audited condensed financial results - cartrack · 2019-06-20 · driver safety and security...

2018

AUDITED CONDENSED FINANCIAL RESULTS

1Audited condensed financial results 2018

NO

TES

2018

AN

NUA

L RES

ULTS

PRE

SEN

TATIO

N

Apr

il 20

18

2 Audited condensed financial results 2018

NO

TES

AGENDA

ABO

UT C

ART

RAC

K

STRA

TEG

IC R

EVIE

W

BUSI

NES

S UP

DA

TE

FIN

AN

CIA

L PE

RFO

RMA

NC

E

SEG

MEN

T PE

RFO

RMA

NC

E

OUT

LOO

K A

ND

QUE

STIO

NS

AN

NEX

URES


NO

TES

Mob

ile a

sset

man

agem

ent s

olut

ions

Asse

t rec

over

y

Wor

kfor

ce o

ptim

isatio

n

Tele

mat

ics a

nd d

ata

anal

ytics

PROVEN TECHNOLOGY

3

ABO

UT

CA

RTRA

CK


NO

TES

4

AM

ON

G T

HE L

ARG

EST

TELE

MA

TICS

CO

MPA

NIE

S G

LOBA

LLY

5 co

ntin

ents

24

co

untr

ies

751

380

subs

crib

ers


NO

TES

5

A R

OBU

ST O

PERA

TING

MO

DEL

Econ

omie

s of

scal

e

Vert

ical

inte

grat

ion

prot

ects

m

argi

ns

Stro

ng cu

stom

er

rete

ntio

n w

ith a

lif

ecyc

le o

f mor

e th

an 6

4 m

onth

s

High

ly sc

alab

le

busin

ess m

odel

an

d te

chno

logy

pl

atfo

rm

Larg

e gr

owin

g su

bscr

iber

bas

e su

ppor

ted

by

prov

en a

bilit

y to

di

strib

ute


NO

TES

6

A L

OW

-RIS

K FI

NA

NC

IAL

MO

DEL

Com

poun

d 5-

yr

reve

nue

grow

th o

f

21%

pa

Annu

ity in

com

e

88%

of to

tal

reve

nue

Cash

co

nver

sion

106%

Com

poun

d 5-

yr

subs

crip

tion

reve

nue

grow

th o

f

26%

pa


NO

TES

7

Com

poun

d 5-

yr

subs

crib

er

grow

th o

f

21%

pa

A P

ROV

EN T

RAC

K RE

CO

RD

Sour

ce: S

hare

data

RoE 58

%

RoA 33

%

Indu

stry

lead

ing

EB

ITDA

mar

gin

of 49

%

Audi

ted

reco

very

rate

of

91%

Indu

stry

lead

ing

oper

atin

g pr

ofit

mar

gin

of

33%


NO

TES

A G

ROW

ING

REG

ION

AL

CO

NTR

IBUT

ION

8

201

2

2018

91%

9%

SARe

st o

f wor

ld

2012

74

%

8% 9%

9%

SAAf

rica

Euro

peAs

iaUS

A

2018

R448

.4 m

R132

4.2

m

Reve

nue


NO

TES

WHA

T W

E O

FFER

INV

ESTO

RS

9


NO

TES

STRA

TEG

Y RE

VIEW


NO

TES

MUL

TIPLE

GRO

WTH

DRI

VER

S

11

A sig

nific

ant

unad

dres

sed

mar

ket

Gl

obal

gro

wth

es

timat

es o

f be

twee

n 17

%

and

22%

pa

Regu

lato

ry

com

plia

nce

requ

irem

ents

Insu

ranc

e te

lem

atics

Dr

iver

safe

ty

and

secu

rity

Barr

iers

to

entr

y

New

ap

plica

tions

fo

r te

chno

logy

Larg

er d

ata

sets

and

use

of

dat

a

Valu

e-ad

ded

prod

ucts

and

se

rvice

s

Stro

nger

SVR

dem

and

Smar

t tr

ansp

orta

tion

OEM

pa

rtne

ring


NO

TES

12

A C

ON

SIST

ENT

STRA

TEG

Y

TO

AN

INTE

GRAL

PAR

T OF

CU

STOM

ERS’

