Internet of Things. Big Data. Asset tracking. Fleet management solutions. SaaS architecture

Transcription

1 Asset tracking Group and Company Financial Statements for the year ended Fleet management solutions Internet of Things SaaS architecture Big Data

2 Financial reports Contents Statement of directors responsibility Certificate of the Company Secretary Directors report Report of the audit and risk committee Nominations and remuneration committee report Independent auditors report Consolidated statements of financial position Consolidated income statements Consolidated statements of comprehensive income Consolidated statements of changes in equity Consolidated statements of cash flows Notes to the annual financial statements 89 Company financial statements 108 Shareholder information

3 Statement of directors' responsibility for the year ended The directors are responsible for the preparation, integrity and fair presentation of the annual financial statements of MiX Telematics Limited ( the Company ) and its subsidiaries ( the Group ). The annual financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and in accordance with the requirements of the Companies Act 71 of 2008 ( the Act ), and include amounts based on judgements and estimates made by management. The directors consider that, having applied IFRS in preparing the financial statements, they have used the most appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all IFRS that they consider applicable have been followed. The directors are satisfied that the information contained in the financial statements fairly presents the results of the operations for the year, and the financial position of the Group and Company at year-end, in accordance with IFRS. The directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the annual financial statements, and to adequately safeguard, verify and maintain accountability of assets, as well as prevent and detect material misstatement and loss. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year. The annual financial statements set out on pages 1 to 6 and 11 to 109 were approved by the Board of Directors on May 26, and are signed on its behalf by: R Bruyns S Joselowitz Chairman Group Chief Executive Officer M Pydigadu Group Chief Financial Officer Midrand May 26, The annual financial statements are prepared on a going concern basis. Nothing has come to the attention of the directors to indicate that the Company or the Group will not remain a going concern for the foreseeable future, based on forecasts and available cash resources. These financial statements support the viability of the Group and the Company. The Group s external auditors are PricewaterhouseCoopers Inc., and their unqualified report is presented on page 11. The external auditors were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of Directors and committees of the Board. The directors believe that all representations made to the independent auditors during their audit are valid and appropriate. 1

4 Certificate of the Company Secretary for the year ended In terms of the Companies Act 71 of 2008 ( the Act ), we certify that, to the best of our knowledge and belief, the Company has lodged with the Companies and Intellectual Properties Commission, for the financial year ended, all such returns as are required of a public company in terms of section 88 of the Act and that all such returns are true, correct and up to date. Java Capital Trustees and Sponsors Proprietary Limited Company Secretary Midrand May 26, 2

5 Directors report for the year ended Nature of business MiX Telematics Limited ( the Company or the Group ) is a holding company listed under the MIX short code in the Business Support Services sector on the Johannesburg Stock Exchange ( JSE ). The Company s American Depositary Shares are listed on the New York Stock Exchange ( NYSE ) and traded under the symbol MIXT. The Group s activities focus on fleet and mobile asset management solutions delivered as Software-as-a-Service. The Company s registered address is Matrix Corner, Howick Close, Bekker Road, Waterfall Park, Midrand, South Africa, Accounting practices The annual financial statements of the Group for the year ended March 31, have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board, IFRS Interpretations Committee ( IFRS IC ) interpretations applicable to companies reporting under IFRS, SAICA Financial Reporting guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act 71 of 2008 of South Africa and the Listings Requirements of the JSE Limited. Review of results The results of the Group and the Company have been set out in the attached financial statements, as set out on pages 1 to 6 and 11 to 109. Changes to share capital The number of issued ordinary shares increased by 8,687,500 as a result of employee share options exercised during the year (: 14,187,500 as a result of employee share options exercised and by an additional 110,000,000 shares issued during the US initial public offering ( IPO ) described below). At year-end, the authorized stated capital amounted to 1 billion ordinary shares and 100 million preference shares with no par value. The number of issued ordinary shares of no par value amounted to 792,837,500 (: 784,150,000). No treasury shares were held (: none). There were no changes in the Company s authorized number of ordinary shares during the year under review (: none) nor were there any changes to the Company's authorized number of preference shares during the year under review. In terms of a special resolution approved in the prior year a new class of no par value shares, consisting of 100 million preference shares was created. No preference shares were issued during the year. Fiscal New York Stock Exchange listing and proceeds from shares issued On August 9, 2013, following a successful US IPO of American Depositary Shares or ADSs, each of which represents 25 ordinary shares at no par value, the Company s ADSs were listed on the NYSE and are traded under the symbol MIXT. As part of the IPO, the Company issued 4,400,000 ADSs on August 14, 2013 and raised R649.9 million for the Company (before expenses amounting to R27.0 million). Selling shareholders sold an additional 2,840,512 ADSs, resulting in a total capital raise by the Company and selling shareholders, prior to underwriting discount, of R1,150 million. The Company did not receive any proceeds from the offering of ADSs by the selling shareholders. Acquisitions and disposals During the year, the Group acquired the operating business of Compass Fleet Management Proprietary Limited ( Compass ), a provider of specialized fleet management solutions delivered off the Group s hardware and software platform. The purchase consideration amounted to a cash consideration of R58.0 million, of which R18.0 million was held in trust as it was contingent on the achievement of agreed revenue and profit targets for the period November 1, to. Subsequent to year end it has been determined that the agreed revenue and profit targets have been achieved and the R18.0 million is expected to be paid to the former owners by the end of May. Further disclosure in respect of acquisitions are set out in note 33 of the consolidated financial statements. During the fiscal year, the Group acquired a proprietary software development business from Roitech Proprietary Limited (constituting employees and specific assets and liabilities). The total purchase consideration amounted to R7.6 million, of which R3.6 million was settled in cash. The remaining R4.0 million will be paid over a threeyear period, with R1.5 million paid by. The Group did not make any disposals of businesses during the current or the prior year. Dividends No dividends were paid or declared during the current fiscal year (: R39.6 million). Following the completion of the IPO, the Company discontinued its policy of declaring regular dividends in order to increase the funds available to pursue opportunities for more rapid growth. 3

