
a healthier, more sustainable environment.
Case studies
How one customer benefited
Lucien Kunegal (LK) Group is based in the
Alsace region in North Eastern France and is
one of the largest independent passenger
transport companies in France, with eight
subsidiary companies throughout the region.
The LK Group, which is one of the first bus and
coach companies to sign the CO2 charter, that
was established by the French government to
reduce CO2 emissions, experienced large fuel
savings with an associated reduction of CO2 emissions after implementation of the MiX fleet management solution.
What began as a proof of concept for four buses of Lucien Kunegal (LK) Group in France, resulted in the installation of a
MiX Telematics fleet management system in 350 of their fleet of buses. The first phase of the project demonstrated
savings of around €28,000 per year for the Schmitt (Europatours) business unit of 40 vehicles. Although originally not a
primary objective, reduction in stress for the drivers was one of the main motivators, which helped gain acceptance of the
system. The drivers greatly valued the new “smooth driving” practice, which they considered an important improvement
in their working conditions.
The MiX Telematics solution also served as a valuable tool for driving trainers, who now conduct their training using
accurate, objective data. They analyse information about drivers, trips and, above all, driving errors, to gain tangible
improvements. MiX Telematics RIBAS (revving, idling, braking, accelerating and speeding) warning indicator display units
are programmed by the trainers with specific parameters in place, set by the LK Group. The device has therefore become
an excellent ally to the trainer, as it ensures that good habits developed in the classroom are reinforced once the driver
returns to the road. The RIBAS display alerts drivers to errors in the same way as a real life trainer and thereby provides
a lasting effect.
Reducing carbon emissions is particularly important for the road transport industry, which is responsible for up to 18% of
global carbon emissions according to a report by Frost & Sullivan. Committing to reduce carbon emissions not only helps
fleet operators prepare for any anticipated legislation surrounding carbon emission reporting and reduction, but it also
helps companies to offset the cost of rising fuel and energy.
Full case study details are available
17
17
Financial reports
MiX Telematics pioneered a service offering that enables fleet operators to take responsibility for their carbon footprint:
the MiX Carbon Offset Initiative. This allows fleet operators to measure and offset their carbon footprint by investing in
globally certified carbon reduction projects.
MiX Telematics ❯
Annual Report 2014
Social
Human capital
Our employees are one of our most important stakeholder
groups as they are the interface to our customers, suppliers,
business partners and other stakeholders and as such have a
huge impact on the performance and reputation of MiX. We are
proud to be the employer of 1,039 people in our 12 offices
around the world. At MiX we take care to recruit people who fit
in with and share MiX’s core values. Our focus after recruitment
is to continuously develop, train and retain quality people. We
believe in empowering and developing our people and there is
a special focus on identifying and developing our future
leaders. Regular employee reviews ensure that employees
and leaders in our business remain aligned to our core values
and promote these while they execute the Group strategy. At
MiX we give preference to promoting from within the Group,
before recruiting externally.
MiX recognizes the rights of employees to freedom of
association, collective bargaining, dispute resolution
mechanisms and protection against any form of harassment,
victimization or discrimination.
Employment equity and equal
opportunities
The Group is committed to the ongoing development of all its
employees, regardless of race or gender and endeavors to
ensure that equal opportunities are created. All the South
African entities understand the Employment Equity Act 1998,
their duties in terms of the Act and they submit employment
equity plans and progress reports to the Department of Labour
as required. Management of each South African business sets
its own employment equity targets and defines its approach
to managing and achieving these targets. All of the entities
improved their equitable representation from the prior year
and have either achieved their targets, or where they set
longer-term targets have confirmed that they are on track
to achieve them, but found it challenging to meet their
management, senior management and senior technical level
representation targets.
Staff demographics are reported to the Group executive
committee on a quarterly basis. The MiX staff demographics
can be seen on page 19.
Labor practices
All companies in the Group comply with the local labor
legislation, employment and taxation laws related to
employment in all of the countries in which we employ staff. In
South Africa, where the bulk of our staff is employed, we
comply with the Labour Relations Act 1995, the Basic
Conditions of Employment Act 1997, Occupational Health
and Safety Act 1993, the Unemployment Insurance Act 1995,
and the Broad-Based Black Economic Empowerment
Act 2003.
Learnerships
MiX’s Consumer business, which is represented by the Matrix and Beam-e brands, has implemented a program whereby
school leavers, the age group in South Africa with an estimated 50% unemployment rate (the South African Institute of
Race Relations), are able to train and qualify as skilled fitment technicians. During the reporting year, the company
developed four school leavers into responsible and accomplished fitters.
The changing trends in fitment requirements have meant that the largest volumes of fitments require less time and
complexity, and normally have a mobile (on-site) requirement. This has created an opportunity, especially with bulk unit
installations, to develop unskilled school leavers into technicians that are able to fulfil these requirements. Young
technicians provide greater agility and flexibility, especially for bulk installations that do not typically suit the profitability
targets of traditional fitment center networks. The Consumer business aims to further develop the program’s participants
for continuous growth within the Group.
18
MiX Telematics ❯
Annual Report 2014
South African employee demographics
2014
Overview
2013
%
%
45
8
7
16
● African
● Coloured
31
35
42
16
● Indian
● White
● African
● Coloured
● Indian
● White
Geographic breakdown
7
Age
5 1
8
7
4
Group employee demographics
33
18
%
%
76
41
● UK and Europe
● Middle East
● Brazil
● <20 – 29
● 40 – 49
● 30 – 39
● 50+
● Africa and SA
● North America
● Australia
Length of service
Gender
5
15
39
%
61
%
● Male
● Female
● 0 – 5 years
● >10 years
● 6 – 10 years
19
Financial reports
80
MiX Telematics ❯
Annual Report 2014
Staff wellness
Training and development
Staff health, wellness and morale are very important to the
Group. Each business in the Group manages its own initiatives
to suit its demographics and these initiatives continue
throughout the year. Once every second year, MiX conducts a
Group-wide staff “climate” survey to invite feedback from our
staff regarding their perception of MiX as an employer on a
wide range of topics. This last survey was conducted in 2012
and will be repeated in 2014; however, the previous survey
revealed that the majority of our staff thought that MiX was a
good employer to work for, that they are proud to work for MiX
and would encourage other people to join the Group.
We encourage all staff members, regardless of their level within
the Group, to participate in training through classroom courses,
e-learning modules, external programs, as well as various
other types of learnerships. It is our policy to give preference
to promoting from within our existing staff complement,
making it crucial that training is not only focused on improving
our staff’s skill in their current positions, but is able to develop
and equip them for their future career opportunities within the
Group. Most of the Group companies have programs for skills
management and life-long learning in place to support the
continued employability of employees.
The Midrand office in South Africa houses the single-largest
number of employees and is shared by MiX Enterprise, MiX
Africa and MiX Fleet Support, who all subscribe to the
Careways Group and who also consolidate their staff wellness
initiatives. Careways specializes in providing comprehensive
wellness solutions to staff with the aim of assisting workers to
achieve a work/life balance, leading to job satisfaction and
healthy, productive lifestyles. Their offering includes a 24-hour
telephonic wellness helpline that is available to staff as well as
their family members.
The Group spent R2.8 million on training of employees during
the reporting period, which is lower than the R4.2 million spent
during the previous year. The main reason for the reduction is
the transition to online training via the MiX Learning Center,
which is a significantly more cost-effective training method.
Online training is also very efficient as the training courses can
be taken at any time that suits the learner or the specific
operation, training standards can be maintained across the
regions (for specific topics) and there is an accurate record of
training courses completed by the staff members. The MiX
Learning Center was put to effective use when the Anti-Bribery
and Corruption Training Course, as part of the anti-bribery and
corruption program, was rolled out to all staff members across
the Group during December 2013. This course was customdesigned for MiX and included the internal policies and
legislation specifically applicable to MiX. Employees have a
complete record of their training achievements in the form of
“badges” that are issued on completion of an online course.
Certain courses, such as the Anti-Bribery and Corruption
Training Course have an expiry date, when the employee will
receive an automatic reminder to enrol for the refresher course.
During the year, the Group hosted two staff wellness days, one
at the Midrand office and another at the Stellenbosch office.
Staff had health screening checks that included glucose,
cholesterol and blood pressure tests, as well as body mass
index assessments. Flu injections were made available to staff
in May last year and “left-over” injections were donated for the
benefit of crèches and primary schools.
MiX again participated in regular blood drives conducted by
the South African National Blood Service in South Africa
throughout the year, at our South African offices.
Given the high risk of communicable diseases in South Africa,
the South African operations committed to give renewed focus
during the coming year to raise awareness and provide training
regarding Aids and tuberculosis specifically.
MiX sponsored several other wellness-related activities for our
staff and their families during the year and these included the
Discovery Cape Times Big Walk, Lourensford Wine Estate
Pride and Joy Fun Run, the Pick n Pay Cape Argus Cycle Tour,
the Cansa Shavathon in support of cancer awareness and the
702 Walk the Talk.
20
The “Online Driver Training” program was another online
training course that was compulsory for all MiX staff with the
objective to provide our staff with specific driving skill sets
through creative and interactive delivery, to make them better
road users and therefore improve their safety on the roads.
MiX Telematics ❯
Annual Report 2014
Broad-based black economic empowerment
Level 6 contributor
MiX Telematics Enterprise SA Proprietary Limited
Valid toJuly 15, 2014
Level 2 contributor
MiX Telematics Fleet Support Proprietary Limited
Valid toAugust 5, 2014
Level 2 contributor
MiX Telematics Africa Proprietary Limited
Valid toNovember 18, 2014
Level 5 contributor
MiX Telematics Limited
Valid toNovember 11,2014
22.32% effective black shareholding of all
issued shares as at March 25, 2014
After review by the Department of Trade and Industry, a new
set of B-BBEE Codes of Good Practice came into operation on
October 13, 2013, and these codes must be transitioned by
April 15, 2015. The codes have some interpretation issues
which may be clarified in the Technical Guidance Notes which
are not yet issued. The new codes may negatively affect the
B-BBEE scorecards of all the entities listed in the table above,
but may equally affect our competitors. The focus of the new
codes is on black ownership, black management and
enterprise and supply development for the purpose of
providing opportunities for small black organizations or black
entrepreneurs to gain access to corporate South African
businesses and become part of the formal economy. These
will then also be the key to achieving acceptable ratings under
the new codes.
MiX Enterprise BEE Trust
The Enterprise Trust holds a 14.9% stake in MiX Enterprise
and is defined as a B-BBEE trust. The Enterprise Trust has
accumulated R7.4 million in dividends since it was established
and has, to the end of March 2014 paid R2.8 million towards
qualifying charities and qualifying initiatives, such as the newly
launched education assistance program. During the year, the
trust established an education assistance program for
qualifying MiX employees, who would otherwise struggle to
afford quality education for their children. There are currently
45 children who benefit from this program and an amount of
R0.4 million of an estimated total of R1.2 million of costs for
the 2014 school year has already been paid. The assistance
provides for tuition fees, stationery, transport, school uniforms
and in certain instances, boarding fees. Unlike most bursaries
or educational assistance programs, this is not focused on
secondary or tertiary students only, but has the specific aim to
assist qualifying students from as early as possible in their
school careers. This means that children currently qualify for
assistance from as early as South African “grade R” level,
when they are about five years old. Provided parent and child
comply with agreed terms and obligations and the employee
maintains employment with MiX, it is the intention to provide
long-term support to each of the children in the program. This
initiative is closely monitored and is administered by a
company which specializes in managing these initiatives,
including parent engagement, student performance monitoring
and of course management of the fees which are mostly paid
directly to educational institutions.
MiX Enterprise and MiX Fleet Support are the Group’s two
empowerment vehicles.
Valid toOctober 13, 2014
21
Financial reports
MiX Telematics International Proprietary Limited
In accordance with the old Codes of Good Practice, issued in terms of section 9(1) of the B-BBEE Act of 2003 (Act 53 of 2003),
the various South African entities rate as follows:
Overview
The Board remains committed to transformation and is focused on the monitoring of transformation efforts of the Group during the
coming year. B-BBEE and transformation is a Board agenda item.
MiX Telematics ❯
Annual Report 2014
Heartbeat Youth Center, Vosloorus
Launched in March 2014, the new Heartbeat Youth Center in Vosloorus, southeast of Johannesburg, was funded by
the MiX Telematics Enterprise Trust to provide essential developmental support to roughly 260 underprivileged children
in the area. Underpinned by a belief in growth, development and mentoring, the trust made R1.5 million available for the
project which will provide healthy meals, leadership development programs, life skills programs, education and
socialization to children identified as disadvantaged, vulnerable or orphaned.
The Heartbeat Youth Center’s vision is aligned with the Trust’s goals of encouraging sustainable development. From the
inception of the project in 2012, MiX and Heartbeat encouraged the beneficiaries to participate in the center’s design and
layout by discussing each child’s needs and by getting to understand what inspires each child to excel at school and on
a personal level. The outcomes of these discussions were incorporated into the project to help ensure a safe environment
that’s conducive to learning and personal development.
Heartbeat – aligned with the MiX Group for sustainable development
Heartbeat_Logo.pdf
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2014/02/28
11:26 AM
Our relationship with Heartbeat, a non-governmental organization specialized in providing material support,
education and other social services to orphans and vulnerable children across South Africa, goes
back as far as five years. Apart from the Heartbeat Youth Center and education scheme, we
have invested in various Heartbeat programs ranging from holiday and youth development
initiatives, to establishing food gardens and hands-on volunteer work.
C
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CM
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Professor Sunette Pienaar founded the organization in the year 2000 after the then
President, Nelson Mandela, called on all South Africans to participate in sustainable
development. Heartbeat has since helped to empower over 54,000 orphans and vulnerable
children to become value-adding members of society. Working closely with communities,
services providers, donors, government and friends who are capable of providing holistic
services to the program’s participants, the organization provides a range of social services to children including
psychological and social support, food, education, care and opportunities for development and growth.
H E A RT B E A T
The MiX Telematics Enterprise Trust’s partnership with Heartbeat is an example of how we invest in the youth – the
potential next generation of MiX employees and customers.
22
MiX Telematics ❯
Annual Report 2014
>>
Heartbeat – This organization is a beneficiary of the Enterprise
Trust as well as from direct funding from MiX Enterprise. We
have been involved in numerous Heartbeat initiatives from the
new Heartbeat Youth Center and education scheme programs
in Vosloorus, to holiday and youth development initiatives,
food gardens and volunteer work.
Clover Mama Afrika – MiX sponsored Clover Mama
Afrika’s annual road show, which saw women who look
after abused, abandoned, orphaned and vulnerable
children as well as the elderly, receive essential mentorship
from skilled social workers. The team traveled over
6,000 km, and stopped at 21 Clover Mama Afrika centers
throughout South Africa. The road show helps the
organization to evaluate what skills and material support
the centers are in need of and where the areas of
improvement are, while also helping the team to scout
for new Mamas – women who are already making
a difference in their communities – to join the program.
Over 14,200 children and 2,000 elderly have
benefited from the organization’s campaigns.
Tereo Project – “Tereo” is an ancient Greek word meaning
“to protect and preserve” and is an apt name for this
community school which was established in 1999 for
children at risk in the Helderberg Basin, Somerset West,
near our Stellenbosch offices. MiX makes monthly
contributions towards feeding, clothing and educating
these vulnerable children and made a total contribution of
R136,080 for the reporting period.
>>
Diepsloot Pre-school received a contribution of R96,643
from MiX towards essential requirements for the “Kiddies
Daycare” where Khomotso Pilai looks after approximately
54 pre-school children from the Diepsloot area.
>>
Other initiatives, of which there are many during this period,
include but are not limited to the Kings Smile (orphaned
and vulnerable children), Pebble project (early childhood
development), Wheel Well (road safety awareness and
training to children) and the Buffelshoek Education Trust.
23
>>
>>
Habitat for Humanity – 50 MiX employees teamed up with
the volunteer-driven organization, Habitat for Humanity, to
help residents of the Pelican Park community near Cape
Town build new homes. We contributed R55k towards
construction materials, and dedicated a day’s work to the
project. The total value of our contribution towards Habitat
for Humanity for this reporting period is R0.2 million.
Our corporate and social investment strategy has maintained
a key focus on education and socio-economic upliftment
throughout the reporting year. In addition to the skills
development and training programs we provided to all MiX
Group employees, we turned our attention to education and
training of previously disadvantaged communities. As a result,
we are proud to be associated with the following programs:
>>
Financial reports
As a good corporate citizen, the Group understands that one
of the best ways to improve the long-term sustainability of our
company and environment is to actively invest in the
communities in which we operate. This is an example of how
success in one area leads to success in another. During the
year, we invested R1.3 million into various community-oriented
campaigns, which is more than double the amount spent
during the previous period. This amount excludes other funds
raised throughout the year by MiX staff.
Overview
Corporate and social investment
Financial reports
MiX Telematics ❯
Annual Report 2014
Contents
25 Statement of directors’ responsibility
25 Certificate of the Company Secretary
26 Directors’ report
29 Report of the audit and risk committee
31 Nominations and remuneration committee report
35 Independent auditors’ report
36 Consolidated statements of financial position
37 Consolidated income statements
38 Consolidated statements of comprehensive income
39 Consolidated statements of changes in equity
40 Consolidated statements of cash flows
41 Notes to the annual financial statements
100 Company financial statements
119 Shareholder information
24
Statement of directors’ responsibility
MiX Telematics ❯
Annual Report 2014
The Group’s external auditors are PricewaterhouseCoopers
Inc., and their unqualified report is presented on page 35. The
external auditors were given unrestricted access to all financial
records and related data, including minutes of all meetings of
shareholders, the Board of Directors and committees of the
Board. The directors believe that all representations made to
the independent auditors during their audit are valid and
appropriate.
The directors consider that, having applied IFRS in preparing
the financial statements, they have used the most appropriate
accounting policies, consistently applied and supported by
reasonable and prudent judgements and estimates, and that
all IFRS that they consider applicable have been followed. The
directors are satisfied that the information contained in the
financial statements fairly presents the results of the operations
for the year, and the financial position of the Group and
Company at year-end, in accordance with IFRS.
The annual financial statements set out on pages 25 to 30 and
35 to 120 were approved by the Board of Directors on June 3,
2014 and are signed on its behalf by:
R Bruyns
S Joselowitz
Chairman
Chief Executive Officer
M Pydigadu
Group Financial Director
The directors are also responsible for the systems of internal
control. These are designed to provide reasonable, but not
absolute, assurance as to the reliability of the annual financial
statements, and to adequately safeguard, verify and maintain
accountability of assets, as well as prevent and detect material
misstatement and loss. Nothing has come to the attention of
the directors to indicate that any material breakdown in the
functioning of these controls, procedures and systems has
occurred during the year.
The directors are responsible for the preparation, integrity and
fair presentation of the annual financial statements of MiX
Telematics Limited (“the Company”) and its subsidiaries (“the
Group”). The annual financial statements have been prepared
in accordance with International Financial Reporting Standards
(“IFRS”) and in accordance with the requirements of the
Companies Act 71 of 2008 (“the Act”), and include amounts
based on judgements and estimates made by management.
Overview
for the year ended March 31, 2014
Midrand
June 3, 2014
The annual financial statements are prepared on a going
concern basis. Nothing has come to the attention of the
directors to indicate that the Company or the Group will not
remain a going concern for the foreseeable future, based on
forecasts and available cash resources. These financial
statements support the viability of the Group and the Company.
In terms of the Companies Act 71 of 2008 (“the Act”), we certify that, to the best of our knowledge and belief, the Company has
lodged with the Companies and Intellectual Properties Commission, for the financial year ended March 31, 2014, all such returns
as are required of a public company in terms of section 88 of the Act and that all such returns are true, correct and up to date.
Certificate of the Company Secretary
Java Capital Trustees and Sponsors Proprietary Limited
Midrand
June 3, 2014
25
Financial reports
Company Secretary
Directors’ report
MiX Telematics ❯
Annual Report 2014
Nature of business
MiX Telematics Limited (“the Company’’ or “the Group”) is a
holding company listed under the “MIX” short code in the
Business Support Services sector on the Johannesburg Stock
Exchange (“JSE”). The Company’s American Depositary
Shares are listed on the New York Stock Exchange (“NYSE”)
and traded under the symbol MIXT. The Group’s activities
focus on fleet and mobile asset management solutions
delivered as Software-as-a-Service. The Company’s registered
address is Matrix Corner, Howick Close, Waterfall Park,
Midrand, 1695.
Accounting practices
The Group and Company annual financial statements were
prepared in accordance with IFRS as issued by the International
Accounting Standards Board (“IASB”) and comply with the
SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee, the JSE Listings Requirements and the
requirements of the Companies Act.
Review of results
The results of the Group and the Company have been set out
in the attached financial statements, as set out on pages 25
to 30 and 35 to 120.
New York Stock Exchange listing
and proceeds from shares issued
On August 9, 2013, following a successful US initial public
offering (“IPO”) of American Depositary Shares or ADSs, each
of which represents 25 ordinary shares at no par value, the
Company’s ADSs were listed on the NYSE and are traded
under the symbol MIXT. As part of the IPO, the Company
issued 4,400,000 ADSs on August 14, 2013 and raised
R649.9 million for the Company (before expenses amounting
to R27.0 million). Selling shareholders sold an additional
2,840,512 ADSs, resulting in a total capital raise by the
Company and selling shareholders, prior to underwriting
discount, of R1,150 million. The Company did not receive any
proceeds from the offering of ADSs by the selling shareholders.
Changes to share capital
In terms of a special resolution approved on August 1, 2013, a
new class of no par value shares, consisting of 100 million
preference shares was created. There were no changes in the
Company’s authorized number of ordinary shares during the
year under review (2013: none).
No preference shares were issued during the year.
26
The number of issued ordinary shares increased by 14,187,500
as a result of employee share options exercised during the
year (2013: 2,762,500) and by an additional 110,000,000
shares issued during the IPO described above.
At year-end, the authorized stated capital amounted to 1 billion
ordinary shares and 100 million preference shares with no
par value. The number of issued ordinary shares of no par
value amounted to 784,150,000. No treasury shares were held
(2013: none).
On October 25, 2012, the Company’s new Memorandum of
Incorporation (“MOI”) was accepted by the Companies and
Intellectual Property Commission. As a result, the issued share
capital of the Company of 659,450,000 shares with a par value
of 0.002 cents per share at the conversion date was converted
to shares of no par value.
Acquisitions and disposals
During the year, the Group acquired a proprietary software
development business from Roitech Proprietary Limited
(constituting employees and specific assets and liabilities).
The total purchase consideration amounted to R7.6 million of
which R3.6 million was settled in cash. The remaining
R4.0 million will be paid over a three-year period. Further
disclosure in respect of the acquisition is set out in note 33 of
the consolidated financial statements.
During the 2013 fiscal year, the Group acquired the business of
Intellichain Proprietary Limited (“Intellichain’’) for an amount
equal to the outstanding balance of the loan previously
provided to Intellichain by the Group. On the effective date
of the transaction, the aforementioned loan approximated
R6 million.
The Group did not make any disposals of businesses during
the current or the prior year.
Dividends
Dividends paid during the year under review are set out in note
31 to the financial statements.
Following the completion of the IPO, the Company has
discontinued its policy of declaring regular dividends in order
to increase the funds available to pursue opportunities for
more rapid growth.
Directors’ report
MiX Telematics ❯
Annual Report 2014
• Providing authority to the directors of the Company to
approve actions related to any transaction amounting
to financial assistance between inter-related companies, in
terms of section 45 of the Companies Act 71 of 2008. This
authority will be put to shareholders for renewal at the
forthcoming annual general meeting; and
• Approving the remuneration payable to non-executive
directors for the 2013/2014 financial year.
The following special resolutions were passed at the general
meeting of shareholders, held on August 1, 2013:
• Approving the specific issue of shares for cash of up to a
maximum of 110 million ordinary shares in the Company
pursuant to an offering of ADSs in the IPO;
• Approving the increase in the authorized share capital by
the creation of a new class of no par value shares, being
preference shares and accordingly the Company’s
authorized share capital after the increase shall comprise
1 billion ordinary shares and 100 million preference
shares; and
• The adoption of a new MOI to align the provisions of the
Company’s MOI to allow, inter alia, for the creation of a new
class of preference shares, the conduct of shareholder
meetings by way of polling only, and additional director
indemnification provisions.
Special resolutions of subsidiary
companies
Overview
R Bruyns (Chairman)
E Banda
H Brody (alternate F Roji)
C Ewing
R Frew
A Welton
Executive directors
S Joselowitz (Chief Executive Officer)
M Pydigadu
C Tasker
E Banda was appointed as an independent non-executive
director to the Board and as a member of the audit and risk
committee with effect from May 13, 2013.
F Roji resigned as a non-executive director from the Board and
has been appointed as an alternate director to H Brody with
effect from May 13, 2013. She remains a member of the social
and ethics committee.
The following directors resigned from the Board with effect
from August 9, 2013:
• R Shough – independent non-executive director;
• R Botha – executive director responsible for special projects;
• T Buzer – executive director responsible for development
and engineering; and
• H Scott – executive director responsible for strategy,
mergers and acquisitions.
The Board was restructured to conform more closely with the
standards of the NYSE, which defines independence differently
to the Johannesburg Stock Exchange. The resigning executive
directors remained with the Company in their respective
management capacities and as members of Board committees
where relevant.
The following special resolutions were passed by MiX
Telematics Investments Limited, a wholly owned subsidiary of
the Company:
Details of directors’ remuneration and shareholding are set out
in notes 28 and 34 of the annual financial statements.
• The change of name, main business and object of MiX
Directors’ interests
Telematics Investments Limited on July 18, 2013; and
• Providing authority to the directors of MiX Telematics
Investments Limited to approve actions related to any
transaction amounting to financial assistance between interrelated companies, in terms of section 45 of the Companies
Act 71 of 2008.
subsidiary) to acquire its own shares in terms of section 48
of the Companies Act. As this general authority remains
valid only until the next AGM, shareholders will be asked at
that meeting to consider a special resolution to renew this
general authority until the next AGM. During the year under
review, no shares of the Company were acquired by the
Company or any of its subsidiaries;
• Providing a general authority to enable the Company (or any
The Board of Directors of the Company (“the Board’’)
comprises:
The following special resolutions were passed at the annual
general meeting of shareholders, held on September 19, 2013:
Directorate
Please refer to note 34 of the annual financial statements
which sets out directors’ shareholdings and interests in
contracts.
27
Financial reports
Special resolutions of MiX
Telematics Limited
Directors’ report
MiX Telematics ❯
Annual Report 2014
Service contracts
Changes to the Board committees
Neither the non-executive directors nor the executive directors
have fixed-term employment contracts.
