Wrap Text
Audited Condensed Financial Results 2018
Cartrack Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/036316/06)
Share Code: CTK ISIN:ZAE000198305
("Cartrack" or "the group")
AUDITED CONDENSED FINANCIAL RESULTS
2018
Salient features
Robust subscriber growth of 25% to 751 380
Subscription revenue up 19% to R1 166 million
Subscription revenue is 88% of the total revenue
Total revenue up 16% to R1 324 million
EBITDA of R652 million, up 25%
EBITDA margin of 49% up from 46%
Operating profit margin of 33% up from 32% despite continued investment for growth
Basic earnings per share (EPS) of 100,5 cents, up 17%
Headline EPS (HEPS) of 100,0 cents, up 17%
Normalised EPS (NEPS)1 of 100,0 cents, up 18%
Return on equity of 58%
Final dividend per share of 28 cents
Cash generated from operating activities of R467 million, up 21%
Currency fluctuations had an insignificant positive impact on operating profit of R0,5 million
1The presentation of NEPS is not an IFRS or JSE requirement. Management presents this measure as a supplementary performance measure. Normalised earnings
represent headline earnings plus/(less) any other unusual non-recurring and non-operating items not already taken into account in headline earnings. In FY18 there
were no such adjustments and therefore NEPS equalled HEPS.
Commentary
GROUP PROFILE
Cartrack is a leading global provider of solutions for mobile asset management, asset recovery, workforce optimisation and data analytics based on a proven
telematics platform. Fleet management (Fleet), Stolen Vehicle Recovery (SVR) and Insurance Telematics services remain its primary offerings. It continues to develop
innovative, first-to-market solutions aimed at further enhancing its customers' experience. Cartrack has an extensive footprint in 24 countries across Africa,
Europe, North America, Asia-Pacific and the Middle East. With a base of more than 750 000 active subscribers, the group ranks among the largest telematics companies
globally.
Cartrack is a service-centric organisation focusing on in-house design, development, production and installation of telematics technology and data analytics
products. It provides fleet, mobile asset and workforce management solutions, underpinned by real-time actionable business intelligence, delivered as Software-as-
a-Service (SaaS), as well as the tracking and recovery of stolen vehicles.
Cartrack's technology is widely accepted by motor manufacturers and insurers. Its customer telematics web interface provides a comprehensive set of features,
ensuring the optimisation of Fleet and human resources. As an expansion of its integrated service offering, Cartrack also provides driver risk assessment offerings
in the Insurance Telematics field.
In addition, Cartrack specialises in vehicle tracking and recovery. An industry-leading audited recovery rate of 91% as at 28 February 2018 reflects the superior
quality of its technology and services. The technology and infrastructure required for the recovery of stolen vehicles is a key barrier to entry for competitors
looking to enter the telematics industry in any high-crime region.
Cartrack's vision is to achieve global industry leadership in the telematics industry by ensuring that it is the technology of choice to manage both fleets and
workforces. Its mission is to provide its customers and partners with real-time actionable business intelligence, based on advanced technology and reliable data.
GROUP PERFORMANCE
Cartrack has geared itself for growth while delivering a robust set of annual results with EPS growth of 17%. This was achieved as a result of strong subscriber and
revenue growth while maintaining industry-leading operating profit and EBITDA margins of 33% (FY17: 32%) and 49% (FY17: 46%) respectively. These figures are
indicative of the strong performance of the annuity-based revenue model in a growth environment, and have been achieved despite strong investment in operational,
distribution and service capacity, as well as accelerated investment in research and development. The decision for ongoing investment in pursuit of sensible growth,
and the realisation of economies of scale across businesses and segments, will continue to generate robust results in the future.
The group achieved subscriber growth of 25%, increasing from 600 610 to 751 380 subscribers. South Africa, Europe and Asia-Pacific all contributed positively to
the growth, while the Africa segment showed a decrease in subscribers of 2% as a result of the challenging economic conditions across this segment. The group
continues to maintain a strong order book while focusing efforts on channel and market development.
Revenue increased by 16% from R1 141 million to R1 324 million. Annuity revenue increased by 19% and represents 88% of total revenue. The increase in revenue can
primarily be attributed to strong subscriber growth. Revenue was negatively impacted on consolidation by the strengthening rand. Had exchange rates remained
unchanged, revenue would have increased by 18% to R1 343 million.
The group continued to invest in operational, distribution and service capacity, while also accelerating its investment in research and development. This resulted
in operating expense growth of 21%. Operating profit increased by 18% from R369 million to R434 million. EBITDA increased by 25% from R523 million to R652 million,
largely as a result of the increased depreciation charge related to increased rental sales.