6 Directors report for the year ended Directorate The Board of Directors of the Company ( the Board ) comprises: Non-executive directors R Bruyns (Chairman) E Banda C Ewing R Frew M Lamberti (alternate M Akoojee) A Welton Executive directors S Joselowitz (Chief Executive Officer) M Pydigadu C Tasker H Brody resigned as a non-executive director from the Board with effect from November 5,. F Roji (alternate to H Brody) resigned as a non-executive director from the Board with effect from November 5,. M Lamberti was appointed as a non-executive director to the Board with effect from November 19,. M Akoojee was appointed as an alternate to M Lamberti as a nonexecutive director to the Board with effect from November 19,. Details of directors remuneration and shareholding are set out in notes 28 and 34 of the annual financial statements. Directors interests Please refer to note 34 of the annual financial statements which sets out directors shareholdings and interests in contracts. Going concern The directors have reviewed the Company and Group cash flow forecast for the year ending. On the basis of this review, and in light of the current financial position and existing borrowing facilities, the directors are satisfied that the Company and Group have access to adequate resources to continue in operational existence for the foreseeable future and are going concerns. The directors have continued to adopt the going concern basis in preparing the financial statements. Litigation statement There are no legal or arbitration proceedings, nor are the directors aware at the date of this report of any proceedings which are pending or threatened, which may have or have had a material effect on the Group or Company s financial position. Contingent liabilities The Group s contingent liabilities are set out in note 35 to the annual financial statements. Events after reporting period The directors are not aware of any matters material or otherwise arising since and up to the date of this report, not otherwise dealt with herein. Refer also to note 37 of the financial statements. Changes to the Board committees With effect from April 3,, C Ewing stepped down as Chairman of the audit and risk committee but remained on as a member of the committee. A Welton, currently an independent non-executive director of the Company, has replaced C Ewing as Chairman of the audit and risk committee. Also effective April 3,, C Ewing assumed the chairmanship of the social and ethics committee from A Welton. Service contracts Neither the non-executive directors nor the executive directors have fixedterm employment contracts. Subsidiaries The subsidiary companies are set out in note 41 to the annual financial statements. Borrowing powers In terms of the Memorandum of Incorporation of the Company, the borrowing powers of the Company are unlimited. The details of borrowings appear in note 16 of the annual financial statements. 4 Auditors PricewaterhouseCoopers Inc. are the appointed auditors to the Company in accordance with section 90 of the Companies Act and also audit all of the subsidiaries. Company Secretary The company secretarial function is outsourced to Java Capital Trustees and Sponsors Proprietary Limited ( Java Capital ), which provides an independent company secretarial service. Midrand May 26,