LIVE

S

FROM

VEH

ICLE

TRA

CKIN

G

Vigo

rous

subs

crib

er a

cqui

sitio

n

Cont

inuo

us in

nova

tion

Stro

ng ca

sh fl

ow

Mar

gin

man

agem

ent t

hrou

gh

vert

ical i

nteg

ratio

n

Disc

iplin

ed ca

pita

l inv

estm

ent

KEY

STRA

TEG

IC

PRIN

CIP

LES


NO

TES

BUSI

NES

S UP

DATE


NO

TES

CUR

REN

T FO

CUS

ARE

AS

14

Build

ing

capa

city

in in

frast

ruct

ure

and

dist

ribut

ion

Cust

omer

par

tner

ship

s

Prod

uct d

evel

opm

ent

New

reve

nue

stre

ams


NO

TES

15

AC

CEL

ERA

TING

GRO

WTH

IN S

UBSC

RIBE

RS

Net

ad

diti

onal

subs

crib

ers f

or e

very

six

mon

ths s

ince

listin

g

43 805

32 565

39 898

48 542

49 219

65 812

84 958

0

10 0

00

20 0

00

30 0

00

40 0

00

50 0

00

60 0

00

70 0

00

80 0

00

90 0

00

100

000

Feb

15Au

g 15

Feb1

6Au

g 16

Feb

17Au

g 17

Feb

18

Number of subscribers REVE

NUE

LAGS

SUB

SCRI

BER

GROW

TH –

THE

FUL

L BEN

EFIT

FOLL

OWS

IN T

HE

FINA

NCIA

L YEA

R AF

TER

THE

INIT

IAL S

ALE


NO

TES

16


NO

TES

17

AN

OTH

ER C

ART

RAC

K IN

NO

VA

TIVE

FIRS

T-TO

-MA

RKET

PRO

DUC

T In

itial

laun

ch in

Sou

th A

frica

R9.9

9 th

eft-o

nly

insu

ranc

e pr

oduc

t la

unch

ed in

Fe

brua

ry 2

018

aim

ed a

t the

SA

unin

sure

d m

arke

t

THIS

INIT

IATI

VE IS

AIM

ED A

T TH

E UN

TAPP

ED U

NINS

URED

MAR

KET

The

Auto

mob

ile

Asso

ciatio

n of

SA

estim

ates

that

70

% o

f the

12

mill

ion

vehi

cles o

n SA

road

s are

un

insu

red

Limite

d to

R15

0 00

0 –

term

s and

cond

ition

s ap

ply

Cove

r to

R300

000

, R5

00 0

00 a

nd

R1 m

illio

n to

be

impl

emen

ted

soon


NO

TES

18

INSU

RAN

CE

TELE

MA

TICS

CO

NTIN

UOUS

INN

OV

ATIV

E PR

OD

UCT

DEV

ELO

PMEN

T

Insu

ranc

e te

lem

atics

is a

cr

itica

l co

mpo

nent

in

risk

man

agem

ent

Prod

uct

deve

lopm

ent i

n th

is ap

plica

tion

is a

core

st

rate

gic f

ocus

The

laun

ch o

f th

eft-o

nly

insu

ranc

e pr

oduc

t op

ens n

ew

oppo

rtun

ities

to

gene

rate

cust

omer

va

lue

Cart

rack

re

mai

ns tr

ue to

‘P

uttin

g yo

u in

co

ntro

l’