EPS increased by 17% to 100,5 cents (FY17: 86,0 cents). HEPS and NEPS increased by 17% and 18% to 100,0 cents (FY17: 85,4 cents) and 100,0 cents (FY17: 84,6 cents)
respectively. Return on equity of 58% (FY17: 55%) and return on assets of 33% (FY17: 35%) remain indicative of the efficient application of capital across the
group.
Lucrative growth opportunities are evident across all channels to market and in each operating region as the demand for telematics data continues to increase.
Opportunities to develop further vertically aligned revenue streams remain at the forefront of management's short and medium-term strategy.
Segment overview
South Africa
The South Africa segment delivered particularly strong results. Subscription revenue increased by 18% year on year while subscribers grew 26% over the same period.
The realisation of a strong sales pipeline, investment in operating capacity and an effective distribution strategy, are the primary contributors to this organic
growth.
In line with expectations, the sales mix changed to include significantly more rental than cash sales in FY18. As a result, hardware revenue decreased 7% year on
year, resulting in total revenue growth of 14%.
Operating expenses increased by 16% largely as a result of the investment in distribution. The investment in operating and distribution capacity will continue to
exploit the growth opportunities in the South African market to the extent that operating profit margins can be maintained at target levels.
The South African market, particularly in the lower vehicle value segment, remains underpenetrated. To this end, Cartrack launched a first-to-market innovative
insurance offering for vehicle theft that targets the previously uninsured market in South Africa. According to the Automobile Association of South Africa, as much
as 70% of the more than 12 million registered vehicles in South Africa are uninsured. Leveraging its 91% recovery rate, wealth of Insurance Telematics data and
investment in research and development, Cartrack is able to offer theft-only car insurance at R9,99 per month, subject to terms and conditions, if a Cartrack
telematics device is installed.
Insurance Telematics is fast becoming a critical component in risk management. The launch of the R9,99 theft-only insurance product coincides with the significant
value that Insurance Telematics is bringing to the insurance industry. It also places Cartrack in the unique position to offer customers of this theft-only
insurance product the best comprehensive insurance premiums by providing insurance companies with the necessary driver analytics, thereby enabling them to offer the
optimal insurance quote. In this way, Cartrack will continue to become a more integral part of its current and future customers' lives.
As the subscriber base continues to grow, Cartrack continues to identify and exploit opportunities to realise economies of scale and operating efficiencies.
Africa
The Africa segment delivered a resilient performance, notwithstanding sluggish regional economic performance. The subscriber base decreased by 2%. Revenue decreased
by 4% from R109 million to R105 million primarily as a result of a stronger rand. Had exchange rates remained unchanged, revenue would have increased by 2%.
Financial hardship, experienced by consumers, private and commercial customers alike, is the major factor contributing to the lacklustre sales levels. However, all
subsidiaries in this segment remain profitable in local currency terms and continue to generate positive cash flows.
Operating costs in this segment have increased by 9%. Careful cost management and optimisation of collection processes have been and remain key focus areas for
management while the economic activity in the segment recovers from the challenges faced over the past two years.
Operating profit decreased by 20% from R40 million to R32 million. The negative impact of the stronger rand combined with a significant increase in corporate
management costs were the primary reasons for the decrease in operating profit. Cartrack expects this investment in strategic resources to positively impact this
segment and group results over the next 18 months.
This segment continues to play a critical role in ensuring a high cross-border stolen vehicle recovery rate.
Europe
The segment delivered strong subscriber growth of 26% largely as a result of the investment in distribution and operating capacity over the past two years. The
consolidated segment revenue increased by 13% from R103 million to R116 million. The strengthening rand negatively impacted consolidated revenue. Had exchange rates
remained unchanged, revenue would have increased by 15% to R118 million.
Operating costs in this segment have increased by 24%. The segment operating profit margin will increase once the investment in operating and distribution capacity
stabilises. Operating profit decreased by 3%. EBITDA for this segment increased by 26% while maintaining a healthy 56% EBITDA margin.
The investment in distribution and operating capacity will continue as new channels to market are established. In particular, the insurance telematics and
individual retail markets, particularly driver safety and security elements, remain underpenetrated. These markets present lucrative growth opportunities to provide
telematics offerings and related value-added services.
Asia Pacific
Asia Pacific is now the second largest segment in the group based on revenue contribution, with total revenue up 73% from R68 million to R118 million and
subscription revenue up 80%. On a constant currency basis, subscription revenue would have increased by 93% to R113 million and total revenue would have increased
by 87% to R127 million. This is the result of subscribers increasing by 59%. The continued strong subscriber growth remains in line with management's expectation.
Despite incurring start-up costs within the region, operating profit and EBITDA margins of 13% (FY17: 1%)and 30% (FY17: 15%) respectively were achieved. The segment
contributed R15 million (FY17: R0,5 million) to group operating profit.
