MiX Telematics 20F 2019 Annual report | MIXT Filing

MiX Telematics (MIXT) 20-F2019 FY Annual report (foreign)

Content analysis



Consolidated statement of financial position


at March 31, 2019 and March 31, 2018



	Notes	March 31, 2019	March 31, 2018
	Notes	R’000	R’000

ASSETS
Non-current assets
Property, plant and equipment	6	457,446	334,038
Intangible assets	7	955,646	898,527
Capitalized commission assets	8	54,066	—
Deferred tax assets	18	51,666	40,717
Total non-current assets		1,518,824	1,273,282

Current assets
Assets classified as held for sale	6	17,058	17,058
Inventory	9	51,263	57,013
Trade and other receivables	10	376,475	286,406
Taxation	29	24,119	30,373
Restricted cash	11	20,187	20,935
Cash and cash equivalents	12	383,443	308,258
Total current assets		872,545	720,043
Total assets		2,391,369	1,993,325

EQUITY
Stated capital	13	786,633	846,405
Other reserves	14	83,212	(51,614	)
Retained earnings		881,819	722,380
Equity attributable to owners of the parent		1,751,664	1,517,171
Non-controlling interest		13	10
Total equity		1,751,677	1,517,181

LIABILITIES
Non-current liabilities
Deferred tax liabilities	18	139,049	82,658
Provisions	19	2,226	2,132
Recurring commission liability		1,798	—
Capitalized lease liability	20	31,183	—
Total non-current liabilities		174,256	84,790

Current liabilities
Trade and other payables	16	399,869	350,519
Capitalized lease liability	20	10,745	—
Taxation		2,511	2,832
Provisions	19	22,049	20,283
Bank overdraft	12	30,262	17,720
Total current liabilities		465,436	391,354
Total liabilities		639,692	476,144
Total equity and liabilities		2,391,369	1,993,325

The accompanying notes form an integral part of these financial statements.



Consolidated income statement


for the years ended March 31, 2019, March 31, 2018 and March 31, 2017



	Notes	March 31, 2019		March 31, 2018		March 31, 2017
	Notes	R’000		R’000		R’000

Revenue	22	1,975,863		1,712,482		1,540,058
Cost of sales		(655,844	)	(586,963	)	(498,785	)

Gross profit		1,320,019		1,125,519		1,041,273
Other income/(expenses) – net	23	1,009		4,246		426
Operating expenses		(982,116	)	(914,813	)	(903,837	)
Sales and marketing		(199,209	)	(184,978	)	(181,601	)
Administration and other charges		(782,907	)	(729,835	)	(722,236	)

Operating profit	24	338,912		214,952		137,862
Finance income/(costs) – net		1,386		(69	)	10,391
Finance income	25	12,286		8,951		16,068
Finance costs	26	(10,900	)	(9,020	)	(5,677	)

Profit before taxation		340,298		214,883		148,253
Taxation	29	(137,962	)	(33,690	)	(26,812	)
Profit for the year		202,336		181,193		121,441

Attributable to:
Owners of the parent		202,336		181,134		121,458
Non-controlling interest		*		59		(17	)
		202,336		181,193		121,441
Earnings per share
Basic (R)	30	0.36		0.32		0.19
Diluted (R)	30	0.35		0.32		0.19

* Amount less than R1,000

The accompanying notes form an integral part of these financial statements.



Consolidated statement of comprehensive income


for the years ended March 31, 2019, March 31, 2018 and March 31, 2017



		March 31, 2019	March 31, 2018		March 31, 2017
	Notes	R’000	R’000		R’000

Profit for the year		202,336	181,193		121,441
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations		114,596	(60,331	)	(80,870	)
Attributable to owners of the parent	14	114,593	(60,339	)	(80,820	)
Attributable to non-controlling interest		3	8		(50	)
Taxation relating to components of other comprehensive income	14, 18, 29	1,151	(237	)	(59	)
Other comprehensive income/(loss) for the year, net of tax		115,747	(60,568	)	(80,929	)
Total comprehensive income for the year		318,083	120,625		40,512

Attributable to:
Owners of the parent		318,080	120,558		40,579
Non-controlling interest		3	67		(67	)
Total comprehensive income for the year		318,083	120,625		40,512

The accompanying notes form an integral part of these financial statements.



Consolidated statement of changes in equity


for the years ended March 31, 2019, March 31, 2018 and March 31, 2017



		Attributable to owners of the parent
	Notes	Stated capital* R’000		Other reserves** R’000		Retained earnings R’000		Total R’000		Non- controlling interest R’000		Total equity R’000


Balance at April 1, 2016		1,320,955		74,262		526,082		1,921,299		(1,491	)	1,919,808
Total comprehensive income		—		(80,879	)	121,458		40,579		(67	)	40,512
Profit for the year		—		—		121,458		121,458		(17	)	121,441
Other comprehensive loss		—		(80,879	)	—		(80,879	)	(50	)	(80,929	)

Total transactions with owners		(466,610	)	2,247		(53,026	)	(517,389	)	—		(517,389	)
Shares issued in relation to share options exercised		7,072		—		—		7,072		—		7,072
Share-based payment transaction		—		2,247		—		2,247		—		2,247
Dividends declared	31	—		—		(53,026	)	(53,026	)	—		(53,026	)
Share repurchase		(473,682	)	—		—		(473,682	)	—		(473,682	)

Balance at March 31, 2017		854,345		(4,370	)	594,514		1,444,489		(1,558	)	1,442,931
Total comprehensive income		—		(60,576	)	181,134		120,558		67		120,625
Profit for the year		—		—		181,134		181,134		59		181,193
Other comprehensive (loss)/income		—		(60,576	)	—		(60,576	)	8		(60,568	)

Total transactions with owners		(7,940	)	13,332		(53,268	)	(47,876	)	1,501		(46,375	)
Shares issued in relation to share options and share appreciation rights exercised	13	10,726		—		—		10,726		—		10,726
Share-based payment transaction	14	—		9,000		—		9,000		—		9,000
Share-based payment – excess tax benefit	14	—		5,833		—		5,833		—		5,833
Transactions with non-controlling interest	21	—		(1,501	)	—		(1,501	)	1,501		—
Dividends declared	31	—		—		(53,268	)	(53,268	)	—		(53,268	)
Share repurchase	13	(18,666	)	—		—		(18,666	)	—		(18,666	)

Balance at March 31, 2018		846,405		(51,614	)	722,380		1,517,171		10		1,517,181

Adjustment on initial application of IFRS 15, IFRS 16 and IFRS 9***		—		—		24,675		24,675		—		24,675
Adjusted balance at April 1, 2018		846,405		(51,614	)	747,055		1,541,846		10		1,541,856



Consolidated statement of changes in equity


for the years ended March 31, 2019, March 31, 2018 and March 31, 2017



		Attributable to owners of the parent
	Notes	Stated capital* R’000		Other reserves** R’000	Retained earnings R’000		Total R’000		Non- controlling interest R’000	Total equity R’000



Total comprehensive income		—		115,744	202,336		318,080		3	318,083
Profit for the year		—		—	202,336		202,336		—	202,336
Other comprehensive income		—		115,744	—		115,744		3	115,747

Total transactions with owners		(59,772	)	19,082	(67,572	)	(108,262	)	—	(108,262	)
Shares issued in relation to share options and share appreciation rights exercised	13	13,776		—	—		13,776		—	13,776
Share-based payment transaction	14	—		12,140	—		12,140		—	12,140
Share-based payment – excess tax benefit	14	—		6,942	—		6,942		—	6,942
Dividends declared	31	—		—	(67,572	)	(67,572	)	—	(67,572	)
Share repurchase	13	(73,548	)	—	—		(73,548	)	—	(73,548	)

Balance at March 31, 2019		786,633		83,212	881,819		1,751,664		13	1,751,677

* Excludes 40,000,000 treasury shares held by MiX Telematics Investments Proprietary Limited (“MiX Investments”), a wholly owned subsidiary of the Group, which were acquired under the approved general share purchase program during fiscal 2016. See note 13.

** See note 14 for a composition of and movements in other reserves.

*** See note 2.1.1.1 for additional information.

The accompanying notes form an integral part of these financial statements.



Consolidated statement of cash flows


for the years ended March 31, 2019, March 31, 2018 and March 31, 2017



		March 31, 2019		March 31, 2018		March 31, 2017
	Notes	R’000		R’000		R’000

Cash flows from operating activities
Cash generated from operations	32.2	541,432		413,025		377,115
Interest received		12,132		8,576		14,737
Interest paid		(4,976	)	(3,731	)	(5,680	)
Taxation paid		(84,742	)	(64,662	)	(62,601	)
Net cash generated from operating activities		463,846		353,208		323,571

Cash flows from investing activities
Purchases of property, plant and equipment	6	(200,840	)	(238,646	)	(180,230	)
Proceeds on sale of property, plant and equipment and intangible assets		2,222		4,388		369
Purchases of intangible assets	7	(85,618	)	(99,615	)	(115,293	)
Deferred consideration paid		—		—		(1,103	)
Decrease in restricted cash		2,724		127		6,951
Increase in restricted cash		(983	)	(8,389	)	(3,588	)
Net cash used in investing activities		(282,495	)	(342,135	)	(292,894	)

Cash flows from financing activities
Proceeds from issuance of shares	13	13,776		10,726		7,072
Share repurchase	13	(73,548	)	(18,666	)	(473,682	)
Dividends paid to Company’s owners		(67,470	)	(53,201	)	(52,966	)
Repayments of capitalized lease liability	20	(11,435	)	—		—
Acquisition of non-controlling interest	21	—		(1,353	)	—
Net cash used in financing activities		(138,677	)	(62,494	)	(519,576	)
Net increase/(decrease) in cash and cash equivalents		42,674		(51,421	)	(488,899	)
Net cash and cash equivalents at the beginning of the year		290,538		356,333		860,762
Exchange gains/(losses) on cash and cash equivalents		19,969		(14,374	)	(15,530	)
Net cash and cash equivalents at the end of the year	12	353,181		290,538		356,333

The accompanying notes form an integral part of these financial statements.



Notes to the consolidated financial statements


for the year ended March 31, 2019

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, 1686. The financial statements were approved by the Board of Directors on July 26, 2019.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These accounting policies have been consistently applied to all the years presented, unless otherwise stated.


2.1	Basis of preparation

The annual financial statements of the Group for the year ended March 31, 2019 have been prepared in accordance with:


•	International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”);


•	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 (“FRSC”);


•	the requirements of the South African Companies Act, No. 71 of 2008; and


•	the JSE Listings Requirements.

The financial statements have been prepared in thousands of Rand (R’000) under the historical cost convention.

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements, are disclosed in note 4.


2.1.1	Changes in accounting policy and disclosures


2.1.1.1	New standards, amendments and interpretations adopted by the Group

Other than the effect of adopting IFRS 9, IFRS 15 and IFRS 16 as set out below, the other standards, amendments and interpretations which are effective for the financial year beginning on April 1, 2018 did not have a material impact on the Group.



Notes to the consolidated financial statements


for the year ended March 31, 2019



Standards and amendments	Executive summary
IFRS 9 Financial Instruments (“IFRS 9”)	IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 Financial Instruments: Recognition and Measurement with a single model that has only two classification categories: amortized cost and fair value. IFRS 9 also introduces a new impairment model and aligns hedge accounting more closely with an entity’s risk management. The standard is effective for the Group from April 1, 2018. The Group has elected not to restate comparatives and recognized the transitional adjustments in retained earnings on the date of initial application. The most relevant change to the Group is the requirement to use an expected loss model instead of the incurred loss model when assessing the recoverability of trade and other receivables. Based on the expected loss model contained in IFRS 9, the increase in the provision for doubtful debts at April 1, 2018 was R3.2 million.
IFRS 15 Revenue from Contracts with Customers (“IFRS 15”)	IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction Contracts. It is a single, comprehensive revenue recognition model for all contracts with customers and has the objective of achieving greater consistency in the recognition and presentation of revenue. In terms of the new standard, revenue is recognized based on the satisfaction of performance obligations, which occurs when control of goods or services transfers to a customer. The revenue standard is effective for annual periods beginning on or after January 1, 2018 and therefore is applicable for the Group from April 1, 2018. The standard permits a modified retrospective cumulative catch-up approach for the adoption, which the Group decided to apply. Under this approach the Group recognized transitional adjustments in retained earnings on the date of initial application (i.e. April 1, 2018), without restating the comparative period. Under the practical expedient, the new requirements have only been applied to contracts that were not completed as of April 1, 2018. The impact of applying IFRS 15 is as follows: Costs incurred in obtaining a contract: Commissions incurred to acquire contracts need to be capitalized and amortized, unless the amortization period is 12 months or less. Previously, the Group expensed commissions. Under IFRS 15, the amortization expense reflects the settlement of the related performance obligations, which, depending on the specific contract, may include hardware, installation, training and/or service. To the extent commission capitalized is commensurate, the commission attributable to service will be amortized over the minimum contractual period or, if shorter, the expected life of the contract. To the extent it is not commensurate, the commission capitalized that is attributable to service will be amortized over the expected life of the contract. The impact on the Group at April 1, 2018 was as follows: – Capitalized commission asset with a net book value of R45.3 million and – Additional recurring commission liability of R6.9 million. Recurring commission is commission which is payable for each month the customer remains with the Group. Since the commission relates to acquiring a customer contract, as part of the adoption of IFRS 15, a recurring commission liability is recognized at the date on which the contract is acquired. The measurement reflects the total commission payable over the minimum contractual period or, if shorter, the expected life of the contract, together with the effect of the time value of money, where significant. Under previous accounting the recurring commissions were accrued for on a monthly basis. Amortization expense of external commissions capitalized under IFRS 15 is recognized in cost of sales, while that of internal commissions is recognized in sales and marketing costs. Commissions not capitalized under the 12-month practical expedient are also classified in the same manner. This is in line with the previous income statement presentation of the commission expense.



Notes to the consolidated financial statements


for the year ended March 31, 2019



Standards and amendments	Executive summary
IFRS 15 Revenue from Contracts with Customers (“IFRS 15”)	Significant financing: In respect of contracts for which the Group receives payment more than 12 months in advance, interest expense is accrued on the income received in advance liability. This results in the revenue being measured at a higher amount when it is recognized, compared to previous accounting. At April 1, 2018, the income received in advance liability (which is disclosed as ‘liabilities related to contracts with customers’) was R1.8 million higher than the balance at March 31, 2018. Fixed escalations: Fixed escalations are spread evenly over the contract period resulting in the related revenue being different to what is actually billed. In the earlier part of the contract, revenue will be higher than the amount billed, while in the latter part it will be lower. Previously, the Group recognized the increase in revenue due to fixed escalations only once the escalations were effective. A contract asset of R1.2 million was recognized on April 1, 2018, reflecting the amount by which revenue should have been higher under IFRS 15 in periods prior to March 31, 2018 as a result of straight-lining the fixed escalations.
IFRS 16 Leases (“IFRS 16”)	IFRS 16 replaces IAS 17 Leases and addresses the accounting and disclosures for leases. The standard provides a single lessee accounting model, requiring lessees to recognize right-of-use assets and lease liabilities for all leases, unless the lease term is 12 months or less or the underlying asset is a low-value asset. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting remaining substantially unchanged from its predecessor, IAS 17. IFRS 16 applies to annual reporting periods beginning on or after January 1, 2019, but can be early adopted. Given that the Group applied IFRS 15 from April 1, 2018, the Group decided to also adopt IFRS 16 from this date. The Group has chosen to apply the ‘simplified approach’ on adoption of IFRS 16 that includes certain relief related to the measurement of the right-of-use asset and the lease liability at April 1, 2018, rather than full retrospective application. Furthermore, the ‘simplified approach’ does not require a restatement of comparatives. The Group leases land and buildings, office equipment and vehicles which were previously treated as operating leases. The impact on the Group at April 1, 2018 was as follows: – Right-of-use asset with a net book value of R30.6 million; and – Lease liability (net of accruals/prepayments already recognized) of R32.6 million.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Summary of the impact at April 1, 2018 of adopting IFRS 9, IFRS 15 and IFRS 16:



IFRS 9 assets	(R3.2 million)
Trade and other receivables	(R3.2 million)

IFRS 15 assets	R46.5 million
Capitalized commission assets	R45.3 million
Trade and other receivables ⁽¹⁾	R1.2 million

IFRS 16 assets	R29.9 million
Property, plant and equipment	R30.6 million
Trade and other receivables ⁽²⁾	(R0.7 million)

Total assets	R73.2 million

IFRS 15 liabilities	R8.7 million
Recurring commission liability (non-current)	R4.0 million
Trade and other payables ⁽³⁾	R4.7 million

IFRS 16 liabilities	R31.9 million
Capitalized lease liability (non-current)	R23.3 million
Capitalized lease liability (current)	R8.8 million
Trade and other payables ⁽²⁾	(R0.2 million)

Deferred tax liabilities	R7.9 million

Total liabilities	R48.5 million

Net increase in equity	R24.7 million

⁽¹⁾Contract assets related to fixed escalations.

⁽²⁾Reversal of lease prepayment and lease accruals under IAS 17 Leases. These have been reflected in the measurement

of the lease liability under IFRS 16.

⁽³⁾ Includes the current portion of additional recurring commission liability of R2.9 million and increase in liabilities related

to contracts with customers due to significant financing adjustments of R1.8 million.

Summary of the impact on fiscal 2019 results of adopting IFRS 9, IFRS 15 and IFRS 16:

The only material impact on the consolidated income statement for fiscal 2019 was a R7.9 million increase in finance costs. This was primarily as a result of IFRS 15 significant financing activity interest expense and IFRS 16 capitalized lease liability interest. The impact on every other line item in the condensed consolidated income statement for fiscal 2019 was not material.

The only adjustment to the statement of cash flows was an outflow of R11.4 million in respect of the capital portion of lease liability payments being recorded in cash flows from financing activities as a result of the adoption of IFRS 16. This outflow was previously accounted for as an operating lease expense and included under cash generated from operations.

2.1.1.2 New standards, amendments and interpretations not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for March 31, 2019 reporting periods and except for IFRS 16 have not been early adopted by the Group. Refer to note 2.1.1.1 above. Although none of these new accounting standards and interpretations that have not been early adopted by the Group are expected



Notes to the consolidated financial statements


for the year ended March 31, 2019

to have a significant effect on the consolidated financial statements of the Group, more information about the effect of IFRIC 23 is provided below:



Interpretation	Executive summary
IFRIC 23 Uncertainty over Income Tax Treatments (“IFRIC 23”)	IFRIC 23 is an interpretation that is effective for the Group from April 1, 2019, which provides guidance on the accounting for uncertain tax treatments. An uncertain tax treatment is a tax treatment for which there is uncertainty over whether the relevant tax authority will accept the tax treatment under tax law. Where such uncertainty exists and it is probable that the tax authority will accept the uncertain tax treatment in an entity’s income tax filings, IFRIC 23 requires the calculation of taxable profit or loss, tax bases, unused tax loss, unused tax credits or tax rates to be determined consistently with the tax treatment used or planned to be used in its income tax filings. When it is not considered probable; the uncertainty should be reflected using the most likely amount or the expected value depending on which method is expected to better predict the resolution of the uncertainty. IFRIC 23 can either be applied fully retrospectively (if possible without using hindsight) or retrospectively with a cumulative catch-up adjustment against opening retained earnings at the date of adoption. The Group has decided to apply the cumulative catch-up approach. Uncertain tax positions are currently accounted for by the Group using a weighted average estimate regardless of whether it is probable that the tax treatment will be accepted. With regard to the uncertain tax positions as at March 31, 2019, it was not considered probable that the tax authority would accept the tax treatment. Accordingly, it is not expected that the adoption of IFRIC 23 will have a significant impact on opening retained earnings at April 1, 2019.


2.2	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 to direct the relevant activities of the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of financial position, respectively.