Inve

stm

ent i

n sk

ills a

nd

infra

stru

ctur

e to

fa

cilita

te


NO

TES

FIN

AN

CIA

L PE

RFO

RMA

NC

E


NO

TES

ROBU

ST 2

018

PERF

ORM

AN

CE

GEA

RED

FO

R G

ROW

TH

20

Lucr

ativ

e gr

owth

op

port

uniti

es

acro

ss a

ll re

gion

s

Subs

crib

er b

ase

up 25

%

EPS

of 1

00.5

cps u

p 17

%

Tota

l div

iden

d of

46 cp

s

Subs

crip

tion

reve

nue

up 19

%

Oper

atin

g pr

ofit

up 18

%


NO

TES

21

2018

SUB

SCRI

BER

GRO

WTH

AC

CEL

ERA

TING

TO

25%

246 348

295 104

348 231

430 386

502 894

600 610

751 380

0

50 0

00

100

000

150

000

200

000

250

000

300

000

350

000

400

000

450

000

500

000

550

000

600

000

650

000

700

000

750

000

800

000

2012

2013

2014

2015

2016

2017

2018

Number of subscribers

COM

POUN

D 5-

YR S

UBSC

RIBE

R GR

OWTH

OF

21%

pa


NO

TES

22

2018

SUB

SCRI

PTIO

N R

EVEN

UE G

ROW

TH O

F 19

%

496

633

835

1 0

05

1 1

40

1 3

24

379

467

702

842

979

1 1

66

0

200

400

600

800

1 00

0

1 20

0

1 40

0

2013

2014

2015

2016

2017

2018

R million

Reve

nue

Subs

crip

tion

reve

nue


NO

TES

23

2018

EBI

TDA

GRO

WTH

OF

25%

174

198

296

361

463

523

652

0

100

200

300

400

500

600

700

2012

2013

2014

2015

2016

2017

2018

R million


NO

TES

CO

NSI

STEN

T IN

DUS

TRY

LEA

DIN

G M

ARG

INS

78%

81

%

80%

82

%

43%

46

%

46%

49

%

35%

34

%

32%

33

%

0%10%

20%

30%

40%

50%

60%

70%

80%

90%

2015

2016

2017

2018

Gros

s mar

gin

%EB

ITDA

%Op

erat

ing

prof

it %

24


NO

TES

EARN

ING

S A

ND

DIV

IDEN

DS

25

64

81

85

100

46

55

55

46

020406080100

120

2015

2016

2017

2018

Cents

HEPS

UP

17%

HEPS

DPS

64

80

86

101

64

75

85

100

020406080100

120

2015

2016

2017

2018

Cents

EPS

UP 1

7%

NORM

ALIS

ED E

PS*

UP 1

8%

EPS

NEPS

*Nor

mal

ised

EPS r

emov

es n

on-o

pera

tiona

l for

ex g

ains

/loss

es


NO

TES

STRO

NG

BA

LAN

CE

SHEE

T

26

POSI

TION

ED F

OR

GRO

WTH

•M

inim

al g

earin

g

•St

rong

per

form

ing

deb

tors

boo

k

•d

ebto

rs’ d

ays F

Y18:

29

day

s – F

Y17:

31

day

s

•St

ock

leve

ls po

sitio

ned

for g

row

th

•in

vent

ory

day

s FY1

8: 2

71 d

ays–

FY1

7: 1

97 d

ays

•

Stro

ng c

ash

gene

ratio

n •

Cle

an, u

ncom

plic

ated

Bal

ance

She

et


NO

TES

CO

NSI

STEN

TLY

HIG

H C

ASH

CO

NV

ERSI

ON

•Ann

uity

bu

sines

s with

st

rong

reve

nue

visib

ility

•Str

ong

track

re

cord

of

retu

rnin

g ex

cess

ca

sh to

the

shar

ehol

ders

27

0%20%

40%

60%

80%

100%

120%

050100

150

200

250

300

350

400

450

500

2012

2013

2014

2015

2016

2017

2018

Percentage operating profit converted to cash

Rm

Oper

atin

g pr

ofit

Net c

ash

from

ope

ratin

g ac

tiviti

esCa

sh co

nver

sion

ratio


NO

TES

SEG

MEN

T PE

RFO

RMA

NC

E


NO

TES

Key

met

rics a

nd g

row

th p

erce

ntag

es

ZAR

Sout

h Af

rica

Af

rica

– O

ther

Eu

rope

As

ia P

acifi

c & M

E Un

ited

Stat

es

R’00

0 Ch

ange

R’

000

Chan

ge

R’00

0 Ch

ange

R’

000

Chan

ge

R’00

0 Ch

ange

Subs

crib

ers

575

052

26

%

54 2

62

(2%

) 71

783

26

%

48 9

69

59%

1

314

-

Reve

nue

983

690

14%

10

4 66

4 (4

%)

116

263

13%

11

8 25

6 73

%

1 39

2 -

Subs

crip

tion

reve

nue

854

416

18%

92

618

(4

%)

111

065

14%

10

5 68

9 80

%

1 39

2 -

Ope

ratin

g Pr

ofit

376

156

20%

31

809

(2

0%)

18 9

94

(3%

) 15

300

32

05%

(7

912

) 84

%

EBIT

DA

523

838

24%

34

672

(1

8%)

64 5

27

26%

35

938

25

7%

(7 6

87)

81%

EB

ITDA

mar

gin

53%

8%

33

%

(15%

) 56

%

11%

30

%

106%

-

-

SEG

MEN

T PE

RFO

RMA

NC

E SU

MM

ARY


NO

TES

Subs

crib

ers

23%

Reve

nue

14%

Subs

crip

tion

reve

nue

18%

Ope

ratin

g pr

ofit

20

%

EPS

cont

ribut

ion

108.