On May 13, 2013, R Bruyns, the independent non-executive
Chairman of the Company, resigned as Chairman of the
nominations and remuneration committee of MiX with effect
from May 7, 2013. R Bruyns remained a member of the
nominations and remuneration committee. R Bruyns was also
appointed as a member of the social and ethics committee
with effect from May 13, 2013.
Subsidiaries
The subsidiary companies are set out in note 42 to the annual
financial statements.
Borrowing powers
In terms of the MOI of the Company, the borrowing powers of
the Company are unlimited. The details of borrowings appear
in note 17 of the annual financial statements.
Going concern
The directors have reviewed the Company and Group cash
flow forecast for the year ending March 31, 2015. On the basis
of this review, and in light of the current financial position and
existing borrowing facilities, the directors are satisfied that the
Company and Group have access to adequate resources to
continue in operational existence for the foreseeable future
and are going concerns. The directors have continued to
adopt the going concern basis in preparing the financial
statements.
Litigation statement
There are no legal or arbitration proceedings, nor are the
directors aware at the date of this report of any proceedings
which are pending or threatened, which may have or have had
a material effect on the Group or Company’s financial position.
Contingent liabilities
The Group’s contingent liabilities are set out in note 35 to the
annual financial statements.
Events after reporting period
The directors are not aware of any matters material or otherwise
arising since March 31, 2014 and up to the date of this report,
not otherwise dealt with herein. Refer also to note 37 of the
R Frew, a non-executive director, was appointed as Chairman
of the nominations and remuneration committee on May 13,
2013. R Bruyns will chair all matters relating to the nomination
and appointment of new directors.
director to the Board of Directors of the Company and as a
member of the audit and risk committee with effect from
May 13, 2013.
R Shough resigned as a member and Chairman of the audit
and risk committee with effect from August 9, 2013. C Ewing
replaced R Shough as Chairman of the committee.
With effect from April 3, 2014, C Ewing stepped down as
Chairman of the audit and risk committee with but will remain
on as a member of the committee. A Welton, currently an
independent non-executive director of the Company, has
replaced C Ewing as Chairman of the committee. Also effective
April 3, 2014, C Ewing assumed the chairmanship of the social
and ethics committee from A Welton.
Auditors
PricewaterhouseCoopers Inc. are the appointed auditors to
the Company in accordance with section 90 of the Companies
Act and also audit all of the subsidiaries, other than MiX
Telematics Europe Limited and MiX Telematics Europe GmbH,
which are audited by KPMG Inc.
Company Secretary
The company secretarial function is outsourced to Java Capital
Trustees and Sponsors Proprietary Limited (“Java Capital”),
which provides an independent company secretarial service.
Midrand
June 3, 2014
28
Report of the audit and risk committee
Members of the audit and risk
committee
Members of the committee are formally nominated by the
Board for re-election by shareholders. The individuals satisfy
the requirements to serve as members of an audit committee
as provided in section 94 of the Companies Act and ensure
that the committee has adequate knowledge and experience.
The committee consists of the independent non-executive
directors listed below. The appointment of the committee was
approved at the annual general meeting held on September 19,
2013.
R Shough resigned as a member and Chairman of the
committee with effect from August 9, 2013 in order for the audit
committee to conform with the requirements of the New York
Stock Exchange (“NYSE”) and the US Securities and Exchange
Commission (“SEC”) regarding the independence of audit
committees. C Ewing replaced R Shough as Chairperson.
director to the Board of Directors of the Company and as a
member of the audit and risk committee with effect from
May 13, 2013.
In the review period, the members of the audit and risk
committee were:
• R Shough (Chairperson April 1, 2013 to August 8, 2013)
• R Bruyns
• C Ewing (Chairperson August 9, 2013 to March 31, 2014)
• E Banda (appointed May 13, 2013)
With effect from April 3, 2014, C Ewing stepped down
as Chairman of the audit and risk committee but remains a
member of the committee. A Welton, an independent nonexecutive director of the Company (independent from April 1,
2014), has replaced C Ewing as Chairman of the committee.
The Chairman of the social and ethics committee attends all
audit and risk committee meetings as an invitee due to the
close working relationship between the two committees.
Financial reporting
The committee reviewed the quarterly, interim and year-end
Group financial statements culminating in a recommendation
to the Board to adopt them. The review of the results included
ensuring compliance with IFRS and the acceptability of the
Company’s accounting policies. This includes the appropriate
disclosures in the financial statements in accordance with the
requirements of the Companies Act, IFRS, the SAICA Financial
Reporting Guides as issued by the Accounting Practices
Committee, so that shareholders will have meaningful financial
reporting pronouncements as issued by the Financial Reporting
Standards Council (“FRSC”) and the JSE Listings Requirements.
It is the duty of the committee to review the Form 20-F filing
with the SEC.
The committee reviewed the processes in place for the
reporting of concerns and complaints relating to reporting and
accounting practices, internal audit, contents of the Group’s
financial statements, internal financial controls and any related
matters. The committee can confirm that there were no such
complaints of substance during the year under review.
Overview
The committee has adopted comprehensive and formal terms
of reference included in its charter, which have been approved
by the Board and which are reviewed on an annual basis.
The Chairperson reports to the Board at all Board meetings on
the activities and recommendations of the committee.
Terms of reference
Members of the executive team, including the Group Financial
Director and Chief Executive Officer, attend committee
meetings by invitation and have no voting rights. Similarly,
external and internal auditors attend committee meetings by
invitation and have no voting rights.
Independence of the external
auditor
A formal procedure governs the process for considering the
provision of non-audit services by the external auditors, and
the provision letters for such services are approved by the
committee in advance. The committee has satisfied itself
through enquiry that the external auditor is independent as
defined by the Act, as well as in terms of NYSE and SEC
requirements.
The committee has met with the external auditors without
management present, to discuss the results of their
examinations, their evaluations of the Company’s internal
controls, including internal control over financial reporting, and
the overall quality of the Company’s financial reporting. The
committee also discussed the expertise, resources and
experience of the Company’s finance function with the external
auditors. No matters of concern were raised during those
meetings.
29
The MiX Telematics Limited audit and risk committee (“the
committee”) has pleasure in submitting this report for the year
ended March 31, 2014, which has been approved by the
Board. This report has been prepared in compliance with
section 94(7)(f) of the Companies Act (“the Act”) and in
accordance with the mandate given by the Board.
Financial reports
MiX Telematics ❯
Annual Report 2014
Report of the audit and risk committee
MiX Telematics ❯
Annual Report 2014
The committee has agreed to the budgeted audit fee for
the 2014 financial year. Auditors’ remuneration is disclosed in
note 27 to the financial statements. We are of the view that this
remuneration is appropriate.
The committee has satisfied itself that the external auditors
and the designated registered auditors are accredited on the
JSE list of auditors and advisers. The committee has
recommended PricewaterhouseCoopers Inc. as external
auditors for the 2015 financial year subject to approval at the
annual general meeting. V Myburgh from this firm of auditors
has been nominated as the designated auditor.
Internal audit
The committee considered the effectiveness of the internal
audit function and monitored adherence to the annual internal
audit plan.
The internal audit plan for the past year was approved by the
committee. All internal audit reports were reviewed and
discussed at committee meetings and, where appropriate,
recommendations were made to the Board.
Internally, management, with the assistance of Ernst & Young,
has reviewed the internal controls over financial reporting,
including disclosure controls and procedures, and presented
their findings to the audit and risk committee. Based on this
review, nothing has come to the attention of the committee to
indicate that significant internal financial controls have not
operated as intended.
Annual report
The committee has considered all factors and risks that may
impact the integrity of this annual report. The committee has
reviewed and discussed the audited financial statements with
the external auditors and executive management as reported
in the annual report. Apart from the annual financial statements
set out on pages 36 to 118 that form part of the annual report,
no other external assurance has been obtained for information
contained in the annual report. The committee is satisfied that
the report complies with the Act, the JSE Listings Requirements
and IFRS and has therefore recommended the annual financial
statements for approval to the Board.
Going concern status
The committee has considered the going concern status of the
Company and the Group on the basis of review of the annual
financial statements and the information available to the
committee and recommended such going concern status for
adoption by the Board. The Board statement on the going
concern status of the Group and Company is contained on
page 28 in the directors’ statement of responsibilities.
Discharge of responsibilities
The committee is satisfied that during the financial year under
review it has conducted its affairs, discharged its legal and
other responsibilities as outlined in its charter, the Companies
Act and King III. The Board concurred with this assessment.
Risk management
The committee reviewed the Group risk register prior to it
being presented to the Board. The committee also had two
meetings dedicated to risk during the year where matters of
risk were discussed.
A Welton
June 3, 2014
Expertise and experience of
Financial Director and finance
function
The committee reviewed the performance and expertise of
the Group Financial Director, Megan Pydigadu, and confirms
her suitability to continue to hold office as Group Financial
Director in terms of the JSE Listings Requirements. The
committee has also considered and has satisfied itself of the
appropriateness of the expertise and experience of the finance
function and adequacy of resources employed in this function.
30
Nominations and remuneration committee report
MiX Telematics ❯
Annual Report 2014
The committee normally invites the Chief Executive Officer to
attend its meetings but he has no voting rights. He does not
participate in discussions on his own remuneration, which is
set by the committee. The committee meets on a quarterly
basis.
Among other items, the committee’s terms of reference
include:
• Attending to the remuneration and benefits of senior
executives and executive directors;
• Advising on non-executive directors’ fees and fees for those
directors who are members of Board committees;
• Advising on senior executive and executive director
appointments;
• Reviewing succession planning at an executive level;
• Confirming the share incentive plan and the allocation of
awards under the plan; and
• Selecting and recommending candidates for appointment
to the Board.
Changes to the non-executive directors’ fees are approved by
shareholders at the annual general meeting.
The King III recommendations suggest that the remuneration
policy be approved by shareholders and that certain senior
executives’ remuneration be disclosed. The Company has not
formally obtained shareholder approval for its remuneration
policy but the Company’s philosophy is detailed below.
The executive remuneration has been detailed further on in
the report.
• Total rewards are set at levels that are responsible and
competitive within the relevant market;
• Total incentive-based rewards are earned through the
achievement of demanding growth and return targets
consistent with shareholder interests over the short,
medium, and long term;
• Incentive plans, performance measures and targets are
structured to operate soundly throughout the business
cycle; and
• The design of long-term incentive plans is prudent and does
Overview
In order to ensure compliance with the guidance on corporate
governance issued by the Johannesburg Stock Exchange on
January 31, 2013, R Bruyns, the independent non-executive
Chairman of the Company, resigned as Chairman of the
nominations and remuneration committee with effect from
May 7, 2013. R Bruyns remained a member of the nominations
and remuneration committee. R Frew, a non-executive director,
assumed the position as Chairman of the nominations and
remuneration committee.
MiX Telematics’ Remuneration Policy is formulated to attract
and retain high-calibre executives and motivate them to
develop and implement the Company’s business strategy in
order to optimize long-term shareholder value. It is the intention
that this policy should conform to best practice standards. The
policy is framed around the following key principles:
not expose shareholders to unreasonable financial risk.
Elements of executive remuneration
Executive remuneration comprises the following four principal
elements:
• Basic salary and allowances;
• Bi-annual incentive bonuses;
• Share incentive plans; and
• Retirement and other benefits.
The committee seeks to ensure an appropriate balance
between the fixed and performance-related elements of
executive remuneration and between those aspects of the
package linked to short-term financial performance and those
linked to longer-term shareholder value creation. The policy
relating to each component of remuneration is summarized
below.
Basic salary
The basic salary of each executive is subject to annual review
and is set to be responsible and competitive with reference to
external market practice in similar companies, which are
comparable in terms of size, market sector, business complexity,
and international scope. Company performance, individual
performance and changes in responsibilities are also taken into
account when determining annual basic salaries.
• R Bruyns (Chairman from April 1, 2013 to May 6, 2013)
• R Frew (Chairman from May 7, 2013 to March 31, 2014)
• A Welton (appointed March 31, 2013)
Principles of executive remuneration
In the review period ended March 31, 2014, the members of
the nominations and remuneration committee were:
Remuneration policy
Bi-annual incentive bonus
All executives are eligible to receive a performance-related
bi‑annual bonus. The bonus is non-contractual and not
pensionable. The committee reviews bonuses at the half-year
and at year-end, and determines the level of bonus based on
performance criteria set at the start of the performance period.
31
Financial reports
We are pleased to report to you on the nominations and
remuneration committee’s (“the committee”) activities in the
2014 fiscal year. The committee executes its responsibility in
accordance with the mandate given by the Board.
MiX Telematics ❯
Annual Report 2014
The criteria include targets relating to subscriber growth,
subscription revenue growth and divisional operating profit
growth and certain discretionary elements.
The short-term incentive program is available to executive
directors, senior executives and selected employees. Cash
bonuses to senior executives and executive directors are
approved by the nominations and remuneration committee.
Share incentive plan
The long-term incentive program is administered through the
Group Executive Incentive Plan – a share option plan. The
share option plan and the award of share options to executive
directors and senior executives is controlled by the committee.
Motivations for the award of share options are presented by
the executive directors to the committee which, after review
and consideration, recommends the award of such options as
it deems fit to the Board for approval. Selected participants will
receive grants of share options which are conditional rights to
receive MiX shares at prices equal to the exercise price.
Vesting of options is subject to time and performance
conditions. The performance conditions and period are
determined by the Board on a grant-by-grant basis in respect
of each new grant of options.
The targets and measuring terms relating to each issue are
detailed in the letter of grant. After vesting, the options will
become exercisable. Upon exercise by a participant, the
Company will settle the value of options by delivering
MiX shares that will be issued out of authorized unissued MiX
shares. These options are treated as equity-settled instruments.
Eligibility
Any senior employee with significant managerial or other
responsibility, including any director holding salaried
employment or office in the Group, is eligible to participate in
the share incentive plan.
A total of 38,912,500 share options remain unexercised at an
average price of R1.52 per share of which 11,762,500 have
vested and met their performance conditions. Refer to note 15
of the annual financial statements for further detail.
During the current financial year no options were granted.
Retirement plans and other benefits
Executives are remunerated on a cost-to-company basis and
as part of their package are entitled to a car allowance,
provident fund contributions, medical, death and disability
insurance. The provision of these benefits is considered to be
market competitive for executive positions.
Other matters affecting
remuneration of directors
External appointments
Executive directors are not permitted to hold external
directorships or offices without the approval of the Board,
other than those of a personal nature.
Fees payable to non-executive directors are proposed and
reviewed by the remuneration committee and recommended
to the Board, which in turn makes recommendations to
shareholders with reference to the fees paid by comparable
companies, responsibilities taken by the non-executive
directors and the importance attached to the retention and
attraction of high-calibre individuals. Non-executive directors,
in accordance with the recommendations of King III, do not
participate in any incentive programs.
Non-executive
R Bruyns
H Brody1
C Ewing1
R Frew1
R Friedman
E Banda1
F Roji1
R Shough
A Welton
Value added tax1
2013
Total
R’000
805
256
407
343
—
346
69
138
401
754
240
365
296
296
—
376
325
320
2,765
199
2,972
179
2,964
3,151
AT included as part of invoice received. Directors’ fees shown
V
exclude VAT.
1
Directors’ fees
Directors’ fees will remain at the same levels in the forthcoming
year.
R
Directors’ fee
Audit and risk committee member*
Nominations and remuneration committee
member*
Social and ethics committee member*
Chairman of the Board^
Chairman of the audit and risk committee**
Chairman of the nominations and
remuneration committee**
Chairman of the social and ethics committee**
*In addition to the directors’ fee.
**Includes committee membership fee.
^Include directors’ fee.
32
2014
Total
R’000
270,000
140,000
63,000
50,000
605,000
168,000
95,000
90,000
MiX Telematics ❯
Annual Report 2014
Executives’ remuneration
S Joselowitz
R Botha
T Buzer
M Pydigadu
H Scott
C Tasker
B Horan
G Pretorius
C Lewis**
Other
benefits
R’000
Retirement
fund
R’000
4,554
2,324
2,030
1,921
2,580
2,897
1,818
1,741
597
—
12
21
101
—
42
108
99
15
—
92
159
77
—
233
74
160
54
20,462
398
849
Performance
bonuses*
R’000
2014
Total
R’000
2013
Total
R’000
5,919
1,242
1,729
3,388
4,189
3,488
1,850
1,852
—
10,473
3,670
3,939
5,487
6,769
6,660
3,850
3,852
666
7,476
3,131
4,080
3,540
4,770
4,713
3,371
3,987
—
23,657
45,366
35,068
*Performance bonuses are based on actual amounts paid during the financial year.
**Appointed to the executive committee with effect from January 1, 2014.
^All prescribed officers of the Company are included as part of the executive committee as noted above.
Executive committee^
Salary and
allowances
R’000
Overview
The table below provides an analysis of the emoluments paid to executives of the Company for the year ended March 31, 2014.
All executives’ contracts are terminable on three calendar months’ notice.
33
Financial reports
Non-executive directors’ appointments are made in terms of the Company’s Memorandum of Incorporation and are initially
confirmed at the first annual general meeting of shareholders following their appointment, and thereafter directors are re-elected
by rotation. Non-executive directors do not hold fixed-term contracts.
Executives’ employment contracts
MiX Telematics ❯
Annual Report 2014
Incentive plans
Executives participate in the incentive plans, designed to recognize the contributions of senior staff to the growth in the Company’s
equity. Within limits imposed by shareholders, rights are allocated to senior executives and executive directors. The equity-linked
compensation benefits for executives that were outstanding at year-end are set out below.
December 9, December 9,
2008
2008
000’s
000’s
S Joselowitz*
R Botha
T Buzer
M Pydigadu*
H Scott
C Tasker*
B Horan
G Pretorius
C Lewis
June 4,
2010
000’s
June 4,
2010
000’s
January 3, November 7,
2012
2012
000’s
000’s
Total
000’s
500
125
—
—
—
500
—
—
—
1,000
750
1,000
—
—
1,000
—
—
—
1,500
1,375
1,500
1,500
750
1,500
250
250
500
3,000
—
—
500
500
—
—
—
—
—
—
—
—
—
2,000
750
750
—
2,500
—
—
1,000
—
2,000
1,500
1,500
1,500
8,500
2,250
2,500
3,000
1,250
7,000
2,500
2,500
2,000
1,125
3,750
9,125
4,000
3,500
10,000
31,500
70
70
112
112
154
246
58
58
104
104
160
300
2014
2014
June 4,
2016
June 4,
2016
Option strike price
(cents per share)
JSE share price on
grant date (cents
per share)
Performance conditions:
Share price of (Rand)
Minimum shareholder
return of
2018
2018
n/a
5
n/a
5
n/a
n/a
10%
n/a
5%
n/a
10%
10%
*Executive director.
On March 17, 2014, 8,300,000 options, previously issued to executives, which had a target share price of R10, expired. Executives
exercised 9,775,000 options during the year and full details of the options exercised are set out in note 15 to the annual financial
statements.
Signed on behalf of the nominations and remuneration committee
R Frew
June 3, 2014
34
Independent auditors’ report
MiX Telematics ❯
Annual Report 2014
Auditors’ responsibility
Our responsibility is to express an opinion on these
consolidated and separate annual financial statements based
on our audit. We conducted our audit in accordance with
International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the
consolidated and separate annual financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the annual financial
statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material
misstatement of the annual financial statements, whether due
to fraud or error. In making those risk assessments, the auditor
considers internal controls relevant to the entity’s preparation
and fair presentation of the annual financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation
of the annual financial statements.
Other reports required by the Companies Act
As part of our audit of the consolidated and separate annual
financial statements for the year ended March 31, 2014, we
have read the directors’ report, the audit and risk committee’s
report and the Company Secretary’s certificate for the purpose
of identifying whether there are material inconsistencies
between these reports and the audited consolidated and
separate annual financial statements. These reports are the
responsibility of the respective preparers. Based on reading
these reports we have not identified material inconsistencies
between these reports and the audited consolidated and
separate annual financial statements. However, we have not
audited these reports and accordingly do not express an
opinion on these reports.
Overview
The Company’s directors are responsible for the preparation
and fair presentation of these consolidated and separate
annual financial statements in accordance with International
Financial Reporting Standards and the requirements of the
Companies Act of South Africa, and for such internal control
as the directors determine is necessary to enable the
preparation of consolidated and separate annual financial
statements that are free from material misstatement, whether
due to fraud or error.
In our opinion, the consolidated and separate annual financial
statements present fairly, in all material respects, the
consolidated and separate financial position of MiX Telematics
Limited as at March 31, 2014, and its consolidated and
separate financial performance and its consolidated and
separate cash flows for the year then ended in accordance
with International Financial Reporting Standards and the
requirements of the Companies Act of South Africa.
Directors’ responsibility for the annual financial
statements
Opinion
PricewaterhouseCoopers Inc.
Director: Vicki Myburgh
Registered Auditor
Sunninghill
June 3, 2014
We have audited the consolidated and separate annual
financial statements of MiX Telematics Limited set out on
pages 36 to 118, which comprise the consolidated and
separate statements of financial position as at March 31, 2014,
and the consolidated and separate income statements,
statements of comprehensive income, statements of changes
in equity and statements of cash flows for the year then ended,
and the notes, comprising a summary of significant accounting
policies and other explanatory information.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
35
Financial reports
To the shareholders of MiX
Telematics Limited
Consolidated statements of financial position
MiX Telematics ❯
Annual Report 2014
at March 31, 2014 and March 31, 2013
Notes
2014
R’000
2013
R’000
6
7
8
9
10
20
129,079
692,190
—
—
6,677
19,825
96,547
645,736
—
—
6,359
13,868
847,771
762,510
39,774
234,839
6,652
7,336
10,279
830,449
38,927
186,987
3,604
4,823
8,235
147,702
Total current assets
1,129,329
390,278
Total assets
1,977,100
1,152,788
1,429,250
(58,335)
300,725
790,491
(111,362)
188,750
Non-controlling interest
1,671,640
(10)
867,879
(5)
Total equity
1,671,630
867,874
2,462
20,601
2,282
—
8,605
283
25,345
8,888
228,961
1,279
2,912
19,163
27,810
184,397
3,472
10,691
21,461
56,005
280,125
276,026
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investment in joint venture
Available-for-sale financial asset
Finance lease receivable
Deferred tax assets
Total non-current assets
Current assets
Inventory
Trade and other receivables
Taxation
Restricted cash
Cash and cash equivalents
11
12
10
13
14
EQUITY
Stated capital
Other reserves
Retained earnings
15
16
Equity attributable to owners of the parent
LIABILITIES
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
17
20
21
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Taxation
Provisions
Bank overdraft
Total current liabilities
Total liabilities
Total equity and liabilities
Net asset value per share (R)
Net tangible asset value per share (R)
The accompanying notes form an integral part of these financial statements.
36
18
17
21
14
305,470
284,914
1,977,100
1,152,788
2.13
1.25
1.32
0.34
Consolidated income statements
Notes
Revenue
22
Cost of sales
Gross profit
2014
R’000
2013
R’000
2012
R’000
1,271,658
(422,034)
1,171,480
(424,545)
1,018,482
(390,926)
849,624
2,151
(680,277)
(148,012)
(532,265)
746,935
4,260
(565,318)
(132,849)
(432,469)
627,556
8,610
(488,176)
(97,312)
(390,864)
185,877
(6,011)
2,018
(8,029)
147,990
(4,475)
2,392
(6,867)
Other income/(expenses) – net
Operating expenses
Sales and marketing
Administration and other charges
23
Operating profit
24
Finance income/(cost) – net
Finance income
Finance costs
25
26
171,498
40,660
43,264
(2,604)
29
212,158
(60,574)
179,866
(51,400)
143,515
(40,275)
151,584
128,466
103,240
151,589
(5)
128,471
(5)
103,240
—
151,584
128,466
103,240
0.21
0.20
0.20
0.19
0.16
0.16
Profit before taxation
Taxation
Profit for the year
Overview
for the years ended March 31, 2014; March 31, 2013 and March 31, 2012
MiX Telematics ❯
Annual Report 2014
Earnings per share
Basic (R)
Diluted (R)
30
30
37
Financial reports
Owners of the parent
Non-controlling interests
Attributable to:
Consolidated statements of comprehensive income
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
2012
R’000
151,584
128,466
103,240
45,475
3,540
(599)
37,090
3,142
—
29,816
(6,718)
—
48,416
40,232
23,098
Total comprehensive income for the year
Attributable to:
200,000
168,698
126,338
Owners of the parent
Non-controlling interests
200,005
(5)
168,703
(5)
126,338
—
200,000
168,698
126,338
Notes
Profit for the year
Other comprehensive income/(losses):
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations
Exchange differences on net investments in foreign operations
Taxation relating to components of other comprehensive income
16
16
20
Other comprehensive income for the year, net of tax
38
Consolidated statements of changes in equity
MiX Telematics ❯
Annual Report 2014
Other Retained
reserves** earnings
R’000
R’000
Noncontrolling
Total
interest
R’000
R’000
Total
equity
R’000
—
13
787,353
(179,844)
75,413
682,935
—
682,935
Profit for the year
Other comprehensive income
—
—
—
—
—
—
—
—
—
23,098
—
23,098
103,240
103,240
—
126,338
103,240
23,098
—
—
—
126,338
103,240
23,098
Total transactions
with owners
—
*
236
2,001
(39,420)
(37,183)
—
(37,183)
—
—
*
—
236
—
—
2,001
—
—
236
2,001
—
—
236
2,001
—
—
—
—
(39,420)
(39,420)
—
(39,420)
—
13
787,589
(154,745)
139,233
772,090
—
772,090
—
—
—
—
—
—
—
—
—
40,232
—
40,232
128,471
128,471
—
168,703
128,471
40,232
(5)
(5)
—
168,698
128,466
40,232
464
*
2,425
3,151
(78,954)
(72,914)
—
(72,914)
15
16
464
—
*
—
2,425
—
—
3,151
—
—
2,889
3,151
—
—
2,889
3,151
31
—
—
—
—
(52,576)
(52,576)
—
(52,576)
31
—
—
—
—
(26,378)
(26,378)
—
(26,378)
15
790,027
(13) (790,014)
—
—
—
—
—
Shares issued in relation to
share options exercised
Share-based payment
Dividend declared of 6 cents
per share
31
Balance at March 31, 2012
Total comprehensive
income
Profit for the year
Total transactions
with owners
Share-based payment
per share
Interim dividend declared of
4 cents per share
Transfer from share capital and
share premium to stated capital
790,491
—
—
(111,362)
188,750
867,879
(5)
867,874
—
—
—
—
—
—
—
—
—
48,416
—
48,416
151,589
151,589
—
200,005
151,589
48,416
(5)
(5)
—
200,000
151,584
48,416
638,759
—
—
4,611
(39,614)
603,756
—
603,756
15
16
15,776
—
—
—
—
—
—
4,611
—
—
15,776
4,611
—
—
15,776
4,611
15
622,983
—
—
—
—
622,983
—
622,983
31
—
—
—
—
(39,614)
(39,614)
—
(39,614)
1,429,250
—
—
(58,335)
Total comprehensive
income
Profit for the year
Total transactions
with owners
Share-based payment
Proceeds from shares issued,
net of share issue costs
Final dividend declared of
6 cents per share
300,725 1,671,640
Overview
Share
Share
capital premium
R’000
R’000
At April 1, 2011
Total comprehensive
income
Stated
capital
R’000
Notes
Attributable to owners of the parent
(10) 1,671,630
*Amount less than R1,000.