(b)	Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:


•	fair values of the assets transferred;


•	liabilities incurred to the former owners of the acquired business;


•	equity interests issued by the Group;


•	fair value of any asset or liability resulting from a contingent consideration arrangement; and


•	fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

Acquisition-related costs are expensed as incurred, except if related to the issue of equity securities, in which case these costs are also included in equity.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The excess of the:


•	consideration transferred;


•	amount of any non-controlling interest in the acquired entity; and


•	acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognized directly in the income statement as a bargain purchase gain.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of acquisition. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Unwinding of the interest element is recognized in the income statement.

Contingent consideration is measured at fair value on acquisition date and classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognized in the income statement.


(c)	Changes in ownership interests in subsidiaries without a change of control

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group, that is, transactions with the owners in their capacity as owners. For purchases from non-controlling interests, the difference between the fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.

Gains or losses on disposals to non-controlling interests are also recorded in equity.


2.3	Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified collectively as the executive committee and the Chief Executive Officer who make strategic decisions.

Sales between segments are carried out at cost plus a margin.


2.4	Foreign currency translation


(a)	Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in South African Rand (“R”), which is the Group’s presentation currency.


(b)	Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognized in the income statement.

Foreign exchange gains/(losses) are classified as “Finance income/(cost) – net”.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.


(c)	Group companies

The results and financial position of foreign operations (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:


(i)	Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;



Notes to the consolidated financial statements


for the year ended March 31, 2019


(ii)	Income and expenses for each income statement presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions);


(iii)	All resulting exchange differences are recognized in other comprehensive income; and


(iv)	Equity items are measured at historical cost at the time of recording, translated at the rate on the date of the recording and are not retranslated to closing rates at reporting dates.

On consolidation, exchange differences arising from the translation of net investments in foreign operations are recognized in other comprehensive income. When a foreign operation is fully disposed of or sold (i.e. control is lost), exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale. A repayment/capitalization of a net investment loan therefore does not result in any exchange differences being transferred from equity to the income statement unless it is part of a transaction resulting in a loss of control.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences are recognized in other comprehensive income.


2.5	Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes all expenditure directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. Repairs and maintenance are charged to the income statement in the reporting period in which they are incurred.

The cost of in-vehicle devices installed in vehicles (including installation and shipping costs) as well as the cost of uninstalled in-vehicle devices, is capitalized as property, plant and equipment. The Group depreciates installed in-vehicle devices on a straight-line basis over their expected useful lives, commencing upon installation, whereas uninstalled in-vehicle devices are not depreciated until installed. The related depreciation expense is recorded as part of cost of sales in the income statement.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to reduce their cost to their residual values over their estimated useful lives, as follows:



Property: Buildings	50 years
Plant and equipment	3 – 20 years
Motor vehicles	3 – 7 years
Other: Furniture, fittings and equipment	2 – 10 years
Computer and radio equipment	3 – 7 years
In-vehicle devices installed	1 – 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 2.7).

Gains and losses on disposal of an asset are determined by comparing the proceeds with the carrying amount and are recognized within “Other income/(expenses) – net” in the income statement.

Right-of-use assets are included in property, plant and equipment on the statement of financial position, refer to note 2.25.1 for the accounting policy related to right-of-use assets.



Notes to the consolidated financial statements


for the year ended March 31, 2019


2.6	Intangible assets


(a)	Goodwill

Goodwill arises on the acquisition of businesses and represents the excess of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the acquirer’s interest in the net fair value of the net assets acquired. Goodwill on acquisition of businesses is included in intangible assets. Gains and losses on the disposal of an entity include the carrying amount of the goodwill relating to the entity sold.

Goodwill is not amortized but is tested annually for impairment, or more frequently if events or changes in circumstances indicate a potential impairment, and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. The carrying amount of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value-in-use and the fair value less costs to sell. Impairment losses recognized as an expense in relation to goodwill are not subsequently reversed.


(b)	Patents and trademarks

Separately acquired patents and trademarks are shown at historical cost. Patents and trademarks acquired in a business combination are recognized at fair value at the acquisition date. Patents and trademarks have a finite useful life and are subsequently carried at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated using the straight-line method to allocate the cost of patents and trademarks over their estimated useful lives (three to 20 years).


(c)	Customer relationships

Customer relationships acquired in a business combination are recognized at fair value at the acquisition date. Customer relationships have a finite useful life and are subsequently carried at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated over the expected useful life of the customer relationship (two to 15 years) and reflects the pattern in which future economic benefits of the customer relationship are expected to be consumed. The useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to factors such as customer churn rates.


(d)	Computer software, technology, in-house software and product development costs

Acquired computer software licenses are capitalized on the basis of costs incurred to acquire and bring the software into use. The acquired computer software licenses have a finite useful life and are subsequently carried at cost less accumulated amortization and accumulated impairment losses. These costs are amortized over their estimated useful lives (two to five years).

In-house software and product development costs that are directly attributable to the design, testing and development of identifiable and unique software and products, controlled by the Group, are recognized as intangible assets when the following criteria are met:


•	It is technically feasible to complete the software or product so that it will be available for use;


•	Management intends to complete the software or product and use or sell it;


•	There is an ability to use or sell the software or product;


•	It can be demonstrated how the software or product will generate probable future economic benefits;


•	Adequate technical, financial and other resources to complete the development and use or sell the software or product are available; and


•	The expenditure attributable to the software or product during its development can be reliably measured.

Directly attributable costs that are capitalized as part of the intangible assets include software and product development employee costs and an appropriate portion of relevant overheads.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Other development expenditures that do not meet the criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period if the criteria are subsequently met.

Costs, including annual licenses, associated with maintaining computer software programs are recognized as an expense as incurred.

Technology, in-house software and product development costs are capitalized on the basis of costs incurred to acquire and bring them into use. The recognized assets have a finite useful life and are subsequently carried at cost less accumulated amortization and accumulated impairment losses. In addition, they are amortized over their estimated useful lives (one to 17 years).


2.7	Impairment of non-financial assets

Assets that have an indefinite useful life, goodwill and intangible assets that are not ready to use are not subject to amortization but are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Assets that are subject to amortization or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value-in-use. In assessing the value-in-use, the estimated future cash flows are discounted to their present value using the pre-tax discount rate that reflects current market assessments on the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs, i.e. operating segments). Non-financial assets other than goodwill that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.


2.8	Financial assets

The Group’s financial assets comprise:

•Trade and other receivables

•Restricted cash

•Cash and cash equivalents

All of the Group’s financial assets are held for the collection of the contractual cash flows and those cash flows represent solely payments of principal and interest. They are initially recognized at fair value (except for trade receivables) plus transaction costs that are directly attributable to the acquisition of the financial asset. Since the terms of payment are not more than 12 months, trade receivables are recognized initially at their fair value. Subsequent measurement is at amortized cost.

Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in the income statement and presented in “Other income/(expenses) – net”. Foreign exchange gains and losses are recognized directly in the income statement and presented in “Finance income/(costs) – net”.

Regular way purchases and sales of financial assets are recognized on the trade date (the date on which the Group commits to purchase or sell the asset). Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.


(a)	Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.

(b) Net cash and cash equivalents

Net cash and cash equivalents included in the statement of cash flows include cash on hand, deposits held on call with banks and bank overdrafts; all of which are available for use by the Group and have an original maturity of less than three months. Bank overdrafts are included within current liabilities on the statement of financial position.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Restricted cash includes short-term deposits and amounts held that are not highly liquid and is accounted for at amortized cost.


2.8.1	Impairment of financial assets

Impairment losses are recognized on an expected credit loss basis and are presented in administration and other charges in the income statement. Expected credit losses are probability-weighted estimates of credit losses. 12 month expected credit losses are recognized (other than for trade receivables for which lifetime expected credit losses are recognized – see below), until there has been a significant increase in credit risk, from which point, lifetime expected credit losses are recognized. 12 month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the entire expected life of the financial asset.

For impairment of trade and other receivables, the Group applies the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognized from initial recognition of the trade and other receivables, refer to note 10 for further details. Probability-weighted estimates of lifetime expected credit losses are determined for appropriate groupings of customers based on their credit characteristics. Historical losses are used as a starting point and adjusted to take account of current expectations of losses over the remaining life of the trade and other receivable.

Accounting policies applied until March 31, 2018

The Group has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy.

2.8.2 Classification

The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets. The Group’s loans and receivables comprise trade and other receivables, finance lease receivables, restricted cash and cash and cash equivalents in the statement of financial position.

2.8.3 Recognition and derecognition

2.8.4 Measurement

Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

Loans and receivables

Loans and receivables are subsequently carried at amortized cost using the effective interest method, less any impairment losses.

2.8.5 Impairment of financial assets

The Group assesses, at the end of each reporting period, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Loans and receivables

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other



Notes to the consolidated financial statements


for the year ended March 31, 2019

financial reorganization and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the amount of the loss is recognized in the income statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the reversal of the previously recognized impairment loss is recognized in the income statement.


2.9	Fair value

Fair value is determined in accordance with IFRS 13 Fair Value Measurement and is categorized as follows:


•	Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;


•	Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and


•	Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The carrying amounts for cash and cash equivalents, restricted cash, trade and other receivables (excluding pre-payments), trade and other payables (excluding leave pay) and the current portion of leases approximate fair value due to their short-term nature.


2.10	Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.


2.11	Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first-in, first-out (“FIFO”), actual cost or weighted average cost basis, depending on the nature of the Group entity in which it is held. The cost of finished goods includes the cost of manufacturing as charged by third parties. It excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.


2.12	Stated capital

Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares or the exercise of share options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity instruments (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the owners of the parent as treasury shares until the shares are canceled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the parent.


2.13	Trade and other payables

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade and other payables are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest method.



Notes to the consolidated financial statements


for the year ended March 31, 2019


2.14	Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, and financial assets, which are specifically exempt from this requirement.

An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset is recognized at the date of derecognition.

Non-current assets are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.

Non-current assets classified as held for sale are presented separately from the other assets in the statement of financial position.


2.15	Taxation

2.15.1 Current and deferred income taxes

The tax expense for the year comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. In addition, to the extent the tax deduction in respect of equity-settled share-based payments exceeds the cumulative share-based payment expense, the tax is recognized directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and its subsidiaries operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Determining how much tax to recognize when an uncertain tax position exists requires judgement. The Group applies the measurement principle in IAS 12 Income Taxes, when measuring the amount of tax to recognize related to an uncertain tax position. Therefore, the Group measures uncertain tax positions based on a weighted average estimate, taking into account all of the tax uncertainties related to the tax position taken.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; and neither are deferred tax liabilities nor deferred tax assets accounted for if they arise from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized.

Deferred tax (‘outside basis’ deferred tax) relating to temporary differences arising from investments in subsidiaries is considered as follows:


•	Deferred tax liabilities are recognized, except to the extent that the Group is able to control the timing of the reversal of the temporary differences, and it is probable that they will not reverse in the foreseeable future.


•	Deferred tax assets are recognized only to the extent that it is probable the temporary differences will reverse in the foreseeable future and there is sufficient taxable profit available against which the temporary differences can be utilized.

Temporary differences arising from investments in subsidiaries in the consolidated financial statements are different from those arising in the Company financial statements. This is because in the Company financial statements, an investment in a subsidiary is carried at cost; whereas the carrying amount in the consolidated financial statements is the consolidated net assets of the subsidiary.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.15.2 Dividends tax

Dividend withholding tax is currently payable at a rate of 20% on dividends distributed to shareholders. This tax is not attributable to the Company but rather paid to the tax authorities on behalf of the shareholders through use of regulatory intermediaries, with only the net amount of the dividend being remitted to the shareholder.


2.16	Employee benefits


(a)	Short-term benefits

Remuneration to employees in respect of services rendered during a reporting period is recognized as an expense in that reporting period. Provision is made for accumulated leave and for short-term benefits when there is no realistic alternative other than to settle the liability, and there is a formal plan and the amounts to be paid are determined before the time of issuing the financial statements.


(b)	Defined contribution plan

The Group operates defined contribution plans. A defined contribution plan is one under which the Group pays a fixed percentage of employees’ remuneration as contributions into a separate fund, and the Group will have no further legal or constructive obligations to pay additional contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. Contributions to defined contribution plans in respect of services rendered during a period are recognized as staff costs when they are due.


(c)	Short-term incentives – bonus plans

The Group recognizes a liability and an expense for bonuses based on the achievement of defined key performance criteria. An accrual is recognized where the Group is contractually obliged or where there is a past practice that has created a constructive obligation.


(d)	Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Termination benefits exclude any benefits which are dependent on future service. The Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and involves payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.


2.20	Share-based payments

Equity-settled

The Group operates equity-settled share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments of the Company. The equity instruments that may be granted in terms of the plans include share options, retention shares, performance shares and share appreciation rights, all of which entitle the holder to obtain shares in the Company. The fair value, determined at grant date, of the employee services received in exchange for the grant of equity instruments is recognized as an expense at Group level with a corresponding credit to equity. The total amount to be expensed is determined by reference to the grant date fair value of the equity instruments granted:


•	Including any market performance conditions;


•	Excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and



Notes to the consolidated financial statements


for the year ended March 31, 2019


•	Including the impact of any non-vesting conditions.

Non-market performance vesting conditions and service conditions are included in the assumptions about the number of equity instruments that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the Group revises its estimates of the number of equity instruments that are expected to vest based on the non-market vesting conditions and service conditions. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding entry to equity.

When equity-settled instruments are settled, the Company may elect to issue new shares or use treasury shares to settle its resultant obligations. For share options, the proceeds received, net of any directly attributable transaction costs, are credited to stated capital (as there are no par value shares).

The grant by the Company of equity-settled instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to those subsidiaries. The fair value of employee services received, measured by reference to the grant date fair value, is recognized over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity financial statements.

The Company has a recharge agreement with its South African subsidiaries, whereby the Company will recharge the relevant subsidiary an amount equal to the market value, at exercise date, of the shares issued to the participants of the plan upon exercise. A recharge asset is recognized in the parent entity financial statements from grant date of the equity-settled instruments for the expected recharge amount based on the proportion of the vesting period that has passed. The expected recharge amount reflects expected attrition and the current share price. The contra entry to the recharge asset is recognized against the relevant investment in subsidiary undertakings as it is considered a return of the afore-mentioned capital contribution. Once the carrying value of an investment in subsidiary undertakings has been reduced to nil, further recharges from that subsidiary are recognized in profit or loss as distributions.

The Group classifies awards issued with settlement alternatives as equity-settled when the Group holds the choice of settlement and there is no past practice of settling in cash. If the counterparty holds the choice of settlement, the award is classified as cash-settled.

Cash-settled

For cash-settled share-based payment transactions, the Group measures goods or services acquired and the liability incurred at the fair value of the liability. The liability and corresponding expense are recognized over the vesting period. Until the liability is settled, the Group shall remeasure the fair value of the liability at each reporting date and at the date of settlement, with any changes in fair value recognized in the income statement.


2.21	Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Provisions which are expected to be settled in a period greater than 12 months are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as an interest expense.

Provision for the estimated liability on all products under warranty is made on the basis of claims experience.

Provision for the estimated liability for maintenance costs is made on a per unit basis when the obligation to repair occurs.

Provision for the anticipated costs associated with the restoration of leasehold property (decommissioning provision) is based on the Group’s best estimate of those costs required to restore the property to its original condition.

Restructuring provisions are recognized when the Group has developed a detailed formal plan for restructuring and has raised a valid expectation that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring and is recorded in administration and other charges in the income statement.



Notes to the consolidated financial statements


for the year ended March 31, 2019


2.22	Revenue from contracts with customers

2.22.1 Recognition and measurement

Revenue is measured based on the consideration specified in a contract with a customer. The Group recognizes revenue when it transfers control over a good or a service to a customer.

The Group provides fleet and mobile asset management solutions to its customers, which comprise the provision of hardware and the rendering of services. Some customers obtain control of the hardware (where legal title transfers to the customer); while other customers do not (where legal title remains with the Group).

In instances where the customer obtains control of the hardware, which is typically upon installation or delivery to the customer, the hardware, the installation thereof and the service are each accounted for as separate performance obligations. In instances where the customer does not obtain control of the hardware, there is only a single performance obligation, namely the service.

Where a contract contains multiple performance obligations, the total transaction price is allocated to each one based on their relative standalone selling prices. The amount so allocated is then recognized as revenue as follows:


•	Hardware – when delivered to the customer


•	Installation – as the installation is done


•	Driver training and other services – at the contractual hourly/daily rate as the training/service is performed


•	Service (subscriptions) – over time as the service is provided

Revenue is shown net of discounts, value added tax, returns and after eliminating sales within the Group.

The Group distributes products to certain small fleet operators and consumers through distributors. Distributors act as agents and hardware revenue is only recognized when the distributor sells the hardware unit to the end customer. Once a unit is sold to a customer, the customer enters into a service agreement directly with the Group for the product. The obligation to supply the service and the credit risk rests with the Group. The service revenue is recognized when the service is rendered (i.e. on a monthly basis).

The Group also sells hardware to motor vehicle dealerships for fitment into their vehicle trading stock. These dealerships purchase the hardware from the Group and are considered principals because they obtain title to the hardware, bear the risks and rewards of ownership and accordingly control the hardware purchased. The buyer of the vehicle then enters into a service-only contract with the Group. Revenue is recognized upon sale of the hardware to the dealership and subscription revenue is recognized as the services are provided to the customer.

The Group distributes products to enterprise fleet customers through dealers. Dealers are considered principals in respect of the sale of hardware and revenue is recognized upon sale of the hardware unit to the dealer. Revenue from services is recognized as and when the service is provided to the dealers.

2.22.2 Costs incurred in obtaining a contract

Commissions incurred to acquire contracts are capitalized and amortized, unless the amortization period is 12 months or less. Under IFRS 15, the amortization expense reflects the settlement of the related performance obligations, which, depending on the specific contract, may include hardware, installation, driver training and/or other services. To the extent commission capitalized is commensurate, the commission attributable to service will be amortized over the minimum contractual period or, if shorter, the expected life of the contract. To the extent it is not commensurate, the commission capitalized that is attributable to service will be amortized over the expected life of the contract. Commission is considered commensurate with respect to a particular contract when equivalent/comparable commission is payable upon the extension or renewal of such a contract or upon the customer entering into a new contract. Typically, with regard to month-to-month contracts, commission payable is not considered commensurate for such contracts because no commission is payable as and when the customer extends each month by not giving notice. Accordingly, commission incurred on such contracts that is attributable to service is amortized over the expected life of the contract taking account of expected extensions/renewals.

Recurring commission is commission which is payable for each month the customer remains with the Group. Since the commission relates to acquiring a customer contract a recurring commission liability is recognized at the date on which the contract is acquired. The measurement reflects the total commission payable over the minimum contractual period or, if shorter, the expected life of the contract, together with the effect of the time value of money, where significant.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Amortization expense of external commissions capitalized is recognized in cost of sales, while that of internal commissions is recognized in sales and marketing costs. Commissions not capitalized under the 12-month practical expedient is also classified in the same manner.

2.22.3 Significant financing

In respect of contracts for which the Group receives payment more than 12 months in advance, interest expense is accrued on the income received in advance liability. This results in the revenue being measured at a higher amount when it is recognized.

2.22.4 Fixed escalations

Fixed escalations are spread evenly over the contract period resulting in the related revenue being different to what is actually billed. In the earlier part of the contract, revenue will be higher than the amount billed, while in the latter part it will be lower.

Accounting policies applied until March 31, 2018

The Group has applied IFRS 15 using the modified retrospective cumulative catch-up approach. Under this approach, the Group recognized the transitional adjustments in retained earnings on April 1, 2018, without restating the comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy.

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods or services in the ordinary course of the Group’s activities. Revenue mainly includes amounts earned on the sale of hardware units, subscription service sales to customers and installation revenue. Revenue is shown net of discounts, value added tax, returns and after eliminating sales within the Group.