The market in this segment remains considerably underpenetrated due to fragmented market participants delivering entry-level telematics offerings, enabling Cartrack
to exploit its more sophisticated, reliable products and customer-centric services. Cartrack remains poised to exploit new opportunities while expanding cross-
border relationships as it drives its robust and proven offerings to SVR and Fleet customers in this segment.
USA
Cartrack's investment in the USA has yielded many key insights that have positively contributed to the improvement of its platform, software and distribution
approach across the group. The investment to date has largely been in research and development, which has been expensed in terms of the group policy. This
investment continues to be strategic in nature.
MANAGING OUR BALANCE SHEET
Capital allocation and cash management are particularly important in a high growth phase with accelerated investment in operating and distribution capacity. Prudent
management in this regard remains a key focus area, which is monitored and managed on an ongoing basis.
Production has been planned to meet growth targets, while ensuring that sufficient buffer stock remains available to provide for adequate lead times associated with
global distribution and unforeseen component shortages. Inventory balances, specifically components required for the FY18/19 production cycle, increased
significantly since 28 February 2017 as a result of increasing lead times by suppliers. Bulk discounts have also been considered in the strategic management of
inventory levels. This has resulted in inventory days increasing to 271 days (FY17: 197 days). Management expects the inventory days to improve in FY19 as the sales
pipeline is realised.
The higher levels of rental sales and the corresponding increase in capitalised rental assets, planned and continued investment in distribution and operating
capacity of the group, as well as the increase in inventory levels to ensure uninterrupted realisation of the sales pipeline, have resulted in the reinvestment of
cash flows generated from operating activities. The current and quick ratios of 0,9 (FY17: 1,1) and 0,5 (FY17: 0,7) respectively, reflect this reinvestment.
Debtors' days (after provision for bad debts) have improved to 29 days (FY17: 31 days). This is a key metric indicating the quality of sales, operational
effectiveness and a strong focus on credit management, improved collections processes and prudent provisioning practices that will be maintained.
Notwithstanding the significant and continuing investment in customer acquisition, Cartrack remains highly cash generative with a strong cash flow forecast for the
foreseeable future.
OUTLOOK 2
SaaS, within the context of the Internet of Things (IoT), continues to rapidly expand as the digital civilisation comes of age. Cartrack remains at the forefront of
the related telematics expansion and continues to drive innovation and application through its interaction with customers and strategic research and development
activities.
Cartrack has started experimenting with smart-mobility in partnership with two of the worlds' leading companies in pay-as-a-service transportation. This reconfirms
the value of an eco-system platform for connected vehicles regardless of the vehicle brand. Cartrack sees this as a strengthening of the value proposition of
telematics companies and particularly those with stable, proven and dynamic platforms. This will in the future leverage both OEM and third-party telematics devices
to provide decision-useful information.
Customers are ever more demanding and reliant on the telematics market to optimise business intelligence relating to assets and people on a global scale. Cartrack
will continue to become a more integral part of its current and future customers' lives. This will require a continued and deliberate investment in technology,
information management, human resources as well as distribution and operating capacity in current and new markets. Under certain circumstances, this may be achieved
through market consolidation to the extent that operational efficiencies can be realised while customer service deepens.
The South African market remains underpenetrated with many opportunities to provide customer-centric solutions to individuals and fleets alike. Further
opportunities to provide customer-centric solutions that put Cartrack customers in control will be exploited.
The new management structure, management teams and refreshed distribution and operating capacity strategies for the Africa segment, are expected to positively
impact group results over the next 18 months.
The order book in Europe remains strong while new sales are being actively pursued. While subscriber growth and customer service remain the primary focus, cost
rationalisation strategies will be implemented to leverage subscriber growth to increase operating profit and margin.
Asia-Pacific continues to gain operational mass as a region, with a strong sales pipeline and many opportunities which are being exploited.
Notwithstanding global economic and foreign exchange volatility, Cartrack expects to continue double-digit subscriber and revenue growth in the foreseeable future.
2 Any forecast information included in this section has not been reviewed and reported on by Cartrack’s auditor in accordance with 8.40(a) of the JSE Listings
Requirements. The directors take sole responsibility for the statements.
AUDIT OPINION AND BASIS OF ACCOUNTING
The auditors, Grant Thornton, have issued an unmodified opinion on the consolidated financial statements for the year ended 28 February 2018. The audit was
conducted in accordance with the International Standards on Auditing. Copies of their audit report on the consolidated financial statements are available for
inspection at Cartrack's registered office. The auditors' report does not necessarily report on all of the information contained in these condensed financial
results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the
auditors' report together with the accompanying financial information from Cartrack's registered office. Any reference to future financial performance or prospects
included in this announcement has not been audited or reported on by Cartrack's auditors.