7 Report of the audit and risk committee for the year ended The MiX Telematics Limited audit and risk committee ( the committee ) has pleasure in submitting this report for the year ended, which has been approved by the Board. This report has been prepared in compliance with section 94(7)(f) of the Companies Act ( the Act ) and in accordance with the mandate given by the Board. Terms of reference The committee has adopted comprehensive and formal terms of reference included in its charter, which have been approved by the Board and which are reviewed on an annual basis. Members of the audit and risk committee Members of the committee are formally nominated by the Board for reelection by shareholders. The individuals satisfy the requirements to serve as members of an audit committee as provided in section 94 of the Companies Act and ensure that the committee has adequate knowledge and experience. The committee consists of the independent non-executive directors listed below. Their appointment to the committee was approved at the annual general meeting held on September 17,. In the review period, the members of the audit and risk committee were: A Welton (Chairman with effect from April 3, ) R Bruyns C Ewing (resigned as Chairman with effect from April 3, ) E Banda With effect from April 3,, C Ewing stepped down as Chairman of the audit and risk committee but remains a member of the committee. A Welton, an independent non-executive director of the Company (independent from April 1, ), has replaced C Ewing as Chairman of the committee. The Chairman of the social and ethics committee is a member of the audit and risk committee and as such, attends all meetings due to the close working relationship between the two committees. Members of the executive team, including the Chief Financial Officer and Chief Executive Officer, attend committee meetings by invitation and have no voting rights. Similarly, external and internal auditors attend committee meetings by invitation and have no voting rights. The Chairman reports to the Board at all Board meetings on the activities and recommendations of the committee. Financial reporting The committee reviewed the quarterly, interim and year-end Group financial statements culminating in a recommendation to the Board to adopt them. The review of the results included ensuring compliance with IFRS and the acceptability of the Company s accounting policies. This includes the appropriate disclosures in the financial statements in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board, IFRS Interpretations Committee ( IFRS IC ) interpretations applicable to companies reporting under IFRS, SAICA Financial Reporting guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa and the Listings Requirements of the JSE Limited. It is the duty of the committee to review the annual report filed on a Form 20-F with the SEC. The committee reviewed the processes in place for the reporting of concerns and complaints relating to reporting and accounting practices, internal audit, contents of the Group s financial statements, internal financial controls and any related matters. The committee can confirm that there were no such complaints of substance during the year under review. Independence of the external auditor A formal procedure governs the process for considering the provision of non-audit services by the external auditors, and the provision letters for such services are approved by the committee in advance. The committee has satisfied itself through enquiry that the external auditor is independent as defined by the Act, as well as in terms of NYSE and SEC requirements. The committee has met with the external auditors without management present, to discuss the results of their examinations, their evaluations of the Company s internal controls, including internal control over financial reporting, and the overall quality of the Company s financial reporting. The committee also discussed the expertise, resources and experience of the Company s finance function with the external auditors. No matters of concern were raised during those meetings. 5

8 Report of the audit and risk committee for the year ended The committee has agreed to the budgeted audit fee for the financial year. Auditors remuneration is disclosed in note 27 to the financial statements. The committee is of the view that this remuneration is appropriate. The committee has satisfied itself that the external auditors and the designated registered auditors are accredited on the JSE list of auditors and advisers. The committee has recommended PricewaterhouseCoopers Inc. as external auditors for the 2016 financial year subject to approval at the annual general meeting. V Myburgh from this firm of auditors has been nominated as the designated auditor. Internal audit The committee considered the effectiveness of the internal audit function and monitored adherence to the annual internal audit plan. The internal audit plan for the past year was approved by the committee. All internal audit reports were reviewed and discussed at committee meetings and, where appropriate, recommendations were made to the Board. Internally, management, with the assistance of Ernst & Young, has reviewed the internal controls over internal financial controls, including disclosure controls and procedures, and presented their findings to the audit and risk committee. Based on this review, nothing has come to the attention of the committee to indicate that significant internal financial controls have not operated as intended. Risk management The committee reviewed the Group risk register and heat map prior to it being presented to the Board. The committee also had two meetings dedicated to risk during the year where matters of risk were discussed. Annual report The committee has considered all factors and risks that may impact the integrity of this annual report. The committee has reviewed and discussed the audited financial statements with the external auditors and executive management as reported in the annual report. Apart from the annual financial statements set out on pages 12 to 107 that form part of the annual report, no other external assurance has been obtained for information contained in the annual report. The committee is satisfied that the report complies with the Act, the JSE Listings Requirements and IFRS and has therefore recommended the annual financial statements for approval to the Board. Going concern status The committee has considered the going concern status of the Company and the Group on the basis of review of the annual financial statements and the information available to the committee and recommended such going concern status for adoption by the Board. The Board statement on the going concern status of the Group and Company is contained on page 4 in the statement of directors responsibilities. Discharge of responsibilities The committee is satisfied that during the financial year under review it has conducted its affairs, discharged its legal and other responsibilities as outlined in its charter, the Companies Act and King III. The Board concurred with this assessment. A Welton Chairman of the committee May 26, Expertise and experience of Financial Director and finance function The committee reviewed the performance and expertise of the Group Chief Financial Officer, Megan Pydigadu, and confirms her suitability to continue to hold office as Group Chief Financial Officer in terms of the JSE Listings Requirements. The committee has also considered and has satisfied itself of the appropriateness of the expertise and experience of the finance function and adequacy of resources employed in this function. 6