6 cp

s

Mat

ure

oper

atio

ns¹

Subs

crib

ers

84%

Reve

nue

85%

Subs

crip

tion

reve

nue

60%

Ope

ratin

g lo

ss

74%

EPS

imp

act o

f los

ses

8.1

cps

SEG

MEN

TAL

PERF

ORM

AN

CE

30

Star

t-up

oper

atio

ns²

¹ inclu

des S

outh

Afri

ca, E

urop

e, A

frica

Oth

er a

nd

Sing

apor

e

²inclu

des A

sia (e

xclu

ding

Sin

gapo

re),

USA


NO

TES

P 31

I St

rictly

priv

ate

and

con

fiden

tial

OUT

LOO

K &

QUE

STIO

NS


NO

TES

CO

NN

ECTE

D A

ND

AUT

ON

OM

OUS

CA

RS

32

DYN

AM

IC S

OFT

WA

RE P

LATF

ORM

•Sm

art m

obilit

y is

gain

ing

mom

entu

m d

esp

ite b

eing

in it

s inf

ancy

stag

e •

Car

track

has

est

ablis

hed

rela

tions

hips

with

two

ma

jor g

loba

l pla

yers

•

Affi

rms t

he a

ppl

icab

ility

of a

uni

vers

al p

latfo

rm fo

r con

nect

ed-v

ehic

les

rega

rdle

ss o

f the

veh

icle

bra

nd

•

This

is a

furth

er st

reng

then

ing

of th

e va

lue

prop

ositi

on o

f tel

ema

tics

com

pani

es a

nd p

arti

cula

rly th

ose

with

sta

ble

, pro

ven

and

dyn

amic

pl

atfo

rms,

such

as C

artra

ck

•Th

is w

ill in

futu

re le

vera

ge b

oth

OEM

and

third

-par

ty te

lem

atic

s d

evic

es to

pro

vid

e d

ecisi

on-u

sefu

l inf

orm

atio

n


NO

TES

A R

OBU

ST O

UTLO

OK

Doub

le d

igit

reve

nue

and

subs

crib

er g

row

th

expe

cted

for t

he

fore

seea

ble

futu

re

Wel

l-pos

ition

ed fo

r gro

wth

and

stro

ng o

pera

ting

resu

lts

Excit

ing

new

ap

plica

tions

Dem

and

for

tele

mat

ics d

ata

cont

inue

s to

incr

ease

33

•Pr

esen

t div

iden

d po

licy

- tar

gete

d co

ver o

f bet

wee

n 1.

25 a

nd 2

.5 ti

mes

HEP

S

•Si

gnifi

cant

gro

wth

opp

ortu

nitie

s req

uire

a re

vise

d di

vide

nd p

olicy

- ta

rget

cove

r of

betw

een

2 an

d 4

times

HEP

S, to

be

effe

ctiv

e fo

r FY1

9

Lucr

ativ

e gr

owth

op

port

uniti

es

acro

ss a

ll ch

anne

ls

Cont

inue

d

and

signi

fican

t in

vest

men

t in

tech

nolo

gy a

nd

capa

city


NO

TES

International Offices

Ang

ola

Bots

wan

a

Hong

Kon

g In

done

sia

Keny

a M

alay

sia

Mal

awi

Moz

ambi

que

Nam

ibia

N

ew Z

eala

nd

Nig

eria

Ph

ilippi

nes

Pola

nd

Portu

gal

Rwan

da

Sing

apor

e

Sout

h A

frica

Sp

ain

Swaz

iland

Th

aila

nd

Tanz

ania

UA

E US

A

Zimba

bwe


NO

TES

AN

NEX

URES


NO

TES

CA

RTRA

CK’

S TE

CHN

OLO

GY

HIST

ORY

36

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Subs

crib

er

base

2007

La

unch

Flee

t M

anag

emen

t (F

M)

2004

Lau

nch

Stol

en V

ehicl

e Re

cove

ry se

rvice

s (S

VR)

In p

roce

ss:

•Da

ta a

naly

tics

•Fi

eld

tech

nolo

gy

part

ner o

f ch

oice

•Sa

aS p

latfo

rm

for O

EMs

2014

La

unch

In

sura

nce

tele

mat

ics 20

15

Laun

ch

Priso

ner

Trac

king

20

09

Laun

ch FM

in

corp

orat

ing

SVR 20

10

Laun

ch e

volv

ed

SaaS

pla

tform

2013

La

unch

Flas

h pr

oduc

t 20

16/1

7 La

unch

m

esh

radi

o fre

quen

cy fo

r dat

a an

d SV

R

2018

2018

Dr

ive

and

Save


NO

TES

STRA

TEG

IC D

RIV

ER –

div

ersif

ied

subs

crib

er b

ase

050

000

100

000

150

000

200

000

250

000

300

000

350

000

400

000

450

000

500

000

550

000

600

000

650

000

700

000

750

000

800

000

2012

2013

2014

2015

2016

2017

2018

Number of subscribers

Sout

h Af

rica

Afric

aEu

rope

Asia

-Pac

ific

37

20%

CAG

R su

bscr

iber

gr

owth

ove

r fiv

e ye

ars

Spre

ad a

cros

s a

rang

e of

ec

onom

ic

regi

ons


NO

TES

DATA

SHA

RING

Stol

en V

ehicl

e Re

cove

ry

Flee

t M

anag

emen

t In

sura

nce

Te

lem

atics

M

obile

ass

et

solu

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42 Salient features

43 Commentary

48 Consolidated statement of financial position

49 Consolidated statement of profit or loss and other comprehensive income

50 Consolidated statement of changes in equity

52 Consolidated statement of cash flows

53 Accounting policies

54 Notes to the audited condensed financial statements

IBC Corporate information

CONTENTS

AUD

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CO

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ENSE

D F

INAN

CIAL

RES

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S 2

01

8

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

1 The 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.

SALIENT FEATURES


25%

25%

58%

17%

16%

49%


COMMENTARY

GROUP PROFILECartrack 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 PERFORMANCECartrack 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.


COMMENTARY (CONTINUED)

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 OVERVIEWSouth AfricaThe 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.

AfricaThe 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.


EuropeThe 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 PacificAsia 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.

USACartrack’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 SHEETCapital 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.


OUTLOOK2 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.

AUDIT OPINION AND BASIS OF ACCOUNTINGThe 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

COMMENTARY (CONTINUED)

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.


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 DECLARATIONOrdinary 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 ZAE000198305Company registration number 2005/036316/06Company tax reference number 9108121162Dividend number 8Gross cash dividend per share 28 centsIssued share capital as at declaration date 300 000 000Declaration date Tuesday, 24 April 2018Last date to trade cum dividend Tuesday, 3 July 218Shares commence trading ex dividend Wednesday, 4 July 2018Record date Friday, 6 July 2018Dividend 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 IMPLICATIONSThe 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 CalistoChairman Global Chief Executive Officer

Johannesburg24 April 2018

SponsorThe Standard Bank of South Africa Limited


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs at 28 February 2018

Figures in rand thousand Notes 2018 2017

ASSETSNon-current assetsProperty, plant and equipment 3 516 045 309 255Goodwill 107 597 102 045Deferred taxation 49 488 41 641

673 130 452 941

Current assetsInventories 173 680 123 140Loans to related parties 2 272 4 588Trade and other receivables 4 154 952 151 438Current taxation receivable 4 143 1 639Cash and cash equivalents 69 573 70 078

404 620 350 883

Total assets 1 077 750 803 824

EQUITY AND LIABILITIESEquityShare capital 42 488 42 488Reserves (53 416) (56 656)Retained income 601 224 461 745

Equity attributable to equity holders of parent 590 296 447 577Non-controlling interest 10 125 14 200

600 421 461 777

LiabilitiesNon-current liabilitiesInstalment sale obligation 28 635 18 123Amounts received in advance* 5 253 –Deferred taxation 2 316 2 066

36 204 20 189

Current liabilitiesTrade and other payables 111 722 94 676Amounts received in advance* 68 860 79 275Loans from related parties 5 486 3 778Provision for warranties 6 482 6 124Share-based payment liability – 6 030Instalment sale obligation 27 637 12 461Current taxation payable 55 911 47 209Bank 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 INCOMEFor the year ended 28 February 2018


Revenue 5 1 324 245 1 140 989Cost of sales (233 949) (228 598)

Gross profit 1 090 296 912 391Other income 9 091 6 796Operating expenses 6 (665 091) (550 356)