The abridged consolidated financial statements were prepared under the supervision of John Edmeston (CA)SA and present a summary of the complete set of audited
consolidated financial statements of Cartrack as approved on 23 April 2018. These abridged consolidated financial statements are extracted from audited information,
but are not themselves audited. The complete set of consolidated financial statements is available at www.cartrack.com and at Cartrack's registered office for
inspection. The directors take full responsibility and confirm that the abridged information has been correctly extracted from the consolidated financial
statements. The abridged consolidated financial statements were prepared in accordance with the requirements of the JSE Limited Listings Requirements for financial
reports, and the requirements of the Companies Act, 71 of 2008, applicable to financial statements. The Listings Requirements require financial reports to be
prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council, and to also, as a minimum, contain the information required by IAS 34: Interim Financial Reporting. The accounting policies applied in the preparation of
the consolidated financial statements from which the abridged consolidated financial statements were derived are in terms of IFRS and are consistent with those
accounting policies applied in the preparation of the previous consolidated annual financial statements, apart from the improvements made to the accounting
standards and interpretations.
DIVIDEND DECLARATION
Ordinary shareholders are advised that the board of directors has declared a final gross cash dividend of 28 cents per ordinary share (22,4 cents net of dividend
withholding tax as applicable) for the year ended 28 February 2018 (the cash dividend). The cash dividend will be paid out of profits of the company.
The group will invest heavily in research and development, data analytical skills and distribution channels to expand and grow the subscriber base significantly.
The increased sales are expected to generate a greater number of rental contracts which will require funding. The group will continue to be highly cash generative
going forward but will require the retention of funding necessary to enable Cartrack to invest for growth.
Consequently, management has re-evaluated the dividend policy, presently being a targeted cover of between 1,25 and 2,5 times HEPS. The revised dividend policy
provides for a target cover of between two and four times HEPS, to be effective for FY19.
Share code CTK
ISIN ZAE000198305
Company registration number 2005/036316/06
Company tax reference number 9108121162
Dividend number 8
Gross cash dividend per share 28 cents
Issued share capital as at declaration date 300 000 000
Declaration date Tuesday, 24 April 2018
Last date to trade cum dividend Tuesday, 3 July 2018
Shares commence trading ex dividend Wednesday, 4 July 2018
Record date Friday, 6 July 2018
Dividend payment date Monday, 9 July 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 4 July 2018 and Friday, 6 July 2018, both days inclusive.
TAX IMPLICATIONS
The cash dividend is likely to have tax implications for both resident and non-resident shareholders. Shareholders are therefore encouraged to consult their
professional tax advisers should they be in any doubt as to the appropriate action to take.
In terms of the Income Tax Act, the cash dividend will, unless exempt, be subject to dividend withholding tax (DWT). South African resident shareholders that are
liable for DWT, will be subject to DWT at a rate of 20% of the cash dividend and this amount will be withheld from the cash dividend. Non-resident shareholders may
be subject to DWT at a rate of less than 20% depending on their country of residence and the applicability of any double tax treaty between South Africa and their
country of residence.
On behalf of the board
David Brown Zak Calisto
Chairman Global Chief Executive Officer
Johannesburg
24 April 2018
Sponsor
The Standard Bank of South Africa Limited
Consolidated statement of financial position
As at 28 February 2018
Figures in rand thousand Notes 2018 2017
Assets
Non-current assets
Property, plant and equipment 3 516 045 309 255
Goodwill 107 597 102 045
Deferred taxation 49 488 41 641
673 130 452 941
Current assets
Inventories 173 680 123 140
Loans to related parties 2 272 4 588
Trade and other receivables 4 154 952 151 438
Current taxation receivable 4 143 1 639
Cash and cash equivalents 69 573 70 078
404 620 350 883
Total assets 1 077 750 803 824
Equity and Liabilities
Equity
Share capital 42 488 42 488
Reserves (53 416) (56 656)
Retained income 601 224 461 745
Equity attributable to equity holders of parent 590 296 447 577
Non-controlling interest 10 125 14 200
600 421 461 777
Liabilities
Non-current liabilities
Instalment sale obligation 28 635 18 123
Amounts received in advance* 5 253 -
Deferred taxation 2 316 2 066
36 204 20 189
Current liabilities
Trade and other payables 111 722 94 676
Amounts received in advance* 68 860 79 275
Loans from related parties 5 486 3 778
Provision for warranties 6 482 6 124
Share-based payment liability - 6 030
Instalment sale obligation 27 637 12 461
Current taxation payable 55 911 47 209
Bank overdraft 165 027 72 305
441 125 321 858
Total liabilities 477 329 342 047
Total equity and liabilities 1 077 750 803 824
* Amounts received in advance, previously included in trade and other payables, have been disclosed separately on the face of the statement of financial
position February 2018 (R74 113 097 February 2017: 79 275 220).