**See note 16 for a composition of and movements in other reserves.
39
Financial reports
Consolidated statements of cash flows
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
2012
R’000
266,169
3,970
(2,496)
(63,866)
287,847
1,880
(3,421)
(74,388)
192,477
1,917
(5,549)
(35,769)
203,777
211,918
153,076
(79,626)
(51,499)
(41,593)
978
(49,119)
—
(3,606)
(295)
966
(42,648)
—
23
—
867
(35,873)
(5,486)
—
—
—
(1,508)
2,207
(5,103)
—
—
(133,176)
(96,054)
(82,085)
665,710
(26,951)
(39,610)
(3,436)
2,889
—
(78,874)
(19,701)
236
—
(39,374)
(41,548)
Net cash generated from/(used in) financing activities
595,713
(95,686)
(80,686)
Net increase/(decrease) in cash and cash equivalents
666,314
91,697
44,628
20,178
68,530
2,989
(9,695)
70,039
8,186
802,639
91,697
68,530
Notes
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Taxation paid
32.2
25
26
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds on sale of property, plant and equipment and
intangible assets
Purchases of intangible assets
Loan granted to external party
Acquisition of business, net of cash acquired
Deferred consideration paid
Government grant received with regards to development
of intangible assets
Increase in restricted cash
6
7
33
33
7
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of shares
Share issue expenses paid
Dividends paid to Company's owners
Repayments of borrowings
15
15
Net cash and cash equivalents at the beginning of the year
Exchange gains on cash and cash equivalents
Net cash and cash equivalents at the end of the year
14
40
Notes to the annual financial statements
MiX Telematics ❯
Annual Report 2014
Basis of preparation
The annual financial statements of the Group for the year ended March 31, 2014 have been prepared in accordance
with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board,
and IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared in thousands of Rand (R’000) under the historical cost
convention except for available-for-sale financial assets, which are measured at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to
the financial statements, are disclosed in note 4.
During the 2014 fiscal year, the Group changed its classification of foreign exchange gains and losses in the income
statement. Refer to note 40 for details on the reclassification.
2.1.1.
2.1.1.1.
Changes in accounting policy and disclosures
New and amended standards adopted by the Group
The following new and amended standards have been adopted by the Group for the first time on April 1, 2013:
Standards and
Amendments
Executive summary
IFRS 10 Consolidated
Financial Statements
and amendments to
transitional
requirements for
IFRS 10, IFRS 11 and
IFRS 12.
This standard builds on existing principles by identifying the concept of control as the
determining factor in whether an entity should be included within the consolidated financial
statements. The standard provides additional guidance to assist in determining control
where this is difficult to assess. The Group re-assessed the control conclusion for its interests
in other entities at April 1, 2013 in accordance with the transitional provisions of IFRS 10.
Based on this assessment, all entities previously consolidated continue to be consolidated
and there were no entities requiring deconsolidation identified. The new standard therefore
had no impact on the consolidated financial statements (refer to note 42).
IFRS 11 Joint
Arrangements
This standard focuses on the rights and obligations of a joint arrangement, rather than its
legal form. There are two types of joint arrangements: joint operations and joint ventures.
The adoption of this standard had no impact on the consolidated financial statements
(refer to note 8).
IFRS 12 Disclosures of
Interests in Other
Entities
This standard includes the disclosure requirements for all forms of interests in other
entities, including joint arrangements, associates, special purpose entities and other offbalance sheet vehicles. The adoption of this standard had no significant impact on the
consolidated financial statements (refer to note 42).
IFRS 13 Fair Value
Measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure
requirements for use across all IFRS standards. The requirements do not extend the use
of fair value accounting but provide guidance on how it should be applied where its use is
already required or permitted by other standards within IFRS. The adoption of this standard
resulted in updated fair value disclosures for available-for-sale assets (refer to note 9).
IAS 1 Presentation of
Financial Statements,
on presentation of
items of OCI
The main change resulting from these amendments is a requirement for entities to group
items presented in “other comprehensive income” (OCI) on the basis of whether they are
potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The
updated disclosure has been included in the consolidated statement of OCI.
IAS 1 Presentation of
Financial Statements,
on changes in
accounting policies
The amendment clarifies the disclosure requirements for comparative information when
an entity provides a third balance sheet either: as required by IAS 8 Accounting policies,
changes in accounting estimates and errors; or voluntarily. The adoption of this standard
had no impact on the consolidated financial statements.
41
2.1.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These accounting policies have been consistently applied to all the years presented, unless otherwise stated.
2.
Overview
General information
MiX Telematics Limited (the “Company”) is a public company which is incorporated and domiciled in South Africa. The
Company’s ordinary shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and its American
Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT). The activities of the Company and its
subsidiaries (“the Group”) focus on fleet and mobile asset management solutions delivered as Software-as-a-Service.
The address of the Company’s registered office is Matrix Corner, Howick Close, Waterfall Park, Midrand, 1686. The
annual financial statements were approved by the Board of Directors on June 3, 2014.
Financial reports
1.
MiX Telematics ❯
Annual Report 2014
2.
Summary of significant
accounting policies (continued)
2.1.
2.1.1.
Basis of preparation (continued)
Changes in accounting policy and
disclosures (continued)
Standards, amendments and interpretations
not yet effective
2.1.1.2.
A number of new standards and amendments to
standards and interpretations are effective for
annual periods beginning after the financial year
under review and have not been applied in
preparing these consolidated financial statements.
None of these is expected to have a significant
effect on the consolidated financial statements of
the Group, except for:
IFRS 9 Financial Instruments (effective date:
January 1, 2015)
IFRS 9 Financial Instruments, addresses the
classification, measurement and recognition of
financial assets and financial liabilities. IFRS 9 was
issued in November 2009, October 2010 and
amended in November 2013.
IFRS 9 replaces the parts of IAS 39 (as amended by
IFRS 9) Financial Instruments: Recognition and
measurement that relate to the classification and
measurement of financial instruments. IFRS 9
requires financial assets to be classified into two
measurement categories: those measured as at fair
value and those measured at amortized cost. The
determination is made at initial recognition. The
classification depends on the entity’s business
model for managing its financial instruments and
the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard
retains most of the IAS 39 requirements. The main
change is that, in cases where the fair value option
is taken for financial liabilities, the part of a fair value
change due to an entity’s own credit risk is recorded
in other comprehensive income rather than the
income statement, unless this creates an accounting
mismatch. The Group is yet to assess IFRS 9’s full
impact. The Group will also consider the impact of
the remaining phases of IFRS 9 when issued by the
International Accounting Standards Board.
Further amendments to IFRS 9 were made with
respect to hedge accounting. The new requirements
align hedge accounting more closely with risk
management and also establish a more principlesbased approach to hedge accounting.
There are no other IFRS or IFRIC interpretations
that are not yet effective that would be expected to
have a material impact on the Group.
42
2.2.
(a)
Consolidation
Subsidiaries
Subsidiaries are all entities (including structured
entities) over which the Group has control. The
Group controls an entity when the Group is
exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to
affect those returns through its power over
the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the
Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used
to account for business combinations. The
consideration transferred for the acquisition of
a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former
owners of the acquiree and the equity instruments
issued by the Group. The consideration transferred
includes the fair value of any asset or liability
resulting from a contingent consideration
arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in
a business combination are measured initially at
their fair values at acquisition date. The Group
recognizes any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis,
either at fair value or at the non-controlling interest’s
proportionate share of the recognized amounts of
the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by
the Group is recognized at fair value on the
acquisition date. Subsequent changes to the fair
value of the contingent consideration that is
deemed to be an asset or a liability is recognized in
accordance with IAS 39 either in profit or loss or as
a change to the other comprehensive income.
Contingent consideration that is classified as
equity is not remeasured and its subsequent
settlement is accounted for within equity.
The excess of the consideration transferred, the
amount of any non-controlling interest in the
acquiree and the acquisition date fair value of any
previous equity interest in the acquiree over the fair
value of the identifiable net assets acquired is
recorded as goodwill. If the total of consideration
transferred, non-controlling interest recognized and
previously held interest measured is less than the
fair value of the net assets of the subsidiary acquired
in the case of a bargain purchase, the difference is
recognized directly in the income statement.
MiX Telematics ❯
Annual Report 2014
(b)
The Group’s share of its joint venture’s postacquisition profits or losses is recognized in the
income statement, and its share of post-acquisition
movements in other comprehensive income is
recognized in other comprehensive income. The
cumulative post-acquisition movements are
adjusted against the carrying amount of the
investment. When the Group’s share of losses in a
joint venture equals or exceeds its interest in the
joint venture, including any other unsecured
receivables, the Group does not recognize further
losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the
joint venture.
Changes in ownership interests in
subsidiaries without a change of control
The Group treats transactions with non-controlling
interests that do not result in a loss of control as
transactions with equity owners of the Group, that
is transactions with the owners in their capacity
as owners. For purchases from non-controlling
interests, the difference between the fair value of
any consideration paid and the relevant share
acquired of the carrying value of net assets of the
subsidiary is recorded in equity.
The Group determines at each reporting date
whether there is any objective evidence that the
investment in the joint venture is impaired. If this
is the case, the Group calculates the amount
of impairment as the difference between the
recoverable amount of the joint venture and its
carrying value and recognizes the amount adjacent
to its share of profit/(loss) of the joint venture in the
income statement.
Gains or losses on disposal to non-controlling
interests are also recorded in equity.
(c)
Disposal of subsidiaries
When the Group ceases to have control in an entity,
any retained interest in the entity is re-measured to
its fair value at the date when control is lost, with
the change in the carrying amount recognized in
profit and loss. The fair value is the initial carrying
amount for the purposes of subsequently
accounting for the retained interest as an associate,
joint venture or financial asset. In addition, any
amounts
previously
recognized
in
other
comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed
of the related assets and liabilities. This may mean
that amounts previously recognized in other
comprehensive income are reclassified to the
income statement.
(d)
Joint arrangements
The Group has applied IFRS 11 to all joint
arrangements as of April 1, 2013. Under IFRS 11,
investments in joint arrangements are classified as
either joint operations or joint ventures depending
on the contractual rights and obligations of each
investor. The Group has assessed the nature of
its joint arrangement and determined that it was
a joint venture.
Unrealized gains on transactions between the
Group and its joint venture are eliminated to the
extent of the Group’s interest in the joint venture.
Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of
the asset transferred. Accounting policies of the
joint venture have been changed where necessary
to ensure consistency with the policies adopted by
the Group.
2.3.
Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating
decision-maker, 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.
Sales between segments are carried out at cost
plus a margin.
43
Overview
Inter-company
transactions,
balances
and
unrealized income/expenses on transactions
between Group companies are eliminated.
Unrealized profits or losses are also eliminated.
Accounting policies of subsidiaries have been
changed where necessary to ensure consistency
with the policies adopted by the Group.
Consolidation (continued)
Subsidiaries (continued)
2.2.
(a)
Investments in joint ventures continue to be
accounted for using the equity method of
accounting and are initially recognized at cost. The
Group’s investment in its joint venture includes
goodwill identified on acquisition, net of any
accumulated impairment loss.
Financial reports
2.
MiX Telematics ❯
Annual Report 2014
2.
2.4.
(a)
Foreign currency translation
Functional and presentation currency
(iv)
Items included in the financial statements of each
of the Group’s entities are measured using the
currency of the primary economic environment
in which the entity operates (“the functional
currency”). The consolidated financial statements
are presented in South African Rand (“R”), which is
the Group’s presentation currency.
(b)
On consolidation, exchange differences arising
from the translation of net investments in foreign
operations are taken to other comprehensive
income. When a foreign operation is fully disposed
of or sold (i.e., control is lost), exchange differences
that were recorded in equity are recognized in the
income statement as part of the gain or loss on
sale. A repayment/capitalization of a net investment
loan therefore does not result in any exchange
differences being transferred from equity to the
income statement unless it is part of a transaction
resulting in a loss of control. However, upon such
conversion/repayment, the amount previously
recognized in the shareholder’s loan revaluation
reserve is transferred to the foreign currency
translation reserve in the statement of comprehensive
income.
Transactions and balances
Foreign currency transactions are translated into
the functional currency using the exchange rates
prevailing at the dates of the transactions or date of
valuation where items are re-measured. Foreign
exchange gains and losses resulting from the
settlement of such transactions and from
the translation at year end exchange rates of
monetary assets and liabilities denominated in
foreign currencies are recognized in the income
statement.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at
the closing rate. Exchange differences arising are
recognized in other comprehensive income.
Foreign exchange gains/(losses) are classified as
“Finance income/(cost) – net”.
Translation differences on non-monetary financial
assets and liabilities such as equities classified
as available-for-sale, are included in other
comprehensive income.
(c)
(i)
Group companies
The results and financial position of all Group
entities (none of which has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency
are translated into the presentation currency as
follows:
Assets and liabilities for each statement of financial
position presented are translated at the closing
rate at the date of that statement of financial
position;
(ii)
Income and expenses for each income statement
are translated at average exchange rates (unless
this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the
transaction dates, in which case income and
expenses are translated at the rate on the dates of
the transactions);
(iii)
All resulting exchange differences are recognized in
other comprehensive income; and
44
Equity items are measured at historical cost at the
time of recording, translated at the rate on the date
of recording and are not retranslated to closing
rates at reporting dates.
2.5.
Property, plant and equipment is stated at historical
cost less accumulated depreciation and any
accumulated impairment losses. Historical cost
includes all expenditure directly attributable to the
acquisition of the items. Subsequent costs are
included in the asset’s carrying amount or
recognized as a separate asset, as appropriate,
only when it is probable that future economic
benefits associated with the item will flow to the
Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part
is derecognized. Repairs and maintenance are
charged to the income statement in the financial
period in which they are incurred.
The cost of in-vehicle devices installed in vehicles
(including installation and shipping costs), as well
as the cost of uninstalled in-vehicle devices are
capitalized as property, plant and equipment. The
Group depreciates installed in-vehicle devices on a
straight-line basis over their expected useful lives,
commencing upon installation, whereas uninstalled
in-vehicle devices are not depreciated until installed.
The related depreciation expense is recorded as
part of cost of sales in the income statement.
MiX Telematics ❯
Annual Report 2014
Buildings
50 years
Plant and equipment
3 – 20 years
Motor vehicles
5 – 7 years
Furniture, fittings and equipment
1 – 10 years
Computer and radio equipment
2 – 5 years
In-vehicle devices installed
1 – 5 years
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount (note 2.7).
(b)
2.6.
(a)
Intangible assets
Goodwill
Goodwill arises on the acquisition of businesses
and represents the excess of consideration
transferred over the acquirer’s interest in the net
fair value of the net identifiable assets, liabilities
and contingent liabilities of the acquiree and the
fair value of the non-controlling interests in the
acquiree. Goodwill on acquisition of businesses is
included in intangible assets. Gains and losses on
the disposal of an entity include the carrying
amount of the goodwill relating to the entity sold.
Patents and trademarks
Separately acquired patents and trademarks are
shown at historical cost. Patents and trademarks
acquired in a business combination are recognized
at fair value at the acquisition date. Patents and
trademarks have a finite useful life and are carried
at cost less accumulated amortization and
accumulated impairment losses. Amortization is
calculated using the straight-line method to
allocate the cost of patents and trademarks over
their estimated useful lives (4 to 20 years).
Gains and losses on disposal of an asset are
determined by comparing the proceeds with the
carrying amount and are recognized within “Other
income/(expenses) – net” in the income statement.
(c)
Customer relationships
Contractual customer relationships acquired in a
business combination are recognized at fair value
at the acquisition date. The contractual customer
relationships have a finite useful life and are carried
at cost less accumulated amortization and
accumulated impairment losses. Amortization is
calculated using the straight-line method over
the expected life of the customer relationship (3 to
5 years).
(d)
Property, plant and equipment (continued)
Land is not depreciated. Depreciation on other
assets is calculated using the straight-line method
to reduce their cost to their residual values over
their estimated useful life, as follows:
2.5.
Goodwill is tested annually for impairment or more
frequently if events or changes in circumstances
indicate a potential impairment, and is carried at
cost less accumulated impairment losses. The
carrying amount of goodwill is compared to the
recoverable amount, which is the higher of value in
use and the fair value less costs to sell. Impairment
losses recognized as an expense in relation to
goodwill are not subsequently reversed. Goodwill
is allocated to cash generating units for the purpose
of impairment testing. The allocation is made to
those cash generating units or groups of cash
generating units that are expected to benefit from
the business combination in which the goodwill
arose. Each unit or group of units to which the
goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored
for internal management purposes. Goodwill is
monitored at the operating segment level.
Computer software, technology, in-house
software and product development
Acquired computer software licenses are
capitalized on the basis of costs incurred to acquire
and bring the software into use. The acquired
computer software licenses have a finite useful life
and are carried at cost less accumulated
amortization and accumulated impairment losses.
These costs are amortized over their estimated
useful lives (1 to 5 years).
45
Financial reports
2.
Overview
MiX Telematics ❯
Annual Report 2014
2.
2.6.
(d)
Intangible assets (continued)
Computer software, technology, in-house
software and product development (continued)
An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of an asset’s fair value less cost to sell,
and value in use. In assessing the value in use, the
estimated future cash flows are discounted to their
present value using the pre-tax discount rate that
reflects current market assessments on the time
value of money and the risks specific to the asset
for which the estimates of future cash flows have
not been adjusted.
In-house software and product development costs
that are directly attributable to the design, testing
and development of identifiable and unique
software and products, controlled by the Group,
are recognized as intangible assets when the
following criteria are met:
• It is technically feasible to complete the software
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating
units, i.e. operating segments). Non-financial
assets other than goodwill that have suffered
impairment are reviewed for possible reversal of
the impairment at each reporting date.
product so that it will be available for use;
• Management intends to complete the software
product and use it or sell it;
• There is an ability to use or sell the software
product;
• It can be demonstrated how the software will
generate probable future economic benefits;
• Adequate
technical, financial and other
resources to complete the development and use
or sell the software product are available; and
• The expenditure attributable to the software
product during its development can be reliably
measured.
Directly attributable costs that are capitalized as
part of the intangible assets include software and
product development employee costs and an
appropriate portion of relevant overheads.
Other development expenditures that do not meet
the criteria are recognized as an expense as
incurred. Development costs previously recognized
as an expense are not recognized as an asset in a
subsequent period if the criteria are subsequently
met.
Costs associated with maintaining computer
software programs are recognized as an expense
as incurred.
Computer software and product development
costs recognized as assets are amortized over their
estimated useful lives (1 to 12 years).
2.7.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example
goodwill, are not subject to amortization or
depreciation but are tested annually for impairment
or whenever there is an indication of impairment.
Assets that are subject to amortization or
depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that
the carrying amount may not be recoverable.
46
2.8.
2.8.1.
Financial assets
Classification
The Group classifies its financial assets in the
following categories: loans and receivables and
available-for-sale. The classification depends
on the purpose for which the financial assets
were acquired. Management determines the
classification of its financial assets at initial
recognition.
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market. They are
included in current assets, except for those with
maturities greater than 12 months after the end of
the reporting period, which are classified as noncurrent assets. The Group’s loans and receivables
comprise trade and other receivables, loans to
external parties, finance lease receivables,
restricted cash, and cash and cash equivalents in
the statement of financial position.
Available-for-sale financial assets
Available-for-sale financial assets are nonderivative financial assets that are either designated
in this category or not classified in any of the other
categories. They are included in non-current assets
unless the investment matures or management
intends to dispose of the investment within
12 months of the end of the reporting period.
MiX Telematics ❯
Annual Report 2014
2.8.3.
The amount of the loss is measured as the
difference between the asset’s carrying amount
and the present value of estimated future cash
flows, discounted at the financial asset’s original
effective interest rate. The asset’s carrying amount
is reduced and the amount of the loss is recognized
in the income statement. If a loan has a variable
interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate
determined under the contract.
Measurement
Loans and receivables are subsequently carried at
amortized cost using the effective interest rate
method, less any impairment losses.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can
be related objectively to an event occurring after
the impairment was recognized, the reversal of
the previously recognized impairment loss is
recognized in the income statement.
Available-for-sale financial assets are subsequently
carried at fair value.
Changes in the fair value of monetary and nonmonetary securities classified as available-for-sale
are recognized in other comprehensive income.
The Group assesses, at the end of each reporting
period, whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. In the case of equity securities classified
as available-for-sale, a significant or prolonged
decline in the fair value of the security below its
cost is also evidence that the assets are impaired.
If any such evidence exists, the cumulative
impairment loss, measured as the difference
between the acquisition cost and the current fair
value, less any impairment loss on that financial
asset previously recognized in the income
statement, is removed from equity and recognized
in the income statement. Impairment losses
recognized in the income statement on equity
instruments are not reversed through the income
statement.
When securities classified as available-for-sale are
sold or impaired, the accumulated fair value
adjustments recognized in other comprehensive
income are reclassified to the income statement as
gains or losses on the investments.
Dividends on available-for-sale equity instruments
are recognized in the income statement as part of
other income when the Group’s right to receive
payments is established.
2.8.4.
Impairment of financial assets
The Group assesses, at the end of each reporting
period, whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. A financial asset or a group of financial
assets is impaired and impairment losses are
incurred only if there is objective evidence of
impairment as a result of one or more events that
occurred after the initial recognition of the asset (a
“loss event”) and that loss event (or events) has an
impact on the estimated future cash flows of the
financial asset or group of financial assets that can
be reliably estimated.
2.9.
Overview
Regular purchases and sales of financial assets are
recognized on the trade date (the date on which the
Group commits to purchase or sell the asset).
Investments are initially recognized at fair value plus
transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets
carried at fair value through profit or loss are initially
recognized at fair value, and transaction costs are
expensed in the income statement. Financial assets
are derecognized when the rights to receive cash
flows from the assets have expired or have been
transferred and the Group has transferred
substantially all risks and rewards of ownership.
Financial assets (continued)
Recognition
2.8.
2.8.2.
Evidence of impairment may include indications
that the debtors or a group of debtors is
experiencing significant financial difficulty, default
or delinquency in interest or principal payments,
the probability that they will enter bankruptcy
or other financial reorganization, and where
observable data indicates that there is a measurable
decrease in the estimated future cash flows, such
as changes in arrears or economic conditions that
correlate with defaults.
Offsetting financial instruments
Financial assets and liabilities are offset and the net
amount reported in the statement of financial
position when there is a legally enforceable right to
offset the recognized amounts and there is an
intention to settle on a net basis, or realize the
asset and settle the liability simultaneously.
47
Financial reports
2.
MiX Telematics ❯
Annual Report 2014
2.
2.10.
Inventories
Inventories are stated at the lower of cost and net
realizable value. Cost is determined on a first-in,
first-out (“FIFO”) or weighted average cost basis,
depending on the nature of the Group entity in
which it is held. The cost of finished goods includes
the cost of manufacturing as charged by third
parties. It excludes borrowing costs. Net realizable
value is the estimated selling price in the ordinary
course of business, less applicable variable selling
expenses.
2.11.
Trade and other payables are initially recognized
at fair value and are subsequently measured
at amortized cost using the effective interest
rate method.
2.16.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12 months
after the reporting date.
Trade receivables
Trade receivables are amounts due from customers
for goods sold or services performed in the ordinary
course of business. If collection is expected in one
year or less they are classified as current assets. If
not, they are presented as non-current assets.
Fees paid on the establishment of loan facilities are
recognized as transaction costs of the loan to the
extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is
deferred until the draw-down occurs. To the extent
there is no evidence that it is probable that some or
all of the facility will be drawn down, the fee is
capitalized as a prepayment for liquidity services
and amortized over the period of the facility to
which it relates.
Trade receivables are recognized initially at fair
value and subsequently measured at amortized
cost using the effective interest rate method, less
provision for impairment.
2.12.
Cash and cash equivalents included in the
statement of cash flows include cash on hand,
deposits held on call with banks and bank
overdrafts, all of which are available for use by the
Group and have an original maturity of less than
three months. Bank overdrafts are included within
current liabilities on the statement of financial
position.
2.13.
Restricted cash
Restricted cash includes short-term deposits and
amounts held in trusts that are not highly liquid and
is accounted for as loans and receivables.
2.14.
Stated capital
Ordinary shares are classified as equity. Incremental
external costs directly attributable to the issue
of new shares or the exercise of share options
are shown in equity as a deduction, net of tax, from
the proceeds.
2.15.
Trade and other payables are obligations to pay
for goods or services that have been acquired in
the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities
if payment is due within one year or less. If not,
they are presented as non-current liabilities.
48
Borrowings
Borrowings are recognized initially at fair value, net
of transaction costs incurred. Borrowings are
subsequently carried at amortized cost; any
difference between the proceeds (net of transaction
costs) and the redemption value is recognized in
the income statement over the period of the
borrowings using the effective interest rate method.
2.17.
Borrowing costs
General and specific borrowing costs that are
directly attributable to the acquisition, construction,
or production of qualifying assets, which are assets
that necessarily take a substantial period of time to
get ready for their intended use or sale, are
capitalized as part of the cost of that asset until such
time as the asset is substantially ready for its
intended use or sale. The amount of borrowing costs
eligible for capitalization is determined as follows:
• Actual borrowing costs on funds specifically
borrowed for the purpose of constructing or
producing a qualifying asset less any investment
income on the temporary investment of those
borrowings.
• Weighted average of the borrowing costs
applicable to the entity on funds generally
borrowed.
The borrowing costs capitalized do not exceed the
total borrowing costs incurred. The capitalization of
borrowing costs commences when:
• Expenditures for the asset have occurred;
• Borrowing costs have been incurred; and
• Activities that are necessary to prepare the asset
for its intended use or sale are in progress.
MiX Telematics ❯
Annual Report 2014
All other borrowing costs are recognized in profit or
loss in the period in which they are incurred.
2.18.
2.18.1.
Taxation
Current and deferred income taxes
The tax expense for the year comprises current
and deferred tax. Tax is recognized in the income
statement, except to the extent that it relates to
items recognized in other comprehensive income
or directly in equity. In this case, the tax is also
recognized in other comprehensive income or
directly in equity, respectively.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantially
enacted at the end of the reporting period in the
countries where the Company and its subsidiaries
operate and generate taxable income. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the
liability method, on temporary differences arising
between the tax base of assets and liabilities and
their carrying amounts in the financial statements.