The Group offers certain arrangements whereby the customer can purchase a combination of the products and services as referred to above. Where such multiple element arrangements exist, the amount of revenue allocated to each element is based on the relative fair values of the various elements offered in the arrangement. When applying the relative fair value approach, the fair values of each element are determined based on the current market price of each of the elements when sold separately.

The Group recognizes revenue when the amount of revenue can be measured reliably and it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities, as outlined below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Invoicing for the various products and services, when sold separately or as part of a multiple element revenue arrangement, occurs based on the specific contractual terms and conditions.

The Group also sells hardware to motor vehicle dealerships for fitment into their vehicle trading stock. These dealerships purchase the hardware from the Group and are considered principals because they obtain title to the hardware and bear the risks and rewards of ownership. The buyer of the vehicle then enters into a service-only contract with the Group. Revenue is recognized upon sale of the hardware to the dealership and subscription revenue is recognized as the services are provided to the customer.

The Group distributes products to enterprise fleet customers through dealers. Dealers are considered principals in respect of the sale of hardware and revenue is recognized upon sale of the hardware unit to the dealer. Similar to the relationship with consumers and small fleet customers originated through distributors, the responsibility for providing services rests with the Group and revenue is recognized as the service is rendered.


(a)	Subscription revenue

Subscription revenue is recognized over the term of the agreement as it is earned. When contracted services are performed through a number of repetitive acts over the contract period, revenue is recognized on a straight-line basis over the contract period.



Notes to the consolidated financial statements


for the year ended March 31, 2019


(b)	Hardware sales

All hardware has value on a standalone basis. Revenue from hardware sales is recognized once the risks and rewards of ownership have transferred.


(c)	Driver training and other services

Revenue is recognized at the contractual hourly/daily rate as the training is performed.


(d)	Rental revenue

Where hardware is provided as part of a service contract the risk and rewards of ownership do not transfer and service revenue from the rental unit is recognized over the period of the service and included in subscription revenue.


(e)	Installation revenue

Revenue earned from the installation of hardware in customer vehicles is recognized once the installation has been completed.

(f) Repair services

Revenue in respect of repair services, which forms part of the monthly subscription, is recognized on a monthly basis over the period of the service arrangement.


2.23	Interest income

Interest income is recognized on a time-proportion basis with reference to the principal amount receivable and the effective interest rate applicable.


2.24	Dividend income

Dividend income is recognized when the right to receive payment is established.


2.25	Leases

2.25.1 The Group as a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is reduced by impairment losses (refer to note 2.7), if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the lessee's incremental borrowing rate. Generally the Group uses the lessee's incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:


•	Fixed payments, including in-substance fixed payments;


•	Variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date;


•	Amounts expected to be payable under a residual value guarantee; and


•	The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of



Notes to the consolidated financial statements


for the year ended March 31, 2019

the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets in property, plant and equipment and lease liabilities in capitalized lease liabilities on the statement of financial position.

2.25.2 Short-term leases and leases of low-value assets

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group regards items that are below $5 000 to be low value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Accounting policies applied until March 31, 2018

The Group has applied IFRS 16 using the simplified approach. Under this approach, the Group recognized the transitional adjustments in retained earnings on April 1, 2018, without restating the comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the group’s previous accounting policy.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

2.25.3 The Group as a lessee

Payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease.


2.26	Dividend distribution

Any dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company’s Board of Directors.


3.	Financial risk management


3.1	Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk, and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets as it relates to financial risks and seeks to minimize potential adverse effects on the Group’s financial performance. Risk management is carried out under policies approved by the Board of Directors. The Board has provided approved formal policies covering specific areas, such as foreign exchange risk as well as cash management and banking facilities.


(a)	Market risk


(i)	Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currencies, primarily with respect to the United States Dollar, the South African Rand, the Euro, the Australian Dollar, the Brazilian Real and the British Pound.

Foreign exchange risk arises when future commercial transactions or recognized assets and liabilities and net investments in foreign operations are denominated in a currency that is not the entity’s functional currency.

The Group has implemented a foreign currency hedging policy to limit the Group’s exposure to fluctuations in foreign currencies. The foreign currency policy reduces exchange rate risk on certain recognized assets and liabilities based on economic hedging principles as opposed to using derivative financial instruments.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the assets of the Group’s foreign operations is reduced as a result of assets and liabilities being denominated in the same foreign currencies.

As a result of our monetary assets being held in multiple currencies, the Group has significant foreign currency exposure.



Notes to the consolidated financial statements


for the year ended March 31, 2019

A financial risk sensitivity analysis is presented in note 37.


(ii)	Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.

The Group’s cash flow interest rate risk arises from restricted cash, cash and cash equivalents and the bank overdraft. Bank overdrafts issued at variable rates expose the Group to cash flow interest rate risk, which is partly offset by financial assets held at variable rates (i.e. cash and cash equivalents and restricted cash). At March 31, 2019 and 2018 the Group had no interest-bearing borrowings except capitalized lease liabilities.

The Group is not exposed to fair value interest rate risk as the Group does not have any fixed rate interest-bearing financial instruments carried at fair value.

Interest rates are constantly monitored and appropriate steps are taken to ensure that the Group’s exposure to interest rate fluctuations is limited. This includes obtaining approval from the Board for all changes to and new borrowing facilities entered into. Refer to note 37 for an interest rate risk sensitivity analysis.


(iii)	Price risk

Currently the Group does not have significant price risk. The Group is not exposed to commodity price risk.


(b)	Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. Credit risk arises from restricted cash, cash and cash equivalents as well as credit exposures to customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position, net of impairment losses where relevant.

Credit risk relating to accounts receivable balances is managed by each local entity which is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. The Group has a policy in place governing the allowance for credit losses. Refer to note 10 for further discussion on the Group's credit risk management.

Cash investments are only placed with reputable financial institutions rated B and above (note 12). All changes in or new banking arrangements entered into are in line with the Board’s approval framework. Refer to note 10 for further disclosure on credit risk.


(c)	Liquidity risk

Liquidity risk is the risk that there will be insufficient funds available to settle obligations when they are due.

The Group has limited liquidity risk due to surplus cash balances and the recurring nature of its income, which generates strong cash inflows. The level of cash balances in the Group is monitored weekly and cash generated from operations is reviewed against planned cash flows on a monthly basis. In addition, working capital reviews are performed monthly.

Surplus cash is invested in interest-bearing current accounts and time deposits that are expected to readily generate cash inflows for managing liquidity risk.

In addition, the Group maintains headroom on its undrawn borrowing facilities to ensure that the Group does not breach borrowing limits on its borrowing facilities. Refer to note 38 for further disclosure on liquidity risk.


3.2	Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern while enhancing the returns for shareholders and ensuring benefits for other stakeholders. The Board of Directors monitors capital by reviewing the net cash position. The Company currently has no long-term borrowings and none of its overdraft facilities, as set out in note 15, were subject to any financial covenants during fiscal 2019 and fiscal 2018.

In order to maintain the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt, where applicable.



Notes to the consolidated financial statements


for the year ended March 31, 2019


4.	Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the financial position and financial performance of the Group within the next 12 months are outlined below:


(a)	Maintenance provision

The Group, in some instances, offers maintenance services as part of its revenue contracts. Management estimates the related provision for maintenance costs per vehicle when the obligation to repair occurs.


(b)	Current and deferred income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. Where applicable tax legislation is subject to interpretation, management makes assessments, based on expert tax advice, of the relevant tax that is likely to be paid and provides accordingly. When the final outcome is determined and there is a difference, this is recognized in the period in which the final outcome is determined.

The Company's interests in subsidiaries include certain loans denominated in foreign currencies which are repayable by agreement of both parties. Realization of such loans will result in taxable foreign exchange differences in accordance with prevailing legislation in South Africa. Although the Company controls the timing of the reversal of these temporary differences, given the volatility of the South African Rand and based on the Group's current assessment, it is not considered probable that the temporary difference relating to a loan between the Company and a South Africa subsidiary will not reverse in the foreseeable future. Hence, a deferred tax liability has been recognized in respect of these temporary differences (note 18).

The Group applies judgement when recognizing deferred tax assets in respect of tax losses. Deferred tax assets in respect of tax losses are recognized for the carry forward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized. In determining the level of future taxable profit that will be available the Group considers both an entity's historical profitability and estimates of future profitability and recognizes deferred tax for the whole or the part of the temporary difference that is more likely than not to be recovered. Where an entity has incurred historical losses, deferred tax assets are only recognized when the particular entity has shown a reasonable period of starting to return to profitability.


(c)	Impairment estimates

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note 2.7. Other assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

For the purposes of assessing impairment, assets are grouped into CGUs at the lowest levels for which there are separately identifiable cash flows. The recoverable amount is based on the CGU’s value-in-use. These calculations require the use of estimates (see notes 6 and 7).


(d)	Customer relationships

The useful life applied principally reflects management’s view of the average economic life of the customer base and is assessed by reference to factors such as customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life.


(e)	Product development cost

Product development cost directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recorded as intangible assets by the Group when the criteria in note 2.6 have been met. The assessment as to when these criteria have been met is subjective and capitalization has been based on management’s best judgement of facts and circumstances in existence at year-end.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The useful lives of development costs capitalized are reviewed at least on an annual basis. The useful life estimates are based on historical experience with similar assets as well as anticipation of future events such as technological changes, which may impact the useful life. The residual values of product development costs are estimated to be zero.


(f)	Provision for impairment of trade receivables

The Group applies the simplified approach permitted by IFRS 9, which requires lifetime expected losses to be recognized from initial recognition of the trade receivables. Probability-weighted estimates of lifetime credit losses are determined for appropriate groupings of customers based on their credit characteristics. Historical losses are used as a starting point and adjusted to take account of current expectations of losses over the remaining life of the trade receivable. Changes to the expected credit losses provided for may be required if the financial condition of the Group’s customers improves or deteriorates. An improvement in financial condition may result in lower actual write-offs. Historically, changes to the estimate of losses have not been material to the Group’s financial position and results.

(h) Allocation between in-vehicle devices and inventory

The allocation between in-vehicle devices and inventory reflects the Group’s estimates of how units are expected to be sold, thereby it is a significant area of judgement for the Group.

(i) Probability on the valuation of performance shares

The probability of the performance targets being met on the valuation of performance shares are based on management’s best estimate of achieving such stretch targets. Management considers whether past actual results on the performance targets were achieved compared to past budgets and considers the most recent budgeted results for the three year strategic plan to determine the probability. Refer to note 13.



Notes to the consolidated financial statements


for the year ended March 31, 2019

5. Segment information

Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.

The chief operating decision maker (“CODM”) reviews the segment results on an integral margin basis as defined by management. The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified collectively as the executive committee and the Chief Executive Officer who make strategic decisions. In respect of revenue, this method of measurement entails reviewing the segmental results based on external revenue only. In respect of Adjusted EBITDA (the profit measure identified by the CODM), the margin generated by CSO, net of any unrealized intercompany profit, is allocated to the geographic region where the external revenue is recorded by our RSOs. The costs remaining in CSO relate mainly to research and development of hardware and software platforms, common marketing, product management and technical and distribution support to each of the RSOs. CSO is a reportable segment of the Group because it produces discrete financial information which is reviewed by the CODM and has the ability to generate external revenues.

Each RSO’s results therefore reflect the external revenue earned, as well as the Adjusted EBITDA earned (or loss incurred) by each operating segment before the remaining CSO and corporate costs allocations. Segment assets are not disclosed as segment information is not reviewed on such a basis by the CODM.

The Group’s CODM assesses the performance of the operating segments based on Adjusted EBITDA. Adjusted EBITDA is defined as the profit for the period before income taxes, net finance income/(costs) including foreign exchange gains/(losses), depreciation of property, plant and equipment including capitalized customer in-vehicle devices and right-of-use assets, amortization of intangible assets including capitalized in-house development costs and intangible assets identified as part of a business combination, share–based compensation costs, restructuring costs, profits/(losses) on the disposal or impairments of assets or subsidiaries, insurance reimbursements relating to impaired assets and certain litigation costs.

The segment information provided to the Group’s CODM for the reportable segments for the year ended March 31, 2019 is as follows:



	Subscription revenue R'000	Hardware and other revenue R'000	Total revenue R’000	Adjusted EBITDA R’000

Regional Sales Offices
Africa	969,377	75,029	1,044,406	484,497
Europe	140,539	69,218	209,757	67,796
Americas	292,577	36,386	328,963	152,575
Middle East and Australasia	226,020	97,474	323,494	145,887
Brazil	63,987	4,421	68,408	27,598
Total Regional Sales Offices	1,692,500	282,528	1,975,028	878,353
Central Services Organization	745	90	835	(156,894	)
Total Segment Results	1,693,245	282,618	1,975,863	721,459
Corporate and consolidation entries	—	—	—	(118,674	)
Total	1,693,245	282,618	1,975,863	602,785



Notes to the consolidated financial statements


for the year ended March 31, 2019

The segment information provided to the Group’s CODM for the reportable segments for the year ended March 31, 2018 is as follows:



	Subscription revenue R'000	Hardware and other revenue R'000	Total revenue R’000	Adjusted EBITDA R’000

Regional Sales Offices
Africa	872,646	84,832	957,478	440,900
Europe	115,199	78,061	193,260	65,326
Americas	194,890	32,715	227,605	79,127
Middle East and Australasia	200,241	78,424	278,665	106,835
Brazil	50,735	3,695	54,430	16,747
Total Regional Sales Offices	1,433,711	277,727	1,711,438	708,935
Central Services Organization	904	140	1,044	(149,878	)
Total Segment Results	1,434,615	277,867	1,712,482	559,057
Corporate and consolidation entries	—	—	—	(117,191	)
Total	1,434,615	277,867	1,712,482	441,866

The segment information provided to the Group’s CODM for the reportable segments for the year ended March 31, 2017 is as follows:



	Subscription revenue R'000	Hardware and other revenue R'000	Total revenue R’000	Adjusted EBITDA R’000

Regional Sales Offices
Africa	772,224	86,945	859,169	344,077
Europe	113,223	64,108	177,331	52,369
Americas	121,462	38,957	160,419	26,804
Middle East and Australasia	199,474	104,976	304,450	91,149
Brazil	32,653	5,158	37,811	9,394
Total Regional Sales Offices	1,239,036	300,144	1,539,180	523,793
Central Services Organization	878	—	878	(127,828	)
Total Segment Results	1,239,914	300,144	1,540,058	395,965
Corporate and consolidation entries	—	—	—	(94,352	)
Total	1,239,914	300,144	1,540,058	301,613

The revenue from external parties reported to the Group’s CODM is measured in a manner consistent with that in the income statement. There are no material non-cash items provided to the Group’s CODM other than disclosed in the reconciliation of profit for the year to Adjusted EBITDA below.

During fiscal 2019, impairments to capitalized product development costs of R0.9 million within the CSO segment was recognized in profit or loss. During fiscal 2018, impairments to capitalized product development costs of R2.3 million within the Africa segment and R0.4 million within the CSO segment were recognized in profit or loss. During fiscal 2017, impairments to capitalized product development costs of R2.6 million within the Africa segment and R0.5 million within the CSO segment were recognized in profit or loss. During fiscal 2017, the Brazil segment recognized a reversal of impairment in respect of in-vehicle devices of R0.8 million in profit or loss.

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s CODM.



Notes to the consolidated financial statements


for the year ended March 31, 2019

A reconciliation of Adjusted EBITDA to profit for the year is disclosed below.



	March 31, 2019		March 31, 2018		March 31, 2017
	R’000		R’000		R’000

Reconciliation of Adjusted EBITDA to profit for the year
Adjusted EBITDA	602,785		441,866		301,613
Add:
Net profit on sale of property, plant and equipment and intangible assets	586		1,264		—
Reversal of impairment⁽¹⁾	—		—		791
Decrease in restructuring cost provision	—		741		—
Less:
Depreciation⁽²⁾	(183,478	)	(151,945	)	(98,508	)
Amortization⁽³⁾	(64,877	)	(63,926	)	(44,734	)
Impairment⁽⁴⁾	(930	)	(2,696	)	(3,166	)
Share-based compensation costs	(12,140	)	(10,352	)	(3,311	)
Equity-settled share-based compensation costs	(12,140	)	(9,000	)	(2,247	)
Cash-settled share-based compensation costs	—		(1,352	)	(1,064	)
Net loss on sale of property, plant and equipment and intangible assets	—		—		(262	)
Increase in restructuring cost provision⁽⁵⁾	(3,034	)	—		(14,561	)
Operating profit	338,912		214,952		137,862
Add: Finance income/(costs) – net	1,386		(69	)	10,391
Less: Taxation	(137,962	)	(33,690	)	(26,812	)
Profit for the year	202,336		181,193		121,441


(1)	The reversal of impairment of R0.8 million in fiscal 2017 related to in-vehicle devices in the Brazil segment.


(2)	Includes depreciation of property, plant and equipment (including in-vehicle devices and right-of-use assets). The adoption of IFRS 16 during the year resulted in depreciation of right-of-use assets of R11.7 million being recorded in fiscal 2019.


(3)	Includes amortization of intangible assets (including capitalized in-house development costs and intangible assets identified as part of a business combination).

(4)

In fiscal 2019, asset impairments relate to the impairment of capitalized product development costs of R0.9 million in the CSO segment. In fiscal 2018, asset impairments related to the impairment of capitalized product development costs of R2.3 million in the Africa segment and R0.4 million in the CSO segment. In fiscal 2017, asset impairments related to the impairment of capitalized product development costs of R2.6 million in the Africa segment and R0.5 million in the CSO segment.


⁽⁵⁾	Restructuring costs incurred in fiscal 2019 are described in note 19.

Revenue generated by the South African-based operating segments of the Group (i.e. Central Services Organization and Africa, excluding East Africa) to its local and foreign-based customers amounted to R1,025.7 million (2018: R931.7 million, 2017: R836.2 million) for fiscal 2019, whereas revenue generated by the foreign-based segments of the Group (i.e. Europe, Americas, East Africa, Middle East, Brazil and Australasia) to its local and foreign-based customers amounted to R950.2 million (2018: R780.8 million, 2017: R703.9 million).

Total non-current assets other than financial instruments, capitalized commission assets and deferred tax assets located in South Africa is R685.8 million (2018: R615.9 million, 2017: R621.0 million), and the total of these non-current assets located in foreign countries is R325.7 million (2018: R260.8 million, 2017: R174.6 million). R257.8 million (2018: R208.5 million, 2017: R119.7 million) of these foreign non-current assets were located in Americas segment. These assets are allocated



Notes to the consolidated financial statements


for the year ended March 31, 2019

based on the physical location of the asset and are stated before any inter-company eliminations. The numbers above exclude assets classified as held for sale disclosed in note 6.