Consolidated statement of profit or loss and other comprehensive income
For the year ended 28 February 2018
Figures in rand thousand Notes 2018 2017
Revenue 5 1 324 245 1 140 989
Cost of sales (233 949) (228 598)
Gross profit 1 090 296 912 391
Other income 9 091 6 796
Operating expenses 6 (665 091) (550 356)
Operating profit 434 296 368 831
Investment revenue 3 641 3 962
Finance costs (15 729) (5 775)
Net non-operating foreign exchange gain - 2 607
Profit before taxation 422 208 369 625
Taxation (111 726) (105 451)
Profit for the year 310 482 264 174
Other comprehensive loss:
Items that may be reclassified to profit or loss in future periods:
Exchange differences on translating foreign operations (2 795) (85 716)
Other comprehensive loss for the year net of taxation (2 795) (85 716)
Total comprehensive income for the year 307 687 178 458
Profit attributable to:
Owners of the parent 300 146 256 895
Non-controlling interest 10 336 7 279
310 482 264 174
Total comprehensive income attributable to:
Owners of the parent 303 386 173 925
Non-controlling interest 4 301 4 533
307 687 178 458
Earnings per share
Per share information
Basic and diluted earnings per share (cents) 8.1 101 86
Consolidated statement of changes in equity
For the year ended 28 February 2018
Figures in rand thousand Share Foreign Treasury Total Retained Total Non- Total
capital currency shares reserves income attributable controlling equity
translation to equity interest
reserve holders of
the group
Balance at 1 March 2016 42 488 38 419 (12 105) 26 314 375 306 444 108 16 387 460 495
Profit for the year - - - - 256 895 256 895 7 279 264 174
Other comprehensive income - (82 970) - (82 970) - (82 970) (2 746) (85 716)
Total comprehensive income for the year - (82 970) - (82 970) 256 895 173 925 4 533 178 458
Dividends - - - - (164 321) (164 321) (5 446) (169 767)
Increase in holding of subsidiary - Cartrack North East Proprietary Limited - - - - (6 135) (6 135) (865) (7 000)
Reduction due to capital distribution in Cartrack Polska.SP.ZO.O - - - - - - (409) (409)
Total contributions by and distributions to owners of company recognised directly in equity - - - - (170 456) (170 456) (6 720) (177 176)
Balance at 28 February 2017 42 488 (44 551) (12 105) (56 656) 461 745 447 577 14 200 461 777
Profit for the year - - - - 300 146 300 146 10 336 310 482
Other comprehensive loss - 3 240 - 3 240 - 3 240 (6 035) (2 795)
Total comprehensive income for the year - 3 240 - 3 240 300 146 303 386 4 301 307 687
Dividends - - - - (158 345) (158 345) (7 696) (166 041)
Increase in holding of subsidiaries1 - - - - (2 322) (2 322) 1 496 (826)
Acquisition of subsidiary of NCI portion - Cartrack New Zealand Limited - - - - - - (2 176) (2 176)
Total contributions by and distributions to owners of company recognised directly in equity - - - - (160 667) (160 667) (8 376) (169 043)
Balance at 28 February 2018 42 488 (41 311) (12 105) (53 416) 601 224 590 296 10 125 600 421
Notes
1 Cartrack Technologies Asia Pte. Limited acquired full control of Cartrack Technologies (China) Limited and PT. Cartrack Technologies Indonesia.
Consolidated statement of cash flows
For the year ended 28 February 2018
Figures in rand thousand Notes 2018 2017
Cash flows from operating activities
Cash generated from operations 589 073 473 685
Interest income 3 641 3 962
Finance costs (11 819) (3 865)
Taxation paid (113 082) (87 131)
Net cash from operating activities 467 813 386 651
Cash flows from investing activities
Purchase of property, plant and equipment 3 (420 067) (266 542)
Sale of property, plant and equipment 3 432 4 155
Acquisition of subsidiaries, net of cash acquired (2 176) -
Net cash from investing activities (418 811) (262 387)
Cash flows from financing activities
Increase in loans from related parties 2 011 2 300
Increase in loans to related parties 2 354 (2 964)
Net finance lease receipts 21 779 14 281
Dividends paid (166 041) (169 767)
Reduction due to capital distribution in Cartrack Polska SP.Z0.0 - (409)
Increase in holding of subsidiaries (826) (7 000)
Net cash from financing activities (140 723) (163 559)
Total cash movement for the year (91 721) (39 295)
Cash at the beginning of the period (2 227) 44 994
Effect of exchange rate movement on cash balances (1 506) (7 926)
Total cash at the end of the year (95 454) (2 227)
Accounting policies
1. Presentation of Group financial statements
Reporting entity
Cartrack Holdings Limited is a company domiciled in the Republic of South Africa. These consolidated annual financial statements for the year ended 28 February 2018
comprise the company and its subsidiaries (collectively the "group" and individually "group companies"). The group is primarily involved in the design, development
and installation of telematics technology, data collection and analysis and the delivery of fleet and mobile asset management solutions delivered as Software-as-a-
Service (SaaS) and the tracking and recovery of vehicles.