9 Nominations and remuneration committee report for the year ended We are pleased to report to you on the nominations and remuneration committee s ( the committee ) activities in the fiscal year. The committee executes its responsibility in accordance with the mandate given by the Board. In the year ended, the members of the nominations and remuneration committee were: R Frew (Chairman) R Bruyns A Welton Robin Frew is the Chairman of the nominations and remuneration committee and chairs all matters relating to remuneration, while Richard Bruyns chairs all matters relating to the nomination and appointment of new directors. The committee normally invites the Chief Executive Officer to attend its meetings but he has no voting rights. He does not participate in discussions on his own remuneration, which is set by the committee. The committee meets on a quarterly basis. Among other items, the committee s terms of reference include: Attending to the remuneration and benefits of senior executives and executive directors; Advising on non-executive directors fees and fees for those directors who are members of Board committees; Advising on senior executive and executive director appointments; Reviewing succession planning at an executive level; Confirming the share incentive plan and the allocation of awards under the plan; and Selecting and recommending candidates for appointment to the Board. Changes to the non-executive directors fees are approved by shareholders at the annual general meeting. The King III recommendations suggest that the remuneration policy be approved by shareholders and that certain senior executives remuneration be disclosed. The Company has not formally obtained shareholder approval for its remuneration policy but the Company s philosophy is detailed below. The executive remuneration has been detailed further on in the report. Remuneration policy Principles of executive remuneration MiX Telematics remuneration policy is formulated to attract and retain high-caliber executives and motivate them to develop and implement the Company s business strategy in order to optimize 7 long-term shareholder value. It is the intention that this policy should conform to best practice standards. The policy is framed around the following key principles: Total rewards are set at levels that are responsible and competitive within the relevant market; Total incentive-based rewards are earned through the achievement of demanding growth and return targets consistent with shareholder interests over the short, medium and long term; Incentive plans, performance measures and targets are structured to operate soundly throughout the business cycle; and The design of long-term incentive plans is prudent and does not expose shareholders to unreasonable financial risk. Elements of executive remuneration Executive remuneration comprises the following four principal elements: Basic salary and allowances; Bi-annual incentive bonuses; Share incentive plans; and Retirement and other benefits. The committee seeks to ensure an appropriate balance between the fixed and performance-related elements of executive remuneration and between those aspects of the package linked to short-term financial performance and those linked to longer-term shareholder value creation. The policy related to each component of remuneration is summarized below. Basic salary The basic salary of each executive is subject to annual review and is set to be responsible and competitive with reference to external market practice in similar companies, which are comparable in terms of size, market sector, business complexity, and international scope. Company performance, individual performance and changes in responsibilities are taken into account when determining annual basic salaries. Bi-annual incentive bonus All executives are eligible to receive a performance-related bi-annual bonus. The bonus is non-contractual and not pensionable. The committee reviews bonuses at the half-year and at year-end, and determines the level of bonus based on performance criteria set at the start of the performance period.