However, deferred tax liabilities are not recognized
if they arise from the initial recognition of goodwill;
deferred income tax assets are not accounted for if
they arise from the initial recognition of an asset or
liability in a transaction other than a business
combination that, at the time of the transaction,
affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or
substantially enacted by the reporting date and are
expected to apply when the related deferred
income tax asset is realized or the deferred income
tax liability is settled.
Deferred income tax assets are recognized only to
the extent that it is probable that future taxable
profit will be available against which the temporary
differences can be utilized.
2.18.2.
Dividends tax
Dividend withholding tax is payable at a rate of
15% on dividends distributed to shareholders. This
tax is not attributable to the Company but rather
paid to the tax authorities on behalf of the
shareholders
through
use
of
regulatory
intermediaries, with only the net amount of the
dividend being remitted to the shareholder.
2.19.
(a)
Employee benefits
Short-term benefits
Remuneration to employees in respect of services
rendered during a reporting period is recognized as
an expense in that reporting period. Provision is
made for accumulated leave and for short-term
benefits when there is no realistic alternative other
than to settle the liability, and at least one of the
following conditions is met:
Overview
Borrowing costs (continued)
Capitalization is suspended during extended
periods in which active development is interrupted.
Capitalization ceases when substantially all the
activities necessary to prepare the qualifying asset
for its intended use or sale are completed.
2.17.
Deferred income tax is provided on temporary
differences arising on investments in subsidiaries
and joint ventures, except where the timing of the
reversal of the temporary difference is controlled by
the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets against current tax liabilities and
when the deferred income tax assets and liabilities
relate to income taxes levied by the same taxation
authority on either the same taxable entity or
different taxable entities where there is an intention
to settle the balances on a net basis.
• There is a formal plan and the amounts to be
paid are determined before the time of issuing
the financial statements; or
• Achievement of previously agreed bonus criteria
has created a valid expectation by employees
that they will receive a bonus and the amount
can be determined before the time of issuing the
(b)
Defined contribution plan
The Group operates defined contribution plans.
A defined contribution plan is one under which the
Group pays a fixed percentage of employees’
remuneration as contributions into a separate fund,
and the Group will have no further legal or
constructive obligations to pay additional
contributions if the fund does not hold sufficient
assets to pay all employee benefits relating to
employee service in the current and prior periods.
Contributions to defined contribution plans in
respect of services rendered during a period are
recognized as staff costs when they are due.
49
Financial reports
2.
MiX Telematics ❯
Annual Report 2014
2.
2.19.
(c)
Employee benefits (continued)
Short-term incentives – bonus
which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of
each reporting period, the Group revises its
estimates of the number of options that are
expected to vest based on the non-market vesting
conditions. It recognizes the impact of the revision
to original estimates, if any, in the income statement,
with a corresponding entry to equity.
The Group recognizes a liability and an expense for
bonuses based on the achievement of defined key
performance criteria. An accrual is recognized
where the Group is contractually obliged or where
there is a past practice that has created a
constructive obligation.
(d)
Termination benefits
Termination benefits are payable when employment
is terminated by the Group before the normal
retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these
benefits. The Group recognizes termination benefits
at the earlier of the following dates: (a) when the
Group can no longer withdraw the offer of those
benefits; and (b) when the entity recognizes costs
for a restructuring that is within the scope of IAS 37
Provisions and involves payment of termination
benefits. In the case of an offer made to encourage
voluntary redundancy, the termination benefits are
measured based on the number of employees
expected to accept the offer. Benefits falling due
more than 12 months after the end of the reporting
period are discounted to their present value.
2.20.
When the options are exercised, the Company issues
new shares. The proceeds received, net of any
directly attributable transaction costs, are credited to
stated capital (as they are no par value shares).
2.21.
Provisions which are expected to be settled in a
period greater than 12 months are discounted to
their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to
the obligation. The increase in the provision due
to the passage of time is recognized as an interest
expense.
Share-based payments
The Group operates an equity-settled share-based
compensation plan, under which the entity receives
services from employees as consideration for
equity instruments (share options) of the Group.
The fair value, determined at grant date, of
the employee services received in exchange for the
grant of share options is recognized as an expense
at a Group level with a corresponding credit to
equity. The total amount to be expensed is
determined by reference to the grant date fair value
of the options issued:
Provision for the estimated liability on all products
under warranty is made on the basis of claims
experience.
Provision for the estimated liability for maintenance
costs is made on a per unit basis when the
obligation to repair occurs.
Provision for the anticipated costs associated with
the restoration of leasehold property is based on
the Group’s best estimate of those costs required
to restore the property to its original condition.
• Including any market performance conditions;
• Excluding the impact of any service and nonmarket performance vesting conditions (for
example, remaining an employee of the entity
over a specified time period); and
• Including the impact of any non-vesting
conditions.
Non-market performance and service conditions
are included in the assumptions about the number
of options that are expected to vest. The total
expense is recognized over the vesting period,
50
Provisions
Provisions are recognized when the Group has a
present legal or constructive obligation as a result
of a past event for which it is probable that an
outflow of resources will be required to settle the
obligation and a reliable estimate can be made of
the amount of the obligation. Provisions are not
recognized for future operating losses.
2.22.
Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable for the sale of
goods or services in the ordinary course of the
Group’s activities. Revenue includes amounts earned
on the sale of hardware units, subscription service
sales to customers, installation revenue and cellular
network connection and upgrade incentives.
Revenue is shown net of discounts, value added tax,
returns and after eliminating sales within the Group.
MiX Telematics ❯
Annual Report 2014
The Group recognizes revenue when the amount of
revenue can be measured reliably and it is probable
that future economic benefits will flow to the entity
and specific criteria have been met for each of the
Group’s activities, as outlined below. The Group
bases its estimates on historical results, taking into
consideration the type of customer, the type of
transaction and the specifics of each arrangement.
Invoicing for the various products and services,
when sold separately or as part of a multiple
element arrangement, occurs based on the specific
contractual terms and conditions.
The Group distributes products to small fleet
customers and consumers through distributors.
Distributors act as agents and hardware revenue is
only recognized when the distributor sells the
hardware unit to the end customer or consumer.
Once a unit is sold to a customer or consumer, the
customer or consumer enters into a service
agreement directly with the Group for the product.
The obligation to supply the service and the credit
risk rests with the Group. The service revenue is
recognized when the service is rendered (i.e. on a
monthly basis).
The Group distributes products to enterprise fleet
customers through dealers. Dealers are considered
principals in respect of the sale of hardware and
revenue is recognized upon sale of the hardware
unit to the dealer. Similar to the relationship with
consumers and small fleet customers originated
through distributors, the responsibility for providing
services rests with the Group and revenue is
recognized as the service is rendered.
(a)
Subscription revenue
Subscription revenue is recognized over the term of
the agreement as it is earned. When contracted
services are performed through a number of repetitive
acts over the contract period, revenue is recognized
on a straight-line basis over the contract period.
(c)
Driver training and other services
Revenue is recognized at the contractual hourly/
daily rate in the period during which the training
is performed.
(d)
Connection and upgrade incentive revenue
Revenue from cellular network connection and
upgrade incentives is recognized on the date of
installation of a unit in a vehicle, which is considered
to be the point at which the Group has substantially
completed its service obligation to the cellular
network.
(e)
Rental revenue
Where hardware is provided as part of a service
contract the risk and rewards of ownership do not
transfer and service revenue from the rental unit is
recognized over the period of the service and
included in subscription revenue.
(f)
Installation revenue
Revenue earned from the installation of hardware
in customer vehicles is recognized once the
installation has been completed.
(g)
Extended product warranties
The fair value of the consideration relating to
extended warranty periods is deferred and
recognized over the extended warranty period.
During the periods presented, the Group did not
offer extended warranties. However, repair services
are provided. Revenue, in respect of repair services,
which forms part of the monthly subscription, is
recognized on a monthly basis over the period of
the service arrangement.
2.23.
Interest income
Interest income is recognized on a time proportion
basis with reference to the principal amount
receivable and the effective interest rate applicable.
2.24.
Overview
The Group offers certain arrangements whereby
the customer can purchase a combination of the
products and services as referred to above. Where
such multiple element arrangements exist, the
amount of revenue allocated to each element is
based on the relative fair values of the various
elements offered in the arrangement. When
applying the relative fair value approach, the fair
values of each element are determined based on
the current market price of each of the elements
when sold separately.
Revenue recognition (continued)
Hardware sales
All hardware has value on a standalone basis.
Revenue from hardware sales is recognized once
the risks and rewards of ownership have transferred.
2.22.
(b)
Dividend income
Dividend income is recognized when the right to
receive payment is established.
2.25.
Leases
Leases are classified as finance leases whenever
the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All
other leases are classified as operating leases.
51
Financial reports
2.
MiX Telematics ❯
Annual Report 2014
2.
2.25.
2.25.1.
Leases (continued)
The Group as a lessor
When assets are leased out under a finance lease,
the present value of the lease payments is
recognized as a receivable. The difference between
the gross receivable and the present value of the
receivable is recognized as unearned finance
income. The method for allocating gross earnings
to accounting periods is referred to as the “actuarial
method”.
The actuarial method allocates rentals between
finance income and repayment of capital in each
accounting period in such a way that finance
income will emerge as a constant rate of return on
the lessor’s net investment in the lease. When
assets are leased out under an operating lease, the
asset is included in the statement of financial
position based on the nature of the asset. Lease
income on operating leases is recognized over the
term of the lease on a straight-line basis.
2.25.2.
2.26.
2.27.
Government grants related to non-current assets
are deducted in arriving at the carrying value of the
asset. The grant is recognized in profit or loss over
the life of the asset as a reduced depreciation
expense.
3.
Financial risk management
3.1.
Financial risk factors
The Group’s activities expose it to a variety of
financial risks: market risk (including foreign
exchange risk, interest rate risk, and price risk),
credit risk, and liquidity risk. The Group’s overall
risk management program focuses on the
unpredictability of financial markets as it relates to
foreign exchange risk and seeks to minimize
potential adverse effects on the Group’s financial
performance. Risk management is carried out
under policies approved by the Board of Directors.
The Board has provided a written policy covering
specific areas, such as foreign exchange risk.
The Group as a lessee
Each lease payment is allocated between the
liability and finance charges. The corresponding
rental obligations, net of finance charges, are
included in borrowings. The interest element of the
finance cost is charged to the income statement
over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of
the liability for each period. The property, plant and
equipment acquired under finance leases is
depreciated over the shorter of the useful life of the
asset and the lease term. The Group had no finance
lease liabilities during the current fiscal year.
52
Government grants
Grants from the government are recognized at their
fair value where there is reasonable assurance that
the grant will be received and the Group will comply
with all attached conditions.
Leases in which a significant portion of the risks
and rewards of ownership are retained by the
lessor are classified as operating leases. Payments
made under operating leases are charged to the
income statement on a straight-line basis over the
term of the relevant lease.
The Group leases certain property, plant and
equipment. Leases of property, plant and
equipment, where the Group has substantially all
the risks and rewards of ownership, are classified
as finance leases. Finance leases are capitalized at
the lease’s commencement at the lower of the fair
value of the leased property and the present value
of the minimum lease payments.
Dividend distribution
Any dividend distribution to the Company’s
shareholders is recognized as a liability in the
Group’s financial statements in the period in which
the dividends are approved by the Company’s
Board of Directors.
(a)
(i)
Market risk
Foreign exchange risk
The Group operates internationally and is exposed
to foreign exchange risk arising from various
currency exposures, primarily with respect to
the United States Dollar, the South African Rand,
the Euro, the Australian Dollar and the British Pound.
Foreign exchange risk arises when future
commercial transactions or recognized assets and
liabilities and net investments in foreign operations
are denominated in a currency that is not the
entity’s functional currency.
The Group has implemented a foreign currency
hedging policy to limit the Group’s exposure to
fluctuations in foreign currencies which is mainly
based on economic hedging principles as opposed
to using derivative financial instruments.
MiX Telematics ❯
Annual Report 2014
Credit risk relating to accounts receivable balances
is managed by each local entity which is responsible
for managing and analyzing the credit risk for each
of their new clients before standard payment and
delivery terms and conditions are offered. The
Group has a policy in place governing the allowance
for credit losses.
As a result of the US initial public offering proceeds
being retained in United States Dollars, the Group’s
foreign currency exposure has been significantly
increased. A financial risk sensitivity analysis is
presented in note 38.
(ii)
Interest rate risk
Cash investments are only placed with high-quality
financial institutions rated BBB and above (note 14).
All changes in or new banking arrangements
entered into are approved by the Board. Refer to
note 12 for further disclosure on credit risk.
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will
fluctuate due to changes in market interest rates.
The Group’s cash flow interest rate risk arises from
borrowings, loans to external parties, restricted
cash, cash and cash equivalents and the bank
overdraft. Borrowings and bank overdrafts issued
at variable rates expose the Group to cash flow
interest rate risk which is partly offset by financial
assets held at variable rates (i.e. cash and cash
equivalents and restricted cash).
The Group is not exposed to fair value interest rate
risk as the Group does not have any interestbearing financial instruments carried at fair value.
Interest rates are constantly monitored and
appropriate steps are taken to ensure that the
Group’s exposure to interest rate fluctuations is
limited. This includes obtaining approval from the
Board for all changes to and new borrowing
facilities entered into during the year. Refer to note
38 for interest rate risk sensitivity analysis.
(iii)
Price risk
Currently the Group does not have significant
price risk. The Group is not exposed to commodity
price risk.
(c)
Liquidity risk
Liquidity risk is the risk that there will be insufficient
funds available to settle obligations when they
are due.
The Group has limited liquidity risk due to surplus
cash balances and the recurring nature of its
income which generates strong cash inflows. The
level of cash balances in the Group is monitored
weekly and cash generated from operations is
reviewed against planned cash flows on a monthly
basis. In addition, working capital reviews are
performed monthly.
Surplus cash is invested in interest-bearing current
accounts and time-deposits that are expected
to readily generate cash inflows for managing
liquidity risk.
Overview
The Group has certain investments in foreign
operations, whose net assets are exposed to
foreign currency translation risk. Currency exposure
arising from the assets of the Group's foreign
operations is reduced as a result of assets and
liabilities denominated in the same foreign
currencies.
Financial risk factors (continued)
Market risk (continued)
Foreign exchange risk (continued)
Credit risk
Credit risk is the risk that a counterparty to a
financial instrument will fail to discharge an
obligation and cause the Group to incur a financial
loss. Credit risk arises from cash and cash
equivalents, as well as credit exposures to
customers and in respect of loans provided to
external parties. The maximum exposure to credit
risk is represented by the carrying amount of each
financial asset in the statement of financial position,
net of impairment losses where relevant.
3.1.
(a)
(i)
(b)
Financial risk
management (continued)
In addition, the Group maintains headroom on its
undrawn borrowing facilities to ensure that the
Group does not breach borrowing limits on its
borrowing facilities. Refer to note 39 for further
disclosure on liquidity risk.
53
Financial reports
3.
MiX Telematics ❯
Annual Report 2014
3.
3.2.
Financial risk
management (continued)
4.
Estimates and judgements are continually
evaluated and are based on historical experience
and other factors, including expectations of future
events that are believed to be reasonable under
the circumstances.
Capital risk management
The Group’s objectives when managing capital are
to safeguard the Group’s ability to continue as a
going concern while enhancing the returns for
shareholders and ensuring benefits for other
stakeholders. The Board of Directors monitors
capital by reviewing the net debt position and the
net gearing ratio. Gearing is calculated as net debt
divided by total equity. Net debt is calculated as
total borrowings (including current and non-current
borrowings as shown in the statement of financial
position) less net cash and cash equivalents. Total
capital is calculated as “total equity” as shown in
the statement of financial position.
In order to maintain the capital structure, the Group
may return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal the
related actual results. The estimates and
assumptions that have significant risk of causing a
material adjustment to the carrying amounts of
assets and liabilities during the 2015 fiscal year are
outlined below:
(a)
(b)
Fair value estimation
markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included
within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or
indirectly (that is, derived from prices).
• Level 3: Inputs for the asset or liability that are
not based on observable market data (that is,
unobservable inputs).
The available-for-sale financial assets have been
classified as level 3 as there are no observable
inputs available for use in valuing these investments.
See note 9 for further disclosures about the
available-for-sale financial assets measured at
fair value.
54
Maintenance provision
The Group, in some instances, offers maintenance
services as part of its revenue contracts.
Management estimates the related provision for
maintenance costs per vehicle when the obligation
to repair occurs.
Additional analysis of financial instruments carried
at fair value, by valuation method has been set out
in note 9. The different levels of the fair value
hierarchy as required by IFRS 13 have been defined
as follows:
• Level 1: Quoted prices (unadjusted) in active
Warranty claims
The Group generally offers warranties on its
hardware units. Management estimates the related
provision for future warranty claims based on
historical warranty claim information, as well as
recent trends that might suggest that past cost
information may differ from future claims.
There were no changes to the Group’s approach to
capital management during the year. The Group
was not subject to any financial covenants on its
borrowings during the 2013 and 2014 fiscal years.
3.3.
Critical accounting estimates
and judgements
(c)
Income taxes
The Group is subject to income taxes in numerous
jurisdictions. Significant judgement is required in
determining the worldwide provision for income
taxes. Where applicable, tax legislation is subject
to interpretation, management makes assessments,
based on expert tax advice, of the relevant tax that
is likely to be paid and provides accordingly. When
the final outcome is determined and there is a
difference this is recognized in the period in which
the final outcome is determined.
MiX Telematics ❯
Annual Report 2014
(d)
Critical accounting estimates
and judgements (continued)
Estimated impairment of goodwill
(e)
Overview
The Group tests annually whether goodwill has
suffered any impairment in accordance with the
accounting policy stated in note 2.7. The
recoverable amount of cash generating units has
been based on value-in-use calculations. These
calculations require the use of estimates (note 7).
Product development cost
Product development cost directly attributable to
the design and testing of identifiable and unique
software products controlled by the Group are
recorded as intangible assets by the Group when
the criteria in note 2.6 have been met. The
assessment as to when these criteria have been
met is subjective and capitalization has been based
on management’s best judgement of facts and
circumstances in existence at year-end.
Receivables allowance
The valuation allowance for trade receivables
reflects the Group’s estimates of losses arising
from the failure or inability of the Group’s customers
to make required payments. The allowance is
based on the ageing of customer accounts,
customer creditworthiness and the Group’s
historical write-off experience. Changes to the
allowance may be required if the financial condition
of the Group’s customers improves or deteriorates.
An improvement in financial condition may result in
lower actual write-offs. Historically, changes to the
estimate of losses have not been material to the
Group’s financial position and results.
(f)
55
Financial reports
4.
MiX Telematics ❯
Annual Report 2014
5.
Segment information
Segments are organized by geography and by product type. The Group’s products and services revolve around its
brands and the customers that it serves and hence it splits the segments based on the geography from which the
customer is serviced and between fleet and consumer from a product offering perspective, which takes into account
the types of products and services provided by each segment.
Consumer solutions include the Group’s Matrix and Beam-e branded products and are sold to individual consumers
and fleet owners who require basic vehicle tracking and recovery and entry-level fleet management functionality.
The Group’s fleet solutions include MiX branded products and are sold to small fleet owners and larger enterprise
fleet customers.
The segment information provided to the Group’s chief operating decision-maker for the reportable segments for the
year ended March 31, 2014 is as follows:
Total
revenue
R’000
Intersegment
revenue
R’000
Africa
355,084
325,400
160,639
134,213
306,450
11,901
358,538
(17,632)
(5,500)
(977)
—
(1,569)
(56)
(354,833)
105,162
95,209
7,285
(6,550)
21,834
(11,621)
102,778
Total
1,652,225
(380,567)
314,097
1,029,353
—
—
(31,874)
1,136,564
(380,567)
380,567
—
(188,817)
1,271,658
—
282,223
1,977,100
Consumer solutions
Fleet solutions
Europe
Fleet solutions
Americas
Fleet solutions
Middle East and Australasia Fleet solutions
Brazil
Fleet solutions
International
Fleet solutions and development
Corporate and consolidation
entries
Inter-segment elimination
Total
Adjusted
EBITDA
R’000
Assets
R’000
276,643
131,286
88,086
74,970
162,848
9,695
285,825
InterTotal
segment
Adjusted
revenue
revenue
EBITDA
Assets
R’000
R’000
R’000
R’000
Africa
Consumer solutions
Fleet solutions
Europe
Fleet solutions
Americas
Fleet solutions
Brazil
Fleet solutions
International
343,578
281,937
128,116
155,657
265,598
—
330,755
(11,910)
(5,838)
(576)
—
—
—
(315,837)
86,943
94,541
(4,608)
3,039
32,952
(2,062)
94,784
279,239
83,047
60,078
53,067
129,133
4,529
243,284
Total
1,505,641
(334,161)
305,589
852,377
entries
Total
56
—
—
(14,768)
415,493
(334,161)
334,161
—
(115,082)
1,171,480
—
290,821
1,152,788
MiX Telematics ❯
Annual Report 2014
Africa
Consumer solutions
Fleet solutions
Europe
Fleet solutions
Americas
Fleet solutions
International
342,324
232,542
126,782
156,013
131,393
286,433
(8,546)
(2,953)
—
(298)
—
(245,208)
74,069
79,680
(5,961)
14,109
14,924
84,058
253,162
79,082
71,110
54,365
72,333
258,692
Total
1,275,487
(257,005)
260,879
788,744
—
(257,005)
—
257,005
(20,257)
—
408,349
(128,677)
1,018,482
—
240,622
1,068,416
entries
Total
Overview
Segment information (continued)
InterTotal
segment
Adjusted
revenue
revenue
EBITDA
Assets
R’000
R’000
R’000
R’000
Africa
Europe
Americas
Middle East and Australasia
Brazil
International
Corporate and consolidation entries
Total
Consumer solutions
Fleet solutions
Fleet solutions
Fleet solutions
Fleet solutions
Fleet solutions
Property,
plant and
equipment
R’000
Intangible
assets
R’000
46,757
29,358
3,951
4,236
3,196
1,899
6,014
(15,221)
8,342
6,485
—
458
18
331
41,172
(1,687)
80,190
55,119
During the fiscal year ended March 31, 2014, the Group changed the way it presents additions to non-current assets.
The additions to property, plant and equipment and intangible assets are now presented gross of any inter-segment
elimination entries, with inter-segment eliminations presented within “Corporate and consolidation entries”. This was
done to provide consistency with the manner in which total assets per reportable segment are reviewed by the chief
operating decision-maker. The table above presents the segment information on this revised basis, with the prior years
amended to conform to the current year presentation.
57
The additions to non-current assets which are included in the measure of segment assets provided to the Group’s chief
operating decision-maker for the reportable segments for the year ended March 31, 2014 are as follows:
There are no material non-cash items provided to the Group’s chief operating decision-maker other than disclosed in
the reconciliation of profit for the year to EBITDA below.
Financial reports
5.
MiX Telematics ❯
Annual Report 2014
5.
Africa
Europe
Americas
Brazil
International
Consumer solutions
Fleet solutions
Fleet solutions
Fleet solutions
Fleet solutions
Fleet solutions
Total
Property,
plant and
equipment
R’000
Intangible
assets
R’000
40,327
7,417
1,724
592
890
319
5,280
(5,050)
7,394
2,128
—
1,227
13
—
31,827
59
51,499
42,648
Africa
Europe
Americas
International
Total
Consumer solutions
Fleet solutions
Fleet solutions
Fleet solutions
Fleet solutions
Property,
plant and
equipment
R’000
Intangible
assets
R’000
27,531
9,398
2,902
841
856
5,996
(5,931)
8,636
—
—
494
—
26,693
50
41,593
35,873
During the 2014 fiscal year, impairments to furniture and fittings of R0.3 million (2013: Nil, 2012: Nil) were recognized in
profit or loss by the Middle East and Australasia segment. The International segment recognized impairments of
capitalized product development costs of R0.1 million (2013: R5.2 million, 2012: R1.3 million) in profit or loss.
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief
operating decision-maker. The Group’s chief operating decision-maker, 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.
58
2014
R’000
2013
R’000
2012
R’000
282,223
290,821
240,622
97
—
314
1,669
—
963
(47,887)
(44,941)
(379)
(4,611)
(41,201)
(56,985)
(5,158)
(3,151)
(36,792)
(53,040)
(1,332)
(2,001)
—
—
(430)
—
(2,745)
(8,503)
(211)
(1,545)
(394)
—
—
(38)
—
—
—
—
—
—
Taxation
171,498
40,660
(60,574)
185,877
(6,011)
(51,400)
147,990
(4,475)
(40,275)
Profit for the year
151,584
128,466
103,240
Reconciliation of Adjusted EBITDA to profit for the year
Adjusted EBITDA
Add:
Net profit on sale of property, plant and equipment and
intangible assets
Net realized foreign exchange losses
Less:
Depreciation(1)
Amortization(2)
Impairment(3)
Share-based compensation costs
Net loss on sale of property, plant and equipment and
intangible assets
Foreign currency translation reserve released due to liquidation of
intermediary subsidiary holding company (note 32.2)
Restructuring costs
Non-recurring initial public offering costs(4)
Transaction costs arising from the acquisition of a business
Net realized foreign exchange gains
Operating profit
Includes depreciation of property, plant and equipment (including in-vehicle devices).
Includes amortization of intangible assets (including product development costs).
Includes impairment of product development costs and furniture and fittings.
(4)
Includes R7.7 million in staff costs and R0.8 million in audit fees.
Overview
The Group’s businesses are managed primarily on a geographic and also on a product basis. During the current fiscal
year, a new segment profit measure was implemented, Adjusted EBITDA. Adjusted EBITDA, which has replaced the
EBITDA segment profit measure previously presented, is defined as follows: profit for the year before income taxes, net
finance income/(expense), depreciation of property, plant and equipment including capitalized customer in-vehicle
devices, amortization of intangible assets including capitalized in-house development costs, share-based compensation
costs, transaction costs arising from the acquisition of a business, restructuring costs, profits/(losses) on the disposal
or impairments of assets or subsidiaries, certain non-recurring initial public offering costs, unrealized foreign exchange
gains/(losses) and foreign exchange gains/(losses) related to the cash proceeds raised through the initial public offering.
A reconciliation of Adjusted EBITDA to profit for the year is disclosed below.
(1)
(3)
The revenue from external parties reported to the Group’s chief operating decision-maker is measured in a manner
consistent with that in the income statement. The amounts provided to the Group’s chief operating decision-maker
with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are
allocated based on the physical location of the asset.