Statement of compliance
The consolidated annual financial statements are prepared in compliance with JSE Listings Requirements, IFRS and Interpretations of those standards, as issued by
the International Accounting Standards Board (IASB), the financial reporting pronouncements as issued by the Financial Reporting Standards Council (FRSC) that are
relevant to its operations and have been effective for the annual reporting period ending 28 February 2018, and the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and the South African Companies Act 71 of 2008, as amended. The annual financial statements were approved for issue by the board
of directors on 23 April 2018 and are subject to approval by the annual general meeting of shareholders, on 17 July 2018.
These accounting policies are consistent with the previous period.
Basis of measurement
The consolidated annual financial statements have been prepared on the historical cost basis.
Functional and presentation currency
These consolidated annual financial statements are presented in South African rand (ZAR), which is the company's functional currency. All financial information
presented has been rounded off to the nearest thousand ZAR, unless otherwise indicated.
Going concern
The consolidated annual financial statements are prepared on the going-concern basis as the directors believe that funds will be available to finance future
operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
2. Segment reporting
The group is organised into geographical business units and has five reportable segments. The group monitors the operating results of its business units separately
for the purpose of making decisions about resource allocation and performance assessment. Segment information is evaluated based on revenue and profit or loss and
is measured consistently with consolidated financial statements.
Figures in rand thousand Asia-Pacific
and
South Africa Africa-Other Europe Middle East USA Total
Segment report - 28 February 2018
Revenue 983 690 104 643 116 263 118 257 1 392 1 324 245
Cost of sales (187 107) (13 531) (13 619) (19 174) (518) (233 949)
Cost of sales - depreciation (82 311) (849) (16 122) (11 073) (41) (110 396)
Cost of sales - other (104 796) (12 682) 2 503 (8 101) (477) (123 553)
Gross profit 796 583 91 112 102 644 99 083 874 1 090 296
Other income 5 747 206 1 894 1 244 - 9 091
Net operating foreign exchange (loss)/gain (3 605) 293 834 504 - (1 974)
Operating expenses* (422 570) (59 803) (86 428) (85 530) (8 786) (663 117)
Operating expense - depreciation (64 884) (2 014) (29 461) (9 565) (184) (106 108)
Operating expenses - other (357 686) (57 789) (56 967) (75 965) (8 602) (557 009)
Operating profit 376 155 31 808 18 944 15 301 (7 912) 434 296
Financing cost (11 627) (686) (1 161) (2 255) - (15 729)
Financing revenue 270 3 354 17 - - 3 641
Profit before taxation 364 798 34 476 17 800 13 046 (7 912) 422 208
Total tangible assets 625 891 82 745 150 491 101 617 9 409 970 153
Total liabilities (346 091) (37 812) (52 089) (39 482) (1 855) (477 329)
Goodwill 107 597
Equity 600 421
Figures in rand thousand Asia-Pacific
and
South Africa Africa-Other Europe Middle East USA Total
Segment report - 28 February 2017
Revenue 861 455 108 610 102 745 68 167 12 1 140 989
Cost of sales (182 112) (15 288) (18 152) (13 046) - (228 598)
Gross profit 679 343 93 322 84 593 55 121 12 912 391
Other income 2 846 516 2 827 607 - 6 796
Net operating foreign exchange (loss)/gain (4 003) 603 1 689 76 - (1 635)
Operating expenses (364 913 ) (54 697) (69 510 ) (55 341) (4 260) (548 721)
Operating profit 313 273 39 744 19 599 463 (4 248) 368 831
Financing cost (5 462) (67) (230) (16) - (5 775 )
Financing revenue 1 804 2 157 - 1 - 3 962
Non-operating foreign exchange gain 2 607 - - - - 2 607
Profit before taxation 312 222 41 834 19 369 448 (4 248) 369 625
Total tangible assets 435 808 75 485 88 998 97 255 4 233 701 779
Total liabilities (231 325) (44 922) (38 274 ) (26 288) (1 238 ) (342 047)
Goodwill 102 045
Equity 461 777
2018 2017
Figures in rand thousands Accumulated Carrying Accumulated Carrying
Cost depreciation value Cost depreciation value
3. Property, plant and equipment
Buildings 6 592 (2 305) 4 287 5 468 (1 234) 4 234
Capital rental units 761 803 (334 430) 427 373 470 210 (212 133) 258 077
Computer software 5 939 (1 419) 4 520 3 003 (960) 2 043
Furniture and fixtures 7 314 (4 381) 2 933 6 326 (3 614) 2 712
IT equipment 35 865 (22 413) 13 452 24 305 (16 618) 7 687
Leasehold improvements 5 333 (4 208) 1 125 4 659 (4 356) 303
Motor vehicles 91 964 (31 103) 60 861 58 535 (25 626) 32 909
Office equipment 3 667 (3 169) 498 3 277 (3 045) 232
Plant and machinery 2 166 (1 469) 697 2 044 (1 291) 753
Security equipment 805 (506) 299 707 (402) 305
921 448 (405 403) 516 045 578 534 (269 279) 309 255
Figures in rand thousands 2018 2017
4. Trade and other receivables
Trade receivables 151 959 157 284
Allowance for impairment of trade receivables (30 382) (33 898)
121 577 123 386
Prepayments 20 233 16 131
Deposits 2 912 2 033
Sundry debtors 8 984 5 846
Value added taxation receivable 1 246 4 042
154 952 151 438
Loans and receivables
Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in
payments (based on prevailing and historical country specific information) are considered indicators that the trade receivable is impaired.