Notes to the annual financial statements


for the year ended March 31, 2019

6. Property, plant and equipment



	Property R’000		Plant, equipment, vehicles and other R’000		Computer and radio equipment R’000		In-vehicle devices uninstalled R’000		In-vehicle devices installed R’000		Total R’000

At April 1, 2017
Cost	22,288		48,186		58,048		55,470		333,057		517,049
Accumulated depreciation and impairments	(4,777	)	(33,315	)	(45,728	)	—		(139,109	)	(222,929	)
Net book amount	17,511		14,871		12,320		55,470		193,948		294,120

Year ended March 31, 2018
Opening net book amount	17,511		14,871		12,320		55,470		193,948		294,120
Additions	—		4,090		4,630		229,528		—		238,248
Transfers	—		(613	)	613		(232,050	)	232,050		—
Assets classified as held for sale	(17,058	)	—		—		—		—		(17,058	)
Impairment (notes 5, 24, 30, 32.2)	—		(6	)	(3	)	—		—		(9	)
Disposals*	—		(606	)	(165	)	—		(1,165	)	(1,936	)
Depreciation charge (notes 5, 24, 32.2)	(453	)	(5,237	)	(6,772	)	—		(139,483	)	(151,945	)
Currency translation differences	—		(280	)	(253	)	(2,777	)	(24,072	)	(27,382	)
– Cost	—		(1,103	)	(985	)	(2,777	)	(33,762	)	(38,627	)
– Accumulated depreciation and impairments	—		823		732		—		9,690		11,245
Closing net book amount	—		12,219		10,370		50,171		261,278		334,038

At March 31, 2018
Cost	—		47,066		46,735		50,171		470,545		614,517
Accumulated depreciation and impairments	—		(34,847	)	(36,365	)	—		(209,267	)	(280,479	)
Net book amount	—		12,219		10,370		50,171		261,278		334,038



Notes to the annual financial statements


for the year ended March 31, 2019



	Property R’000		Plant, equipment, vehicles and other R’000		Computer and radio equipment R’000		In-vehicle devices uninstalled R’000		In-vehicle devices installed R’000		Total R’000

Year ended March 31, 2019

Opening net book amount	—		12,219		10,370		50,171		261,278		334,038
Adjustment on initial application of IFRS 16	29,273		1,295		—		—		—		30,568
Additions	14,674		6,068		6,474		196,810		—		224,026
Transfers	—		(12	)	12		(175,473	)	175,473		—
Disposals**	—		(223	)	(58	)	—		(1,355	)	(1,636	)
Depreciation charge (notes 5, 24, 32.2)	(10,947	)	(5,438	)	(5,418	)	—		(161,675	)	(183,478	)
Currency translation differences	5,668		432		356		5,005		42,467		53,928
– Cost	8,298		2,315		1,911		5,005		62,003		79,532
– Accumulated depreciation and impairments	(2,630	)	(1,883	)	(1,555	)	—		(19,536	)	(25,604	)
Closing net book amount	38,668		14,341		11,736		76,513		316,188		457,446



Owned assets
Year ended March 31, 2019
Opening net book amount	—		12,219		10,370		50,171		261,278		334,038
Additions	—		5,626		6,474		196,810		—		208,910
Transfers	—		(12	)	12		(175,473	)	175,473		—
Disposals**	—		(223	)	(58	)	—		(1,355	)	(1,636	)
Depreciation charge (notes 5, 24, 32.2)	—		(4,662	)	(5,418	)	—		(161,675	)	(171,755	)
Currency translation differences	—		267		356		5,005		42,467		48,095
– Cost	—		2,016		1,911		5,005		62,003		70,935
– Accumulated depreciation and impairments	—		(1,749	)	(1,555	)	—		(19,536	)	(22,840	)
Net book amount	—		13,215		11,736		76,513		316,188		417,652

Cost	—		50,262		51,853		76,513		654,453		833,081
Accumulated depreciation and impairments	—		(37,047	)	(40,117	)	—		(338,265	)	(415,429	)
Net book amount	—		13,215		11,736		76,513		316,188		417,652



Notes to the annual financial statements


for the year ended March 31, 2019



	Property R’000		Plant, equipment, vehicles and other R’000		Computer and radio equipment R’000	In-vehicle devices uninstalled R’000	In-vehicle devices installed R’000	Total R’000
Right-of-use assets
Year ended March 31, 2019
Opening net book amount	—		—		—	—	—	—
Adjustment on initial application of IFRS 16	29,273		1,295		—	—	—	30,568
Additions	14,674		442		—	—	—	15,116
Depreciation charge (notes 5, 24, 32.2)	(10,947	)	(776	)	—	—	—	(11,723	)
Currency translation differences	5,668		165		—	—	—	5,833
– Cost	8,298		22		—	—	—	8,320
– Accumulated depreciation and impairments	(2,630	)	143		—	—	—	(2,487	)
Net book amount	38,668		1,126		—	—	—	39,794
Cost	66,502		2,745		—	—	—	69,247
Accumulated depreciation and impairments	(27,834	)	(1,619	)	—	—	—	(29,453	)
Net book amount	38,668		1,126		—	—	—	39,794

Property, plant and equipment comprises owned and leased assets. The Group leases many assets including land and buildings, vehicles, machinery and IT equipment.

* The historical costs and accumulated depreciation on fully depreciated assets which were retired and removed from the accounting records during fiscal 2018

included R1.2 million relating to plant, equipment, vehicles and other, R14.7 million relating to computer and radio equipment and R63.9 million relating to

in-vehicle devices installed.

** The historical costs and accumulated depreciation on fully depreciated assets which were retired and removed from the accounting records during fiscal 2019

included R1.4 million relating to plant, equipment, vehicles and other, R0.2 million relating to computer and radio equipment and R55.6 million relating to

in-vehicle devices installed.

Additions of R224.0 million made in fiscal 2019 include non-cash additions of uninstalled in-vehicle devices of R9.0 million relating to the Central Services Organization segment and Americas segment, right-of-use of assets of R15.1 million and R0.5 million relating to other asset categories. R1.4 million was paid in the current fiscal year which related to uninstalled in-vehicle devices which were accrued and accounted for as non-cash additions in fiscal 2018 by the Central Services Organization. Additions of R238.2 million made in fiscal 2018 included non-cash additions of uninstalled in-vehicle devices of R1.4 million relating to the Central Services Organization segment. R1.9 million was paid in fiscal 2018 which related to uninstalled in-vehicle devices which were accrued and accounted for as non-cash additions in fiscal 2017 by the Central Services Organization.



Notes to the annual financial statements


for the year ended March 31, 2019

Depreciation expense of R162.9 million (2018: R141.6 million, 2017: R85.8 million) has been charged to cost of sales. The remainder has been included in administration and other charges in the income statement.

Assets classified as held for sale

The assets classified as held for sale relate to the property held by the CSO segment. No impairment loss was recognized on reclassification of the property as held for sale as the fair value (estimated based on the recent market prices of similar properties in similar locations) less costs to sell is higher than the carrying amount. MiX Telematics has concluded agreements pertaining to a Broad-Based Black Economic Empowerment (“B-BBEE”) transaction in which the sale of this property is included, refer below for additional information. The transaction is subject to certain conditions precedent which were fulfilled on May 17, 2019. The transaction is expected to be concluded during fiscal 2020.

B-BBEE Property Transaction

MiX has concluded a B-BBEE transaction which involves the following:

•

Acquiring Erf 1335 Vorna Valley Extension 21 Township, Registration Division IR, Province of Gauteng situated in Midrand (“the Midrand property”) for R44.0 million from TPF Investments (Pty) Ltd (“TPF”), which Midrand property is currently being leased from TPF. TPF is an associate of Robin Frew, the non-executive Chairperson of MiX Telematics and therefore the acquisition is a small related party transaction under the JSE Listings Requirements.


•	In a back-to-back transaction, selling the Midrand property for R44.0 million, as well as the Group’s property in Stellenbosch currently classified as held for sale (discussed above) for R23.5 million to Black Industrialists Group Property Management Company (Pty) Ltd (“BIG”). The Group will also provide loan funding to BIG for R9.0 million.


•	Leasing both properties from BIG for an initial period of 5 years with an option to renew the lease for a further 5 years period.



	March 31, 2019 R’000	March 31, 2018 R’000

Non-current assets
Property, plant and equipment	457,446	334,038
Current assets
Assets classified as held for sale	17,058	17,058
Total property, plant and equipment	474,504	351,096



Notes to the consolidated financial statements


for the year ended March 31, 2019

7. Intangible assets



	Goodwill R’000		Patents and trademarks R’000		Customer relationships R’000		Product development costs R’000		Computer software, technology, in-house software and other R’000		Total R’000

At April 1, 2017
Cost	618,910		3,155		40,165		265,637		130,131		1,057,998
Accumulated amortization and impairments	—		(2,229	)	(16,942	)	(89,848	)	(67,079	)	(176,098	)
Net book amount	618,910		926		23,223		175,789		63,052		881,900

Year ended March 31, 2018
Opening net book amount	618,910		926		23,223		175,789		63,052		881,900
Additions	—		31		5,300		65,342		23,965		94,638
Transfers	—		—		—		(365	)	365		—
Disposals*	—		—		—		(1,188	)	—		(1,188	)
Amortization charge (notes 24 and 32.2)	—		(513	)	(7,516	)	(37,639	)	(18,258	)	(63,926	)
Impairment loss (notes 5, 24, 30 and 32.2)	—		—		—		(2,687	)	—		(2,687	)
Currency translation differences	(7,266	)	—		(356	)	(235	)	(2,353	)	(10,210	)
– Cost	(7,266	)	—		(475	)	(265	)	(4,760	)	(12,766	)
– Accumulated amortization and impairments	—		—		119		30		2,407		2,556
Closing net book amount	611,644		444		20,651		199,017		66,771		898,527

At March 31, 2018
Cost	611,644		1,031		44,990		312,338		145,387		1,115,390
Accumulated amortization and impairments	—		(587	)	(24,339	)	(113,321	)	(78,616	)	(216,863	)
Net book amount	611,644		444		20,651		199,017		66,771		898,527

Year ended March 31, 2019
Opening net book amount	611,644		444		20,651		199,017		66,771		898,527
Additions	—		213		—		69,912		23,012		93,137
Disposals**	—		—		—		—		—		—
Amortization charge (notes 24 and 32.2)	—		(119	)	(6,797	)	(37,318	)	(20,643	)	(64,877	)
Impairment loss (notes 5, 24, 30 and 32.2)	—		—		—		(930	)	—		(930	)
Currency translation differences	25,587		—		(9	)	229		3,982		29,789
– Cost	25,587		—		1,053		374		7,737		34,751
– Accumulated amortization and impairments	—		—		(1,062	)	(145	)	(3,755	)	(4,962	)
Closing net book amount	637,231		538		13,845		230,910		73,122		955,646

At March 31, 2019
Cost	637,231		1,244		46,043		365,665		166,832		1,217,015
Accumulated amortization and impairments	—		(706	)	(32,198	)	(134,755	)	(93,710	)	(261,369	)
Net book amount	637,231		538		13,845		230,910		73,122		955,646



Notes to the consolidated financial statements


for the year ended March 31, 2019

* The historical costs and accumulated amortization on fully depreciated assets which were retired and removed from the accounting records during the 2018 year included R2.2 million relating to patents and trademarks, R13.9 million relating to product development costs and R4.3 million relating to computer software, technology, in-house software and other.

** The historical costs and accumulated amortization on fully depreciated assets which were retired and removed from the accounting records during the 2019 year included R17.0 million relating to product development costs and R9.3 million relating to computer software, technology, in-house software and other.

In fiscal 2019, staff costs of R52.2 million (2018: R46.4 million, 2017: R54.6 million) have been capitalized to product development costs. In fiscal 2019, no staff costs were capitalized to in-house software (2018: Nil, 2017: R1.6 million).

Additions of R93.1 million were made during fiscal 2019 which includes non-cash additions of R2.3 million relating to capitalized development costs and R5.2 million relating to computer software. Additions of R94.6 million were made during 2018. In addition, R1.9 million relating to capitalized development costs and R3.1 million related to computer software, technology, in-house software and other intangibles were paid in fiscal 2018 which were accrued and accounted for as non-cash additions in 2017.

Amortization expense of R45.7 million (2018: R44.1 million, 2017: R30.1 million) has been charged to cost of sales. The remainder has been included in administration and other charges in the income statement.

During fiscal 2019, impairment to capitalized product development costs of R0.9 million within the CSO segment was recognized in profit or loss. During fiscal 2018, impairments to capitalized product development costs of R0.4 million within the CSO segment and R2.3 million within the Africa segment were recognized in profit or loss. The impairment losses have been included in administration and other charges in the income statement.

Included in product development costs is product development assets in progress with a net book amount of R36.1 million (2018: R32.1 million, 2017: R51.1 million). Computer software, technology, in-house software and other included internally generated in-house software in progress of R10.3 million (2018: Nil, 2017: R42.8 million).

Impairment tests for goodwill

Goodwill is allocated to the Group’s CGUs identified within its operating segments. It should be noted that, as disclosed in note 5, while CSO is reported as a reportable segment excluding any inter-company revenue and related costs, it remains a CGU, as there remains an active market for the output produced by CSO. The impairment tests for goodwill have been performed on the same basis as the previous financial years.

A summary of the goodwill at operating segment level is presented below:



	March 31, 2018 R’000	Foreign currency translation differences R’000	March 31, 2019 R’000

Central Services Organization	103,119	—	103,119
Europe	108,624	15,001	123,625
Middle East and Australasia	46,851	10,586	57,437
Africa	353,050	—	353,050
Total	611,644	25,587	637,231

The recoverable amounts of all CGUs are determined based on value-in-use calculations, which use pre-tax cash flow projections based on approved financial budgets covering a three to five-year period. A five-year period was used to ensure that in respect of the Europe and Middle East and Australasia segments, stable cash flows are used for purposes of calculating terminal values included in the value-in-use calculations. These cash flows are based on the current market conditions and near-term expectations.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The key assumptions used for the value-in-use calculations are as follows:



2019	Central Services Organization	Africa	Europe	Middle East and Australasia

Discount rate
– pre-tax discount rate applied to the cash flow projections (%)	17.9	17.8	9.0	11.1
Growth rate
– growth rate used to extrapolate cash flow beyond the budget period (%)	5.5	5.5	2.0	2.3



2018	Central Services Organization	Africa	Europe	Middle East and Australasia

Discount rate
– pre-tax discount rate applied to the cash flow projections (%)	17.1	17.3	9.2	13.3
Growth rate
– growth rate used to extrapolate cash flow beyond the budget period (%)	5.4	5.4	2.2	2.9

The discount rates were calculated using the capital asset pricing model. These rates reflect specific risks relating to the relevant CGUs. The growth rate has been determined based on the expected long-term inflation outlook.

Goodwill sensitivity

Given the significant headroom that exists in the CGUs, management believes that a reasonable change in assumptions would not result in any goodwill impairments.

Europe goodwill sensitivity

To determine the recoverable amount of its investment in the Europe CGU, the Group calculated future net cash flows of the CGU and discounted them to their present value using the rates as indicated above. The calculation of the CGU’s discounted net present value requires extensive use of estimates and assumptions about discount rates and budgeted cash flows. The budgeted cash flows at March 31, 2019 reflect the current market conditions for the European economy and near-term expectations. To the extent that anticipated new contracts do not materialize and the business strategy does not come to fruition, or key personnel are not retained, the forecasts could be negatively impacted.

At March 31, 2019, the date at which the impairment testing was performed, Europe CGU’s recoverable amount exceeded the carrying amount by 33.5%. A 10.7% pre-tax discount rate, or a 33.5% decrease of the projected cash flows, would reduce the headroom for the Europe CGU to nil. This analysis assumes that all other variables remain constant.

8. Capitalized commission assets



	March 31, 2019 R’000	March 31, 2018 R’000

Net book value of asset recognized from costs incurred in obtaining a contract	54,066	*

Amortization recognized during the year	30,477	*
– Cost of sales	20,885	*
– Sales and marketing	9,592	*



Notes to the consolidated financial statements


for the year ended March 31, 2019

* Due to the transition method chosen by the Group in applying IFRS 15, comparative information has not been restated to reflect the new requirements. Refer to note 2.1.1.1.

Amortization expense of external commissions capitalized is recognized in cost of sales, while that of internal commissions is recognized in sales and marketing costs. Commission not capitalized under the 12-month practical expedient is also classified in the same manner. This is consistent with the income statement presentation of the commission expense for fiscal 2018.

9. Inventory

During the current year an amount of R4.1 million (2018: R9.3 million) was recognized as a charge in cost of sales as a result of the write-down of inventory to net realizable value (notes 24 and 32.2).

10. Trade and other receivables



	March 31, 2019 R’000		March 31, 2018 R’000

Trade receivables	344,551		248,878
Contract asset related to fixed escalations	207		—
Sundry debtors	43,189		27,811
Less: Provision for impairment	(43,768	)	(17,523	)
Trade and other receivables – net	344,179		259,166
Pre-payments	32,296		27,240
	376,475		286,406

The ageing of trade and other receivables (excluding pre-payments) at the reporting date is as follows:



	Gross R’000	Provision for impairment R’000		Net R'000

2019
Not past due	223,979	(5,425	)	218,554
Past due by 1 to 30 days	71,552	(1,898	)	69,654
Past due by 31 to 60 days	26,547	(1,069	)	25,478
Past due by more than 60 days	65,869	(35,376	)	30,493
Total	387,947	(43,768	)	344,179



	Gross R’000	Provision for impairment R’000		Net R'000

2018
Not past due	173,157	(334	)	172,823
Past due by 1 to 30 days	51,844	(2,518	)	49,326
Past due by 31 to 60 days	24,763	(3,732	)	21,031
Past due by more than 60 days	26,925	(10,939	)	15,986
Total	276,689	(17,523	)	259,166



Notes to the consolidated financial statements


for the year ended March 31, 2019

The carrying amounts of trade and other receivables are denominated in the following currencies:



	March 31, 2019 R’000	March 31, 2018 R’000

South African Rand	138,042	98,148
Australian Dollar	22,987	24,016
Brazilian Real	25,051	19,129
Euro	29,699	28,192
Great Britain Pound	16,301	18,883
Ugandan Shilling	4,659	3,515
United Arab Emirates Dirham	2,090	2,578
United States Dollar	133,166	91,105
Other	4,480	840
	376,475	286,406

Movements in the Group’s provision for impairment of trade and other receivables are as follows:



	March 31, 2019 R’000		March 31, 2018 R’000

Opening balance	(17,523	)	(13,346	)
Adjustment on initial application of IFRS 9	(3,171	)	*
Opening balance – restated	(20,694	)	*
Increase in provision for impairment (note 32.2)	(29,725	)	(24,143	)
Amount written off during the year as irrecoverable**	7,861		19,354
Foreign currency translation differences	(1,210	)	612
Closing balance	(43,768	)	(17,523	)

* Comparatives have not been restated under IFRS 9. Refer to note 2.1.1.1.

** Amounts written off are not subject to enforcement activity.

From April 1, 2018 the Group measures the provision for impairment of trade and other receivables at an amount equal to lifetime expected credit losses as a result of IFRS 9. The initial application resulted in an increase of the provision at March 31, 2018 of R3.2 million, which was recognized against opening retained income. Prior to April 1, 2018, the provision for impairment was determined on an incurred loss basis. A loss was considered to have been incurred when there was objective evidence of impairment as a result of one or more loss events that had incurred.

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is default) and the exposure at default. The assessment of the probability given default and loss given default is based on historical data adjusted by relevant forward-looking information. The exposure at default is represented by the asset’s gross carrying amount at the reporting date.

The Group considers that default has occurred when a receivable is more than 90 days past due or information determined internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full.

Amounts provided for are generally written off when there is no expectation of recovering the amount, in accordance with the Group’s write-off policy.

Overview of the Group’s exposure to credit risk

The maximum exposure to credit risk at the reporting date is the carrying value of each receivable, net of impairment losses where relevant. Other than 16% of the gross receivable balance (excluding pre-payments) relating to four debtors at the end



Notes to the consolidated financial statements


for the year ended March 31, 2019

of fiscal 2019 (2018: 11% of the gross receivable balance (excluding pre-payments) relating to two debtors), the Group has no significant concentration of credit risk, due to its spread of customers across various operations and geographical locations. The Group does not hold any collateral as security.

Trade receivables of R26.2 million (2018: R17.9 million) are pledged as security for the Group’s overdraft facilities (notes 12 and 15).

Credit risk management

The Group minimizes credit risk by only dealing with creditworthy counterparties and performing adequate credit checks upon accepting new customers and determining credit limits. Credit approvals and other monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts. Furthermore, the Group reviews the recoverable amount of trade and other receivables individually, or for appropriate groupings of customers based on their credit characteristics, at the end of the reporting period to ensure that adequate provision is made for irrecoverable amounts. In this regard, the directors consider that the Group’s credit risk is significantly reduced.