Operating profit 434 296 368 831Investment revenue 3 641 3 962Finance costs (15 729) (5 775)Net non-operating foreign exchange gain – 2 607

Profit before taxation 422 208 369 625Taxation (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 895Non-controlling interest 10 336 7 279

310 482 264 174

Total comprehensive income attributable to:Owners of the parent 303 386 173 925Non-controlling interest 4 301 4 533

307 687 178 458

Earnings per sharePer share informationBasic and diluted earnings per share (cents) 8.1 101 86


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 28 February 2018

Figures in rand thousandShare

capital

Foreign currency

translation reserve

Treasury shares

Total reserves

Retained income

Total attributable

to equity holders of the group

Non-controlling

interestTotal

equity

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 174Other 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)



Notes1 Cartrack Technologies Asia Pte. Limited acquired full control of Cartrack Technologies (China) Limited and PT.

Cartrack Technologies Indonesia.


Figures in rand thousandShare

capital

Foreign currency

translation reserve

Treasury shares

Total reserves

Retained income

Total attributable

to equity holders of the group

Non-controlling

interestTotal

equity

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 174Other 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)



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)



Notes1 Cartrack Technologies Asia Pte. Limited acquired full control of Cartrack Technologies (China) Limited and PT.

Cartrack Technologies Indonesia.


CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 28 February 2018


Cash flows from operating activitiesCash generated from operations 589 073 473 685Interest income 3 641 3 962Finance costs (11 819) (3 865)Taxation paid (113 082) (87 131)

Net cash from operating activities 467 813 386 651

Cash flows from investing activitiesPurchase of property, plant and equipment 3 (420 067) (266 542)Sale of property, plant and equipment 3 432 4 155Acquisition of subsidiaries, net of cash acquired (2 176) –

Net cash from investing activities (418 811) (262 387)

Cash flows from financing activitiesIncrease in loans from related parties 2 011 2 300Increase in loans to related parties 2 354 (2 964)Net finance lease receipts 21 779 14 281Dividends 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 994Effect of exchange rate movement on cash balances (1 506) (7 926)

Total cash at the end of the year (95 454) (2 227)


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 will be tabled at 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.

ACCOUNTING POLICIES


2. SEGMENT REPORTINGThe 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 South Africa Africa-Other Europe

Asia-Pacific and

Middle East USA Total

Segment report – 28 February 2018Revenue 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

NOTES TO THE AUDITED CONDENSED FINANCIAL STATEMENTS


2. SEGMENT REPORTINGThe 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.


Asia-Pacific and


Segment report – 28 February 2018Revenue 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 liabilities (346 091) (37 812) (52 089) (39 482) (1 855) (477 329)

Goodwill 107 597

Equity 600 421



Asia-Pacific and


2. SEGMENT REPORTING (continued)Segment report – 28 February 2017Revenue 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 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 CostAccumulateddepreciation

Carrying value Cost

Accumulated depreciation

Carrying value

3. PROPERTY, PLANT AND EQUIPMENTBuildings 6 592 (2 305) 4 287 5 468 (1 234) 4 234Capital rental units 761 803 (334 430) 427 373 470 210 (212 133) 258 077Computer software 5 939 (1 419) 4 520 3 003 (960) 2 043Furniture and fixtures 7 314 (4 381) 2 933 6 326 (3 614) 2 712IT equipment 35 865 (22 413) 13 452 24 305 (16 618) 7 687Leasehold improvements 5 333 (4 208) 1 125 4 659 (4 356) 303Motor vehicles 91 964 (31 103) 60 861 58 535 (25 626) 32 909Office equipment 3 667 (3 169) 498 3 277 (3 045) 232Plant and machinery 2 166 (1 469) 697 2 044 (1 291) 753Security equipment 805 (506) 299 707 (402) 305

921 448 (405 403) 516 045 578 534 (269 279) 309 255

NOTES TO THE AUDITED CONDENSED FINANCIAL STATEMENTS (CONTINUED)



Asia-Pacific and


2. SEGMENT REPORTING (continued)Segment report – 28 February 2017Revenue 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 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 CostAccumulateddepreciation