The allowance for doubtful debt recognised is measured as the difference between the carrying amount and the aggregated expected cash flows that the entity expects
to recover. The effects of time value of money are not considered to be material for trade receivables. Therefore, these instruments are not discounted as their
face values approximate their amortised cost.
The determination of the allowance for doubtful debt is specific to every jurisdiction and requires significant judgement. Management considers internal and
external variable collection costs, refundable sales and other taxes as well as the value realisable through the sale of debt to third-party collection agencies in
determining the allowance for doubtful debt.
Figures in rand thousands 2018 2017
5. Revenue
Sale of hardware 138 639 144 008
Subscription revenue 1 165 532 980 017
Sundry sales 20 074 16 964
1 324 245 1 140 989
6. Operating expenses
Depreciation 106 970 71 794
Employee costs 340 429 270 312
Operating lease rentals 30 676 25 504
Motor vehicle expenses 52 548 34 995
Net operating foreign exchange loss 1 974 1 635
Other operating expenses* 78 021 111 696
Research and development* 54 473 34 420
665 091 550 356
* Expense items have been reallocated to more accurately represent the nature of their cost.
7.Financial instruments - Fair values and risk management
Financial assets and liabilities are materially short term in nature and settled in the ordinary course of business with the exception of finance lease
agreements. The fair values of these short-term financial instruments approximate in all material respects the carrying amounts of the instruments as disclosed in
the statement of financial position. Instalment sale agreements are variable rate instruments which mature over a period of approximately 36 months. It is estimated
that the fair value of these agreements materially approximate the carrying amounts of the instruments as disclosed in the statement of financial position.
Figures in rand thousands 2018 2017
8. Basic earnings per share
8.1 Basic earnings per share
The calculation of basic earnings per share has been based on the
following profit attributable to ordinary shareholders and the
weighted average number of ordinary shares in issue.
Basic earnings per share
Basic earnings per share (cents) 101 86
Weighted average number of ordinary shares (basic)
Issued at the beginning of the year 300 000 300 000
Effect of treasury shares held (1 234) (1 234)
298 766 298 766
Basic earnings
Profit attributable to ordinary shareholders 300 146 256 895
8.2 Headline earnings per share
Headline earnings per share (cents) 100 85
Reconciliation between basic earnings and headline earnings
Basic earnings 300 146 256 895
Adjusted for:
Gain on disposal of assets net of tax (929) (1 610)
299 217 255 285
8.3 Normalised earnings per share
Normalised earnings per share (cents) 100 85
Reconciliation between headline earnings and normalised earnings
Headline earnings 299 217 255 285
Net non-operating foreign exchange gain - (2 607)
299 217 252 678
Figures in rand thousands 2018 2017
9. Commitments
Operating leases
Minimum lease payments due
- within one year 19 124 18 586
- in second to fifth year inclusive 13 056 29 115
32 180 47 701
Operating lease payments represent rentals payable by the group for certain of its office properties. Leases are negotiated for an average term of three to five
years. No contingent rent is payable.
Mercantile Bank Limited has provided a facility of R70 million to Cartrack Proprietary Limited. At 28 February 2018 that facility was fully utilised.
Mercantile Bank Limited has provided a facility of R80 million (2017: R80 million) to Cartrack Manufacturing Proprietary Limited. Cartrack Proprietary Limited has
provided limited suretyship in favour of Mercantile Bank Limited for this facility. At the end of the year, the amount was fully utilised (2017: R72 million).
Nedbank Limited has provided a facility of R5 million(2017: R5 million) to Plexique Proprietary Limited. Cartrack Proprietary Limited has provided a limited
guarantee for the facility in favour of Nedbank Limited. At the end of the year, the amount utilised was R2 million (2017: R2,5 million).
Cartrack Investments UK Limited has provided Cartrack Espana, S.L with a loan in the amount of euro 1,4 million (2017: euro 1,4 million) (the Loan). Cartrack
Technologies Asia Pte. Limited has provided Cartrack Investments UK Limited with a guarantee for repayment of the loan.