11. Restricted cash



	March 31, 2019 R’000	March 31, 2018 R’000

Cash securing guarantee issued in terms of the Mobile Telephone Networks Proprietary Limited incentive agreement (denominated in South African Rand)	1,000	1,000
Cash securing guarantees issued in respect of lease agreements entered into (denominated in South African Rand)	393	393
Tax refund received erroneously (denominated in South African Rand)	7,188	7,188
Cash securing guarantees issued in respect of products sold by MiX Telematics Europe Limited (denominated in Euro)	1,276	1,447
Cash securing guarantees issued in respect of MiX Telematics Middle East FZE relating to employee visas in the UAE (denominated in UAE Dirham)	2,296	3,616
Cash held for purposes of distribution to MiX Telematics Enterprise BEE Trust and MiX Telematics Fleet Support Trust beneficiaries (denominated in South African Rand)	7,240	6,257
Cash securing guarantees issued in respect of property lease agreements entered into by MiX Telematics Australasia (denominated in Australian Dollar)	794	1,034
	20,187	20,935

12. Net cash and cash equivalents

Net cash and cash equivalents included in the statement of cash flow comprise the following amounts which are included in the statement of financial position:



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Cash and cash equivalents	383,443		308,258		375,782
Bank overdraft (note 15)	(30,262	)	(17,720	)	(19,449	)
	353,181		290,538		356,333



Notes to the consolidated financial statements


for the year ended March 31, 2019

The credit quality of cash and cash equivalents that are not impaired can be assessed by reference to external credit ratings, based on the Fitch rating scales, as follows:



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Cash and cash equivalents
AA	138,700	110,854	197,873
A	98,339	82,738	78,605
BBB	38,383	33,962	99,304
BB	98,027	80,704	—
B	9,994	—	—
	383,443	308,258	375,782

The carrying amounts of net cash and cash equivalents are denominated in the following currencies:



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Great Britain Pound	43,866	37,209	48,540
Brazilian Real	9,995	3,787	2,987
South African Rand	208,144	171,223	100,721
Australian Dollar	21,898	22,912	19,574
United States Dollar	65,226	48,354	178,768
Euro	1,233	4,300	4,649
Other	2,819	2,753	1,094
	353,181	290,538	356,333

13. Stated capital



	Number of shares 000s		Stated capital R’000


At April 1, 2017	563,435		854,345
Shares issued in relation to share options and share appreciation rights exercised	6,001		10,726
Share repurchase under the Share Repurchase Program	(5,016	)	(18,666	)
Balance at March 31, 2018	564,420		846,405
Shares issued in relation to share options and share appreciation rights exercised	6,685		13,776
Share repurchase under the Share Repurchase Program	(9,158	)	(73,548	)

Balance at March 31, 2019	561,947		786,633

The total authorized number of ordinary shares at the end of the financial year amounted to 1 billion shares (2018: 1 billion) with no par value. All issued shares are fully paid up and carry one vote per share and the right to dividends. There were no changes to the authorized number of ordinary shares during the current or prior financial year.

In terms of a special resolution approved in fiscal 2014 a new class of no par value shares, consisting of 100 million preference shares, was created. No preference shares have been issued to date.

MiX Investments, a wholly owned subsidiary of the Company, holds 40,000,000 of the Company’s ordinary shares of no par value, which were acquired under an approved general share repurchase program during fiscal 2016. These shares were



Notes to the consolidated financial statements


for the year ended March 31, 2019

held as treasury shares by the Group at the end of the current and prior financial years.

Share repurchases

On May 23, 2017, the MiX Telematics Board of Directors approved a share repurchase program of up to R270 million under which the Company may repurchase its ordinary shares, including American Depositary Shares (“ADSs”). The Company may repurchase its shares from time to time at its discretion through open market transactions and block trades, based on ongoing assessments of the capital needs of the Company, the market price of its securities and general market conditions. This share repurchase program may be discontinued at any time by the Board of Directors, and the Company has no obligation to repurchase any amount of its securities under the program. The repurchase program will be funded out of existing cash resources.

Fiscal 2018 purchase

During fiscal 2018 the following purchases had been made under the share repurchase program:



	Total number of shares repurchased	Average price paid per share ⁽¹⁾ R	Shares canceled under the share repurchase program	Total value of shares purchased as part of publicly announced program R’000	Maximum value of shares that may yet be purchased under the program R’000

June 2017	5,015,660	3.72	5,015,660	18,666	251,334
	5,015,660		5,015,660	18,666	251,334

⁽¹⁾ Including transaction costs.

Subsequent to the repurchase, the shares were delisted and now form part of the authorized unissued share capital of the Company.

Fiscal 2019 purchase

During fiscal 2019 the following purchases had been made under the share repurchase program:



	Total number of shares repurchased	Average price paid per share ⁽¹⁾ R	Shares canceled under the share repurchase program	Total value of shares purchased as part of publicly announced program R’000	Maximum value of shares that may yet be purchased under the program R’000

October 2018	9,157,695	8.03	9,157,695	73,548	177,786
	9,157,695		9,157,695	73,548	177,786

⁽¹⁾ Including transaction costs.

Subsequent to the repurchase, the shares were delisted and now form part of the authorized unissued share capital of the Company.

Fiscal 2017 specific share repurchase from related party

Fiscal 2017

On April 29, 2016, the Company entered into an agreement (the “share repurchase agreement”) with Imperial Holdings Limited (“Imperial Holdings”) and Imperial Corporate Services Proprietary Limited (“Imperial Corporate Services”), a wholly owned subsidiary of Imperial Holdings, to repurchase all 200,828,260 of the Company’s shares held by Imperial Corporate Services (the “repurchase shares”) at R2.36 per repurchase share, for an aggregate repurchase consideration of R474.0 million (the “repurchase”). At the general meeting held on August 1, 2016, shareholders of the Company approved



Notes to the consolidated financial statements


for the year ended March 31, 2019

the repurchase in terms of the JSE Listings Requirements and the South African Companies Act, No. 71 of 2008, at which point the transaction was accounted for in terms of IFRS. The repurchase was implemented on August 29, 2016. Subsequent to the repurchase, the shares were delisted and now form part of the authorized unissued share capital of the Company.

In fiscal 2017, the financial effect of the transaction was as follows:



	R’000

Aggregate repurchase consideration	473,955
Impact of discounting related to the fiscal 2017 share repurchase transaction (note 25)	(3,222	)
Transaction costs capitalized	2,949
Total share repurchase costs	473,682

Equity incentive plans

The Group has issued share incentives under two equity incentive plans, the TeliMatrix Group Executive Incentive Scheme and the MiX Telematics Long-Term Incentive Plan (“LTIP”), to directors and certain key employees within the Group. With the introduction of the LTIP, which was approved by shareholders in terms of an ordinary resolution during 2014, no further awards will be made in terms of the TeliMatrix Group Limited Executive Incentive Scheme going forward.

The LTIP is now being used to issue share incentives to employees and executive members within the Group. The LTIP provides for three types of grants to be issued, namely performance shares, retention shares or share appreciation rights (“SARs”). To date only SARs and performance shares have been issued.

The table below indicates the total number of awards under the LTIP which are available for issue:



	Number of awards

Reconciliation of number of awards available for issue under the LTIP
Maximum number of awards that may be issued during the life of the LTIP	120,000,000
Issued in fiscal 2015	(2,900,000	)
Number of awards available for issue as at March 31, 2015	117,100,000
Issued in fiscal 2016	(11,835,000	)
Number of awards available for issue as at March 31, 2016	105,265,000
Issued in fiscal 2017	(13,950,000	)
Number of awards available for issue as at March 31, 2017	91,315,000
Issued in fiscal 2018	(10,000,000	)
Number of awards available for issue as at March 31, 2018	81,315,000
Issued in fiscal 2019	(5,500,000	)
Number of awards available for issue as at March 31, 2019	75,815,000

Both equity incentive plans are discussed in further detail in the sections that follow.

Refer to note 24 for the total expense recognized in fiscal year 2019 in respect of equity-settled instruments granted to employees and directors.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Share options under the TeliMatrix Group Executive Incentive Scheme

Share options have been granted to directors and certain key employees within the Group. The exercise price of the options granted is equal to the weighted average market value of ordinary shares for the 20 days preceding the date of the grant. The options vest in tranches of 25% per annum, commencing on the second anniversary of the grant date and expire 6 years after the grant date. In addition to these vesting periods, the vesting of the share options granted are conditional on certain performance conditions being met, namely the share price on the associated measurement date being in excess of the target, after being reduced by the aggregate amount of dividends paid, or an annual total shareholder return in excess of 10%, taking into account any dividends paid during the vesting period, being achieved. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movements in the total number of share options outstanding and their related weighted average exercise prices are as follows:



	Weighted average exercise price 2019 cents per share	Number of options 2019 000s		Weighted average exercise price 2018 cents per share	Number of options 2018 000s

Outstanding at the beginning of the year	309	9,100		266	14,613
Exercised	246	(5,600	)	195	(5,513	)
Forfeited	—	—		—	—
Expired	—	—		—	—
Outstanding at the end of the year	411	3,500		309	9,100
Exercisable at the end of the year	411	2,625		285	7,350

The weighted average remaining contractual life on share options outstanding at year-end is 1.45 years (2018: 1.31 years).

Options exercised in fiscal 2019 resulted in 5,600,000 shares (2018: 5,512,500 shares) being issued at a weighted average exercise price of 246 cents per share (2018: 195 cents per share). The related weighted average share price at the time of exercise was 922 cents per share (2018: 608 cents per share).

Share options outstanding at the end of the fiscal year have the following exercise prices:



					March 31, 2019 000s	March 31, 2018 000s

Annual shareholder return	Grant date	Expiry date	Exercise price
10%	November 7, 2012	November 7, 2018	246	cents	—	5,600
10%	September 10, 2014	September 10, 2020	411	cents	3,500	3,500
					3,500	9,100

No share options were granted during fiscal 2019 or fiscal 2018 under this scheme.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Group executives held the following share options outstanding at March 31, 2019 (summarized by grant date):



	September 10, 2014 000s		Total 000s
C Tasker⁽¹⁾	1,500		1,500
G Pretorius	1,000		1,000
C Lewis	1,000		1,000
	3,500		3,500
Option strike price (cents per share)	411
JSE share price on grant date (cents per share)	411
Expiry date	September 10, 2020
Performance condition
Minimum shareholder return of	10	%

⁽¹⁾Executive director at March 31, 2019.

No options were held by retired executives as at March 31, 2019.

Group executives held the following share options outstanding at March 31, 2018 (summarized by grant date):



	November 7, 2012 000s		September 10, 2014 000s		Total 000s
S Joselowitz⁽¹⁾	2,500		—		2,500
C Tasker⁽¹⁾	2,000		1,500		3,500
G Pretorius	1,100		1,000		2,100
C Lewis	—		1,000		1,000
	5,600		3,500		9,100
Option strike price (cents per share)	246		411
JSE share price on grant date (cents per share)	300		411
Expiry date	November 7, 2018		September 10, 2020
Performance condition
Minimum shareholder return of	10	%	10	%

⁽¹⁾Executive director at March 31, 2018.

No options were held by retired executives as at March 31, 2018.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The following share options were exercised by Group executives during fiscal 2019:



	Date of exercise	Options exercised	Grant date	Strike price (cents per share)	Performance condition (R share price or % minimum shareholder return)		Exercise date share price (cents per share)

S Joselowitz	August 21, 2018	2,500,000	November 7, 2012	246	10	%	910
C Tasker	September 11, 2018	2,000,000	November 7, 2012	246	10	%	907
G Pretorius	November 6, 2018	1,100,000	November 7, 2012	246	10	%	1,030

The following share options were exercised by Group executives during fiscal 2018:



	Date of exercise	Options exercised	Grant date	Strike price (cents per share)	Performance condition (R share price or % minimum shareholder return)		Exercise date share price (cents per share)

C Tasker	November 29, 2017	2,000,000	January 3, 2012	154	10	%	628
G Pretorius	August 8, 2017	400,000	November 07, 2012	246	10	%	451
G Pretorius	November 22, 2017	750,000	January 3, 2012	154	10	%	648
C Lewis	March 2, 2018	1,500,000	November 07, 2012	246	10	%	600

Share appreciation rights

Under the LTIP, SARs may be issued to certain directors and key employees. The award price of the SARs granted is equal to the closing market value of ordinary shares on the day preceding the date of the grant. The SARs granted vest in tranches of 25% per annum, commencing on the second anniversary of the grant date and expire six years after the grant date. In addition to these vesting periods, the vesting of the SARs granted are conditional on a performance condition of an annual total shareholder return in excess of 10%, taking into account any dividends paid during the vesting period, being achieved.

Upon exercise of the SARs by participants, the Group will settle the value of the difference between the closing market value of ordinary shares on the day of settlement and the award price (if positive) by delivering shares, alternatively as a fall back provision only, by settling the value in cash.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Movements in the total number of SARs outstanding and their related weighted average award prices are as follows:



	Weighted average award price 2019 cents per share	Number of SARSs 2019 000s		Weighted average award price 2018 cents per share	Number of SARs 2018 000s

Outstanding at the beginning of the year	322	28,039		309	20,810
Granted on May 25, 2018	964	500		—	—
Granted on December 14, 2018	965	1,000		—	—
Granted on May 30, 2017	—	—		346	10,000
Exercised	306	(1,593	)	310	(1,709	)
Forfeited	320	(2,025	)	314	(1,062	)
Outstanding at the end of the year	360	25,921		322	28,039
Exercisable at the end of the year	312	4,419		313	1,306

The weighted average remaining contractual life on SARs outstanding at year-end is 3.55 years (2018: 4.38 years).

SARs exercised in fiscal 2019 resulted in 1,593,125 awards (2018: 1,708,750) being issued at a weighted average exercise price of 306 cents per award (2018: 310). The related weighted average share price at the time of exercise was 968 cents per award (2018: 464).

No SARs were exercised by Group executives during fiscal 2019 and fiscal 2018.

SARs outstanding at the end of the fiscal year have the following award prices:



				March 31, 2019 000s	March 31, 2018 000s

Annual shareholder return	Grant date	Expiry date	Award price
10%	August 31, 2015	August 31, 2021	313	6,090	7,764
10%	May 30, 2016	May 30, 2022	294	5,369	6,525
10%	November 24, 2016	November 24, 2022	328	4,000	4,000
10%	May 30, 2017	May 30, 2023	346	8,962	9,750
10%	May 25, 2018	May 25, 2024	964	500	—
10%	December 14, 2018	December 14, 2024	965	1,000	—
				25,921	28,039

The weighted average grant date fair value of SARs granted during fiscal 2019 and fiscal 2018 was determined using a combination of the Monte Carlo Simulation option pricing model and the Binomial Tree option pricing model. The key drivers and assumptions input into the valuation models used to determine these values are disclosed below.

The volatility was calculated using a mixture of the Company's historical data as well as the share data of comparable companies for grants made in all financial years preceding 2019 and the Company's historical share data for grants made in the current year.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Group executives held the following SARs outstanding at March 31, 2019 (summarized by grant date):



	August 31, 2015 000s		May 30, 2016 000s		November 24, 2016 000s		May 30, 2017 000s		Total 000s
S Joselowitz⁽¹⁾	1,000		1,000		—		1,100		3,100
C Tasker⁽¹⁾	750		750		875		1,100		3,475
P Dell⁽¹⁾	200		200		875		1,100		2,375
G Pretorius	500		500		875		1,100		2,975
C Lewis	500		500		875		1,100		2,975
	2,950		2,950		3,500		5,500		14,900

JSE share price on grant date (cents per share)	319		289		328		345
Expiry date	August 31, 2021		May 30, 2022		November 24, 2022		May 30, 2023
Performance condition
Minimum shareholder return of	10	%	10	%	10	%	10	%

⁽¹⁾Executive director at March 31, 2019.

Group executives held the following SARs outstanding at March 31, 2018 (summarized by grant date):



	August 31, 2015 000s		May 30, 2016 000s		November 24, 2016 000s		May 30, 2017 000s		Total 000s
S Joselowitz⁽¹⁾	1,000		1,000		—		1,100		3,100
C Tasker⁽¹⁾	750		750		875		1,100		3,475
P Dell⁽¹⁾	200		200		875		1,100		2,375
G Pretorius	500		500		875		1,100		2,975
C Lewis	500		500		875		1,100		2,975
	2,950		2,950		3,500		5,500		14,900

JSE share price on grant date (cents per share)	319		289		328		345
Expiry date	August 31, 2021		May 30, 2022		November 24, 2022		May 30, 2023
Performance condition
Minimum shareholder return of	10	%	10	%	10	%	10	%

⁽¹⁾Executive director at March 31, 2018.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The salient details of SARs granted during fiscal 2019 are provided in the table below:



	Total shareholder return	Total shareholder return

Grant date	December 14, 2018	May 25, 2018
Grant date fair value (cents per share)	399.5	434.8
Award price (cents per share)	965	964
JSE share price on grant date (cents per share)	922	989
Expiry date	December 14, 2024	May 25, 2024
Performance conditions
– Total shareholder return of (%)	10.0	10.0
Remaining contractual life at March 31, 2019	5.71	5.16

Valuation assumptions and drivers
Volatility (%)	41.0	41.0
Anticipated forfeiture rate (%)	5.0	5.0
Anticipated dividend yield (%)	1.55	1.45
Annual risk-free interest rate (%)	7.52	7.05

The salient details of SARs granted during fiscal 2018 are provided in the table below:



				Total shareholder return

Grant date				May 30, 2017
Grant date fair value (cents per share)				128.4
Award price (cents per share)				346
JSE share price on grant date (cents per share)				345
Expiry date				May 30, 2023
Performance conditions
– Total shareholder return of (%)				10.0
Remaining contractual life at March 31, 2018				5.17

Valuation assumptions and drivers
Volatility (%)				41.5
Anticipated forfeiture rate (%)				5.0
Anticipated dividend yield (%)				3.84
Annual risk-free interest rate (%)				7.51

Performance shares

Under the LTIP, performance shares may be issued to certain directors and key employees. The performance shares granted vest immediately once the service and performance conditions have been met. Settlement takes place by delivering ordinary shares equal to the number of performance shares that have vested, alternatively as a fall back provision only, by settling the value in cash.



Notes to the consolidated financial statements


for the year ended March 31, 2019

During fiscal 2019, the MiX Telematics Board of Directors authorized a supplemental performance share award under the LTIP. In terms of this award the Board has designated 8,000,000 ordinary shares, to be awarded to eligible employees if the Group achieves both of the following constant currency targets at March 31, 2020:


•	Cumulative subscription revenue for the 2019 and 2020 fiscal years of R3,588 million; and


•	Cumulative Adjusted EBITDA for the 2019 and 2020 fiscal years of R1,322 million.

The targets have been derived using an average forecast exchange rate of R13.8000 per $1.00.

Half of this supplemental equity grant of 4,000,000 ordinary shares, was made during November 2018. No commitments have been made towards potential individual participants in the second grant that may be made. As a result, only the first grant is being accounted for at this stage.

The scheme rules allow for a maximum of 5,000,000 performance shares to be granted in any financial year and for a maximum of 30,000,000 performance shares to be granted in aggregate over the life of the plan.

Movements in the total number of performance shares outstanding are as follows:



	Number of performance shares 2019 000s

Outstanding at the beginning of the year	—
Granted on November 05, 2018	4,000
Forfeited	(200	)
Outstanding at the end of the year	3,800
Exercisable at the end of the year	—

The estimated weighted average remaining contractual life on performance shares outstanding at year-end is 1.31 years, which is based on an expected vesting date of June 14, 2020.

The grant date fair value of performance shares granted during fiscal 2019 was R5.87 per share. The fair value was determined by deducting the present value of expected dividends to be paid per share prior to vesting from the closing market price of the MiX Limited shares on grant date of R10.00. Since the period related to the performance targets commenced substantially before the service period (which commenced only on grant date), as required by IFRS 2, management’s assessment of the probability of these targets being met was incorporated into the grant date fair value. The grant date fair value is not subsequently revised. This means that any changes in the share price as well as in management’s assessment of meeting the performance targets are not taken into account. Accordingly, should the performance targets not be met, the share-based payment expense shall continue to be recognized on a cumulative basis to the extent that the service conditions are met.