(2)
Revenue generated by the South African-based operating segments of the Group (i.e. Africa and International) to its
local and foreign-based customers amounted to R650.3 million (2013: R615.2 million, 2012: R601.3 million) for the
2014 fiscal year, whereas revenue generated by the foreign-based segments of the Group (i.e. Europe, Americas,
East Africa, Middle East, Brazil and Australasia) to its local and foreign-based customers amounted to R621.3 million
(2013: R556.2 million, 2012: R417.2 million).
Total non-current assets other than financial instruments and deferred tax assets located in South Africa is R380.6 million
(2013: R318.5 million), and the total of these non-current assets located in foreign countries is R22.9 million (2013:
R14.1 million).
59
Financial reports
5.
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
6.
Property
owned
R’000
Plant,
equipment,
vehicles
and other
owned
R’000
Computer
and radio
owned
R’000
Cost
Accumulated depreciation
22,014
(2,527)
37,342
(25,367)
39,883
(26,004)
Net book amount
19,487
11,975
13,879
Opening net book amount
Additions
Business combination (note 33)
Transfers
Disposals
Depreciation charge (notes 5, 24 and 32.2)
Currency translation differences
19,487
—
—
—
—
(447)
—
11,975
6,205
72
—
(32)
(4,889)
407
13,879
11,388
110
—
(19)
(7,793)
270
Closing net book amount
19,040
13,738
17,835
Cost
22,014
(2,974)
41,500
(27,762)
51,525
(33,690)
Net book amount
19,040
13,738
17,835
Additions
Transfers
Impairment (notes 5, 24 and 32.2)
Disposals
Depreciation charge (notes 24 and 32.2)
19,040
—
—
—
—
(447)
—
13,738
10,103
83
(316)
(585)
(5,544)
603
17,835
11,144
—
—
(55)
(9,313)
260
18,593
18,082
19,871
Cost
22,014
(3,421)
44,895
(26,813)
51,071
(31,200)
Net book amount
18,593
18,082
19,871
At April 1, 2012
Year ended March 31, 2013
At March 31, 2013
Additions of R80.2 million made in 2014 include non-cash additions of furniture and fittings of R0.6 million relating to
decommissioning costs previously classified within provisions in the Europe fleet solutions segment.
Depreciation expense of R34.7 million (2013: R30.9 million, 2012: R26.5 million) has been charged to cost of sales. The
remainder has been included in administration and other charges in the income statement.
60
MiX Telematics ❯
Annual Report 2014
112,817
(83,108)
222,168
(137,006)
50
(5)
1,999
(1,999)
2,049
(2,004)
224,217
(139,010)
10,112
29,709
85,162
45
—
45
85,207
10,112
33,854
—
(34,657)
—
—
—
29,709
—
—
34,657
—
(28,047)
223
85,162
51,447
182
—
(51)
(41,176)
900
45
52
—
—
—
(25)
11
—
—
—
—
—
—
—
45
52
—
—
—
(25)
11
85,207
51,499
182
—
(51)
(41,201)
911
9,309
36,542
96,464
83
—
83
96,547
9,309
—
148,104
(111,562)
272,452
(175,988)
117
(34)
770
(770)
887
(804)
273,339
(176,792)
9,309
36,542
96,464
83
—
83
96,547
9,309
58,943
(47,810)
—
—
—
180
36,542
—
47,810
—
(226)
(32,583)
368
96,464
80,190
83
(316)
(866)
(47,887)
1,411
83
—
(83)
—
—
—
—
—
—
—
—
—
—
—
83
—
(83)
—
—
—
—
96,547
80,190
—
(316)
(866)
(47,887)
1,411
20,622
51,911
129,079
—
—
—
129,079
20,622
—
112,461
(60,550)
251,063
(121,984)
—
—
—
—
—
—
251,063
(121,984)
20,622
51,911
129,079
—
—
—
129,079
Total
leased
R’000
Total
R’000
61
10,112
—
Computer
and radio
leased
R’000
Total
owned
R’000
In-vehicle
devices
installed
R’000
Financial reports
In-vehicle
devices
uninstalled
R’000
Plant,
equipment,
vehicles
and other
leased
R’000
Overview
MiX Telematics ❯
Annual Report 2014
Patents
Product Technology,
and
Customer development
software
Goodwill trademarks relationships
costs and other
R’000
R’000
R’000
R’000
R’000
7.
Total
R’000
Intangible assets
At April 1, 2012
Cost
Accumulated amortization
544,709
—
7,435
(6,093)
47,109
(38,159)
128,833
(62,735)
84,024 812,110
(62,037) (169,024)
Net book amount
544,709
1,342
8,950
66,098
21,987
544,709
Additions
—
—
Capitalization of borrowing cost
—
Government grant received
—
Transfers
—
Disposals
—
Amortization charge (notes 24 and 32.2)
—
Impairment loss (notes 5, 24, 30 and
32.2)
—
17,554
1,342
59
—
—
—
—
—
(951)
8,950
—
—
—
—
—
—
(5,660)
66,098
31,220
—
304
(2,207)
(4,839)
(600)
(33,501)
21,987 643,086
11,369
42,648
5,739
5,739
—
304
—
(2,207)
4,839
—
—
(600)
(16,873) (56,985)
—
116
—
893
(5,158)
6
—
340
(5,158)
18,909
27,401
645,736
643,086
At March 31, 2013
562,263
566
4,183
51,323
Cost
562,263
—
8,609
(8,043)
51,591
(47,408)
142,489
(91,166)
Net book amount
562,263
566
4,183
51,323
27,401
562,263
Additions
—
2,656
Capitalization of borrowing cost
—
Transfers
—
Disposals
—
—
Impairment loss (notes 5, 24, 30 and
32.2)
—
28,557
566
291
—
—
—
—
(291)
4,183
—
—
—
—
—
(2,624)
51,323
41,205
—
10
(614)
—
(27,336)
27,401 645,736
13,623
55,119
4,000
6,656
—
10
614
—
(15)
(15)
(14,690) (44,941)
—
18
—
770
(63)
21
593,476
584
2,329
64,546
Cost
593,476
—
10,325
(9,741)
57,473
(55,144)
152,189
(87,643)
Net book amount
593,476
584
2,329
64,546
104,961 869,913
(77,560) (224,177)
645,736
—
322
31,255
(63)
29,688
692,190
At March 31, 2014
115,391 928,854
(84,136) (236,664)
31,255
692,190
Staff costs of R33.9 million (2013: R23.8 million, 2012: R22.0 million) have been capitalized to product development
costs during the year.
Additions of R55.1 million made during 2014 include non-cash additions of R6.0 million relating to capitalized staff
development costs which have been accrued.
Amortization expense of R27.9 million (2013: R33.5 million, 2012: R26.5 million) has been charged to cost of sales. The
remainder has been included in administration and other charges in the income statement.
62
MiX Telematics ❯
Annual Report 2014
The Group received a government grant from the Department of Trade and Industry in South Africa during the 2013
fiscal year of R2.2 million (2012: Nil) relating to certain technology developed. All conditions attached to the grant have
been met. No grants were received during the 2014 fiscal year.
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identified within its operating segments. A summary
of the goodwill at operating segment level is presented below:
March 31,
2013
R’000
Foreign
currency
translation
differences
R’000
Additions
R’000
2014
R’000
International fleet solutions and development
Europe fleet solutions
Middle East and Australasia fleet solutions
Africa fleet solutions
100,463
91,907
36,583
333,310
—
23,245
5,312
—
2,656
—
—
—
103,119
115,152
41,895
333,310
Total
562,263
28,557
2,656
593,476
The recoverable amount of all CGUs is determined based on value-in-use calculations, which use pre-tax cash flow
projections based on approved financial budgets covering a three to five-year period. A five-year period was used to
ensure that, in respect of the Europe fleet solutions segment, stable cash flows are used for purposes of calculating
terminal values included in the value-in-use calculations. These cash flows are based on the current market conditions
and near-term expectations.
Overview
The Group has capitalized borrowing costs amounting to R0.01 million (2013: R0.3 million, 2012: R0.8 million) on
qualifying assets during the 2014 fiscal year. Borrowing costs were capitalized at the weighted average rate of its
general borrowings of 7.3% (2013: 7.3%, 2012: 7.8%).
An impairment loss, amounting to R0.1 million (2013: R5.2 million, 2012: R1.3 million) in the International operating
segment (notes 5, 24 and 32.2), arose due to the recoverable amount being less than the carrying value of certain
identified intangible assets. The impairment loss has been included in administration and other charges in the
income statement.
2014
Discount rate
– pre-tax discount rate applied to the cash flow projections (%)
Growth rate
– growth rate used to extrapolate cash flow beyond the budget
period (%)
International
fleet
solutions and
development
and Africa
fleet
solutions
Europe
fleet
solutions
Middle
East and
Australasia
fleet
solutions
15.5 – 16.4
10.3
14.6
3.8
2.4
1.8
63
The key assumptions used for the value-in-use calculations are as follows:
Financial reports
7.
MiX Telematics ❯
Annual Report 2014
7.
2013
Discount rate
– pre-tax discount rate applied to the cash flow projections (%)
Growth rate
–g
rowth rate used to extrapolate cash flow beyond the budget
period (%)
International
fleet
solutions and
development
and Africa
fleet
solutions
Europe
fleet
solutions
Middle
East and
Australasia
fleet
solutions
15.2 – 16.8
9.7
11.9
4.8
2.0
0.7
The discount rates were calculated using the capital asset pricing model. These rates are pre-tax and reflect specific risks
relating to the relevant CGUs. The growth rate has been determined based on the expected long-term inflation outlook.
Europe fleet solutions goodwill sensitivity
To determine the recoverable amount of its investment in the Europe fleet solutions’ CGU, the Group calculated future
net cash flows of the CGU and discounted them to their present value using the rates as indicated above. The
calculation of the CGU’s discounted net present value requires extensive use of estimates and assumptions about
discount rates and forecasted cash flows. Due to a restructuring process and the acquisition of new business contracts,
the business’ operating performance is gradually improving. The forecast cash flows at March 31, 2014 reflect the
current market conditions for the European economy and near-term expectations. To the extent that anticipated new
contracts do not materialize and the business strategy does not come to fruition, or key personnel are not retained, the
forecasts could be negatively impacted.
At March 31, 2014, the date at which the impairment testing was performed, Europe fleet solutions’ recoverable
amount exceeded the carrying amount by 165.5%.
A 19.4% pre-tax discount rate, or a 62.3% decrease of the projected cash flows, would reduce the headroom for the
Europe fleet solutions’ CGU to nil. This analysis assumes that all other variables remain constant.
2014
R’000
2013
R’000
Beginning of the year
Share of joint venture losses
—
—
—
—
End of the year
—
—
8.
Investment in joint venture
The investment in joint venture previously included the Group’s 60% interest held in Matrixvtrack Nig. Limited, an
unlisted company incorporated in Nigeria and was denominated in Nigerian Naira (“NGN”). The investment was
disposed of on April 30, 2013 for NGN1 (equal to 6 South African cents) which equated to the profit on the sale of the
investment, as its carrying amount had been nil at disposal date.
The Group has not earned any share of income or loss for the 2014 fiscal year. The Group did not recognize its portion
of the profit for the 2013 fiscal year of R0.2 million (2012: R0.1 million) due to the existence of accumulated losses not
yet recovered. There were no contingent liabilities nor commitments relating to the Group’s interest in the joint venture
and there were no contingent liabilities of the venture itself.
64
—
—
Available-for-sale financial asset
Available-for-sale financial assets include the following listed securities:
1,288,920 ordinary shares in Datatrak Malta Limited, which is denominated in Euro
The Group impaired the available-for-sale financial asset in full in the 2011 fiscal year as there was no demonstrable
active market for trading these shares and no income is expected to be derived from this investment in the foreseeable
future. The position remained unchanged at the end of the 2014 fiscal year.
There were no additions or disposals of available-for-sale financial assets during the 2014 or 2013 fiscal years.
The available-for-sale financial assets have been classified as level 3 as there are no observable inputs available for use
in valuing these investments.
2014
R’000
2013
R’000
13,329
6,652
9,963
3,604
6,677
6,359
7,748
6,328
4,238
6,549
Unearned finance income
14,076
747
10,787
824
Net investment in finance leases
13,329
9,963
6,652
6,677
3,604
6,359
13,329
9,963
39,774
38,927
10.
Total finance lease receivable
Short-term portion receivable within 12 months
Long-term portion receivable after 12 months
During the 2013 fiscal year, the Group entered into a finance lease arrangement
with a customer to supply fleet management products and services. The term of
the lease is 36 months and the lease is denominated in Euro. The unguaranteed
residual values of the assets leased under finance lease are considered negligible.
The finance lease receivables are neither past due nor impaired.
Gross finance lease receivable – minimum lease payments:
Not later than one year
Later than one year but not later than five years
The net investment in finance leases may be analyzed as follows:
Not later than one year
Later than one year but not later than five years
Net investment in finance leases
11.
Inventory
Inventory – finished goods
2013
R’000
During the current year, an amount of R2.6 million (2013: R4.8 million) was recognized as a charge in cost of sales as
a result of the write down of inventory to net realizable value (notes 24 and 32.2).
65
Financial reports
9.
2014
R’000
Overview
MiX Telematics ❯
Annual Report 2014
12.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
Trade receivables
Less: Provision for impairment of trade receivables
202,450
(7,922)
164,904
(7,356)
Trade receivables – net
Prepayments
Sundry debtors
194,528
24,338
15,973
157,548
12,209
17,230
234,839
186,987
Gross
R’000
Provision for
impairment
R’000
Not past due
Past due by 1 to 30 days
Past due by more than 60 days
113,315
43,510
17,369
28,256
(205)
(339)
(716)
(6,662)
Total
202,450
(7,922)
99,616
33,934
9,251
22,103
(447)
(361)
(1,332)
(5,216)
164,904
(7,356)
The ageing of trade receivables at the reporting date is as follows:
2014
2013
Not past due
Past due by more than 60 days
Total
The trade receivables above, which are past due and not impaired and fully performing trade receivables, relate to
a number of independent customers for whom there is no recent history of default.
Sundry debtors are neither past due nor impaired.
66
MiX Telematics ❯
Annual Report 2014
71,999
24,288
88,482
20,062
23,084
3,862
3,062
37,124
17,965
77,678
28,972
19,723
—
5,525
234,839
186,987
Movements in the Group’s provision for impairment of trade receivables are
as follows:
Opening balance
Increase in provision for impairment (note 32.2)
Receivables written off during the year as irrecoverable
Foreign currency translation differences
(7,356)
(7,820)
7,425
(171)
(7,569)
(6,159)
6,585
(213)
Closing balance
(7,922)
(7,356)
South African Rand
UK Pound
US Dollar
AU Dollar
Euro
Brazilian Real
Other
The creation of the provision for impairment of trade receivables has been included in administration and other charges
in the income statement. In determining the recoverability of a trade receivable, the Group considers any change in the
credit quality of the trade receivable from the date credit was initially granted until the end of the reporting year.
Amounts charged to the allowance account are generally written off when there is no expectation of recovering
additional cash.
Trade receivables of R30.9 million (2013: R20.3 million) are pledged as security for the Group's overdraft facilities
(note 17).
The fair value of trade and other receivables approximate their book values as the impact of discounting is not
considered material due to the short-term nature of the receivables. The maximum exposure to credit risk at the
reporting date is the carrying value of each class of receivable mentioned above. Other than 10% of the gross receivable
balance relating to one debtor at the end of the 2014 fiscal year (2013: 12% of the gross receivable balance relating to
one debtor), the Group has no significant concentration of credit risk, due to its spread of customers across various
operations and geographical locations. The Group does not hold any collateral as security.
2013
R’000
2014
R’000
Overview
Trade and other receivables (continued)
The carrying amounts of trade and other receivables are denominated in the following currencies:
67
Financial reports
12.
MiX Telematics ❯
Annual Report 2014
13.
2014
R’000
2013
R’000
1,000
1,000
393
1,303
3,361
393
—
3,076
4,222
3,766
10,279
8,235
Restricted cash
Cash securing guarantee issued in terms of the Mobile Telephone Networks
Proprietary Limited incentive agreement (denominated in South African Rand)
Cash securing guarantees issued in respect of lease agreements entered into
(denominated in South African Rand)
Cash securing guarantees issued in respect of products sold (denominated in Euro)
Cash securing guarantees issued in respect of MiX Telematics Middle East FZE*
Cash held for purposes of distribution to MiX Telematics Enterprise BEE Trust and
MiX Telematics Fleet Support Trust beneficiaries (denominated in South African Rand)
*Includes employee visas in the UAE of R3.2 million (2013: R3.1 million) that are denominated in Arab Emirates Dirham and a VAT registration
guarantee of R0.1 million (2013: Nil) that is denominated in Euro.
14.
2014
R’000
2013
R’000
2012
R’000
830,449
(27,810)
147,702
(56,005)
118,695
(50,165)
802,639
91,697
68,530
666,583
76,181
87,685
5,989
36,124
105,589
4,962
45,576
68,157
830,449
147,702
118,695
103,944
29,216
653,091
(3,720)
12,948
7,160
72,225
16,668
(5,188)
(4,575)
8,012
4,555
48,454
19,823
(2,343)
(3,520)
4,923
1,193
802,639
91,697
68,530
Net cash and cash equivalents
Net cash and cash equivalents included in the cash flow statement
comprise the following amounts included in the statement of
financial position:
Bank overdraft (note 17)
The credit quality of cash and cash equivalents that are neither
past due nor impaired can be assessed by reference to external
credit ratings.
AA
A
BBB
The carrying amounts of net cash and cash equivalents are
denominated in the following currencies:
South African Rand
UK Pound
US Dollar
Euro
AU Dollar
Other
68
MiX Telematics ❯
Annual Report 2014
Number of
Ordinary
shares share capital
000’s
R’000
Stated
capital
R’000
Total
R’000
657,200
13
787,589
—
787,602
2,763
*
2,425
464
2,889
—
(13)
(790,014)
790,027
—
659,963
—
—
790,491
790,491
Share issue in relation to share options
exercised
Share capital and share premium
reclassified to stated capital
Share issue in relation to share options
exercised
Proceeds from shares issued, net of
share issue costs
14,187
—
—
15,776
15,776
110,000
—
—
622,983
622,983
784,150
—
—
1,429,250
1,429,250
At April 1, 2012
Overview
Stated capital/share
capital and premium
The ordinary shares with a par value of 0.002 cents were converted to ordinary shares with no par value on October 25,
2012, the date that the new Memorandum of Incorporation was accepted by the Companies and Intellectual Property
Commission in South Africa.
The total authorized number of ordinary shares at the end of the financial year amounted to 1 billion shares (2013: 1 billion)
with no par value. All issued shares are fully paid up and carry one vote per share and the right to dividends. There were
no changes to the authorized number of ordinary shares during the current or prior financial year.
In terms of a special resolution approved on August 1, 2013 a new class of no par value shares, consisting of 100 million
preference shares, was created. No preference shares have been issued to date.
New York Stock Exchange listing and proceeds from shares issued
R’000
Reconciliation of initial public offering price and proceeds received, net of expenses
Initial public offering price
Underwriting discount
Proceeds received by selling shareholders (before expenses)
1,150,013
(80,501)
(419,578)
Proceeds received by Company (before expenses)
Share issue expenses
649,934
(26,951)
Proceeds from shares issued, net of share issue costs
622,983
69
On August 9, 2013, following a successful US initial public offering of American Depositary Shares or “ADSs”, each of
which represents 25 ordinary shares at no par value, the Company’s ADSs were listed on the New York Stock Exchange
and are traded under the symbol MIXT. As part of the US initial public offering of ADSs, the Company issued 4,400,000
ADSs on August 14, 2013 and raised R649.9 million for the Company (before expenses amounting to R27.0 million).
Selling shareholders sold an additional 2,840,512 ADSs, resulting in a total capital raise by the Company and selling
shareholders, prior to underwriting discount, of R1,150 million. The Company did not receive any proceeds from ADSs
that were sold by the selling shareholders.
Financial reports
15.
Share
premium
R’000
MiX Telematics ❯
Annual Report 2014
15.
Stated capital/share capital and premium (continued)
Share options
Share options are granted to directors and certain key employees within the Group. The exercise price of the options
granted is equal to the weighted average market value of ordinary shares for the 20 days preceding the date of the
grant. The options vest in tranches of 25% per annum, commencing on the second anniversary of the grant date and
expire six years after the grant date. In addition to these vesting periods, the vesting of the share options granted are
conditional on certain performance conditions being met, namely the share price on the associated measurement date
being in excess of the target, after being reduced by the aggregate amount of dividends paid, or an annual total
shareholder return in excess of 10% and 5%, taking into account any dividends paid during the vesting period, being
achieved. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the total number of share options outstanding and their related weighted average exercise prices are
as follows:
Weighted
average
exercise price
2014
cents per
share
Outstanding at the beginning of the year
Granted on November 7, 2012
Exercised
Forfeited
Expired
138
—
111
166
118
Outstanding at the end of the year
152
Weighted
average
exercise price
2013
cents per
share
Number of
options
2013
000’s
63,675
—
(14,187)
(1,625)
(8,950)
113
246
105
131
—
57,250
12,350
(2,763)
(3,162)
—
38,913
138
Number of
options
2014
000’s
11,763
Exercisable at the end of the year
63,675
11,513
The weighted average remaining contractual life on share options outstanding at year-end is 2.92 years (2013: 3.11 years).
Options exercised in 2014 resulted in 14,187,500 shares (2013: 2,762,500 shares) being issued at a weighted average
exercise price of 111 cents per share (2013: 105 cents per share). The related weighted average share price at the time
of exercise was 547 cents per share (2013: 245 cents per share).
Share options outstanding at the end of the fiscal year have the following exercise prices:
Annual shareholder
return
10%(1)
10%
10%
5%
5%
10%
10%
Grant date
March 14, 2008
June 23, 2008
December 9, 2008
June 4, 2010
September 13, 2011
January 3, 2012
November 7, 2012
Expiry date Exercise price
March 14, 2014
118 cents
June 23, 2014
125 cents
December 9, 2014
70 cents
June 4, 2016
112 cents
September 13, 2017
130 cents
January 3, 2018
154 cents
November 7, 2018
246 cents
March 14, 2008
June 23, 2008
December 9, 2008
June 4, 2010
September 13, 2011
March 14, 2014
June 23, 2014
December 9, 2014
June 4, 2016
September 13, 2017
2014
000’s
2013
000’s
—
200
1,275
10,075
1,450
3,500
11,600
6,550
250
2,700
12,025
2,200
4,000
12,100
—
200
3,800
5,525
1,288
8,950
200
4,500
7,600
2,600
38,913
63,675
Target share price
R10(1)
R10
R5
R5
R5
Expired during the 2014 fiscal year.
(1)
70
118 cents
125 cents
70 cents
112 cents
130 cents
MiX Telematics ❯
Annual Report 2014
The salient details of options granted during the 2013 fiscal year are provided in the table below:
Grant date
Fair value (cents per share)
Option strike price (cents per share)
JSE share price on grant date (cents per share)
Expiry date
Performance conditions
– Total shareholder return of (%)
Remaining contractual life at March 31, 2014
Total
shareholder
return
November 7, 2012
114.4
246.0
300.0
November 7, 2018
10.0
4.61
Valuation assumptions and drivers
Volatility (%)
Anticipated forfeiture rate (%)
Anticipated dividend streams (cents per share)
– Year ended March 31, 2014
– Year ending March 31, 2015
Anticipated dividend yield (%)
Annual risk-free interest rate (%)
42.7
5.0
11.0
13.5
16.5
20.0
24.5
5.5
6.3
As the shares were only listed on the JSE on November 12, 2007, the volatility was calculated using a mixture of the
Company’s historical share data, as well as the share data of comparable companies.
The weighted average fair value of options granted during the 2013 fiscal year was determined using a combination of
the Monte Carlo Simulation option pricing model and the Binomial Tree option pricing model. The key drivers and
assumptions input into the valuation models used to determine these values are disclosed below.
Overview
No new options were granted during the 2014 fiscal year.
Refer to note 24 for the total expense recognized in fiscal years 2014, 2013 and 2012 in respect of share options
granted to employees and directors.
71
Financial reports
15.
MiX Telematics ❯
Annual Report 2014
15.
Group executives held the following share options at March 31, 2014 (summarized by grant date):
2008
2008
000’s
000’s
S Joselowitz(1)
R Botha(2)
T Buzer(3)
M Pydigadu(1)
H Scott(2)
C Tasker(1)
B Horan
G Pretorius
C Lewis(4)
Option strike
price (cents
per share)
JSE share price
on grant date
(cents per share)
Expiry date
June 4,
2010
000’s
June 4,
2010
000’s
2012
2012
000’s
000’s
500
125
—
—
—
500
—
—
—
1,000
750
1,000
—
—
1,000
—
—
—
1,500
1,375
1,500
1,500
750
1,500
250
250
500
3,000
—
—
500
500
—
—
—
—
—
—
—
—
—
2,000
750
750
—
2,500
—
—
1,000
—
2,000
1,500
1,500
1,500
8,500
2,250
2,500
3,000
1,250
7,000
2,500
2,500
2,000
1,125
3,750
9,125
4,000
3,500
10,000
31,500
70
70
112
112
154
246
58
58
104
104
160
300
2014
2014
June 4,
2016
June 4,
2016
2018
2018
Performance
conditions
Share price
of (Rand)
Minimum
shareholder
return of
n/a
5
n/a
5
n/a
n/a
10%
n/a
5%
n/a
10%
10%
Executive director at March 31, 2014 and March 31, 2013.
Executive director at March 31, 2013.
(3)
Retired on March 31, 2014. Executive director at March 31, 2013.
(4)
Appointed to the executive committee with effect from December 1, 2013.
(1)
(2)
72
Total
000’s
MiX Telematics ❯
Annual Report 2014
T Buzer(3)
M Pydigadu(1)
H Scott(2)
C Tasker(1)
B Horan
G Pretorius
C Lewis(4)
February 14, 2014 1,500,000
April 3, 2013
125,000
December 13, 2013
250,000
April 3, 2013
125,000
February 14, 2014
375,000
February 14, 2014
250,000
February 14, 2014 1,500,000
February 17, 2014
500,000
February 17, 2014
750,000
February 17, 2014
500,000
February 14, 2014 1,500,000
February 14, 2014
150,000
February 14, 2014
200,000
February 14, 2014
50,000
February 17, 2014
250,000
February 17, 2014
250,000
February 14, 2014
500,000
February 17, 2014
250,000
February 17, 2014
250,000
February 14, 2014
500,000
March 17, 2008
December 9, 2008
December 9, 2008
June 4, 2010
March 17, 2008
December 9, 2008
March 17, 2008
June 4, 2010
June 4, 2010
June 4, 2010
March 17, 2008
December 9, 2008
March 17, 2008
December 9, 2008
June 4, 2010
January 3, 2012
March 17, 2008
June 4, 2010
January 3, 2012
March 17, 2008
118
70
70
112
118
70
118
112
112
112
118
70
118
70
112
154
118
112
154
118
10%
10%
R5.00
5%
10%
10%
10%
R5.00
5%
R5.00
10%
10%
10%
R5.00
5%
10%
10%
5%
10%
10%
540
370
504
370
540
540
540
529
529
529
540
540
540
540
529
529
540
529
529
540
(3)
(4)
Appointed to the executive committee with effect from December 1, 2013.