Carrying value Cost

Accumulated depreciation

Carrying value

3. PROPERTY, PLANT AND EQUIPMENTBuildings 6 592 (2 305) 4 287 5 468 (1 234) 4 234Capital rental units 761 803 (334 430) 427 373 470 210 (212 133) 258 077Computer software 5 939 (1 419) 4 520 3 003 (960) 2 043Furniture and fixtures 7 314 (4 381) 2 933 6 326 (3 614) 2 712IT equipment 35 865 (22 413) 13 452 24 305 (16 618) 7 687Leasehold improvements 5 333 (4 208) 1 125 4 659 (4 356) 303Motor vehicles 91 964 (31 103) 60 861 58 535 (25 626) 32 909Office equipment 3 667 (3 169) 498 3 277 (3 045) 232Plant and machinery 2 166 (1 469) 697 2 044 (1 291) 753Security 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 RECEIVABLESTrade receivables 151 959 157 284Allowance for impairment of trade receivables (30 382) (33 898)

121 577 123 386Prepayments 20 233 16 131Deposits 2 912 2 033Sundry debtors 8 984 5 846Value added taxation receivable 1 246 4 042

154 952 151 438

Loans and receivablesAppropriate 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.


5. REVENUESale of hardware 138 639 144 008Subscription revenue 1 165 532 980 017Sundry sales 20 074 16 964

1 324 245 1 140 989

6. OPERATING EXPENSESDepreciation 106 970 71 794Employee costs 340 429 270 312Operating lease rentals 30 676 25 504Motor vehicle expenses 52 548 34 995Net operating foreign exchange loss 1 974 1 635Other operating expenses* 78 021 111 696Research 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 MANAGEMENTFinancial 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.


8. BASIC EARNINGS PER SHARE8.1 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 shareBasic earnings per share (cents) 101 86

Weighted average number of ordinary shares (basic)Issued at the beginning of the year 300 000 300 000Effect of treasury shares held (1 234) (1 234)

298 766 298 766

Basic earningsProfit attributable to ordinary shareholders 300 146 256 895

8.2 Headline earnings per shareHeadline earnings per share (cents) 100 85

Reconciliation between basic earnings and headline earningsBasic earnings 300 146 256 895Adjusted for:Gain on disposal of assets net of tax (929) (1 610)

299 217 255 285

8.3 Normalised earnings per shareNormalised earnings per share (cents) 100 85Reconciliation between headline earnings and normalised earningsHeadline earnings 299 217 255 285Net non-operating foreign exchange gain – (2 607)

299 217 252 678



9. COMMITMENTSOperating 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

GuaranteesAccelerate Property Fund Limited – 76 500FPG Holdings Proprietary Limited 250 000 250 000Janco Property Investments CC 32 729 32 729SA Post Office Limited 30 000 30 000Vodacom Service Provider Company – 450 000



10. ACQUISITION OF ADDITIONAL INTERESTAcquisitions occurring during the year ended 28 February 2018Cartrack New Zealand LimitedIn 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) LimitedIn 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 IndonesiaIn 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 2017Cartrack North East (Pty) LtdIn 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.


Figures in rand thousandSouth Africa

Africa-Other Europe

Asia-Pacific

and Middle

East USATotal2018

Total 2017

Constant currency segment report1

Revenue 983 690 111 361 118 756 127 260 2 247 1 343 314 1 140 989Cost 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 391Other income 5 748 231 1 928 1 312 – 9 219 6 796Net 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 831Financing cost (11 627) (707) (1 170) (2 365) – (15 869) (5 775)Financing revenue 269 3 480 – 17 – 3 766 3 962Net 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.

CONSTANT CURRENCY SEGMENT REPORT

CORPORATE INFORMATION

REGISTERED OFFICE Cartrack Corner11 Keyes RoadRosebankJohannesburg2196(PO Box 4709, Rivonia, 2128)

DIRECTORS Independent non-executive directorsDavid Brown (independent chairman)Thebe IkalafengKim White

Executive directorsIsaias Jose Calisto (global chief executive officer)John Richard Edmeston (global chief financial officer)

COMPANY SECRETARYAnnamè de VilliersCartrack Corner11 Keyes RoadRosebankJohannesburg2196(PO Box 4709, Rivonia, 2128)

SPONSORThe Standard Bank of South Africa Limited30 Baker StreetRosebank2109(PO Box 61344, Marshalltown, 2107)

TRANSFER SECRETARYComputershare Investor Services Proprietary LimitedRosebank Towers15 Biermann StreetRosebank2001(PO Box 61051, Marshalltown, 2107)

GREYMATTER & FINCH # 12371

audited condensed financial results - cartrack · 2019-06-20 · driver safety and security...

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