The probability of achieving the performance conditions is considered to be an area of critical accounting estimate and judgement. Refer to notes 2.20 and 4 of the Group’s accounting policies.

A 5% attrition rate due to staff departures has also been factored into the calculation of the number of performance shares expected to meet the service condition.



Notes to the consolidated financial statements


for the year ended March 31, 2019

The salient details of performance shares granted during fiscal 2019 are provided in the table below:



		Performance shares

Grant date		November 05, 2018
Grant date fair value (cents per share)		587.2
JSE share price on grant date (cents per share)		1,000
Expiry date (estimated)*		June 14, 2020
Performance conditions (R’million)
The following two constant currency targets both need to be met for the performance share awards to vest:
– Cumulative subscription revenue for fiscal years 2019 and 2020 and		3,588
– Cumulative Adjusted EBITDA for fiscal years 2019 and 2020		1,322
The targets have been derived using an average forecast exchange rate of R13.8000 per $1.00
Remaining contractual life at March 31, 2019		1.31

Valuation assumptions and drivers
Probability (%)		60.0
Anticipated forfeiture rate (%)		5.0
Anticipated present value of dividends (cents per share)		21.4

*The vesting of which will occur on the finalization and sign-off of the audited financial statements for fiscal 2020 (vesting period) and will be subject to continued employment and the satisfaction of both the performance conditions being the performance targets listed above. Management expect the fiscal 2020 audit to be concluded around June 14, 2020.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Group executives held the following performance shares at March 31, 2019 (summarized by grant date):



	November 05, 2018 000s	Total 000s
S Joselowitz⁽¹⁾	400	400
C Tasker⁽¹⁾	400	400
P Dell⁽¹⁾	200	200
G Pretorius	400	400
C Lewis	400	400
	1,800	1,800

JSE share price on grant date (cents per share)	1,000
Expiry date (estimated)	June 14, 2020
Performance condition	R'million
The following two constant currency targets both need to be met for the performance share awards to vest:
Cumulative subscription revenue for fiscal years 2019 and 2020 and	3,588
Cumulative Adjusted EBITDA for fiscal years 2019 and 2020	1,322
The targets have been derived using an average forecast exchange rate of R13.8000 per $1.00

⁽¹⁾Executive director at March 31, 2019.

The remaining 2,000,000 performance shares outstanding at March 31, 2019 are held by other key employees that are not Group executives.



Notes to the consolidated financial statements


for the year ended March 31, 2019

14. Other reserves



	March 31, 2019 R’000		March 31, 2018 R’000

Opening balance	(51,614	)	(4,370	)
Foreign currency translation*	115,744		(60,576	)
– Movement for the year – Gross	114,593		(60,339	)
– Tax effect of movement	1,151		(237	)
Share-based payments (notes 24 and 32.2)	19,082		14,833
– Transaction	12,140		9,000
– Excess tax benefit	6,942		5,833
Transaction with non-controlling interests**	—		(1,501	)
Closing balance	83,212		(51,614	)

Foreign currency translation*	157,970		42,226
Reserve on transaction with non-controlling interest**	(138,939	)	(138,939	)
Share-based payments	64,181		45,099
Closing balance	83,212		(51,614	)

* The foreign currency translation reserve mainly results from the translation of the Group’s foreign subsidiaries for

which it is considered probable that temporary differences will not reverse in the foreseeable future. Refer to note 18

for details about deferred taxes recognized for related temporary differences.

** During fiscal 2008, the Group acquired a non-controlling equity interest held by a minority shareholder in one of its

subsidiaries in exchange for a share consideration. R137.9 million (2018: R137.9 million) of the reserve represents

the difference between the consideration paid and the Group’s share in the net asset value of the subsidiary acquired

which has been recorded in equity.

The reserve on transaction with non-controlling interests included the transfer of Edge Gestao Empresarial Ltda's

(“Edge”) share of the historical losses of MiX Telematics Servicos De Tlematria E Rastremento De Veiculos Do Brazil

Limitada (“MiX Brazil”) from distributable reserves to non-controlling interests. R0.5 million, representing a reduction

of the reserve, relates to the transaction with Edge in fiscal 2015, whereby Edge increased its non-controlling interest

in MiX Brazil from 0.0025% to 5.0%. R1.5 million of the non-controlling interest relates to the acquisition of Edge’s 5%

interest in MiX Brazil by MiX Investments (Proprietary) Limited (“MiX Investments”) during fiscal 2018 (note 21).

15. Borrowings

The Group and its subsidiaries have unlimited borrowing capacity as specified in their respective Memorandums of Incorporation.

Other than bank overdrafts, no new borrowings were raised by the Group during fiscal 2019 and fiscal 2018.



	Interest rate	March 31, 2019 R’000	March 31, 2018 R’000

Undrawn borrowing facilities at floating rates include:
– Standard Bank Limited:
Overdraft	Prime less 1.2%	39,738	52,280
Vehicle and asset finance	Prime less 1.2%	8,500	8,500
– Nedbank Limited overdraft	Prime less 2%	10,000	10,000
		58,238	70,780



Notes to the consolidated financial statements


for the year ended March 31, 2019

The Standard Bank and Nedbank facilities have no fixed renewal date and are repayable on demand.

Included in the bank overdraft (note 12) is the following Standard Bank Limited facility which was secured by the following at March 31, 2019 and at March 31, 2018:

•Cross suretyships between the following Group companies:

– MiX Telematics Africa Proprietary Limited;

– MiX Telematics International Proprietary Limited; and

– MiX Telematics Limited.


•	An unrestricted cession of book debts by the following entities:

– MiX Telematics Limited; and

– MiX Telematics International Proprietary Limited.

The facility from Nedbank Limited is unsecured.

16. Trade and other payables



	March 31, 2019 R’000	March 31, 2018 R’000

Trade payables	90,770	98,094
Accruals	200,502	176,963
Revenue received in advance⁽¹⁾	88,552	66,120
Recurring commission liability	5,304	*
Value added taxes	11,280	6,646
Other	3,461	2,696
	399,869	350,519

⁽¹⁾ The impact of adopting IFRS 15 on April 1, 2018 was a R1.8 million increase in revenue received in advance due to significant financing adjustments. Refer to note 2.1.1.1. Revenue of R42.3 million was recognized during fiscal 2019 that was included in the opening balance of the revenue received in advance liability at April 1, 2018.

* Comparatives have not been restated on adoption of IFRS 15. Refer to note 2.1.1.1.

17. Retirement benefits

It is the policy of the Group to provide retirement benefits to all its South African, United Kingdom, United States, Brazilian, Romanian and Australian employees. All these retirement benefits are defined contribution plans and are held in separate trustee-administered funds. These plans are funded by members as well as company contributions. The South African plan is subject to the Pension Funds Act of 1956, the UK plan is subject to the United Kingdom Pensions Act 2008 and the



Notes to the consolidated financial statements


for the year ended March 31, 2019

Australian plan is subject to the Superannuation Guarantee Administration Act of 1992. In Brazil, the Group contributes to a mandatory state social contribution plan known as Regime Geral de Previdência Social (“RGPS”). In Romania there is a mandatory social security contribution paid to the state budget, as defined by the Pension Law (Law 263/2010) and the Fiscal Code (Law 227/2015). For the United States employees, a voluntary Internal Revenue Service section 401(k) tax-deferred defined contribution scheme is offered. The full extent of the Group’s liability, in respect of the retirement benefits offered, is the contributions made, which are charged to the income statement as they are incurred. The total Group contribution to such schemes in 2019 was R29.2 million (2018: R27.1 million, 2017: R29.4 million) (note 24).



Notes to the consolidated financial statements


for the year ended March 31, 2019

18. Deferred tax



	March 31, 2019 R’000		March 31, 2018 R’000

Deferred tax liabilities
Capital allowances for tax purposes	79,800		42,828
Intangible assets	66,442		57,084
Pre-payments	3,012		2,857
Deferred foreign currency gains	84,978		33,858
Capitalized commission assets	13,805		—
Right-of-use assets	6,940		—
Other	2,108		887
Gross deferred tax liabilities	257,085		137,514
Set-off of deferred tax balances	(118,036	)	(54,856	)
Net deferred tax liabilities	139,049		82,658
Deferred tax assets
Revenue received in advance	16,835		15,730
Capital allowances for tax purposes	27,720		30,556
Provisions, accruals and lease straight-lining	48,341		33,910
Assessable losses	43,140		5,892
Share-based payments	16,828		8,187
Deferred foreign currency losses	4,052		—
Recurring commission liability	1,078		—
Capitalized lease liability	7,592		—
Expected credit losses	1,022		—
Other	3,094		1,298
Gross deferred tax assets	169,702		95,573
Set-off of deferred tax balances	(118,036	)	(54,856	)
Net deferred tax assets	51,666		40,717
Net deferred tax liability	(87,383	)	(41,941	)

The gross movement in net deferred tax assets/(liabilities) is as follows:
Beginning of the year	(41,941	)	(71,937	)
Adjustment on initial application of IFRS 15, IFRS 16 and IFRS 9 (note 2.1.1.1)	(7,923	)	—
Foreign currency translations	1,563		(578	)
Credited to equity (note 14)	8,093		5,596
– Foreign currency translation on net investment loans	1,151		(237	)
– Share-based payment - excess tax benefit	6,942		5,833
Income statement charge (note 29)	(47,175	)	24,978
End of the year	(87,383	)	(41,941	)

Deferred foreign currency gains

Deferred foreign currency gains and losses comprise of taxable temporary differences arising on investments in subsidiaries, including intercompany loans, in respect of which deferred tax has been recognized.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Recognition of deferred tax

Deferred tax at year-end has been recognized using the following corporate tax rates:


•	South Africa 28% (2018: 28%)


•	Australia 30% (2018: 30%)


•	Brazil 34% (2018: 34%)


•	Romania 16% (2018: 16%)


•	Thailand 20% (2018: 20%)


•	Uganda 30% (2018: 30%)


•	United Arab Emirates 0% (2018: 0%)


•	United Kingdom 17% (2018: 19%)


•	United States of America 25% (2018: 27%)

Deferred tax assets are recognized for tax losses carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. The Group did not recognize deferred tax assets of R15.9 million (2018: R61.3 million) in respect of losses amounting to R67.0 million (2018: R237.3 million) at year-end. These tax losses can be carried forward indefinitely except for tax losses of R4.3 million in Thailand which expire after 5 years. During fiscal 2019 the Group raised a further net deferred tax asset of R3.6 million (2018: R0.6 million) after taking into account taxable temporary differences in respect of a portion of the tax losses available in the Europe, Americas and Brazil segments. These tax losses were incurred in prior years. Over the past years, the Europe, Americas and Brazil segments started returning to profitability resulting in a reassessment of their ability to utilize the tax losses and the recognition of a deferred tax asset for a portion thereof.

The movement in deferred tax assets and liabilities during the year, prior to taking into account the offsetting of deferred tax balances within the same tax jurisdiction, is as follows:



Notes to the consolidated financial statements


for the year ended March 31, 2019



	March 31, 2018		Adjustment on initial application of IFRS 15, IFRS 16 and IFRS 9		Charged/ (credited) to the income statement (note 29)		Charged/ (credited) directly to equity (note 14)		Foreign currency translation differences		March 31, 2019
	R’000		R’000		R’000		R’000		R’000		R’000

Deferred tax liabilities
Capital allowances for tax purposes	42,828		—		35,132		—		1,840		79,800
Intangible assets	57,084		—		9,285		—		73		66,442
Pre-payments	2,857		—		155		—		—		3,012
Deferred foreign currency gains	33,858		—		47,993		2,901		226		84,978
Capitalized commission assets	—		10,743		3,062		—		—		13,805
Right-of-use asset capitalized	—		1,165		5,775		—		—		6,940
Other	887		418		803		—		—		2,108
	137,514		12,326		102,205		2,901		2,139		257,085

Deferred tax assets
Revenue received in advance	(15,730	)	—		(1,097	)	—		(8	)	(16,835	)
Capital allowances for tax purposes	(30,556	)	—		2,905		—		(69	)	(27,720	)
Provisions, accruals and lease straight-lining	(33,910	)	—		(13,969	)	—		(462	)	(48,341	)
Assessable losses	(5,892	)	—		(34,617	)	—		(2,631	)	(43,140	)
Deferred foreign currency losses	—		—		—		(4,052	)	—		(4,052	)
Share-based payments	(8,187	)	—		(1,699	)	(6,942	)	—		(16,828	)
Recurring commission liability	—		(2,004	)	926		—		—		(1,078	)
Capitalized lease liability	—		(1,296	)	(6,296	)	—		—		(7,592	)
Expected credit losses	—		(512	)	(510	)	—		—		(1,022	)
Other	(1,298	)	(591	)	(673	)	—		(532	)	(3,094	)
	(95,573	)	(4,403	)	(55,030	)	(10,994	)	(3,702	)	(169,702	)
Net deferred tax liability	41,941		7,923		47,175		(8,093	)	(1,563	)	87,383



Notes to the consolidated financial statements


for the year ended March 31, 2019

The movement in deferred tax assets and liabilities during the prior year, prior to taking into account the offsetting of deferred tax balances within the same tax jurisdiction, is as follows:



	March 31, 2017		Charged/ (credited) to the income statement (note 29)		Charged/ (credited) directly to equity (note 14)		Foreign currency translation differences		March 31, 2018
	R’000		R’000		R’000		R’000		R’000
Deferred tax liabilities
Capital allowances for tax purposes	33,616		9,185		—		27		42,828
Intangible assets	49,807		7,279		—		(2	)	57,084
Pre-payments	2,815		68		—		(26	)	2,857
Deferred foreign currency gains	61,616		(28,318	)	237		323		33,858
Other	1,106		105		—		(324	)	887
	148,960		(11,681	)	237		(2	)	137,514
Deferred tax assets
Revenue received in advance	(14,304	)	(1,426	)	—		—		(15,730	)
Capital allowances for tax purposes	(22,107	)	(8,503	)	—		54		(30,556	)
Provisions, accruals and lease straight-lining	(28,731	)	(5,572	)	—		393		(33,910	)
Assessable losses	(10,736	)	4,713		—		131		(5,892	)
Share-based payments	—		(2,354	)	(5,833	)	—		(8,187	)
Other	(1,145	)	(155	)	—		2		(1,298	)
	(77,023	)	(13,297	)	(5,833	)	580		(95,573	)
Net deferred tax liability	71,937		(24,978	)	(5,596	)	578		41,941

19. Provisions



	March 31, 2019 R’000		March 31, 2018 R’000

Product warranties
Beginning of the year	13,785		11,538
Income statement charge	2,993		5,772
Utilized	(5,916	)	(3,452	)
Foreign currency translation differences	401		(73	)
End of the year	11,263		13,785
Non-current portion	(291	)	(516	)
Current portion	10,972		13,269

The Group provides warranties on certain products and undertakes to repair or replace items that fail to perform satisfactorily. Management estimates the related provision for future warranty claims based on historical warranty claim information, the product lifetime, as well as recent trends that might suggest that past cost information may differ from future claims.



Notes to the consolidated financial statements


for the year ended March 31, 2019



	March 31, 2019 R’000		March 31, 2018 R’000

Maintenance provision
Beginning of the year	4,429		3,511
Income statement charge	20,098		13,695
Utilized	(17,923	)	(12,604	)
Foreign currency translation differences	311		(173	)
End of the year	6,915		4,429
Non-current portion	—		—
Current portion	6,915		4,429

The Group provides for maintenance required related to ongoing contracts when the obligation to repair occurs. Management estimates the related provision for maintenance costs per unit based on the estimated costs expected to be incurred to repair the respective units.



	March 31, 2019 R’000		March 31, 2018 R’000

Decommissioning provision
Beginning of the year	1,616		1,424
Finance costs (note 26)	44		213
Foreign currency translation differences	275		(21	)
End of the year	1,935		1,616
Non-current portion	(1,935	)	(1,616	)
Current portion	—		—

The Group provides for the anticipated present value of costs associated with the restoration of leasehold property to its condition at inception of the lease, including the removal of items included in plant and equipment that is erected on leased land. The final cash outflow of these costs is not expected to occur in the next 12 months.



	March 31, 2019 R’000		March 31, 2018 R’000

Restructuring provision
Beginning of the year	24		11,465
Income statement charge/(reversal) (note 24)	3,034		(741	)
Utilized	(2,278	)	(10,653	)
Foreign currency translation differences	4		(47	)
End of the year	784		24
Non-current portion	—		—
Current portion	784		24



Notes to the consolidated financial statements


for the year ended March 31, 2019

Restructuring costs

2019

R3.0 million provision was raised in respect of restructuring plans implemented during fiscal 2019. R1.9 million was raised in the Middle East and Australasia segment and R1.1 million in the Africa segment. R2.3 million of the restructuring provision was utilized in respect of these restructuring plans during fiscal 2019.The remaining restructuring provision is expected to be utilized by the third quarter of fiscal 2020.

2018

R10.7 million of the restructuring provision was utilized in respect of the restructuring plans implemented during fiscal 2017 by the Europe and Middle East and Australasia segments. The total cost of the restructuring plans was expected to approximate R15.0 million. These costs consisted of estimated staff costs in respect of affected employees. R0.7 million was released during fiscal 2018. The remaining restructuring provision was expected to be utilized within the first quarter of fiscal 2019.



	March 31, 2019 R’000		March 31, 2018 R’000

Other provisions
Beginning of the year	2,561		2,673
Income statement charge	227		224
Utilized	—		—
Foreign currency translation differences	590		(336	)
End of the year	3,378		2,561
Non-current portion	—		—
Current portion	3,378	—	2,561

Other provisions

The provision in fiscal 2018 relates to taxation matters which may not be resolved in a manner that is favorable to the Group. The Group has raised provisions in respect of these matters based on estimates and the probability of an outflow of economic benefits and this should not be construed as an admission of legal liability.



	March 31, 2019 R’000		March 31, 2018 R’000

Total provisions
Product warranties	11,263		13,785
Maintenance provision	6,915		4,429
Decommissioning provision	1,935		1,616
Restructuring provision	784		24
Other provisions	3,378		2,561
Total provision	24,275		22,415
Non-current portion	(2,226	)	(2,132	)
Current provision	22,049		20,283



Notes to the consolidated financial statements


for the year ended March 31, 2019

20. Capitalized lease liability

The present value of the capitalized lease liability was determined by discounting the lease payments at the interest rate implicit in the lease or, if that rate cannot be readily determined, the lessee’s incremental borrowing rate. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities is 6.6%. For the reconciliation between operating lease commitments at March 31, 2018 and the capitalized lease liability recognized on initial application of IFRS 16, refer to note 35.

On adoption of IFRS 16, the Group has elected to apply the practical expedient that allows for all leases with a lease term ending within 12 months of initial application, i.e. by March 31, 2019, to be measured by straight-lining the payments associated with those leases over the lease term. The Group also used hindsight in determining the lease term for leases that include options to extend the lease term.

Refer to note 24 for the expense incurred during the year for short-term leases and leases of low value assets.



	March 31, 2019 R’000		March 31, 2018 R’000

Current	10,745		*
Non-current	31,183		*
Total capitalized lease liability	41,928		*

Reconciliation of total capitalized lease liability
Opening finance lease liability	—		*
Adjustment on initial application of IFRS 16	32,104		*
Finance costs (note 26)	2,214		*
Additions	15,116		*
Capital repayments	(11,435	)	*
Interest repayments	(2,053	)	*
Foreign currency translation differences	5,982		*
Total capitalized lease liability	41,928		*

* The Group has applied the ‘simplified approach’ on adoption of IFRS 16 that includes certain relief related to the measurement of the right-of-use asset and the lease liability at April 1, 2018, rather than full retrospective application. Furthermore, the ‘simplified approach’ does not require a restatement of comparatives. Refer to note 2.1.1.1.