(1)
(2)
S Joselowitz(1)
R Botha(2)
Exercise
date share
price
Options
Date of exercise exercised
Performance
condition (R
share price or
Strike price % minimum
(cents per
shareholder
Grant date
share)
return)
Overview
The following share options were exercised by Group executives during the 2014 fiscal year:
73
Financial reports
15.
MiX Telematics ❯
Annual Report 2014
15.
Group executives held the following share options at March 31, 2013 (summarized by grant date):
March
March
17, 2008 17, 2008
000’s
000’s
S Joselowitz(1)
R Botha(2)
T Buzer(3)
M Pydigadu(1)
H Scott(2)
C Tasker(1)
B Horan
G Pretorius
Option strike
price (cents
per share)
JSE share price
on grant date
(cents per
share)
Expiry date
December
9, 2008
000’s
December
June
June January
9, 2008 4, 2010 4, 2010 3, 2012
000’s
000’s
000’s
000’s
November
7, 2012
000’s
Total
000’s
1,500
375
1,500
—
—
1,500
200
500
2,000
2,000
2,000
—
—
2,000
100
200
500
250
250
—
—
500
150
—
1,000
1,000
1,000
—
—
1,000
50
—
1,500
1,500
1,500
1,500
1,500
1,500
500
500
3,000
—
—
1,000
1,000
—
—
—
—
—
—
—
—
2,000
1,000
1,000
2,500
—
—
1,000
—
2,000
1,500
1,500
12,000
5,125
6,250
3,500
2,500
10,500
3,500
3,700
5,575
8,300
1,650
4,050
10,000
5,000
4,000
8,500
47,075
118
118
70
70
112
112
154
246
118
118
March
March
17, 2014 17, 2014
58
December
9, 2014
58
104
104
160
December June June January 9, 2014 4, 2016 4, 2016 3, 2018
300
November 7, 2018
Performance
conditions
Share price of
(Rand)
Minimum
shareholder
return of
n/a
10
n/a
5
n/a
5
n/a
n/a
10%
n/a
10%
n/a
5%
n/a
10%
10%
(3)
(1)
(2)
The following share options were exercised by Group executives during the 2013 fiscal year:
R Botha(2)
T Buzer(3)
Date of exercise
Options
exercised
September 25, 2012
September 25, 2012
January 10, 2012
1,125,000
250,000
250,000
Performance
condition (%
Strike price
minimum
Exercise (cents per shareholder
date
Grant date
share)
return) share price
March 17, 2008
September 12, 2008
September 12, 2008
(2)
(3)
74
118
70
70
10%
10%
10%
230
230
221
(154,745)
36,900
37,090
(190)
3,332
3,142
190
3,151
Closing balance
Foreign currency translation
Reserve on transaction with non-controlling interest***
Share-based payments
Shareholder loan revaluation*
(58,335)
(111,362)
58,901
(137,895)
14,961
5,698
13,426
(137,895)
10,350
2,757
Closing balance
(58,335)
(111,362)
*Shareholder loan revaluation relates to the unrealized foreign exchange gains/(losses) on loans viewed as part of the Group’s net
investment in foreign operations.
**Upon capitalization/settlement of certain net investment loans, amounts that were previously recognized in the shareholder’s loan
revaluation reserve have been transferred to the foreign currency translation reserve.
***During the fiscal year ended March 31, 2008, the Group acquired a non-controlling equity interest held by a minority shareholder in one
of its subsidiaries in exchange for a share consideration. The reserve represents the difference between the consideration paid and the
Group's share in the net asset value of the subsidiary acquired and has been recorded in equity.
Overview
(111,362)
45,475
45,475
—
2,941
2,941
—
4,611
Other reserves
Opening balance
Foreign currency translation:
– Movement for the year – net of tax
– Transfer from shareholder loan revaluation**
Shareholder loan revaluation*:
– Movement for the year – net of tax
– Transfer to foreign currency translation**
Share-based payments (note 24 and 32.2)
2013
R’000
2014
R’000
16.
75
Financial reports
MiX Telematics ❯
Annual Report 2014
17.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
Secured loans: Long-term loans
Unsecured loans: Deferred consideration payable
36
3,705
3,472
—
Short-term portion payable within 12 months
3,741
(1,279)
3,472
(3,472)
Long-term portion payable after 12 months
2,462
—
Opening balance
Net payments made
Borrowings raised
3,472
(3,731)
4,000
22,941
(19,469)
—
Closing balance
3,741
3,472
Borrowings
Movement for the year
The Group and its subsidiaries have unlimited borrowing capacity as specified in their respective Memorandums
of Incorporation.
Borrowings raised during the 2014 fiscal year comprise a R4.0 million deferred consideration payable relating to the
purchase of a proprietary software business (note 33). No new borrowings were raised by the Group during the 2013
fiscal year.
The Group has access to revolving credit facilities on which payments of R4.4 million (2013: R26.0 million) were made
and drawdowns on the borrowing facilities of R1.0 million (2013: R6.5 million) were raised in the 2014 fiscal year. The
net of these amounts have been included in the movement above.
2014
R’000
2013
R’000
Loans from Investec Bank Limited:
– Loan 1
– Loan 2
Deferred consideration payable
—
36
3,705
*
3,472
—
Total long-term loans
3,741
(1,279)
3,472
(3,472)
2,462
—
Long-term loans
*Amounts less than R1,000.
The Investec loan 1 was repaid in full during the 2014 fiscal year. Interest was previously charged at prime less 0.5%
and the loan was repayable in monthly instalments of R0.5 million when the full facility was utilized. This Investec loan
was secured by the cession and pledge of 100% of the shares held in MiX Telematics Australasia Proprietary Limited.
The Investec loan 2 bears interest at prime less 0.5% and is repayable in maximum monthly instalments of R0.6 million
(2013: R0.6 million) if the facility is fully utilized. The facility matures in September 2015. The above Investec loan is
secured by:
• Cession of all rights, title and interest in and to the subscriber contracts of MiX Telematics Africa Proprietary Limited.
• Joint and several suretyships between the following Group companies:
– MiX Telematics Limited; and
– MiX Telematics Africa Proprietary Limited.
The deferred consideration payable is unsecured, bears interest at the prime interest rate, which varied between
8.5% and 9% per annum during the 2014 fiscal year, and is repayable in monthly instalments of R0.1 million commencing
January 31, 2014. The deferred consideration paid during the 2014 fiscal year amounted to R0.3 million.
76
MiX Telematics ❯
Annual Report 2014
Undrawn borrowing facilities at floating rates are:
– Standard Bank Limited:
Overdraft
Vehicle and asset finance
– Investec Bank Limited:
Overdraft
Loan facility
– Nedbank Limited
Interest
rate
2014
R’000
2013
R’000
Prime less 1.2%
Prime less 1.2%
42,346
8,500
46,289
8,500
Prime less 0.5%
Prime less 0.5%
Prime less 2%
49,844
9,065
10,000
17,706
15,225
—
119,755
87,720
The Investec overdraft facility is for a two-year period and the next renewal date is January 31, 2015. The Standard
Bank and Nedbank facilities have no fixed renewal date and are repayable on demand.
Included in the bank overdraft (note 14) are overdraft facilities from Investec Bank Limited and Standard Bank Limited
which were secured by the following at March 31, 2014 and March 31, 2013:
Investec Bank Limited
• Cession of all rights, title and interest in and to the subscriber contracts of MiX Telematics Africa Proprietary Limited;
The Group did not default on any payments or breach any loan agreement term during the current or previous
financial year.
The fair value of the Investec loan equals its carrying amounts, as the impact of discounting is not significant. The fair
values are based on cash flows discounted using the prime interest rate less 0.5% and are within level 2 of the fair value
hierarchy. Other borrowings are treated in a similar manner except for discounting, for which prime interest rate is used.
Overview
Borrowings (continued)
The loans are all denominated in South African Rand.
Standard Bank Limited
• Cross suretyships between the following Group companies:
– MiX Telematics Africa Proprietary Limited;
– MiX Telematics International Proprietary Limited; and
– MiX Telematics Limited.
• An unrestricted cession of book debts by the following entities:
– MiX Telematics International Proprietary Limited
The facility from Nedbank Limited is unsecured.
77
Financial reports
17.
18.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
62,019
121,970
36,171
7,060
1,741
57,026
96,176
22,996
7,167
1,032
228,961
184,397
Trade payables
Accruals
Revenue received in advance
Value added taxes
Other
The fair values of trade payables, accruals and other payables approximate their book values as the impact of
discounting is not considered material due to the short-term nature of the payables.
19.
Retirement benefits
It is the policy of the Group to provide retirement benefits to all its South African, United Kingdom, United States,
Brazilian and Australian employees. All these retirement benefits are defined contribution plans and are held in separate
trustee-administered funds. These plans are generally funded by both member and Company contributions except in
the United States where no Group contribution is made. The South African plan is subject to the Pension Funds Act of
1956, the UK plan is subject to the United Kingdom Pensions Act 2011 (Commencement No 3) and the Australian plan
is subject to the Superannuation Guarantee Administration Act of 1992. In Brazil, the Group contributes to a mandatory
state social contribution plan known as Regime Geral de Previdência Social (“RGPS”) and a private social contribution
plan called Regime de Previdência Complementar (“RPC”), which is optional. For the United States employees a
voluntary Internal Revenue Service section 401(k) tax-deferred defined contribution scheme is offered. The full extent
of the Group’s liability is the contributions made, which are charged to the income statement as they are incurred. The
total Group contribution to such schemes in 2014 was R17.8 million (2013: R14.5 million, 2012: R12.8 million) (note 24).
78
Capital allowances for tax purposes
Intangible assets
Prepayments
Section 24I (10A) – deferred foreign currency gains
Other
12,868
16,297
1,285
11,450
3,856
8,957
12,755
796
—
3,118
Gross deferred tax liabilities
Set-off of deferred tax balances
45,756
(25,155)
25,626
(17,021)
Net deferred tax liabilities
20,601
8,605
8,072
12,436
21,523
612
2,337
4,763
8,577
15,799
—
1,750
Deferred tax
Deferred tax assets
Revenue received in advance
Provisions, accruals and lease straight-lining
Assessable losses
Other
Gross deferred tax assets
44,980
30,889
(25,155)
(17,021)
Net deferred tax assets
19,825
13,868
(776)
5,263
5,263
557
(599)
1,032
(7,029)
(12,550)
361
—
—
17,452
(776)
5,263
Net deferred tax (liability)/asset
The gross movement in net deferred tax assets/(liabilities) is as follows:
Foreign currency translations
Charge to equity (note 16)
Acquisition of business (note 33)
Income statement charge (note 29)
End of the year
Overview
2013
R’000
2014
R’000
• South Africa 28% (2013: 28%)
• United Kingdom 23% (2013: 24%)
• Germany 15% (2013: 15%)
• United States of America 34% (2013: 34%)
• Australia 30% (2013: 30%)
• Dubai 0% (2013: 0%)
• Brazil 34% (2013: 34%)
Deferred tax assets are recognized for tax losses carried forward to the extent that the realization of the related tax
benefit through future taxable profits is probable. The Group did not recognize deferred tax assets of R28.7 million
(2013: R22.9 million) in respect of losses amounting to R123.7 million (2013: R91.7 million) at year-end.
79
Deferred tax at year-end has been recognized using the following corporate tax rates:
Financial reports
20.
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
20.
Deferred tax (continued)
The movement in deferred tax assets and liabilities during the year, prior to taking into account the offsetting of
balances within the same tax jurisdiction, is as follows:
2013
R’000
Charged/
(credited)
to the
income
statement
(note 29)
R’000
Charged/
(credited)
directly
to equity
(note 16)
R’000
Acquisition
of business
(note 33)
R’000
Foreign currency
translation
differences
R’000
2014
R’000
8,957
12,755
796
3,912
3,542
489
—
—
—
—
—
—
—
—
—
12,869
16,297
1,285
—
3,118
10,851
737
599
—
—
—
—
—
11,450
3,855
25,626
19,531
599
—
—
45,756
(4,763)
(3,309)
—
—
—
(8,072)
(8,577)
(2,573)
—
(1,032)
(254)
(12,436)
(15,799)
—
(1,750)
(5,421)
(612)
(587)
—
—
—
—
—
—
(303)
—
—
(21,523)
(612)
(2,337)
(30,889)
(12,502)
—
(1,032)
(557)
(44,980)
Capital allowances for tax
purposes
Intangible assets
Prepayments
Section 24I (10A) –
deferred foreign currency
gains
Other
Deferred tax assets
Revenue received in
advance
purposes
Provisions, accruals and
lease straight-lining
Assessable losses
Other
80
MiX Telematics ❯
Annual Report 2014
2012
R’000
Charged/
(credited)
to the
income
statement
(note 29)
R’000
Charged/
(credited)
directly
to equity
(note 16)
R’000
Acquisition
of business
(note 33)
R’000
Foreign currency
translation
differences
R’000
2013
R’000
5,463
17,570
477
3,494
(4,824)
319
—
—
—
—
—
—
—
9
—
8,957
12,755
796
9,748
3,991
(9,748)
(873)
—
—
—
—
—
—
—
3,118
37,249
(11,632)
—
—
9
25,626
(3,151)
(1,612)
—
—
—
(4,763)
(6,913)
(1,549)
—
—
(115)
(8,577)
(14,294)
(341)
(1,250)
(1,409)
—
—
—
—
(255)
—
(15,799)
(1,750)
(24,699)
(5,820)
—
—
(370)
(30,889)
purposes
Intangible assets
Prepayments
Section 24C – future
expenditure allowance
Other
Overview
Deferred tax (continued)
The movement in deferred tax assets and liabilities during the prior year, prior to taking into account the offsetting of
balances within the same tax jurisdiction, is as follows: Sustainability review
Revenue received in
advance
purposes
Provisions and lease
straight-lining
Other
Deferred tax assets
81
Financial reports
20.
21.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
Income statement charge
Utilized
10,172
5,664
(4,839)
1,193
9,342
2,218
(2,228)
840
End of the year
12,190
10,172
Current portion
12,190
10,172
8,702
18,584
(19,588)
61
16,663
7,642
(15,626)
23
7,759
8,702
(786)
(283)
6,973
8,419
Income statement reversal
Utilized
Capitalized to property, plant and equipment
2,870
(1,750)
(738)
564
550
2,958
(263)
(224)
—
399
End of the year
Non-current portion
1,496
(1,496)
2,870
—
—
2,870
Product warranties
Decommissioning provision
12,190
7,759
1,496
10,172
8,702
2,870
Total provision
Non-current portion
21,445
(2,282)
21,744
(283)
Current provision
19,163
21,461
Provisions
Product warranties
The Group provides warranties on certain products and undertakes to repair or
replace items that fail to perform satisfactorily. Management estimates the related
provision for future warranty claims based on historical warranty claim information,
the product lifetime, as well as recent trends that might suggest that past cost
information may differ from future claims.
Income statement charge
Utilized
End of the year
Non-current portion
Current portion
The Group provides for maintenance required related to ongoing contracts when
the obligation to repair occurs. Management estimates the related provision for
maintenance costs per unit based on the estimated costs expected to be incurred
to repair the respective units.
Decommissioning provision
Current portion
The Group provides for the anticipated costs associated with the restoration of
leasehold property to its condition at inception of the lease, including the removal
of items included in plant and equipment that is erected on leased land. The final
cash outflow of these costs is expected to occur in the 2018 fiscal year.
Total provisions
82
2013
R’000
2012
R’000
853,716
326,902
91,040
686,720
378,070
106,690
577,330
328,386
112,766
1,271,658
1,171,480
1,018,482
832
2,603
8,030
—
—
(394)
—
—
113
97
1,222
314
1,737
(430)
897
2,151
4,260
8,610
44,941
47,887
63
316
20,801
2,745
2,604
1,189
211
19,674
455,459
433,074
17,774
4,611
1,039
56,985
41,201
5,158
—
15,946
—
4,785
1,300
38
15,707
347,103
329,424
14,528
3,151
937
53,040
36,792
1,332
—
17,629
—
3,153
817
—
12,795
294,764
280,013
12,750
2,001
824
Revenue
Subscription revenue
Hardware sales
Other
23.
2014
R’000
Other income/(expenses) – net
Motor Industry Development Program incentives
Foreign currency translation reserve released due to liquidation
of intermediary subsidiary holding company (notes 30 and 32.2)
Rental income
Profit/(loss) on disposal of property, plant and equipment and
intangible assets (note 32.2)
Other
Overview
22.
MiX Telematics ❯
Annual Report 2014
Operating profit is stated after accounting for the following charges:
Amortization (notes 7 and 32.2)
Depreciation (notes 6 and 32.2)
Impairment of intangible assets (notes 5, 7 and 32.2)
Impairment of furniture and fittings (notes 5, 6 and 32.2)
Operating lease charges – premises and equipment
Restructuring costs
Write-down of inventory to net realizable value (notes 11 and 32.2)
Research expenditure
Transaction costs arising from the acquisition of a business
Professional fees
Staff costs
– Salaries, wages and other costs
– Pension costs (note 19)
– Share-based payments (notes 16 and 32.2)
Number of employees at the end of the year
Restructuring costs
During June 2013, the Europe fleet solutions segment implemented a restructuring plan. The total cost of the
restructuring was R2.7 million. The restructuring has resulted in operating cost savings for the segment in the current
year and is expected to continue to do so in future years.
83
Operating profit
Financial reports
24.
Refer to note 40 for information on the reclassifications made to
2013 and 2012 results.
MiX Telematics ❯
Annual Report 2014
25.
2014
R’000
2013
R’000
2012
R’000
3,853
117
1,788
96
1,706
171
3,970
1,884
1,877
437
—
729
—
—
134
—
515
—
1,166
134
515
38,128
—
—
43,264
2,018
2,392
(2,252)
—
(189)
(55)
(2,507)
—
(425)
(489)
(2,316)
(12)
(3,148)
(73)
(2,496)
(3,421)
(5,549)
Finance income
Cash
– Current accounts and short-term bank deposits
– Other
Non-cash
– Short-term bank deposits
– External loans
– Finance lease receivable income
Net foreign exchange gains (note 40)
26.
Finance costs
Cash
– Overdraft
– Finance leases
– Other long-term loans
– Other
– Capitalization of borrowing costs (note 7)
10
304
837
(2,486)
(3,117)
(4,712)
—
(114)
(4)
—
(231)
—
(221)
(332)
—
(118)
(231)
(553)
—
(4,681)
(1,602)
(2,604)
(8,029)
(6,867)
8,068
4,207
3,113
Non-cash
– Decommissioning provision (note 21)
– Long-term loans
– Other
Net foreign exchange losses (note 40)
Refer to note 40 for information on the reclassifications made
to 2013 and 2012 results.
27.
Auditors’ remuneration
Auditors’ remuneration has been significantly increased due to the reviews and other related services required by the
initial public offering process and subsequent compliance requirements.
84
MiX Telematics ❯
Annual Report 2014
R Bruyns
H Brody(2)
C Ewing(2)
R Frew(2)
E Banda(3)
F Roji(2), (4)
R Shough(5)
A Welton
Value added tax
(2)
805
256
407
343
346
69
138
401
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
805
256
407
343
346
69
138
401
2,765
—
—
—
—
2,765
199
—
—
—
—
199
—
—
—
—
—
—
—
—
—
4,554
2,324
2,030
1,921
2,580
2,897
1,818
1,741
597
—
12
21
101
—
42
108
99
15
—
92
159
77
—
233
74
160
54
5,919
1,242
1,729
3,388
4,189
3,488
1,850
1,852
—
10,473
3,670
3,939
5,487
6,769
6,660
3,850
3,852
666
2,964
20,462
398
849
23,657
48,330
754
240
365
296
296
376
325
320
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
30
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
754
240
365
296
296
376
325
350
2,972
—
30
—
—
3,002
179
—
—
—
—
179
—
—
—
—
—
—
—
—
3,678
2,326
1,898
1,746
2,636
2,199
1,662
1,587
—
11
19
91
—
40
97
96
—
90
150
71
—
189
68
150
3,798
704
2,013
1,632
2,134
2,285
1,544
2,154
7,476
3,131
4,080
3,540
4,770
4,713
3,371
3,987
3,151
17,732
384
718
16,264
38,249
Executive committee(6)
S Joselowitz(7)
R Botha(8)
T Buzer(9)
M Pydigadu(7)
H Scott(8)
C Tasker(7)
B Horan
G Pretorius
C Lewis(10)
2013
R Bruyns
H Brody(2)
C Ewing(2)
R Frew(2)
R Friedman(11)
F Roji(2)
R Shough(5)
A Welton
Value added tax
(2)
S Joselowitz(12)
R Botha(12)
T Buzer(12)
M Pydigadu(12)
H Scott(12)
C Tasker(12)
B Horan
G Pretorius
85
2014
Group
Other Retirement Performance
bonuses(1) 12 months
fund
benefits
R’000
R’000
R’000
R’000
Directors’ Salary and
fees allowances
R’000
R’000
Overview
Directors’ and executive committee emoluments
Financial reports
28.
MiX Telematics ❯
Annual Report 2014
28.
Directors’ and executive committee emoluments (continued)
Group
Directors’
fees
R’000
Salary and
allowances
R’000
Other
benefits
R’000
Retirement Performance
fund
bonuses(1) 12 months
R’000
R’000
R’000
771
240
61
296
296
304
389
328
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
771
240
61
296
296
304
389
328
2,685
—
—
—
—
2,685
181
—
—
—
—
181
—
—
—
—
—
—
—
—
2,972
2,069
1,770
1,616
1,856
2,160
401
382
—
125
25
75
458
37
34
22
—
96
245
72
—
152
15
46
2,816
1,096
1,001
700
371
1,297
—
—
5,787
3,386
3,041
2,463
2,686
3,646
450
450
2,866
13,226
776
626
7,281
24,775
2012
R Bruyns
H Brody(2)
C Ewing(2)
R Frew(2)
R Friedman
A Patel(2), (13)
F Roji(2)
A Welton
Value added tax
(2)
S Joselowitz(12)
R Botha(12)
T Buzer(12)
M Pydigadu(12)
H Scott(12)
C Tasker(12)
B Horan(14)
G Pretorius(14)
Performance bonuses are based on actual amounts paid during the fiscal year.
(2)
Value added tax (“VAT”) included as part of invoice received. Directors’ fees shown exclude VAT.
(3)
Appointed to the Board with effect from May 13, 2013.
(4)
Resigned as a non-executive director from the Board and appointed as alternate director to Hubert Brody with effect from May 13, 2013.
(5)
Appointed to the Board with effect from June 1, 2012 and resigned from the Board with effect from August 9, 2013.
(6)
All prescribed officers of the Company are included as part of the executive committee as noted above.
(7)
Executive director as at March 31, 2014.
(8)
Resigned from the Board with effect from August 9, 2013 but remained as Group executive committee member.
(9)
Resigned from the Board with effect from August 9, 2013 but remained as Group executive committee member until he retired on
March 31, 2014.
(10)
Appointed to the executive committee with effect from December 1, 2013. Emoluments disclosed only include amounts paid from December
1, 2013 to March 31, 2014.
(11)
Resigned from the Board with effect from March 31, 2013.
(12)
Executive director as at March 31, 2013 and March 31, 2012.
(13)
Resigned from the Board with effect from January 10, 2012.
(14)
Appointed to the executive committee with effect from January 1, 2012. Emoluments disclosed only include amounts paid from January 1,
2012 to March 31, 2012.
(1)
The remaining related party transactions are set out in note 34.
86
2012
R’000
Normal taxation
(53,545)
(68,852)
(44,400)
– Current
– Over/(under)-provision prior years
– Foreign tax paid
– Withholding tax
– Secondary taxation on companies
(53,409)
569
(351)
(354)
—
(67,641)
(76)
(702)
(433)
—
(40,520)
428
—
—
(4,308)
Deferred taxation (note 20)
(7,029)
17,452
4,125
– Current year
(6,722)
18,505
4,125
(307)
(1,053)
—
(60,574)
(51,400)
(40,275)
Before tax
R’000
Tax impact
R’000
After tax
R’000
45,475
3,540
—
(599)
45,475
2,941
49,015
(599)
48,416
37,090
3,142
—
—
37,090
3,142
40,232
—
40,232
29,816
(6,718)
—
—
29,816
(6,718)
23,098
—
23,098
Taxation
Major components of taxation expense
– Under-provision prior years
Taxation recognized in other comprehensive income
2014
2013
Overview
2013
R’000
2014
R’000
2012
87
Financial reports
29.
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
29.
2014
R’000
2013
R’000
2012
R’000
212,158
59,404
1,170
179,866
50,362
1,038
143,515
40,184
91
(522)
4,125
—
354
(958)
351
(4,562)
7,664
388
(262)
(5,784)
376
(423)
3,362
—
433
(190)
702
(3,153)
3,405
7
1,129
(4,485)
251
(107)
2,639
4,308
—
(4,005)
34
(501)
4,079
—
(428)
(5,968)
40
60,574
51,400
40,275
151,589
732,171
0.21
128,471
658,456
0.20
103,240
657,045
0.16
Profit attributable to owners of the parent
151,589
128,471
103,240
Weighted average number of ordinary shares in issue (000’s)
Adjusted for: potentially dilutive effect of share options
732,171
36,136
658,456
16,316
657,045
5,277
Diluted weighted average number of ordinary shares in issue (000’s)
768,306
674,772
662,322
0.20
0.19
0.16
Taxation (continued)
Tax rate reconciliation
The tax on the Group’s profit before taxation differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the entities as follows:
Tax at the applicable tax rate of 28%
Tax effect of:
– Income not subject to tax
– Expenses not deductible for tax purposes
– Secondary tax on companies
– Withholding tax
– Utilization of prior year assessed losses
– Foreign tax paid
– Foreign tax rate differential
– Deferred tax not recognized on assessed losses
– Deferred tax previously not recognized
– (Over)/under provision prior years
– Tax incentives in addition to incurred cost
– Other
The Group’s weighted average tax rate is 28.6%
(2013: 28.6%, 2012: 28.1%).
30.
Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to owners of the parent by the weighted average
number of ordinary shares in issue during the year.