10 Nominations and remuneration committee report for the year ended The criteria include targets relating to subscriber growth, subscription revenue growth, adjusted EBITDA targets and divisional operating profit growth and certain discretionary elements. The short-term incentive program is available to executive directors, senior executives and selected employees. Cash bonuses to senior executives and executive directors are approved by the nominations and remuneration committee. Share incentive plan The Group has two share incentive plans in place. TeliMatrix Group Executive Incentive Scheme The TeliMatrix Group Executive Incentive Scheme is a share option plan and the award of share options to executive directors and senior executives is controlled by the committee. Motivations for the award of share options are presented by the executive directors to the committee which, after review and consideration, recommends the award of such options as it deems fit to the Board for approval. Selected participants will receive grants of share options which are conditional rights to receive MiX shares at prices equal to the exercise price. Vesting of options is subject to time and performance conditions. The performance conditions and period are determined by the Board on a grant-by-grant basis in respect of each new grant of options. The targets and measuring terms relating to each issue are detailed in the letter of grant. After vesting, the options will become exercisable. Upon exercise by a participant, the Company will settle the value of options by delivering MiX shares that will be issued out of authorized unissued MiX shares. These options are treated as equity-settled instruments. are equal to the closing market value of ordinary shares on the day preceding the date of the grant. Vesting of performance shares, retention shares and SARs are subject to time and performance conditions. The performance conditions and period are determined by the Board on a grant-bygrant basis in respect of each new grant. The targets and measuring terms relating to each issue are detailed in the letter of grant. After vesting, the retention and performance shares become immediately vested while the SARs will become exercisable. To date, only SARs have been issued under the LTIP. The value of the difference between the exercise and grant price of the SARs may be settled at the Company s option by the Company by delivering shares or by settling the value in cash. Because the Company intends to settle the SARs by delivering shares and has not established a past practice of settling in cash, the SARs are classified as equity-settled share-based payment awards. Eligibility Any senior employee with significant managerial or other responsibility, including any director holding salaried employment or office in the Group, is eligible to participate in a share incentive plan which is operated by the Group. A total of 36,587,500 share options remain unexercised at an average price of R2.17 per share, of which 10,437,500 have vested and met their performance conditions. Refer to note 14 of the annual financial statements for further detail. At the general meeting on September 17, with the introduction and approval by shareholders of the MiX Telematics Limited Long- Term Incentive Plan ( LTIP ), the TeliMatrix Group Executive Incentive Scheme was closed. With the introduction of the LTIP, no further awards will be made in terms of the TeliMatrix Group Limited Executive Incentive Scheme. MiX Telematics Limited Long-Term Incentive Plan The LTIP provides for three types of grants to be issued, namely performance shares, retention shares and share appreciation rights ( SARs ). Under the LTIP awards may be issued to certain directors and key employees. This is controlled by the committee. Motivations for the awards are presented by the executive directors to the committee which, after review and consideration, recommends the award as it deems fit to the Board for approval.the award/exercise price of the SARs, performance shares and retention shares granted 8 During the current financial year 7,000,000 options were granted and 2,900,000 SARs were granted (: nil). The 2,900,000 SARs were outstanding at and had not yet vested. Retirement plans and other benefits Executives are remunerated on a cost-to-company basis and as part of their package are entitled to a car allowance, provident fund contributions, medical, death and disability insurance. The provision of these benefits is considered to be market competitive for executive positions. Other matters affecting remuneration of directors External appointments Executive directors are not permitted to hold external directorships or offices without the approval of the Board, other than those of a

11 Nominations and remuneration committee report for the year ended personal nature. Non-executive directors Fees payable to non-executive directors are proposed and reviewed by the remuneration committee and recommended to the Board, which in turn makes recommendations to shareholders with reference to the fees paid by comparable companies, responsibilities taken by the non-executive directors and the importance attached to the retention and attraction of high-caliber individuals. Non-executive directors, in accordance with the recommendations of King III, do not participate in any incentive programs. Non-executive Total Total R Bruyns E Banda H Brody C Ewing R Frew M Lamberti 1 99 F Roji R Shough 138 A Welton M Akoojee Value added tax 2,972 2, ,058 2,964 1 VAT included as part of certain invoices received. Directors fees shown exclude VAT. Directors fees Directors fees proposed for the forthcoming two years are as follows: Director's fee 300 Chairman (in addition to director's fee) - Board Audit and risk Nomination and remuneration Social and ethics 100 Committee fees (in addition to director's fee) - Audit and risk Nomination and remuneration 70 - Social and ethics 55 This will be put to the shareholders at the forthcoming annual general meeting on September 16,. Executives remuneration The table below provides an analysis of the emoluments paid to executives of the Company for the year ended. Executive committee ^ Salary and allowances Other benefits Retirement fund Performance bonuses* Total Total S Joselowitz 5,532 2,573 8,105 10,473 R Botha 2, ,070 3,670 T Buzer 3,939 M Pydigadu 2, ,082 3,392 5,487 H Scott 2,821 1,411 4,232 6,769 C Tasker 3, ,416 4,870 6,660 B Horan 2, ,330 3,530 3,850 G Pretorius 1, ,360 3,566 3,852 C Lewis 1, , , ,732 33,811 45,366 * Performance bonuses are based on actual amounts paid during the financial year. ^ All prescribed officers of the Company are included as part of the executive committee as noted above. 9