The total cash outflow relating to capitalized leases for the year amounts to R13.5 million. For the Maturity analysis of the undiscounted contractual cash flows, refer to note 38.



Notes to the consolidated financial statements


for the year ended March 31, 2019

21. Share-based payment liability



	March 31, 2019 R’000	March 31, 2018 R’000

Movement in share-based payment liability for the year
Opening balance	—	—
Share-based payment expense recognized during the year	—	1,352
Payment made in settlement of the share-based payment liability	—	(1,353	)
Foreign currency translation differences	—	1
Closing balance	—	—

MiX Brazil

In June 2014, the Group entered into a quotaholders agreement with Edge, whereby Edge was granted a 5% holding in the equity interest of MiX Brazil. Prior to this quotaholders agreement Edge held a non-controlling interest in MiX Brazil of 0.0025%. Edge is a Brazilian-based investment company controlled by Luiz Munhoz, the Managing Director of MiX Brazil. The increase in the equity interests granted to Edge was in respect of services provided by Luiz Munhoz to MiX Brazil, in his role as Managing Director of MiX Brazil. In terms of the quotaholders agreement, Edge had an option to transfer its interest in MiX Brazil back to the Group at fair value. The quotaholders agreement with Edge represented a cash-settled share-based payment.

In September 2017, Edge exercised the put option in the quotaholders agreement. In terms of the subsequent sale agreement MiX Investments (Proprietary) Limited acquired Edge’s 5% equity interest in MiX Brazil for R1.4 million which increased the Group's interest in MiX Brazil to 100% during fiscal 2018. As a result during fiscal 2018, the Group recognized a cash-settled share-based payment expense and liability of R1.4 million, which was subsequently settled. The non-controlling interest related to MiX Brazil of R1.5 million was also transferred to other reserves within equity during fiscal 2018 (note 14).

22. Revenue



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Subscription revenue	1,693,245	1,434,615	1,239,914
Hardware revenue	241,837	227,752	222,315
Driver training, installation and other revenue	40,781	50,115	77,829
	1,975,863	1,712,482	1,540,058

The impact of adopting IFRS 15 on the Group's revenue from contracts with customers is described in note 2.1.1.1. Due to the transition method chosen by the Group in applying IFRS 15, comparative information has not been restated to reflect the new requirements. The impact of adopting IFRS 15 on the Group's revenue for fiscal 2019 was not material, therefore a reconciliation between the Group's revenue for fiscal 2019 under IAS 18 and IFRS 15 is not disclosed.

Refer to notes 8, 10 and 16 for contract balances from contracts with customers.



Notes to the consolidated financial statements


for the year ended March 31, 2019

23. Other income/(expenses) – net



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Insurance reimbursement relating to operating costs	—	2,500	—
Profit/(loss) on disposal of property, plant and equipment and intangible assets (note 32.2)	586	1,264	(262	)
Other	423	482	688
	1,009	4,246	426

24. Operating profit



	March 31, 2019 R’000	March 31, 2018 R’000		March 31, 2017 R’000

Operating profit is stated after accounting for the following charges:
Amortization (notes 7 and 32.2)	64,877	63,926		44,734
Depreciation (notes 6 and 32.2)	183,478	151,945		98,508
Amortization of capitalized commission assets (notes 8 and 32.2)	30,477	—		—
Impairment of intangible assets (notes 7 and 32.2)	930	2,687		3,166
Impairment/(reversal of impairment) of property, plant and equipment (notes 6 and 32.2)	—	9		(791	)
Restructuring costs (note 19)	3,034	(741	)	14,561
Write-down of inventory to net realizable value (notes 9 and 32.2)	4,112	9,294		9,967
Research expenditure	685	1,624		2,398
Professional fees	36,686	32,689		22,358
Lease expenses	12,863	24,622		24,690
– Operating lease charges – premises, vehicles and equipment under IAS 17	*	24,622		24,690
– Expenses relating to short-term leases under IFRS 16	12,659	*		*
– Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets under IFRS 16	204	*		*
Staff costs	625,958	601,656		587,474
– Salaries, wages and other costs	584,648	564,207		554,793
– Pension costs (note 17)	29,170	27,097		29,370
– Equity-settled share-based payments (notes 14 and 32.2)	12,140	9,000		2,247
– Cash-settled share-based payments (note 20)	—	1,352		1,064

Number of employees at the end of the year	1,078	1,054		1,056

* The Group’s leases that were accounted for under IAS 17 in fiscal 2018 have been accounted for under IFRS 16 in fiscal 2019. Comparatives have not been restated under IFRS 16. Refer to note 2.1.1.1.

25. Finance income



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Current accounts and short-term bank deposits	10,274	8,508	14,052
Finance lease receivable income	—	3	20
Tax authorities	999	303	—
Other	630	137	520
	11,903	8,951	14,592

Net foreign exchange gains	383	—	1,476

	12,286	8,951	16,068



Notes to the consolidated financial statements


for the year ended March 31, 2019

26. Finance costs



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Overdraft	(2,723	)	(2,324	)	(2,259	)
Impact of discounting related to the fiscal 2017 share repurchase transaction (note 13)	—		—		(3,222	)
Other long-term loans	—		—		(50	)
Decommissioning provision (note 19)	(44	)	(213	)	—
Capitalized lease liability (note 20)	(2,214	)	*		*
Significant financing activity **	(4,920	)	*		*
Recurring commission liability	(802	)	*		*
Other	(197	)	(1,410	)	(146	)
	(10,900	)	(3,947	)	(5,677	)

Net foreign exchange losses	—		(5,073	)	—

	(10,900	)	(9,020	)	(5,677	)

* Comparatives have not been restated on adoption of IFRS 15 and IFRS 16. Refer to note 2.1.1.1.

** The liability relating to the significant financing activity is included in revenue received in advance in note 16.

27. Auditors’ remuneration



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Auditors’ remuneration	11,259	12,076	8,821

In fiscal 2019, auditors’ remuneration includes R0.3 million (2018: R2.2 million) in respect of fees paid to PricewaterhouseCoopers Inc. (the previous auditors of the Group) and the balance relates to Deloitte & Touche.



Notes to the consolidated financial statements


for the year ended March 31, 2019

28. Directors’ and executive committee emoluments



Group	Directors’ fees R’000	Salary and allowances R’000		Other benefits R’000		Retirement fund R’000		Performance bonuses⁽¹⁾R’000		12 months R’000

2019
Non-executive directors
R Bruyns⁽²⁾	900	—		—		—		—		900
F Futwa^(2),(3)	371	—		—		—		—		371
R Frew⁽²⁾	760	—		—		—		—		760
E Banda⁽⁴⁾	130	—		—		—		—		130
A Welton	625	—		—		—		—		625
I Jacobs	400	—		—		—		—		400
F Roji-Maplanka	600	—		—		—		—		600
	3,786	—		—		—		—		3,786
Value added tax⁽²⁾	305	—		—		—		—		305
Executive committee⁽⁵⁾
S Joselowitz⁽⁶⁾	—	7,383		—		—		9,276		16,659
C Tasker⁽⁶⁾	—	5,820		—		—		7,097		12,917
P Dell⁽⁶⁾	—	1,950		180		77		2,774		4,981
G Pretorius	—	2,843		281		481		3,280		6,885
C Lewis	—	2,808		67		117		2,786		5,778
	4,091	20,804		528		675		25,213		51,311

2018
Non-executive directors
R Bruyns⁽²⁾	773	—		—		—		—		773
C Ewing^(2),(7)	348	—		—		—		—		348
R Frew⁽²⁾	746	—		—		—		—		746
E Banda	486	—		—		—		—		486
A Welton	614	—		—		—		—		614
I Jacobs	386	—		—		—		—		386
F Roji-Maplanka⁽⁸⁾	292	—		—		—		—		292
	3,645	—		—		—		—		3,645
Value added tax⁽²⁾	266	—		—		—		—		266
Executive committee⁽⁵⁾
S Joselowitz⁽⁶⁾	—	6,841		—		—		6,737		13,578
C Tasker⁽⁶⁾	—	5,393		—		—		4,133		9,526
P Dell⁽⁶⁾	—	1,844		100		71		1,750		3,765
G Pretorius	—	2,573		268		433		3,299		6,573
C Lewis	—	2,570		122		130		2,603		5,425
	3,911	19,221	—	490	—	634	—	18,522	—	42,778



Notes to the consolidated financial statements


for the year ended March 31, 2019



Group	Directors’ fees R’000	Salary and allowances R’000	Other benefits R’000	Retirement fund R’000	Performance bonuses⁽¹⁾R’000	12 months R’000


2017
Non-executive directors
R Bruyns	794	—	—	—	—	794
C Ewing	570	—	—	—	—	570
R Frew⁽²⁾	566	—	—	—	—	566
E Banda	470	—	—	—	—	470
A Welton	650	—	—	—	—	650
M Lamberti^{(2), (9)}	115	—	—	—	—	115
I Jacobs⁽¹⁰⁾	277	—	—	—	—	277
G Nakos⁽¹¹⁾	—	—	—	—	—	—
	3,442	—	—	—	—	3,442
Value added tax⁽²⁾	95	—	—	—	—	95

Executive committee⁽⁵⁾
S Joselowitz⁽⁶⁾	—	7,219	—	—	3,404	10,623
M Pydigadu⁽¹²⁾	—	2,101	98	80	1,206	3,485
C Tasker⁽⁶⁾	—	3,612	178	256	1,511	5,557
B Horan⁽¹³⁾	—	1,215	63	47	1,456	2,781
P Dell⁽¹⁴⁾	—	275	14	11	—	300
G Pretorius	—	2,096	129	335	1,147	3,707
C Lewis	—	2,328	—	144	1,099	3,571
	3,537	18,846	482	873	9,823	33,561


⁽¹⁾	Performance bonuses are based on actual amounts paid during the fiscal year.


⁽²⁾	Value added tax (“VAT”) included as part of certain invoices received. Directors’ fees shown exclude VAT.


⁽³⁾	Appointed to the Board with effect July 4, 2018.


⁽⁴⁾	Resigned from the Board with effect July 4, 2018.


⁽⁵⁾	All prescribed officers of the Company are included as part of the executive committee.


⁽⁶⁾	Executive director as at March 31, 2019, March 31, 2018 and March 31, 2017.


⁽⁷⁾	Resigned from the Board with effect from November 7, 2017.


⁽⁸⁾	Appointed to the Board with effect from October 3, 2017.


⁽⁹⁾	Appointed to the Board with effect from November 19, 2014, resigned from the Board with effect from August 18, 2016.


⁽¹⁰⁾	Appointed to the Board with effect from June 1, 2016.


⁽¹¹⁾	Appointed as alternate director to Mark Lamberti with effect from November 4, 2015. Subsequently resigned as alternate director to Mark Lamberti with effect from August 18, 2016.


⁽¹²⁾	Resigned from the Board with effect from February 9, 2017.


⁽¹³⁾	Resigned with effect from September 30, 2016.


⁽¹⁴⁾	Appointed as Group executive committee member from February 1, 2017 and to the Board with effect from February 9, 2017. Executive director as at March 31, 2019, March 31, 2018 and March 31, 2017.

The remaining related party transactions are set out in note 33.



Notes to the consolidated financial statements


for the year ended March 31, 2019

29. Taxation



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Major components of taxation expense
Normal taxation	(90,787	)	(58,668	)	(46,788	)
– Current	(87,540	)	(55,385	)	(43,434	)
– (Under)/Over-provision prior years	1,318		325		589
– Foreign tax paid	(3,800	)	(2,880	)	(3,711	)
– Withholding tax	(765	)	(728	)	(232	)

Deferred taxation (note 18)	(47,175	)	24,978		19,976
– Current year	(43,700	)	25,658		20,748
– Under-provision prior years	(3,475	)	(680	)	(772	)
	(137,962	)	(33,690	)	(26,812	)

Taxation recognized in other comprehensive income



	Before tax R’000	Tax impact R’000	After tax R’000

2019
Exchange differences on translating foreign operations	114,596	1,151	115,747
	114,596	1,151	115,747



	Before tax R’000		Tax impact R’000		After tax R’000

2018
Exchange differences on translating foreign operations	(60,331	)	(237	)	(60,568	)
	(60,331	)	(237	)	(60,568	)



	Before tax R’000		Tax impact R’000		After tax R’000

2017
Exchange differences on translating foreign operations	(80,870	)	(59	)	(80,929	)
	(80,870	)	(59	)	(80,929	)



Notes to the consolidated financial statements


for the year ended March 31, 2019

Tax rate reconciliation

The tax on the Group’s profit before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the entities as follows:



		March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000
Profit before taxation		340,298		214,883		148,253
Tax at the applicable tax rate of 28%		95,283		60,167		41,511
Tax effect of:		42,679		(26,477	)	(14,699	)
– Income not subject to tax		(557	)	(552	)	—
– Expenses not deductible for tax purposes⁽¹⁾		5,014		6,460		7,409
– Non-deductible/(non-taxable) foreign exchange movements⁽²⁾	`	47,318		(28,184	)	(15,884	)
– Withholding tax		765		728		232
– Utilization of prior year assessed losses⁽³⁾		(5,497	)	(6,452	)	(1,461	)
– Foreign tax paid⁽⁴⁾		3,800		2,880		3,711
– Tax rate differential		(3,317	)	(2,546	)	1,281
– Deferred tax not recognized on assessed losses		239		517		4,049
– Deferred tax asset previously not recognized		(3,598	)	(1,122	)	(5,342	)
– Under-provision prior years		2,157		355		183
– Tax incentives in addition to incurred cost⁽⁵⁾		(6,049	)	(3,258	)	(10,387	)
– Share-based payment expense previously not deductible		—		(1,049	)	—
– Imputation of controlled foreign company income		2,438		2,365		1,453
– Transfer pricing imputation		78		3,381		57
– Other		(112	)	—		—
		137,962		33,690		26,812


⁽¹⁾	These non-deductible expenses consist primarily of items of a capital nature and costs attributable to exempt income.


⁽²⁾	The non-deductible/(non-taxable) foreign exchange movements arise as a result of the Group’s internal loan structures.


⁽³⁾	The utilization of assessed losses arises mainly in Europe, Brazil and the Americas where historical assessed losses are being utilized, refer to note 18.


⁽⁴⁾	The foreign tax paid relates primarily to withholding taxes on revenue earned in jurisdictions where the Group does not have a legal entity.


⁽⁵⁾	The tax incentives relate mainly to the section 11D allowance detailed below, as well as S12H learnership allowances received.

The Group’s weighted average tax rate is 40.5% (2018: 15.7%, 2017: 18.1%).

Section 11D allowances relating to tax assets recognized

MiX Telematics International Proprietary Limited (“MiX International”), a subsidiary of the Group, historically claimed a 150% allowance for research and development spend in terms of section 11D (“S11D”) of the South African Income Tax Act No. 58 of 1962 (“the Act”). As of October 1, 2012, the legislation relating to the allowance was amended. The amendment requires pre-approval of development project expenditure on a project specific basis by the South African Department of Science and Technology (“DST”) in order to claim a deduction of the additional 50% over and above the expenditure incurred (150% allowance). Since the amendments to S11D of the Act, MiX International had been claiming the 150% deduction resulting in a recognized tax benefit. MiX International has complied with the amended legislation by submitting all required documentation to the DST in a timely manner, commencing in October 2012.



Notes to the consolidated financial statements


for the year ended March 31, 2019

In June 2014, correspondence was received from the DST indicating that the research and development expenditure on certain projects for which the 150% allowance was claimed in fiscal 2013 and fiscal 2014 did not, in the DST’s opinion, constitute qualifying expenditure in terms of the Act. MiX International, through due legal process, had formally requested a review of the DST’s decision not to approve this expenditure. While approvals were obtained for a portion of this project expenditure as a result of a further review performed by the DST in February 2017, we continue to seek approval for the remaining projects and as such the legal process is ongoing. In addition to the approvals that were subject to the legal process, further approvals have been obtained for certain project expenditure, relating to both current and prior financial years. However, at period end, an uncertain tax position remains in relation to S11D deductions in respect of which approvals remain pending.

Since the introduction of the DST pre-approval process, MiX International has recognized in the income statement cumulative tax incentives in addition to the incurred cost of R24.3 million in respect of S11D deductions, of which R3.8 million was recognized in the current financial year. R21.5 million relates to deductions in respect of development project expenditure which has been approved by the DST. R2.8 million relates to an uncertain tax position in respect of projects where approvals have not yet been received from the DST. If MiX International is unsuccessful in this regard, MiX International will not recover the R2.8 million raised at March 31, 2019.

The taxation receivable includes amounts due of R13.8 million in respect of S11D tax incentives at March 31, 2019 (2018: R17.7 million).

30. Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Profit attributable to owners of the parent	202,336	181,134	121,458
Weighted average number of ordinary shares in issue (000s)	563,578	561,088	629,626
Basic earnings per share (R)	0.36	0.32	0.19

Diluted

Diluted earnings per share is calculated by dividing the diluted profit attributable to owners of the parent by the diluted weighted average number of ordinary shares in issue during the year. Share options and share appreciation rights granted to employees under the TeliMatrix Group Executive Incentive Scheme and the MiX Telematics Long-Term Incentive Plan (“LTIP”), as disclosed in note 13, are considered to be potential ordinary shares. They have been included in the determination of diluted earnings per share if the required target share price or annual shareholder return hurdles (as applicable) would have been met based on the Company's performance up to the reporting date, and to the extent to which they are dilutive. Details relating to the share options and share appreciation rights are set out in note 13.

Performance share awards were issued for the first time during fiscal 2019. The performance share awards are not considered to be dilutive as the performance conditions have not been met. Share appreciation rights were issued for the first time during fiscal 2015 and there were no potentially dilutive share appreciation rights at March 31, 2017.



Notes to the consolidated financial statements


for the year ended March 31, 2019



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Diluted profit attributable to owners of the parent	202,336	181,134	121,458

Weighted average number of ordinary shares in issue (000s)	563,578	561,088	629,626
Adjusted for:
– potentially dilutive effect of share appreciation rights	16,275	7,230	—
– potentially dilutive effect of share options	3,794	5,663	2,193
Diluted weighted average number of ordinary shares in issue (000s)	583,647	573,981	631,819
Diluted earnings per share (R)	0.35	0.32	0.19

Adjusted earnings per share

Adjusted earnings per share is defined as profit attributable to owners of the parent, MiX Telematics Limited, excluding net foreign exchange gains/(losses) net of tax and share based compensation costs related to performance share awards net of tax, divided by the weighted average number of ordinary shares in issue during the period.



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Reconciliation of adjusted earnings
Profit attributable to owners of the parent	202,336		181,134		121,458
Net foreign exchange (gains)/losses	(383	)	5,073		(1,476	)
IFRS 2 charge on performance share awards (note 13)	5,110		—		—
Income tax effect on the above components⁽¹⁾	47,382		(29,403	)	(15,307	)
Adjusted earnings attributable to owners of the parent	254,445		156,804		104,675


⁽¹⁾	The income tax effect is mainly influenced by the Group’s internal loan structures (note 29).

Basic

Basic adjusted earnings per share is calculated by dividing the adjusted earnings attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Adjusted earnings attributable to owners of the parent	254,445	156,804	104,675
Weighted average number of ordinary shares in issue (000s)	563,578	561,088	629,626
Basic adjusted earnings per share (R)	0.45	0.28	0.17

Diluted

Adjusted diluted earnings per share is calculated by dividing the diluted adjusted earnings attributable to owners of the parent by the diluted weighted average number of ordinary shares in issue during the year.



Notes to the consolidated financial statements


for the year ended March 31, 2019



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Diluted adjusted earnings attributable to owners of the parent	254,445	156,804	104,675
Diluted adjusted weighted average number of ordinary shares in issue (000s)	583,647	573,981	631,819
Diluted adjusted earnings per share (R)	0.44	0.27	0.17

Headline earnings per share

Headline earnings is a profit measure required for JSE-listed companies and is calculated in accordance with circular 4/2018 issued by the South African Institute of Chartered Accountants. The profit measure is determined by taking the profit for the period prior to certain separately identifiable re-measurements of the carrying amount of an asset or liability that arose after the initial recognition of such asset or liability net of related tax (both current and deferred) and related non-controlling interest.