The group has signed subordination agreements with all insolvent subsidiaries.
At 28 February 2018, Cartrack Manufacturing Proprietary Limited has no outstanding forward exchange contracts. Cartrack Manufacturing Proprietary Limited had
forward exchange contracts in February 2017 of R2,7 million which expired on 3 April 2017.
Figures in rand 2018 2017
Guarantees
Accelerate Property Fund Limited - 76 500
FPG Holdings Proprietary Limited 250 000 250 000
Janco Property Investments CC 32 729 32 729
SA Post Office Limited 30 000 30 000
Vodacom Service Provider Company - 450 000
10. Acquisition of additional interest
Acquisitions occurring during the year ended 28 February 2018
Cartrack New Zealand Limited
In April 2017, the group acquired 51% interest in Cartrack New Zealand Limited for a cash consideration of 510 New Zealand dollars from Johan De Wet. The group
acquired this company in order to achieve economies of scale, standardisation, integration and operational simplification in order to stimulate future growth.
Cartrack Technologies (China) Limited
In July 2017, the group acquired the full minority interest in Cartrack Technologies (China) Limited for a cash consideration of 20 000 Singapore dollars (R191
644) from YC Lee. The group acquired this company in order to achieve economies of scale, standardisation, integration and operational simplification in order to
stimulate future growth.
PT. Cartrack Technologies Indonesia
In November 2017, the group acquired the full minority interest in PT. Cartrack Technologies Indonesia for a cash consideration of 46 405 US dollars (R634 588)
from minority shareholder. The group acquired this company in order to achieve economies of scale, standardisation, integration and operational simplification in
order to stimulate future growth.
Acquisitions occurring during the year ended 28 February 2017
Cartrack North East (Pty) Ltd
In July 2016, the group acquired the full minority interest of 24,5% in Cartrack North East (Pty) Ltd for a cash consideration of R7 million from the Phillip
Oosthuysen Trust. The new shareholding in Cartrack North East (Pty) Ltd is 100%. The group acquired this company in order to achieve economies of scale
standardisation, integration and operational simplification in order to stimulate future growth.
Constant currency segment report
Figures in rand thousand Asia-
Pacific
and
South Africa- Middle Total Total
Africa Other Europe East USA 2018 2017
Constant currency segment report1
Revenue 983 690 111 361 118 756 127 260 2 247 1 343 314 1 140 989
Cost of sales (189 072) (14 905) (14 185) (21 381) (562) (240 105) (228 598)
Gross profit 794 618 96 456 104 571 105 879 1 685 1 103 209 912 391
Other income 5 748 231 1 928 1 312 - 9 219 6 796
Net operating foreign exchange gain/(loss) (3 605) 296 834 508 - (1 967) (1 635)
Operating expenses (422 570) (63 557) (88 032) (91 074) (10 469) (675 702) (548 721)
Operating profit 374 191 33 426 19 301 16 625 (8 784) 434 759 368 831
Financing cost (11 627) (707) (1 170) (2 365) - (15 869) (5 775)
Financing revenue 269 3 480 - 17 - 3 766 3 962
Net non-operating foreign exchange gain - - - - - - 2 607
Net profit before tax 362 833 36 199 18 131 14 277 (8 784) 422 656 369 625
1 This pro forma information is the responsibility of the directors of Cartrack.
The purpose of this pro forma information is to provide insight into the impact of foreign exchange movements on the statement of comprehensive income and related
earnings information, and is for illustrative purposes only. Due to its nature, it may not fairly present Cartrack's financial position, changes in equity, and
results of operations or cash flows.
The impact is computed as a combination of the following two calculations:
- Components included in cost of sales are largely procured in US dollars. The impact of currency fluctuations on cost of sales for the period to 28 February
2018 was recomputed by applying the average exchange rates applicable to the corresponding 28 February 2017 cost of sales, being those rates applicable at the dates
of stock procurement. On this basis, the cost of sales for period to 28 February 2018 would have decreased by 5%, and
- All other actual 28 February 2018 line items were recalculated at the average exchange rates applied for the period ended 28 February 2017.
Registered office
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
2196
(PO Box 4709, Rivonia, 2128)
Directors
Independent non-executive directors
David Brown (independent chairman)
Thebe Ikalafeng
Kim White
Executive directors
Isaias Jose Calisto (global chief executive officer)
John Richard Edmeston (global chief financial officer)
Company Secretary
Anname de Villiers
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
2196
(PO Box 4709, Rivonia, 2128)
Sponsor
The Standard Bank of South Africa Limited
30 Baker Street
Rosebank
2109
(PO Box 61344, Marshalltown, 2107)
Transfer Secretary
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Street
Rosebank
2001
(PO Box 61051, Marshalltown, 2107)
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