12 Nominations and remuneration committee report for the year ended Executives employment contracts All executives contracts are terminable on three calendar months notice. Non-executive directors appointments are made in terms of the Company s Memorandum of Incorporation and are initially confirmed at the first annual general meeting of shareholders following their appointment, and thereafter directors are re-elected by rotation. Non-executive directors do not hold fixed-term contracts. Incentive plans Executives participate in the incentive plans, designed to recognize the contributions of senior staff to the growth in the Company s equity. Within limits imposed by shareholders, rights are allocated to senior executives and executive directors. The equity-linked compensation benefits for executives that were outstanding at year-end are set out below. Share options June 4, June 4, January 3, November 7, September 10, Total 000 s 000 s 000 s 000 s 000 s 000 s S Joselowitz* 1,500 3,000 2,500 7,000 R Botha 1,375 1,375 M Pydigadu* 1, ,000 1,500 4,100 H Scott C Tasker* 1,500 2,000 2,000 1,500 7,000 B Horan ,500 1,000 3,375 G Pretorius ,500 1,000 3,375 C Lewis 125 1,500 1,000 2,625 6,225 4,000 3,500 10,000 6,000 29,725 Option strike price (cents per share JSE share price on grant date (cents per share) Expiry date Performance conditions: June 4, 2016 June 4, 2016 January 3, 2018 November 7, 2018 September 10, 2020 Share price of (Rand) n/a 5 n/a n/a n/a Minimum shareholder return of 5% n/a 10% 10% 10% *Executive director. Executives exercised 5,275,000 options during the year and full details of the options exercised are set out in note 14 to the annual financial statements. Share appreciation rights As at no SARs had been issued to Group executives. Signed on behalf of the nominations and remuneration committee R Frew Chairman of the committee May 26, 10

13 Independent auditors report for the year ended To the shareholders of MiX Telematics Limited We have audited the consolidated and separate financial statements of MiX Telematics Limited set out on pages 12 to 107, which comprise the consolidated and separate statements of financial position as at, and the consolidated and separate income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information. Directors responsibility for the annual financial statements The Company s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Opinion In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of MiX Telematics Limited as at, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. Other reports required by the Companies Act As part of our audit of the consolidated and separate financial statements for the year ended, we have read the directors report, the report of the audit and risk committee and the certificate of the Company Secretary for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports. PricewaterhouseCoopers Inc. Director: VS Myburgh Registered Auditor Sunninghill, South Africa May, 26 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 11

14 Consolidated statements of financial position at and Notes ASSETS Non-current assets Property, plant and equipment 6 135, ,079 Intangible assets 7 778, ,190 Available-for-sale financial asset 8 Finance lease receivable 9 1,002 6,677 Deferred tax assets 19 23,607 19,825 Total non-current assets 938, ,771 Current assets Inventory 10 38,934 39,774 Trade and other receivables , ,839 Finance lease receivable 9 5,607 6,652 Taxation 7,602 7,336 Restricted cash 12 30,539 10,279 Cash and cash equivalents , ,449 Total current assets 1,289,637 1,129,329 Total assets 2,228,608 1,977,100 EQUITY Stated capital 14 1,436,993 1,429,250 Other reserves 15 (21,894) (58,335) Retained earnings 450, ,725 Equity attributable to owners of the parent 1,865,446 1,671,640 Non-controlling interest (874) (10) Total equity 1,864,572 1,671,630 LIABILITIES Non-current liabilities Borrowings 16 1,104 2,462 Deferred tax liabilities 19 63,425 20,601 Provisions 20 4,005 2,282 Share-based payment liability 21 1,950 Total non-current liabilities 70,484 25,345 Current liabilities Trade and other payables , ,961 Borrowings 16 1,399 1,279 Taxation 3,586 2,912 Provisions 20 23,240 19,163 Bank overdraft 13 17,966 27,810 Total current liabilities 293, ,125 Total liabilities 364, ,470 Total equity and liabilities 2,228,608 1,977,100 Net asset value per share (R) Net tangible asset value per share (R) The accompanying notes form an integral part of these financial statements. 12