Basic earnings per share (R)
Diluted
Diluted earnings per share is calculated by dividing the diluted profit
attributable to owners of the parent by the diluted weighted average
number of ordinary shares in issue during the year (assuming
conversion of all dilutive potential ordinary shares). The Group has
one category of diluted potential ordinary shares – share options, for
which a calculation is done to determine the number of shares that
could have been acquired at fair value (determined at the closing
market share price) based on the monetary value of the subscription
rights attached to outstanding share options. The number of shares
calculated is compared with the number of shares that would have
been issued assuming the exercise of the share options.
Diluted earnings per share (R)
88
2014
R’000
2013
R’000
2012
R’000
Net foreign exchange (gains)/losses
Income tax effect on the above component
151,589
(38,128)
10,458
128,471
4,681
(1,098)
103,240
1,602
(249)
Adjusted earnings attributable to owners of the parent
123,919
132,054
104,593
123,919
732,171
0.17
132,054
658,456
0.20
104,593
657,045
0.16
123,919
132,054
104,593
768,306
0.16
674,772
0.20
662,322
0.16
151,589
128,471
103,240
(97)
63
316
(314)
5,158
—
430
1,332
—
—
(85)
394
(1,357)
—
(323)
151,786
132,352
104,679
151,786
732,171
0.21
132,352
658,456
0.20
104,679
657,045
0.16
151,786
768,306
0.20
132,352
674,772
0.20
104,679
662,322
0.16
Reconciliation of adjusted earnings
Basic
Basic adjusted earnings per share is calculated by dividing the
adjusted earnings attributable to owners of the parent by the
weighted average number of ordinary shares in issue during the year.
Basic adjusted earnings per share (R)
Diluted
Adjusted diluted earnings per share is calculated by dividing the diluted
adjusted earnings attributable to owners of the parent by the diluted
Diluted adjusted earnings attributable to owners of the parent
Diluted adjusted weighted average number of ordinary shares in
issue (000’s)
Diluted adjusted earnings per share (R)
Headline earnings per share
Reconciliation of headline earnings
(Profit)/loss on disposal of property, plant and equipment and
intangible assets (note 32.2)
Impairment of intangible assets (notes 5, 7 and 32.2)
Impairment of furniture and fittings (notes 5, 6 and 32.2)
Foreign currency translation reserve released due to liquidation of
intermediary subsidiary holding company (note 23)
Income tax effect on the above components
Headline earnings attributable to owners of the parent
Basic
Basic headline earnings per share is calculated by dividing the
headline earnings attributable to owners of the parent by the
Basic headline earnings per share (R)
During the current fiscal year, a new profit measure was implemented,
adjusted earnings per share. Adjusted earnings per share is defined
as profit attributable to owners of the parent excluding net foreign
exchange gains/(losses) divided by the weighted average number of
ordinary shares in issue during the year.
Overview
Earnings per share (continued)
Adjusted earnings per share
Diluted
Diluted headline earnings per share is calculated by dividing the diluted
headline earnings attributable to owners of the parent by the diluted
Diluted headline earnings attributable to owners of the parent
Diluted headline earnings per share (R)
89
Financial reports
30.
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
31.
2014
R’000
2013
R’000
2012
R’000
39,614
660,213
6.0
52,576
657,200
8.0
39,420
657,200
6.0
—
—
—
26,378
659,450
4.0
—
—
—
Profit before income taxation
Adjustments
– (Profit)/loss on disposal of property, plant and equipment and
intangible assets (note 23)
– Depreciation (notes 6 and 24)
– Amortization (notes 7 and 24)
– Impairment of intangible assets (notes 7 and 24)
– Impairment of furniture and fittings (notes 6 and 24)
– Finance income – cash (note 25)
– Finance income – non-cash (note 25)
– Finance costs – cash (note 26)
– Finance costs – non-cash (note 26)
– Share-based payments (notes 16 and 24)
– Foreign exchange (gains)/losses (notes 25 and 26)
– Impairment of receivables (note 12)
– Write-down of inventory to net realizable value (notes 11 and 24)
– Foreign currency translation reserve released due to liquidation of
intermediary subsidiary holding company (note 23)
– Increase in provisions
– Lease straight-line adjustment
– Other
Cash generated from operations before working capital changes
Changes in working capital
– Increase in inventories
– Increase in trade and other receivables
– Increase in finance lease receivable
– Increase in trade and other payables
– Decrease in provisions
– Foreign currency translation differences on working capital
– Increase in restricted cash
212,158
94,799
179,866
131,123
143,515
114,294
(97)
47,887
44,941
63
316
(3,970)
(1,166)
2,486
118
4,611
(33,658)
7,820
2,604
(314)
41,201
56,985
5,158
—
(1,884)
(134)
3,117
231
3,151
3,012
6,159
4,785
430
36,792
53,040
1,332
—
(1,877)
(515)
4,712
553
2,001
639
7,050
3,153
—
22,498
—
346
306,957
(40,788)
(3,451)
(55,235)
(2,637)
32,389
(25,165)
13,311
—
394
8,986
(76)
352
310,989
(23,142)
(7,810)
(30,844)
(9,829)
24,876
(16,205)
16,670
—
—
7,415
(11)
(420)
257,809
(65,332)
(12,698)
(54,877)
—
23,571
(20,371)
324
(1,281)
Cash generated from operations
266,169
287,847
192,477
Dividend per share
Final dividend declared
Shares in issue at dividend date (000’s)
Final dividend per share (cents)
Interim dividend declared
Interim dividend per share (cents)
Following the completion of its initial public offering of ADSs, the
Company discontinued its policy of declaring regular dividends in
order to increase the funds available to pursue opportunities for more
rapid growth.
32.
Cash flow statement
32.1.
The following convention applies to figures other than
adjustments:
Outflows of cash are represented by figures in brackets. Inflows of
cash are represented by figures without brackets.
32.2.
90
Reconciliation of profit for the year before taxation to
cash generated from operations:
MiX Telematics ❯
Annual Report 2014
Business combinations
The acquisition was considered to be a business combination as defined by International Financial Reporting Standards,
and as a result has been accounted for under the requirements of IFRS 3. The Group acquired the power to control the
operating and financial activities of the acquired business on December 19, 2013, and the assets acquired and liabilities
assumed have been recorded at their fair values.
From the acquisition date, no revenue has been recorded by the business acquired and losses of R0.6 million have been
included in profit or loss. Had the software business been consolidated from April 1, 2013 the consolidated income
statement would show nil pro forma revenue and a net loss of R2.4 million in respect of this business.
Consideration at December 19, 2013
Total consideration payable
Cash consideration transferred at effective date
7,606
(3,606)
17
4,000
Notes
Fair value
R’000
7
20
18
4,000
1,032
(82)
Recognized amounts of identifiable assets acquired and liabilities
assumed
Software
Deferred tax asset
4,950
Total identifiable net assets
Goodwill
Acquisition date fair value of consideration
7
2,656
7,606
Acquisition-related expenses of R0.2 million were incurred and have been charged to administrative and other expenses
in the consolidated income statement for the 2014 fiscal year. The goodwill of R2.7 million arising from the acquisition is
attributable to the workforce acquired and the synergies expected from combining the business acquired and the Group.
By year-end, R0.1 million interest on the deferred consideration was charged to profit or loss for the 2014 fiscal year.
2013
Deferred consideration payable
R’000
Notes
On December 19, 2013, the Group acquired a proprietary software development business from Roitech Proprietary
Limited, constituting employees and specific assets and liabilities. The business acquired has developed customizable
software which comprises a smartphone application and a web-based user interface, and uses mobile and geographic
information systems (“GIS”) technologies for the effective management of in-field data collection, distribution and tracking
which may be applied to areas such as sales teams, research teams, meter readers and vehicle tracking and driver
monitoring. The services offered by the business complement the Group’s existing fleet management solutions and the
acquisition broadens the array of services offered to current and future fleet management customers.
Overview
2014
On May 1, 2012, the Group acquired the business of Intellichain Proprietary Limited, or “Intellichain” (constituting
employees and specific assets and liabilities), a supply chain management software business. The services offered by
Intellichain are compatible with the Group’s existing fleet management solutions and the acquisition broadens the array
of services offered to current and future fleet management customers. The purchase consideration of the acquisition
consisted of the outstanding loan advanced to Intellichain in the prior fiscal year including interest accrued.
No material acquisition-related expenses were incurred in relation to the acquisition of the business.
The post-acquisition revenue earned during the 2013 fiscal year of R6.6 million and the post-acquisition loss of R1.6 million
were included in the 2013 consolidated results.
91
Financial reports
33.
MiX Telematics ❯
Annual Report 2014
33.
Business combinations (continued)
2013 (continued)
The fair values of the assets and liabilities arising from the acquisition are as follows:
Software
Trade receivables
Notes
Fair value
R’000
6
7
12
14
18
182
5,739
756
23
(654)
6,046
Acquisition date fair value of consideration paid
6,046
Net cash inflow on acquisition of business
Consideration paid in cash
Cash and cash equivalent balances acquired
34.
—
23
Related party transactions
Directors’ and executive committee members’ interest
The list of directors and executive committee and their beneficial interests declared in the Company’s share capital at
year-end held directly, indirectly and by associates were:
2014
Direct
000’s
Indirect
000’s
Associate
000’s
Direct
000’s
2013
Indirect
000’s
Associate
000’s
—
—
—
—
—
250
—
—
—
—
3,668
—
63,848
—
—
—
—
—
—
—
—
70,261
—
—
—
200
—
—
—
—
—
12,318
250
—
—
—
—
3,931
—
79,847
1,656
—
—
—
—
—
653
—
90,261
2,779
—
—
200
—
23,442
6,663
2,881
33
10,772
—
—
—
1,025
—
—
—
—
—
1,138
—
—
—
—
125
—
—
—
—
—
78
—
28,240
7,798
3,602
33
13,465
—
—
—
—
—
—
—
—
—
1,138
—
—
—
—
125
—
—
—
—
—
78
—
45,066
68,654
70,664
65,706
86,572
94,096
Non-executive
H Brody
R Bruyns
C Ewing
R Frew
R Friedman(1)
F Roji(2)
R Shough(3)
A Welton
E Banda(4)
Executive
S Joselowitz
R Botha(5)
T Buzer(6)
M Pydigadu
H Scott(5)
C Tasker
G Pretorius
B Horan
C Lewis(7)
Resigned from the Board with effect from March 31, 2013.
Resigned as a non-executive director from the Board and appointed as alternate director to Hubert Brody with effect from May 13, 2013.
(3) Resigned from the Board with effect from August 9, 2013.
(4) Appointed to the Board with effect from May 13, 2013.
(5) Resigned from the Board with effect from August 9, 2013 but remains a member of the Group executive committee.
(6) Resigned from the Board with effect from August 9, 2013 and remained a member of the Group executive committee until he retired on March 31,
2014.
(7) Appointed to the executive committee with effect from December 1, 2013.
(1) (2) 92
MiX Telematics ❯
Annual Report 2014
Related party transactions (continued)
Name of director
Related party
Nature of relationship with the Group
R Friedman1
Provides contract manufacturing services to the Group
(2013 fiscal year only)
Lease agreement: Midrand office
H Brody
Control Instruments Automotive
Proprietary Limited
Thynk Property Fund
Proprietary Limited
Thynk Capital Proprietary Limited
Masalini Capital Proprietary Limited
Imperial Group Limited
F Roji2
Imperial Group Limited
C Ewing
DLA Cliffe Dekker Hofmeyr
Incorporated
Creative Space Media
R Frew
B Horan
Fees in respect of rental unit financing
Provides directors’ services
Shareholder and distribution outlet through motor dealer
channel and provides director services
Shareholder and distribution outlet through motor dealer
channel and provides director services
Provides director services
Provides media-related services
s at June 30, 2012, R Friedman resigned as a director of Control Instruments Group Limited and as such the group and its subsidiaries are
A
no longer considered a related party to the Group. The major subsidiaries include PI Shurlok Proprietary Limited and Control Instruments
Automotive Proprietary Limited. Furthermore, R Friedman resigned as director of MiX Telematics Limited on March 31, 2013.
2 Resigned as a non-executive director from the Board and appointed as alternate director to Hubert Brody with effect from May 13, 2013.
During the year under review, the following were disclosed as contractual arrangements that existed between the Group
and parties outside of the Group, in which certain of the directors and executive committee members had interests:
Overview
Interests in contracts
Transactions with related parties and balances outstanding at year-end are as follows (excluding key management
personnel emoluments):
Sales of goods and services
– Control Instruments Automotive Proprietary Limited
– Imperial Group Limited
Purchases of goods and services
– PI Shurlok Proprietary Limited
– Masalini Capital Proprietary Limited
– Thynk Capital Proprietary Limited
– Thynk Property Fund Proprietary Limited
– Creative Space Media
Year-end balance of receivables (included in trade and other
receivables – note 12)
Year-end balance of payables (included in trade and other
payables – note 18)
– PI Shurlok Proprietary Limited
– Masalini Capital Proprietary Limited
– Thynk Capital Proprietary Limited
– Thynk Property Fund Proprietary Limited
2014
R’000
2013
R’000
2012
R’000
54,440
*
54,440
18,702
629
—
18
26
5,824
12,143
62
42,155
236
41,919
25,516
—
11,917
27
40
5,796
7,675
61
20,693
213
20,480
98,463
—
91,543
42
59
6,208
432
179
4,624
*
4,624
3,194
*
3,194
4,184
123
4,061
113
*
1
2
41
69
124
*
2
3
74
45
10,777
10,770
3
4
—
—
*No longer a related party during the fiscal year or at the applicable year-end.
93
A list of subsidiaries has been included in note 42.
1 Financial reports
34.
MiX Telematics ❯
Annual Report 2014
34.
Related party transactions (continued)
Refer to note 28 for key management personnel emoluments disclosure. Key management personnel include executive
committee members.
The related parties included above are related to the Group due to certain shares in these entities being held by the
executive and non-executive directors of the Company or due to common directorships held.
The receivables from related parties arise from sales transactions and are unsecured and bear no interest. Provisions that
are held against receivables from related parties amounted to R0.2 million (2013: Nil).
The payables to related parties arise mainly from purchase transactions and the payables bear no interest.
During the 2012 fiscal year, MiX Telematics Europe and Imperial Commercials Limited, a subsidiary of a significant
shareholder, entered into an agreement whereby Imperial Commercials Limited purchased the business and assets of
MiX Telematics Europe’s vehicle conversion business, One Stop Shop. The business and related assets were sold to
Imperial Commercials Limited for R2.3 million.
35.
Contingencies
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. Furthermore, no connection
incentives will be received going forward. The maximum potential liability under the arrangement is R58.1 million (2013:
R65.1 million). No loss is considered probable under this arrangement.
36.
Commitments
Capital commitments
At March 31, the Group had approved, but not yet contracted,
capital commitments for:
Intangible assets
At March 31, the Group had approved and contracted capital
commitments for: Property, plant and equipment
Intangible assets
2014
R’000
2013
R’000
2012
R’000
—
30,368
1,451
31,341
413
26,396
30,368
32,792
26,809
15,953
13,794
2,240
9,465
1,330
9,165
29,747
11,705
10,495
Capital commitments will be funded out of a mixture of working capital and cash and cash equivalents.
94
MiX Telematics ❯
Annual Report 2014
36.
Commitments (continued)
The future minimum lease payments under non-cancellable operating leases are as follows:
2014
R’000
2013
R’000
2012
R’000
15,806
27,839
12,653
23,971
8,316
7,940
43,645
36,624
16,256
718
224
882
490
1,230
1,082
942
1,372
2,312
1,477
1,019
1,802
1,215
1,362
1,521
2,496
3,017
2,883
Land and buildings
Within one year
One to five years
The Group leases various office equipment and vehicles under
cancellable operating lease agreements. The lease terms are
between one and five years with annual escalations between zero
and 10% per annum. The Group is required to give up to three
months’ notice for the termination of these agreements.
The Group leases various offices under non-cancellable operating lease agreements. The leases have various terms and
escalation clauses and renewal rights.
Overview
Operating leases
Office equipment
Within one year
One to five years
Vehicles
Within one year
One to five years
The future minimum lease payments under cancellable operating
leases are as follows:
The lease expenditure charged to the income statement during the year is disclosed in note 24.
37.
Events after the reporting period
Financial risk sensitivity analysis
Interest rate sensitivity
A change in the interest rate at the reporting date of 100 basis points for ZAR denominated instruments and 10 basis
points for USD denominated instruments would have increased/(decreased) profit or loss before tax by the amounts
shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same
basis for the year ended March 31, 2013.
USD denominated instruments
ZAR denominated instruments
Increase of 10 basis points
Decrease of 10 basis points
Increase of 100 basis points
2014
R’000
2013
R’000
612
(612)
1,005
(1,005)
(18)
18
682
(682)
95
Financial reports
38.
The directors are not aware of any matter material or otherwise arising since March 31, 2014 and up to the date of this
report, not otherwise dealt with herein.
MiX Telematics ❯
Annual Report 2014
38.
Financial risk sensitivity analysis (continued)
Foreign currency sensitivity
The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss and equity of
an instantaneous 5% strengthening or weakening in the functional currency against all other currencies, from the rate
applicable at March 31, 2014, for each class of financial instrument with all other variables remaining constant. This
analysis is for illustrative purposes only as, in practice, market rates rarely change in isolation.
The Group is exposed mainly to fluctuations in foreign exchange rates in respect of the South African Rand, Australian
Dollar, United States Dollar, the British Pound and the Euro. This analysis considers the impact of changes in foreign
exchange rates on profit or loss or equity, excluding foreign exchange translation differences resulting from the translation
of the Group entities that have a functional currency different from the presentation currency, into the Group’s presentation
currency (and recognized in the foreign currency translation reserve).
A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/
(decreased) profit before taxation/equity by the amounts shown below.
The analysis has been performed on the basis of the change occurring at the end of the reporting period.
Change in
exchange
rate
%
Increase/(decrease) in
profit before taxation
Increase/(decrease) in equity
Result of
Result of
weakening strengthening
in functional in functional
currency
currency
R’000
R’000
Result of
Result of
weakening strengthening
in functional in functional
currency
currency
R’000
R’000
2014
Denominated currency:
Functional currency
EUR:GBP
USD:GBP
USD:ZAR
EUR:ZAR
GBP:ZAR
ZAR:USD
BRL:ZAR
EUR:USD
USD:AUD
AUD:USD
EUR:AUD
AUD:ZAR
ZAR:GBP
ZAR:AUD
USD:BRL
ZAR:BRL
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
188
407
30,674
(260)
(16)
(44)
—
904
(14)
(7)
—
—
(11)
(20)
(77)
(1)
(188)
(407)
(30,674)
260
16
44
—
(904)
14
7
—
—
11
20
77
1
5
5
5
5
5
5
5
5
5
5
5
380
(35)
(61)
147
11
(84)
603
(52)
(42)
(2)
(20)
(380)
35
61
(147)
(11)
84
(603)
52
42
2
20
(1,586)
1,586
(1,289)
(805)
(537)
1,289
805
537
(361)
(779)
361
779
2013
Denominated currency:
Functional currency
EUR:GBP
USD:GBP
USD:ZAR
EUR:ZAR
GBP:ZAR
ZAR:USD
EUR:USD
USD:AUD
AUD:USD
EUR:AUD
ZAR:GBP
96
MiX Telematics ❯
Annual Report 2014
Liquidity risk
Cash and cash equivalents, net of overdrafts
2014
R’000
2013
R’000
234,839
802,639
186,987
91,697
1,037,478
278,684
The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period
at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Payable
within
1 month or
on demand
R’000
Between 1 month and
1 year
R’000
Between
1 year and
2 years
R’000
Between
2 years and
5 years
R’000
More than
5 years
R’000
136
32,024
41,746
27,655
1,143
29,995
67,323
156
1,359
—
—
—
1,103
—
—
—
—
—
—
—
101,561
98,617
1,359
1,103
—
Borrowings
Trade payables
Accruals and other payables
Bank overdraft
595
28,103
37,619
32,294
3,112
28,922
47,882
23,711
—
—
—
—
—
—
—
—
—
—
—
—
Total
98,611
103,627
—
—
—
March 31, 2014
Borrowings
Trade payables
Bank overdraft
Total
March 31, 2013
The following liquid resources are available:
The Group has limited risk due to the recurring nature of its income and the availability of liquid resources. The Group
meets its financing requirements through a mixture of cash generated from its operations and short and long-term
borrowings. In addition, the Group has access to undrawn borrowing facilities (note 17).
Overview
Liquidity risk is the risk that there will be insufficient funds available to settle obligations when they are due.
There have been no significant changes in the Group’s financial risk management described above relative to the prior year.
97
Financial reports
39.
MiX Telematics ❯
Annual Report 2014
40.
Reclassification
During the 2014 fiscal year, the Group changed its classification of foreign exchange gains and losses in the income
statement. Foreign exchange gains and losses, which were previously classified as part of “Other income/(expenses) –
net”, are now classified as part of “Finance income/(cost) – net”. The change is considered a more relevant presentation
of such items in the income statement since the majority of foreign exchange gains and losses in 2014 relate to translation
differences on foreign currency cash and cash equivalents arising from the initial public offering proceeds.
The reclassification has been adopted retrospectively and the comparative amounts for the years ended March 31, 2013
and March 31, 2012 have been adjusted accordingly.
The impact of the reclassification results in an increase of R4.7 million and R1.6 million in “Operating profit” with a
corresponding additional cost in “Finance income/(cost) – net” for the years ended March 31, 2013 and March 31, 2012,
respectively. Profit before taxation and profit for the period remain unchanged for the periods disclosed.
41.
Exchange rates
The following major rates of exchange were used in the preparation of the consolidated financial statements:
98
2014
2013
2012
ZAR:USD
– closing
– average
10.60
10.12
9.24
8.50
7.69
7.43
ZAR:GBP
– closing
17.60
14.04
12.29
– average
16.11
13.43
11.84
MiX Telematics ❯
Annual Report 2014
List of Group companies
Principal activity
Place of
incorporation
2014
%
2013
%
RSA
100
—
RSA
100
100
RSA
100
100
—
—
UK
100
100
USA
100
100
Australia
100
100
Brazil
100
100
RSA
100
100
Germany
100
100
UAE
100
100
RSA
85.1
85.1
Nigeria
—
60
RSA
49
49
99.9
99.9
Direct
MiX Telematics Investments Proprietary Limited*
MiX Telematics Africa Proprietary Limited
MiX Telematics International Proprietary Limited
Sunstore Limited
MiX Telematics Europe Limited
MiX Telematics North America Incorporated
MiX Telematics Australasia Proprietary Limited
MiX Telematics Serviços De Telemetria E
Rastreamento De Veículos Do Brasil Limitada**
Treasury company
Vehicle tracking and
recovery
Fleet services and research
and development
Liquidated during the
2013 fiscal year
Fleet management
products and services
Fleet management
Fleet management
Fleet management
Cyprus
Indirect
MiX Telematics Technology Holdings
Proprietary Limited
MiX Telematics Europe GmbH
MiX Telematics Middle East FZE
MiX Telematics Enterprise SA
Proprietary Limited***
Matrixvtrack Nig. Limited
MiX Telematics Fleet Support Services
Proprietary Limited***
MiX Telematics East Africa Limited
Dormant
Fleet management
Fleet management
Fleet management
Vehicle tracking and
recovery
Fleet management
Fleet management
Uganda
*During the 2014 fiscal year, MiX Telematics Limited obtained a 100% equity interest in MiX Telematics Investments Proprietary Limited
(a dormant entity at acquisition).
**During the 2014 fiscal year an additional capital contribution of R4.6 million was made. The capital contribution had no impact on the
percentage ownership held by the Group.
***The remaining shareholdings in these companies are owned by structured entities, the MiX Telematics Fleet Support Trust (which holds a
51% interest in MiX Telematics Fleet Support Services Proprietary Limited) and the MiX Telematics Enterprise Trust (which holds a 14.9%
interest in MiX Telematics Enterprise SA Proprietary Limited), which have been fully consolidated. Control of the structured entities was
assessed when IFRS 10 was adopted with effect from April 1, 2013 and there was no change to the historical accounting treatment applied
by the Group. These trusts were set up in prior years to invest in the specified Group companies and to hold such investments for the benefit
of certain MiX employees as beneficiaries.
99
Name
Legal % ownership
All of the entities listed have been consolidated apart from Matrixvtrack Nig. Limited which was an equity accounted joint
venture (note 8) until its disposal during the 2014 fiscal year.
Overview
MiX Telematics Limited is the parent company of the MiX Telematics Group of companies outlined below.
Financial reports
42.
Company statements of financial position
MiX Telematics ❯
Annual Report 2014
at March 31, 2014
Notes
2014
R’000
2013
R’000
4
5
585
1,576,122
362
890,526
1,576,707
890,888
4,533
18,168
225
306
22,701
531
1,599,408
891,419
1,429,250
14,961
140,375
790,491
10,350
85,086
1,584,586
885,927
10,881
—
10,881
—
3,905
36
2,020
3,472
3,941
5,492
14,822
5,492
1,599,408
891,419
ASSETS
Non-current assets
Intangible assets
Interest in subsidiaries
Total non-current assets
Current assets
6
7
Total current assets
Total assets
EQUITY
Stated capital
Other reserves
Retained earnings
8
9
Total equity
LIABILITIES
Non-current liabilities
12
Total non-current liabilities
Current liabilities
Borrowings
Total current liabilities
Total liabilities
Total equity and liabilities
100
11
10
Company income statements
2014
R’000
2013
R’000
Dividend income
Other income
Operating expenses
Administration and other charges
22
73,500
38
(11,748)
(11,748)
100,458
38
(6,591)
(6,591)
Operating profit
13
Finance income
Finance costs
14
15
61,790
43,994
44,188
(194)
93,905
820
1,216
(396)
17
105,784
(10,881)
94,725
—
94,903
94,725
0.13
0.12
0.14
0.14
Taxation
Profit for the year
Earnings per share
Basic (R)
Diluted (R)
19
19
Overview
Notes
MiX Telematics ❯
Annual Report 2014
101
Financial reports
Company statements of comprehensive income
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
Other comprehensive income for the year, net of tax
94,903
—
94,725
—
94,903
94,725
Profit for the year
102
Company statements of changes in equity
MiX Telematics ❯
Annual Report 2014
7,199
—
—
—
69,315
94,725
94,725
—
864,116
94,725
94,725
—
2,425
3,151
(78,954)
(72,914)
*
—
2,425
—
—
3,151
—
—
2,889
3,151
—
—
—
—
(52,576)
(52,576)
20
—
—
—
—
(26,378)
(26,378
8
790,027
(13)
(790,014)
—
—
—
790,491
—
—
10,350
85,086
885,927
—
—
—
—
—
—
—
—
—
—
—
—
94,903
94,903
—
94,903
94,903
—
638,759
—
—
4,611
(39,614)
603,756
8
9
15,776
—
—
—
—
—
—
4,611
—
15,776
4,611
8
622,983
—
—
—
—
622,983
20
—
—
—
—
(39,614)
(39,614)
1,429,250
—
—
14,961
140,375
1,584,586
Share
premium
R’000
Other
reserves**
R’000
—
—
—
—
13
—
—
—
787,589
—
—
—
464
—
8
9
464
—
20
Notes
Balance at April 1, 2012
Total comprehensive income
Profit for the year
Total transactions with owners
Shares issued in relation to share
options exercised
Share-based payment
per share
Interim dividend declared of 4 cents
per share
Transfer from share capital and
share premium to stated capital
Total comprehensive income
Profit for the year
Total transactions with owners
Shares issued in relation to share
options exercised
Share-based payment
Proceeds from shares issued, net of
share issue costs
Final dividend declared of 6 cents
per share
Total
equity
R’000
Share
capital
R’000
Retained
earnings
R’000
Stated
capital
R’000
Overview
Attributable to owners of the parent
**See note 9 for the composition of and movements in other reserves.
103
Financial reports
Company consolidated statements of cash flows
MiX Telematics ❯
Annual Report 2014
Notes
2014
R’000
2013
R’000
21.2
14
15
22
(11,437)
520
(77)
73,500
(6,462)
403
(165)
93,548
62,506
87,324
(291)
(4,630)
(59)
(4,428)
(4,921)
(4,487)
665,710
(26,951)
(39,610)
(635,436)
(3,436)
2,889
—
(78,874)
—
(7,958)
Net cash used in financing activities
(39,723)
(83,943)
Net increase/(decrease) in cash and cash equivalents
17,862
306
(1,106)
1,412
18,168
306
Cash flows from operating activities
Cash used in operations
Interest received
Interest paid
Dividends received
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
Investment in subsidiary
4
5
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of shares
Share issue expenses paid
Dividends paid to Company’s owners
Loans to subsidiaries
Repayments of borrowings
8
8
20
5
10
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the end of the year
104
7
Notes to the company annual financial statements
MiX Telematics ❯
Annual Report 2014
Summary of significant accounting policies
The principal accounting polices applied in the preparation of these financial statements are set out below. These
accounting policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The annual financial statements of the Company for the year ended March 31, 2014 have been prepared in accordance
with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standard Board, and
IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS.