15 Consolidated income statements for the years ended, and 2013 Notes 2013 Revenue 22 1,389,380 1,271,658 1,171,480 Cost of sales (449,663) (422,034) (424,545) Gross profit 939, , ,935 Other income/(expenses) net 23 3,795 2,151 4,260 Operating expenses (793,651) (680,277) (565,318) Sales and marketing (171,948) (148,012) (132,849) Administration and other charges (621,703) (532,265) (432,469) Operating profit , , ,877 Finance income/(cost) net 80,778 40,660 (6,011) Finance income 25 82,905 43,264 2,018 Finance costs 26 (2,127) (2,604) (8,029) Profit before taxation 230, , ,866 Taxation 29 (81,623) (60,574) (51,400) Profit for the year 149, , ,466 Attributable to: Owners of the parent 149, , ,471 Non-controlling interests (606) (5) (5) Earnings per share 149, , ,466 Basic (R) Diluted (R) The accompanying notes form an integral part of these financial statements. 13

16 Consolidated statements of comprehensive income for the years ended, and Notes Profit for the year 149, , ,466 Other comprehensive income/(losses): Items that may be subsequently reclassified to profit or loss Exchange differences on translating foreign operations 26,466 45,475 37,090 Attributable to owners of the parent 15 26,267 45,475 37,090 Attributable to non-controlling interests 199 Exchange differences on net investments in foreign operations 15 1,487 3,540 3,142 Taxation relating to components of other comprehensive income 19 3,010 (599) Other comprehensive income for the year, net of tax 30,963 48,416 40,232 Total comprehensive income for the year 179, , ,698 Attributable to: Owners of the parent 180, , ,703 Non-controlling interests (407) (5) (5) Total comprehensive income for the year 179, , ,698 The accompanying notes form an integral part of these financial statements. 14

17 Consolidated statements of changes in equity for the years ended, and 2013 Attributable to owners of the parent Notes Stated capital Share capital Share premium Other reserves ** Retained earnings Total Noncontrolling interest Total equity At April 1, ,589 (154,745) 139, , ,090 Total comprehensive income 40, , ,703 (5) 168,698 Profit for the year 128, ,471 (5) 128,466 Other comprehensive income 40,232 40,232 40,232 Total transactions with owners 464 * 2,425 3,151 (78,954) (72,914) (72,914) Shares issued in relation to share options exercised 464 * 2,425 2,889 2,889 Share-based payment 3,151 3,151 3,151 Dividend declared of 8 cents per share 31 (52,576) (52,576) (52,576) Interim dividend declared of 4 cents per share 31 (26,378) (26,378) (26,378) Transfer from share capital and share premium to stated capital 790,027 (13) (790,014) Balance at ,491 (111,362) 188, ,879 (5) 867,874 Total comprehensive income 48, , ,005 (5) 200,000 Profit for the year 151, ,589 (5) 151,584 Other comprehensive income 48,416 48,416 48,416 Total transactions with owners 638,759 4,611 (39,614) 603, ,756 Shares issued in relation to share options exercised 14 15,776 15,776 15,776 Share-based payment 15 4,611 4,611 4,611 Proceeds from shares issued, net of share issue costs , , ,983 Final dividend declared of 6 cents per share 31 (39,614) (39,614) (39,614) Balance at 1,429,250 (58,335) 300,725 1,671,640 (10) 1,671,630 15

18 Consolidated statements of changes in equity for the years ended, and 2013 Attributable to owners of the parent Notes Stated capital Share capital Share premium Other reserves ** Retained earnings Total Noncontrolling interest Total equity Total comprehensive income 30, , ,386 (407) 179,979 Profit for the year 149, ,622 (606) 149,016 Other comprehensive income 30,764 30, ,963 Total transactions with owners 7,743 5,677 13,420 (457) 12,963 Shares issued in relation to share options exercised 14 7,743 7,743 7,743 Share-based payment 15 5,220 5,220 5,220 Transactions with noncontrolling interest (457) Balance at 1,436,993 (21,894) 450,347 1,865,446 (874) 1,864,572 * Amount less than R1,000. ** See note 15 for a composition of and movements in other reserves. The accompanying notes form an integral part of these financial statements. 16