Refer to pages 41 to 52 in the MiX Telematics Limited consolidated annual financial statements for a summary of the
significant accounting policies which are consistent with the accounting policies used in the preparation of the Company’s
financial statements. The accounting policy for investments in subsidiaries is set out below.
The new accounting standards effective for the first time during the current year have had no impact on the financial
statements of the Company.
Investments in subsidiaries
The Company accounts for its subsidiaries at cost. Acquisition-related expenses are expensed as they are incurred. The
cost is adjusted to reflect changes in consideration arising from contingent consideration amendments where it relates to
facts and circumstances existing on acquisition date.
3.
Financial risk management
3.1.
Financial risk factors
2.
Overview
General information
MiX Telematics Limited (the “Company”) is a public company which is incorporated and domiciled in South Africa. The
Company’s shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and its American Depositary
Shares are listed on the New York Stock Exchange (NYSE: MIXT). The activities of the Company and its subsidiaries (“the
Group”) focus on fleet and mobile asset management solutions delivered as Software-as-a-Service. The address of the
Company’s registered office is Matrix Corner, Howick Close, Waterfall Park, Midrand, 1686. The annual financial
statements were approved by the Board of Directors on June 3, 2014.
1.
Refer to note 3.1 in the MiX Telematics Limited consolidated annual financial statements for details regarding the financial
risk management of financial risk factors which are consistent with those applied for the Company.
3.2.
Capital risk management
Fair value estimation
risk management of fair value estimation which are consistent with those applied for the Company.
105
Financial reports
3.3.
risk management of capital risk factors which are consistent with those applied for the Company.
Notes to the Company annual financial statements
MiX Telematics ❯
Annual Report 2014
Patents
and
trademarks
R’000
4.
Intangible assets
At April 1, 2012
Cost
461
(108)
Net book amount
353
Additions
353
59
(50)
362
At March 31, 2013
Cost
520
(158)
Net book amount
362
Additions
Amortization charge (note 13, 21.2)
362
291
(68)
585
At March 31, 2014
Cost
811
(226)
Net book amount
585
Amortization expense of R68,000 (2013: R50,000) is included in “Administration and other charges” in the income
statement.
106
161,052
159,286
435,054
197,909
433,395
197,719
16,207
57,679
15,445
57,446
9,058
*
4,428
—
9,056
16,099
328
673,680
7,222
15,585
—
—
1,576,122
890,526
Interest in subsidiaries
Shareholding
– 1,000 shares (100%) (2013: 100%) in MiX Telematics Africa Proprietary Limited
– 739,672 shares (100%) (2013: 100%) in MiX Telematics International Proprietary
Limited
– 8,301,420 shares (100%) (2013: 100%) in MiX Telematics Europe Limited
– 5,913,927 shares (100%) (2013: 100%) in MiX Telematics North America
Incorporated
– 100 shares (100%) (2013: 100%) in MiX Telematics Australasia Proprietary Limited
– 1,999,950 quotas (99.9975%) (2013: 99.9975%) in MiX Telematics Serviços
De Telemetria E Rastreamento De Veículos Do Brazil Limitada
– 100 shares (100%) (2013: 0%) in MiX Telematics Investments Proprietary Limited
Loans to
MiX Telematics Europe Limited
MiX Telematics North America Incorporated
MiX Telematics Serviços De Telemetria E Rastreamento De Veículos Do Brazil Limitada
MiX Telematics Investments Proprietary Limited
During the current financial year, MiX Telematics Limited increased its capital contribution to MiX Telematics Serviços
De Telemetria E Rastreamento De Veículos Do Brazil Limitada (“MiX Brazil”) by R4.6 million (BRL1.1 million). This was
advanced to MiX Brazil as an additional capital investment in the Company.
In the 2014 fiscal year, MiX Telematics Limited also obtained an equity interest in a previously dormant shelf company
in South Africa, MiX Telematics Investments Proprietary Limited (“MiX Investments”). R100 was contributed to
MiX Investments as a capital investment in the entity.
Overview
2013
R’000
2014
R’000
A loan was also advanced to MiX Brazil in the current year by this company. The loan is unsecured, bears interest at the
Bacan Silica rate and has no fixed date of repayment.
The loan to MiX Telematics North America Incorporated is denominated in South African Rand, the loan to MiX Telematics
Europe Limited is denominated in UK Pound, the loan to MiX Brazil is denominated in Brazilian Real, and the loan to
MiX Investments Proprietary Limited is denominated in US Dollar. The maximum exposure to credit risk at the reporting
date is the carrying value of the loans.
107
The movement in interest in subsidiaries previously held is as a result of the movements described in this note, together
with the effect of share options granted to employees of the respective subsidiary companies, resulting in the expensed
fair value of the options being recognized as an equity contribution by the Company to the respective subsidiary.
Financial reports
5.
MiX Telematics ❯
Annual Report 2014
6.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
2,590
1,943
192
33
4,533
225
4,194
339
225
—
4,533
225
Net cash and cash equivalents included in the cash flow statement comprise the
following amounts included in the statement of financial position:
18,168
306
The credit quality of cash and cash equivalents that are neither past due nor impaired
can be assessed by reference to external credit ratings.
AA
BBB
18,052
116
—
306
18,168
306
Share-based payment reserve
Opening balance
Share-based payments (note 8)
10,350
4,611
7,199
3,151
Closing balance
14,961
10,350
Trade and other receivables Prepayments
Sundry debtors
Sundry debtors are neither past due nor impaired.
The carrying amounts of trade and other receivables are denominated in the following
currencies:
South African Rand
US Dollar
The fair value of trade and other receivables approximate their book values as
the impact of discounting is not considered material due to the short-term nature of
the receivables. The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The Company has no
significant concentration of credit risk. The Company does not hold any collateral
as security.
7.
8.
Net cash and cash equivalents
Stated capital/share capital and premium
Refer to note 15 in the MiX Telematics Limited consolidated annual financial
statements where all disclosures in respect of the stated capital/share capital and
premium have been made.
9.
108
Other reserves
2014
R’000
2013
R’000
36
(36)
3,472
(3,472)
—
—
3,472
(3,436)
11,199
(7,727)
36
3,472
Loans from Investec Bank Limited:
– Loan 1
– Loan 2
—
36
*
3,472
Total long-term loans
36
(36)
3,472
(3,472)
—
—
Borrowings
Secured loans: Long-term loans
Opening balance
Net payments made
Closing balance
The Company has unlimited borrowing capacity as specified in the Memorandum
of Incorporation.
No new borrowings were raised by the Company during the current or prior financial year.
The Company, however, has access to revolving credit facilities on which payments
of R4.4 million (2012: R14.2 million) were made, and drawdowns on the borrowing
facilities of R1 million (2013: R6.5 million) were raised in the 2014 financial year.
The net of these amounts have been included in the movement above.
Movement for the year
The Investec loan 1 was repaid in full during the 2014 fiscal year. Interest was previously charged at prime less 0.5% and
the loan was repayable in monthly instalments of R0.5 million when the full facility was utilized. This Investec loan was
secured by the cession and pledge of 100% of the shares held in MiX Telematics Australasia Proprietary Limited.
Long-term loans
The Investec loan 2 bears interest at prime less 0.5% and is repayable in maximum monthly instalments of R0.6 million
(2013: R0.6 million) if the facility is fully utilized. The facility matures in September 2015. The above Investec loan is
secured by:
The loans are all denominated in South African Rand.
The fair value of the Investec loan equals its carrying amounts, as the impact of discounting is not significant. The fair
values are based on cash flows discounted using the prime interest rate less 0.5% and are within level 2 of the fair value
hierarchy. Other borrowings are treated in a similar manner except for discounting, for which prime interest rate is used.
• Accession of all rights, title and interest in and to the subscriber contracts of MiX Telematics Africa Proprietary Limited.
The Company did not default on any payments or breach any loan agreement term during the current or previous
financial year.
Undrawn borrowing facilities at floating rates are:
– Standard Bank Limited: Vehicle and asset finance
– Investec Bank Limited
Interest rate
2014
R’000
2013
R’000
Prime less 1.2%
Prime less 0.5%
8,500
9,065
8,500
15,224
17,565
23,724
109
Financial reports
10.
Overview
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
11.
2014
R’000
2013
R’000
3,682
223
1,849
171
3,905
2,020
Prepayments
135
11,367
—
—
Gross deferred tax liabilities
11,502
(621)
—
—
Net deferred tax liabilities
10,881
—
Assessable losses
9
612
—
—
Gross deferred tax assets
621
(621)
—
—
Net deferred tax assets
—
—
Net deferred tax liability
10,881
—
The gross movement in net deferred tax liabilities is as follows:
Income statement charge (note 17)
—
10,881
—
—
End of the year
10,881
—
Accruals
Other
12.
Deferred tax
Deferred tax assets
Deferred tax at year-end has been recognized using the corporate tax rate of 28% (2013: 28%).
The movement in deferred tax assets and liabilities during the year, prior to taking into account the offsetting of balances
within the same tax jurisdiction, is as follows:
2013
R’000
Charged/
(credited to)
the income
statement
(note 17)
2014
R’000
—
—
135
11,367
135
11,367
—
11,502
11,502
—
—
(9)
(612)
(9)
(612)
—
(621)
(621)
Prepayments
Deferred tax assets
Assessable losses
110
14.
2013
R’000
Operating profit is stated after accounting for the following charges:
Amortization (notes 4 and 21.2)
Professional fees
Investor related costs
68
1,504
2,264
50
349
669
Directors’ fees paid (note 18)
2,964
3,151
520
406
520
406
34
635
—
498
669
498
Operating profit
Finance income
Cash
Non-cash
– Inter-company interest (note 22)
Net foreign exchange gains (note 27)
42,999
312
44,188
1,216
(77)
(165)
(77)
(165)
(117)
(231)
(117)
(231)
(194)
(396)
3,539
1,177
Refer to note 27 for information on the reclassification made to 2013 results. Foreign
exchange gains have significantly increased as a result of foreign exchange
movements on the loan issued to MiX Telematics Investments Proprietary Limited
during the current year which is denominated in United States Dollar.
15.
Finance costs
Cash
– Other long-term loans
Overview
2014
R’000
13.
MiX Telematics ❯
Annual Report 2014
16.
Auditors’ remuneration has been significantly increased due to the reviews and other
related services required by the initial public offering process and subsequent
compliance requirements.
111
Financial reports
– Long-term loans
Non-cash
MiX Telematics ❯
Annual Report 2014
2014
R’000
17.
2013
R’000
Taxation
Major components of taxation expense
Normal taxation
Deferred taxation (note 12)
– Current year
—
(10,881)
(10,801)
(80)
—
—
—
—
(10,881)
—
105,784
29,620
(18,739)
(20,580)
2,476
(958)
80
243
94,725
26,523
(26,523)
(28,136)
1,394
—
—
219
Tax rate reconciliation
The tax on the Company’s profit before taxation differs from the theoretical amount
that would arise using the tax rate applicable to profits of the Company as follows:
Tax at the applicable tax rate of 28%
Tax effect of:
– Income not subject to tax
– Expenses not deductible for tax purposes
– Utilization of prior year assessed losses
– Other
18.
10,881
—
94,903
732,171
0.13
94,725
658,456
0.14
Diluted earnings per share is calculated by dividing the diluted profit attributable to
owners of the parent by the diluted weighted average number of ordinary shares in
issue during the year (assuming conversion of all dilutive potential ordinary shares).
The Company has one category of diluted potential ordinary shares — share options,
for which a calculation is done to determine the number of shares that could have
been acquired at fair value (determined at the closing market share price) based on
the monetary value of the subscription rights attached to outstanding share options.
The number of shares calculated is compared with the number of shares that would
have been issued assuming the exercise of the share options.
Profit attributable to owners of the parent (R’000)
Adjusted for: potentially dilutive effect of share options
94,903
732,171
36,135
94,725
658,456
16,316
Diluted earnings per share (R)
768,306
0.12
674,772
0.14
Directors’ and committee emoluments
Please refer to note 28 in the MiX Telematics Limited consolidated annual financial
statements for disclosure relating to directors’ emoluments for the Company.
19.
Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit attributable to owners
of the parent by the weighted average number of ordinary shares in issue during
the year. Profit attributable to owners of the parent (R’000)
Basic earnings per share (R)
Diluted
112
2014
R’000
2013
R’000
During the current fiscal year, a new profit measure was implemented, Adjusted
earnings per share. Adjusted earnings per share is defined as profit attributable to
owners of the parent excluding net foreign exchange gains/(losses) divided by the
Reconciliation of adjusted earnings
Net foreign exchange gains
Income tax effect on the above component
94,903
(42,999)
12,040
94,725
(312)
—
63,944
94,413
63,944
732,171
0.09
94,413
658,456
0.14
63,944
768,306
0.08
94,413
674,772
0.14
94,903
732,171
0.13
94,725
658,456
0.14
94,903
768,306
0.12
94,725
674,772
0.14
Basic
Basic adjusted earnings per share is calculated by dividing the adjusted earnings
attributable to owners of the parent by the weighted average number of ordinary
shares in issue during the year.
Adjusted earnings attributable to owners of the parent (R’000)
Basic adjusted earnings per share (R)
Diluted
Adjusted diluted earnings per share is calculated by dividing the diluted adjusted
earnings attributable to owners of the parent by the diluted weighted average number
of ordinary shares in issue during the year.
Diluted adjusted earnings attributable to owners of the parent (R’000)
Diluted adjusted weighted average number of ordinary shares in issue (000’s)
Diluted adjusted earnings per share (R)
Headline earnings per share
Basic
Basic headline earnings per share is calculated by dividing the headline earnings
attributable to owners of the parent by the weighted average number of ordinary
shares in issue during the year.
Basic headline earnings per share (R)
Diluted
Diluted headline earnings per share is calculated by dividing the diluted headline
earnings attributable to owners of the parent by the diluted weighted average number
of ordinary shares in issue during the year.
Diluted headline earnings attributable to owners of the parent
Diluted headline earnings per share (R)
113
Adjusted earnings per share
Overview
Earnings per share (continued)
19.
Financial reports
MiX Telematics ❯
Annual Report 2014
20.
MiX Telematics ❯
Annual Report 2014
2014
R’000
2013
R’000
Final dividend declared (R’000)
39,614
660,213
52,576
657,200
Final dividend per share (R)
Interim dividend declared (R’000)
0.06
—
—
0.08
26,378
659,450
—
0.04
Dividend per share
Interim dividend per share (R)
Following the completion of its initial public offering of ADSs, the Company
discontinued its policy of declaring regular dividends in order to increase the funds
available to pursue opportunities for more rapid growth. As a result, no interim
dividend was declared during the 2014 fiscal year.
21.
Cash flow statement
21.1.
The following convention applies to figures other than adjustments:
Outflows of cash are represented by figures in brackets. Inflows of cash are
represented by figures without brackets.
21.2.
Reconciliation of profit for the year before taxation to cash used in
operations
Adjustments
– Dividend income – subsidiary companies (note 22)
– Amortization (note 4)
– Finance income – cash (note 14)
– Finance income – non-cash (note 14)
– Finance costs – cash (note 15)
– Finance costs – non-cash (note 15)
– Foreign exchange gains (note 14)
– Other
Cash used in operations before working capital changes
Changes in working capital
– Increase in inventories
– Increase in restricted cash
Cash utilized in operations
114
105,784
(114,747)
(73,500)
68
(520)
(669)
77
117
(40,320)
—
(8,963)
(2,474)
(4,390)
1,916
94,725
(101,260)
(100,458)
50
(406)
(498)
165
231
(312)
(32)
(6,535)
73
(53)
126
(11,437)
(6,462)
2014
R’000
2013
R’000
700,668
16,099
9,056
9
1,214
22,807
15,585
7,222
—
—
328
673,962
—
—
47
47
—
—
73,500
27,500
46,000
—
100,458
38,500
55,000
6,958
635
635
498
498
statements for disclosure relating to directors’ and executive committee members’
beneficial interests declared in the Company’s share capital at year end.
Interests in contracts
statements for disclosure relating to contractual agreements that existed between the
Company and companies outside of the Group, in which certain directors and
executive committee members had interests.
Transactions with related parties and balances outstanding at year-end
are as follows (excluding key management personnel emoluments):
Year-end balance of receivables
– MiX Telematics North America Incorporated (note 5)
– MiX Telematics Europe Limited (note 5)
– MiX Telematics International Proprietary Limited (note 6)
– MiX Telematics Africa Proprietary Limited (note 6)
– MiX Telematics Serviços De Telemetria E Rastreamento De Veículos Do Brazil
Limitada (note 5)
– MiX Telematics Investments Proprietary Limited (notes 5 and 6)
Year-end balance of payables (included in trade and other payables – note 11)
– MiX Telematics Africa Proprietary Limited
Dividends received
– MiX Telematics Africa Proprietary Limited
– MiX Telematics International Proprietary Limited
– Sunstore Limited
Interest received
– MiX Telematics North America Incorporated
Overview
Related party transactions
Directors’ and executive committee members’ interest
The parties identified as related to the Company are mainly subsidiaries of the Group
directly or indirectly controlled by the Company.
The receivables from related parties arise mainly from inter-company loans as
disclosed under note 5 and are unsecured. No provisions were held against
receivables from related parties (2013: Nil). The payables to related parties arise
mainly from purchase transactions and the payables bear no interest.
115
Financial reports
22.
MiX Telematics ❯
Annual Report 2014
MiX Telematics ❯
Annual Report 2014
23.
2014
R’000
2013
R’000
—
4
—
4
182
(182)
124
(124)
Commitments
Capital commitments
At March 31, the Company had approved and contracted capital commitments for:
Intangible assets
24.
Events after the reporting period
The directors are not aware of any matter material or otherwise arising since
March 31, 2014 and up to the date of this report, not otherwise dealt with herein.
25.
Financial risk sensitivity analysis
Interest rate sensitivity
A change of 100 basis points in the interest rate at the reporting date would have
increased/(decreased) profit or loss before tax by the amounts shown below. This
analysis assumes that all other variables remain constant. The analysis is performed
on the same basis for the year ended March 31, 2013. Increase of 100 basis points
Foreign currency sensitivity
The Company has used a sensitivity analysis technique that measures the estimated change to profit or loss and equity
of an instantaneous 5% strengthening or weakening in the functional currency against all other currencies, from the rate
applicable at March 31, 2014, for each class of financial instrument with all other variables remaining constant. This
analysis is for illustrative purposes only as, in practice, market rates rarely change in isolation.
The Company is exposed mainly to fluctuations in foreign exchange rates in respect of the South African Rand, US Dollar, the
UK Pound and the Brazilian Real. This analysis considers the impact of changes in foreign exchange rates on profit or loss.
A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/
(decreased) profit before taxation by the amounts shown below.
The analysis has been performed on the basis of the change occurring at the end of the reporting period.
Increase/(decrease) in profit
before taxation
Result of
Result of
weakening in strengthening
functional in functional
Change
currency
currency
in exchange
R’000
R’000
rate %
2014
Denominated currency: Functional currency
USD:ZAR
GBP:ZAR
BRL:ZAR
5
5
5
33,744
453
16
(33,744)
(453)
(16)
5
5
5
—
453
—
—
(453)
—
2013
Denominated currency: Functional currency
USD:ZAR
GBP:ZAR
BRL:ZAR
116
MiX Telematics ❯
Annual Report 2014
Liquidity risk
2014
R’000
2013
R’000
Cash and cash equivalents, net of overdrafts
4,533
18,168
225
306
22,701
531
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows.
Payable
within 1 month or on demand
R’000
Between 1 month and 1 year
R’000
Between
1 year and
2 years
R’000
Between 2 years and
5 years
R’000
More than
5 years
R’000
Borrowings
—
3,905
36
—
—
—
—
—
—
—
Total
3,905
36
—
—
—
Borrowings
595
2 019
3 112
—
—
—
—
—
—
—
Total
2 614
3 112
—
—
—
March 31, 2014
March 31, 2013
The following liquid resources are available:
The Company meets its financing requirements through a mixture of cash generated from its operations, which consists
primarily of dividends received from subsidiaries, and available liquid resources. In addition, the Company has access to
undrawn borrowing facilities (note 10).
Overview
Liquidity risk is the risk that there will be insufficient funds available to settle obligations when they are due.
There have been no significant changes in the Company’s financial risk management described above relative to the
prior year.
117
Financial reports
26.
27.
MiX Telematics ❯
Annual Report 2014
Reclassification
During the current fiscal year, the Company changed its classification of foreign exchange gains and losses in the income
statement. Foreign exchange gains and losses, which were previously classified as part of “Other income/(expenses) –
net”, are now classified as part of “Finance income/(cost) – net”. The change is considered a more relevant presentation
of such items in the income statement since the majority of foreign exchange gains and losses in 2014 relate to translation
differences on foreign currency cash and cash equivalents arising from the initial public offering proceeds.
The reclassification has been adopted retrospectively and the comparative amounts for the year ended March 31, 2013
have been adjusted accordingly.
The impact of the reclassification results in a decrease of R0.3 million in “Operating profit” with a corresponding additional
income in “Finance income/(cost) – net” for the year ended March 31, 2013. Profit before taxation and profit for the period
remain unchanged for the period disclosed.
28.
List of subsidiary companies
Refer to note 42 of the MiX Telematics Limited consolidated annual financial statements for a list of entities owned and
controlled by the Company.
For details regarding loans to subsidiary entities, refer to note 22.
118
Analysis of ordinary shareholders
MiX Telematics ❯
Annual Report 2014
Number
of shares
% of shares
in issue
507
872
413
90
44
26.32
45.28
21.44
4.67
2.29
229,056
3,739,886
13,054,319
25,634,911
741,491,828
0.03
0.48
1.66
3.27
94.56
1,926
100
784,150,000
100
Private companies
American Depositary Shares*
Retail shareholders
Trusts
Custodians
Collective investment schemes
Hedge funds
Stockbrokers and nominees
Close corporations
Investment partnerships
Retirement benefit funds
Public companies
Unclaimed scrip
Assurance companies
Foundations and charitable funds
47
4
1,676
108
12
9
11
5
28
10
5
1
5
1
4
2.44
0.21
87.02
5.61
0.62
0.47
0.57
0.26
1.45
0.52
0.26
0.05
0.26
0.05
0.21
276,763,968
206,533,825
109,752,756
80,225,500
51,877,182
30,238,142
22,529,626
2,221,611
1,579,855
1,387,411
839,529
145,000
43,578
10,000
2,017
35.29
26.33
14.00
10.23
6.62
3.86
2.87
0.28
0.20
0.18
0.11
0.02
0.01
0.00
0.00
Total
1,926
100
784,150,000
100
16
7
0.83
184,384,092
45,066,410
23.52
5.75
17.77
25.61
25.61
50.87
100
1 – 1,000 shares
1,001 – 10,000 shares
10,001 – 100,000 shares
100,001 – 1,000,000 shares
1,000,001 shares and over
Total
Distribution of shareholders
Shareholder type
Non-public shareholders
– Directors and executive committee members (direct holding)
– Directors, executive committee members and associates
(indirect holding)
Holders holding more than 10% (excluding directors’ holding)
– Imperial Corporate Services Proprietary Limited
Public shareholders
9
1
1
1,909
99.12
139,317,682
200,828,260
200,828,260
398,937,648
Total
1,926
100
784,150,000
0.05
% of total
shareholdings
Number of
shareholdings
Shareholder spread
Overview
as at March 31, 2014
119
Financial reports
*Held by BNY Mellon as American Depositary Shares and listed on the New York Stock Exchange.
** Robin Frew has an indirect interest in the GAF Family Trust.
Analysis of ordinary shareholders
MiX Telematics ❯
Annual Report 2014
as at March 31, 2014
Beneficial shareholders with a holding greater than 5% of the shares in issue
Total
shareholding
% of shares
in issue
Imperial Corporate Services Proprietary Limited
GAF Family Trust**
Masalini Capital Proprietary Limited (directors’ indirect holding)
Massachusetts Financial Services Co.
200,828,260
70,261,440
60,410,880
41,223,800
25.61
8.96
7.70
5.26
Total
372,724,380
47.53
Total number of shareholders
Total number of shares in issue
1,926
784,150,000
JSE share price performance
Closing price March 28, 2013
Opening price April 2, 2013
Closing price March 31, 2014
Closing high for the period
Closing low for the period
Number of shares in issue
Volume traded during period
Ratio of volume traded to shares issued (%)
R3.70
R3.70
R4.60
R6.50
R3.10
784,150,000
81,187,312
10,35
*Held by BNY Mellon as American Depositary Shares and listed on the New York Stock Exchange.
** Robin Frew has an indirect interest in the GAF Family Trust.
120
BASTION GRAPHICS

MiX Telematics Annual Report 2014

Transcription

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