19 Consolidated statements of cash flows for the years ended, and 2013 Cash flows from operating activities 2013 Notes Cash generated from operations , , ,847 Interest received 8,926 3,970 1,880 Interest paid (2,057) (2,496) (3,421) Taxation paid (51,179) (63,866) (74,388) Net cash generated from operating activities 217, , ,918 Cash flows from investing activities Purchases of property, plant and equipment 6 (63,554) (79,626) (51,499) Proceeds on sale of property, plant and equipment and intangible assets Purchases of intangible assets 7 (65,748) (49,119) (42,648) Acquisition of business, net of cash acquired 33 (40,000) (3,606) 23 Deferred consideration paid 16 (1,241) (295) Government grant received with regards to development of intangible assets 7 2,207 Increase in restricted cash (19,907) (1,508) (5,103) Net cash used in investing activities (189,845) (133,176) (96,054) Cash flows from financing activities Proceeds from issuance of shares 14 7, ,710 2,889 Share issue expenses paid 14 (26,951) Dividends paid to company's owners (39,610) (78,874) Repayments of borrowings 16 (3,436) (19,701) Net cash generated from/(used in) financing activities 7, ,713 (95,686) Net increase in cash and cash equivalents 35, ,314 20,178 Net cash and cash equivalents at the beginning of the year 802,639 91,697 68,530 Exchange gains on cash and cash equivalents 89,234 44,628 2,989 Net cash and cash equivalents at the end of the year , ,639 91,697 The accompanying notes form an integral part of these financial statements. 17

20 for the year ended 1. General information MiX Telematics Limited (the Company ) is a public company which is incorporated and domiciled in South Africa. The Company s ordinary shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and its American Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT). The activities of the Company and its subsidiaries (the Group ) focus on fleet and mobile asset management solutions delivered as Software-as-a-Service. The address of the Company s registered office is Matrix Corner, Howick Close, Bekker Road, Waterfall Park, Midrand, South Africa, The consolidated financial statements were approved by the Board of Directors on May 26,. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These accounting policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The annual financial statements of the Group for the year ended have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board, IFRS Interpretations Committee ( IFRIC ) interpretations applicable to companies reporting under IFRS, SAICA Financial Reporting guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies Act of South Africa and the Listings Requirements of the JSE Limited. The consolidated financial statements have been prepared in thousands of Rand () under the historical cost convention except for certain financial instruments that have been measured at fair value. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements, are disclosed in note Changes in accounting policy and disclosures New standards, amendments and interpretations adopted by the Group The following new and amended standards have been adopted by the Group for the first time on April 1, : Standards and amendments IAS 32 Financial Instruments: Presentation IAS 36 Impairment of Assets IFRIC 21 Levies Executive summary This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the consolidated financial statements. This amendment removed certain disclosures of the recoverable amount of cash-generating units ( CGU ) which had been included in IAS 36 by the issue of IFRS 13 Fair Value Measurement. The amendment had no impact on the consolidated financial statements. This interpretation sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 Provisions. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognized. The Group is not subjected to significant levies so the impact on the Group is not material. Other standards, amendments and interpretations which are effective for the financial year beginning on or after April 1, are not material to the Group New standards, amendments and interpretations not yet effective A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after April 1, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group, except for the following: 18

21 for the year ended IFRS 9 Financial Instruments (effective date: January 1, 2018) IFRS 9 Financial Instruments addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July. IFRS 9 replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income which are not yet recycled. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January Early adoption is permitted. The Group is yet to assess IFRS 9 s full impact. IFRS 15 Revenue from Contracts with Customers (effective date: January 1, 2017) IFRS 15 Revenue from Contracts with Customers issued in May, replaces IAS 18 Revenue and IAS 11 Construction Contracts to account for revenue from contracts with customers. The objective of the standard is to provide a single, comprehensive revenue recognition model for all contracts with customers. IFRS 15 establishes principles for reporting useful information to users of the financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. The new standard therefore introduces changes which impact the recognition and measurement principles, as well as disclosure requirements for revenue from contracts with customers. The revenue standard is effective for annual periods beginning on or after 1 January Early adoption is permitted and the standard provides for a choice of transition methods full retrospective application or a practical expedient that permits limited retrospective application, however requires additional disclosures. The Group is assessing the impact of IFRS 15. There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group Consolidation (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity instruments issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognized amounts of the acquiree s identifiable net assets. Acquisition related costs are expensed as incurred. 19