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Reconciliation of headline earnings
Profit attributable to owners of the parent	202,336		181,134		121,458
(Profit)/loss on disposal of property, plant and equipment and intangible assets (note 32.2)	(586	)	(1,264	)	262
Impairment of intangible assets (notes 5, 7 and 32.2)	930		2,687		3,166
Impairment/(reversal of impairment) of property, plant and equipment (notes 5, 6 and 32.2)	—		9		(791	)
Non-controlling interest effects of adjustments	—		—		8
Income tax effect on the above components	(85	)	(380	)	(661	)
Headline earnings attributable to owners of the parent	202,595		182,186		123,442

Basic

Basic headline earnings per share is calculated by dividing the headline earnings attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Headline earnings attributable to owners of the parent	202,595	182,186	123,442
Weighted average number of ordinary shares in issue (000s)	563,578	561,088	629,626
Basic headline earnings per share (R)	0.36	0.32	0.20

Diluted

Diluted headline earnings per share is calculated by dividing the diluted headline earnings attributable to owners of the parent by the diluted weighted average number of ordinary shares in issue during the year.



Notes to the consolidated financial statements


for the year ended March 31, 2019



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Diluted headline earnings attributable to owners of the parent	202,595	182,186	123,442
Diluted weighted average number of ordinary shares in issue (000s)	583,647	573,981	631,819
Diluted headline earnings per share (R)	0.35	0.32	0.20

31. Dividends



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Dividends declared	67,572	53,268	53,026

During fiscal 2016 the Board decided to reintroduce the Company’s policy of paying regular dividends. Dividend payments are currently considered on a quarter-by-quarter basis.

The following dividends were declared by the Company in fiscal 2019 (excluding dividends paid on treasury shares):


•	In respect of the fourth quarter of fiscal 2018, a dividend of R16.9 million was declared on May 8, 2018 and paid on June 4, 2018. Using shares in issue of 564,420,145 (excluding 40,000,000 treasury shares), this equated to a dividend of 3 cents per share.


•	In respect of the first quarter of fiscal 2019, a dividend of R16.9 million was declared on July 31, 2018 and paid on August 27, 2018. Using shares in issue of 564,634,076 (excluding 40,000,000 treasury shares), this equated to a dividend of 3 cents per share.


•	In respect of the second quarter of fiscal 2019, a dividend of R16.8 million was declared on October 30, 2018 and paid on November 26, 2018. Using shares in issue of 561,807,639 (excluding 40,000,000 treasury shares), this equated to a dividend of 3 cents per share.


•	In respect of the third quarter of fiscal 2019, a dividend of R16.9 million was declared on January 31, 2019 and paid on February 25, 2019. Using shares in issue of 561,807,639 (excluding 40,000,000 treasury shares), this equated to a dividend of 3 cents per share.

The following dividends were declared by the Company in fiscal 2018 (excluding dividends paid on treasury shares):


•	In respect of the fourth quarter of fiscal 2017, a dividend of R11.3 million was declared on May 23, 2017 and paid on June��19, 2017. Using shares in issue of 563,514,561 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 cents per share.


•	In respect of the first quarter of fiscal 2018, a dividend of R14.0 million was declared on August 1, 2017 and paid on August 28, 2017. Using shares in issue of 558,898,901 (excluding 40,000,000 treasury shares), this equated to a dividend of 2.5 cents per share.



Notes to the consolidated financial statements


for the year ended March 31, 2019


•	In respect of the second quarter of fiscal 2018, a dividend of R14.0 million was declared on October 31, 2017 and paid on November 27, 2017. Using shares in issue of 559,418,095 (excluding 40,000,000 treasury shares), this equated to a dividend of 2.5 cents per share.


•	In respect of the third quarter of fiscal 2018, a dividend of R14.0 million was declared on January 30, 2018 and paid on February 26, 2018. Using shares in issue of 562,320,145 (excluding 40,000,000 treasury shares), this equated to a dividend of 2.5 cents per share.

The following dividends were declared by the Company in fiscal 2017 (excluding dividends paid on treasury shares):


•	In respect of the fourth quarter of fiscal 2016, a dividend of R15.2 million was declared on May 24, 2016 and paid on June 20, 2016. Using shares in issue of 761,337,500 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 cents per share.


•	In respect of the first quarter of fiscal 2017, a dividend of R15.3 million was declared on August 4, 2016 and paid on August 29, 2016. Using shares in issue of 763,087,500 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 cents per share.


•	In respect of the second quarter of fiscal 2017, a dividend of R11.3 million was declared on November 3, 2016 and paid on November 28, 2016. Using shares in issue of 563,434,240 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 cents per share.


•	In respect of the third quarter of fiscal 2017, a dividend of R11.2 million was declared on February 2, 2017 and paid on February 27, 2017. Using shares in issue of 563,434,240 (excluding 40,000,000 treasury shares), this equated to a dividend of 2 cents per share.



Notes to the consolidated financial statements


for the year ended March 31, 2019

32. Cash flow statement

32.1 The following convention applies to figures other than adjustments:

Outflows of cash are represented by figures in brackets. Inflows of cash are represented by figures without brackets.

32.2 Reconciliation of profit for the year before taxation to cash generated from operations:



	March 31, 2019 R’000		March 31, 2018 R’000		March 31, 2017 R’000

Profit before taxation	340,298		214,883		148,253
Adjustments	346,614		279,727		197,023
– (Profit)/loss on disposal of property, plant and equipment and intangible assets (note 23)	(586	)	(1,264	)	262
– Depreciation (notes 6 and 24)	183,478		151,945		98,508
– Amortization (notes 7 and 24)	64,877		63,926		44,734
– Amortization of capitalized commission assets (notes 8 and 24)	30,477		*		*
– Impairment of intangible assets (notes 7 and 24)	930		2,687		3,166
– Impairment/(reversal of impairment) of property, plant and equipment (notes 6 and 24)	—		9		(791	)
– Finance income (note 25)	(11,903	)	(8,951	)	(14,592	)
– Finance costs (note 26)	10,900		3,947		5,677
– Equity-settled share-based payments (notes 14 and 24)	12,140		9,000		2,247
– Cash-settled share-based payments (notes 21 and 24)	—		1,352		—
– Foreign exchange losses/(gains) (notes 25 and 26)	(383	)	5,073		(1,476	)
– Impairment of receivables (note 10)	29,725		24,143		17,713
– Write-down of inventory to net realizable value (notes 9 and 24)	4,112		9,294		9,967
– Increase in provisions	26,352		18,950		31,821
– Lease straight-line adjustment	—		(384	)	(213	)
– Significant financing revenue adjustment	(4,542	)	*		*
– Fixed escalations revenue adjustment	1,037		*		*
Cash generated from operations before working capital changes	686,912		494,610		345,276

Changes in working capital	(145,480	)	(81,585	)	31,839
– Decrease/(increase) in inventories	1,638		(39,858	)	28,073
– (Increase)/decrease in trade and other receivables	(123,733	)	(49,601	)	17,404
– Increase in capitalized commission assets under IFRS 15	(31,769	)	*		*
– Decrease in finance lease receivable	—		165		1,009
– Increase in trade and other payables	70,430		8,519		21,993
– Decrease in provisions	(26,117	)	(26,709	)	(32,854	)
– Foreign currency translation differences on working capital	(35,929	)	25,899		(3,786	)

Cash generated from operations	541,432		413,025		377,115

* Due to the transition method chosen by the Group in applying IFRS 15, comparative information has not been restated to reflect the new requirements. Refer to note 2.1.1.1.



Notes to the consolidated financial statements


for the year ended March 31, 2019

33. Related party transactions

Directors’ and executive committee members’ interest

The list of directors and executive committee members and their beneficial interests declared in the Company’s share capital at year-end held directly, indirectly and by associates were as follows:



	March 31, 2019			March 31, 2018
	Direct 000s	Indirect 000s	Associate 000s	Direct 000s	Indirect 000s	Associate 000s

Non-executive
R Bruyns	—	3,697	—	—	3,697	—
R Frew	—	63,848	70,261	—	63,848	70,261
A Welton	—	—	235	—	—	235
E Banda⁽¹⁾	—	—	—	—	—	—
I Jacobs	241	14,296	—	241	14,296	—
F Roji-Maplanka⁽²⁾	—	—	—	—	—	—
F Futwa⁽³⁾	—	—	—	—	—	—

Executive
S Joselowitz	23,842	—	—	26,342	—	—
C Tasker	2,907	—	2,428	2,057	—	2,428
P Dell	1	—	—	1	—	—
G Pretorius	690	—	—	338	—	—
C Lewis	1,525	—	—	1,525	—	—
	29,206	81,841	72,924	30,504	81,841	72,924


⁽¹⁾	Resigned from the Board with effect from July 4, 2018.


⁽²⁾	Appointed to the Board with effect from October 3, 2017.


⁽³⁾	Appointed to the Board with effect from July 4, 2018.

Interests in contracts

During the year under review, the following were disclosed as contractual arrangements that existed between the Group and parties outside of the Group, in which certain of the directors and executive committee members had interests:



Name of director	Related party	Nature of relationship with the Group

R Frew	TPF Investments Proprietary Limited	Lease agreement: Midrand office*
R Frew	Masalini Capital Proprietary Limited	Provides directors’ services

*During the year a small related party transaction was entered into with TPF. Refer to note 6 for further details.

A list of subsidiaries has been included in note 40.



Notes to the consolidated financial statements


for the year ended March 31, 2019

Transactions with related parties and balances outstanding at year-end are as follows (excluding key management personnel emoluments):



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Sales of goods and services	—	—	22,263
– Imperial Group Limited*	—	—	22,263
Purchases of goods and services	7,384	8,277	11,206
– TPF Investments Proprietary Limited**	7,384	8,277	5,277
– Imperial Group Limited*	—	—	5,929


*	Related party until August 1, 2016. See “Fiscal 2017 specific share repurchase” in note 13 for additional information.


**	Previously known as Thynk Property Fund Proprietary Limited.

Refer to note 28 for key management personnel emoluments disclosure. Key management personnel include executive committee members.

The related parties included above are related to the Group due to certain shares in these entities being held by executive or non-executive directors of the Company or due to common directorships held.

There were no receivables from related parties at March 31, 2019, 2018 and 2017.

There were no payables to related parties at March 31, 2019, 2018 and 2017.

34. Contingencies

Service agreement

In terms of an amended network services agreement with Mobile Telephone Networks Proprietary Limited (“MTN”), MTN is entitled to claw back payments from MiX Telematics Africa Proprietary Limited, a subsidiary of the Group, in the event of early cancellation of the agreement or certain base connections not being maintained over the term of the agreement. No connection incentives will be received in terms of the amended network services agreement. The maximum potential liability under the arrangement is R39.1 million (2018: R43.7 million). No loss is considered probable under this arrangement.

Competition Commission of South Africa matter

On April 15, 2019 the Competition Commission of South Africa (“Commission”) referred a matter to the Competition Tribunal of South Africa (“Tribunal”). The Commission contends that the Group and a number of our channel partners have engaged in market division. Should the Tribunal rule against MiX Telematics, the Group may be liable to an administrative penalty in terms of the Competition Act, No. 89 of 1998. The Group had cooperated fully with the Commission during its preliminary investigation. We cannot predict the timing of a resolution or the ultimate outcome of the matter, however, the Group and our external legal advisers continue to believe that we have consistently adhered to all applicable laws and regulations and that the referral from the Commission is without merit. We have therefore not made any provisions for this matter as yet.



Notes to the consolidated financial statements


for the year ended March 31, 2019

35. Commitments

Capital commitments

At March 31, the Group had approved, but not yet contracted, capital commitments for:



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Property, plant and equipment	—	—	—
Intangible assets	52,366	56,406	58,036
	52,366	56,406	58,036

At March 31, the Group had approved and contracted capital commitments for:



	March 31, 2019 R’000	March 31, 2018 R’000	March 31, 2017 R’000

Property, plant and equipment	40,070	11,601	50,074
Intangible assets	18,271	17,046	24,726
	58,341	28,647	74,800

Capital commitments will be funded out of a mixture of working capital and cash and cash equivalents.

Lease commitments

At March 31, 2019, the Group had ongoing month-to-month lease contracts with respect of leases to which the 12-month practical expedient has been applied during fiscal 2019.

Operating leases until March 31, 2018 under IAS 17 Leases accounting

The Group leases various offices under operating lease agreements as defined in IAS 17 Leases. The leases have various terms and escalation clauses and renewal rights.

The future minimum lease payments in respect of land and buildings under non-cancellable operating leases are as follows:



	March 31, 2018 R’000	March 31, 2017 R’000

Land and buildings
Within one year	12,324	15,201
One to five years	10,862	20,354
	23,186	35,555

The Group leases various office equipment and vehicles under non-cancellable operating lease agreements as defined in IAS 17 Leases. The lease terms are between one and five years with annual escalations up to 10% per annum. The Group is required to give up to three months’ notice for the termination of these agreements.

100



Notes to the consolidated financial statements


for the year ended March 31, 2019

The future minimum lease payments of office equipment and vehicles under non-cancellable operating leases are as follows:



	March 31, 2018 R’000	March 31, 2017 R’000

Office equipment
Within one year	716	853
One to five years	674	495
	1,390	1,348

Vehicles
Within one year	1,585	1,507
One to five years	1,617	1,626
	3,202	3,133

The lease expenditure charged to the income statement during fiscal 2018 and fiscal 2017 is disclosed in note 24.

The Group has adopted IFRS 16 from April 1, 2018, for information regarding capitalized lease liabilities recognized under IFRS 16 refer to note 20.

Reconciliation of operating lease commitments to IFRS 16 liability recognized on April 1, 2018



	March 31, 2019 R’000

Operating lease commitments at March 31, 2018	27,778
Discounted using the incremental borrowing rate at April 1, 2018 ⁽²⁾	25,771
Recognition exemption for:
– Short term leases	(5,010	)
– Leases of low value assets	(1,186	)
Extension and termination options reasonably certain to be exercised and variable lease payments based on an index or rate	12,529
Lease liabilities recognized at April 1, 2018 (note 20)	32,104

⁽²⁾ The weighted average lessee’s incremental borrowing rate applied was 6.6%.

36. Events after the reporting period

Other than the items below, the directors are not aware of any matter material or otherwise arising since March 31, 2019 and up to the date of this report, not otherwise dealt with herein.

Dividend declared

The Board of Directors declared in respect of the fourth quarter of fiscal 2019 which ended on March 31, 2019, a dividend of 4 South African cents per ordinary share that was paid on June 3, 2019.

B-BBEE Property Transaction

All of the conditions precedent related to the B-BBEE transaction were fulfilled on May 17, 2019. The Stellenbosch property was transferred into the name of BIG on July 25, 2019. Once transfer of the Midrand property is concluded, MiX Enterprise will, similarly to the Stellenbosch property, conclude a lease agreement with BIG and will lease the premises in Midrand for an initial period of five years with an option to renew the lease for a further five-year period. The Midrand transfer is expected to be concluded during fiscal 2020. Refer to note 6 for further information regarding this transaction.

101



Notes to the consolidated financial statements


for the year ended March 31, 2019

Changes to the Board

John Granara has been appointed as Chief Financial Officer (“CFO”) and Executive Vice President, effective July 8, 2019. John Granara will succeed Paul Dell, who has filled the role of interim CFO since early 2017 and who resigned from the Board as interim CFO and Director of the Company with effect from July 8, 2019. Paul will continue at MiX Telematics in an alternative senior role.

102



Notes to the consolidated financial statements


for the year ended March 31, 2019

37. Financial risk sensitivity analysis

Interest rate sensitivity

A change in the interest rate at the reporting date of 100 basis points for ZAR denominated instruments would have increased/(decreased) profit or loss before tax by the amounts shown below. A change in the interest rate at the reporting date of 10 basis points for USD denominated instruments is not material. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for the year ended March 31, 2018.



		March 31, 2019 R’000		March 31, 2018 R’000

ZAR denominated instruments	Increase of 100 basis points	1,803		1,811
	Decrease of 100 basis points	(1,803	)	(1,811	)

* Amount less than R1,000.

Foreign currency sensitivity

The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss and equity of an instantaneous 5% strengthening or weakening in the functional currency against all other currencies, from the rate applicable at March 31, 2019, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only as, in practice, market rates rarely change in isolation.

The Group is exposed mainly to fluctuations in foreign exchange rates in respect of the South African Rand, Australian Dollar, United States Dollar, the British Pound, the Brazilian Real and the Euro. This analysis considers the impact of changes in foreign exchange rates on profit or loss.

A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/(decreased) profit before taxation by the amounts shown below. The analysis has been performed on the basis of the change occurring at the end of the reporting period.

103



Notes to the consolidated financial statements


for the year ended March 31, 2019



		Increase/(decrease) in profit before taxation
	Change in exchange rate %	Result of weakening in functional currency R’000		Result of strengthening in functional currency R’000

2019
Denominated currency: Functional currency
EUR:GBP	5	1,075		(1,075	)
USD:GBP	5	242		(242	)
USD:ZAR	5	103		(103	)
EUR:ZAR	5	33		(33	)
GBP:ZAR	5	(5	)	5
ZAR:USD	5	(24	)	24
EUR:USD	5	119		(119	)
USD:AUD	5	39		(39	)
AUD:ZAR	5	50		(50	)
ZAR:GBP	5	(98	)	98
ZAR:AUD	5	(18	)	18
USD:BRL	5	(24	)	24


2018
Denominated currency: Functional currency
EUR:GBP	5	710		(710	)
USD:GBP	5	(149	)	149
USD:ZAR	5	814		(814	)
EUR:ZAR	5	368		(368	)
GBP:ZAR	5	(78	)	78
ZAR:USD	5	2		(2	)
EUR:USD	5	231		(231	)
USD:AUD	5	(33	)	33
AUD:ZAR	5	598		(598	)
ZAR:GBP	5	(22	)	22
USD:BRL	5	(33	)	33

104



Notes to the consolidated financial statements


for the year ended March 31, 2019

38. Liquidity risk

Liquidity risk is the risk that there will be insufficient funds available to settle obligations when they are due.

The Group has limited risk due to the recurring nature of its income and the availability of liquid resources. The Group meets its financing requirements through a mixture of cash generated from its operations and its access to undrawn borrowing facilities (note 15). In addition, the Group holds the following cash resources:

The table below analyzes the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.



	Payable within 1 month or on demand R’000	Between 1 month and 1 year R’000	Between 1 year and 2 years R’000	Between 2 years and 5 years R’000	More than 5 years R’000	Total R’000

March 31, 2019
Trade payables	50,742	40,028	—	—	—	90,770
Accruals and other payables	90,432	91,970	—	—	—	182,402
Bank overdraft	30,262	—	—	—	—	30,262
Capitalized lease liability	883	10,180	8,493	19,061	9,691	48,308
Recurring commission liability	171	6,700	1,845	—	—	8,716
Total	172,490	148,878	10,338	19,061	9,691	360,458

March 31, 2018
Trade payables	58,085	40,009	—	—	—	98,094
Accruals and other payables	92,318	68,646	—	—	—	160,964
Bank overdraft	17,720	—	—	—	—	17,720
Total	168,123	108,655	—	—	—	276,778

There have been no significant changes in the Group’s financial risk management described above relative to the prior year.

39. Exchange rates

The following major rates of exchange were used in the preparation of the consolidated financial statements:



		March 31, 2019	March 31, 2018	March 31, 2017

ZAR:USD	– closing	14.48	11.83	13.41
	– average	13.75	12.99	14.06
ZAR:GBP	– closing	18.90	16.60	16.75
	– average	18.03	17.21	18.42

105



Notes to the consolidated financial statements


for the year ended March 31, 2019

40. List of Group companies

MiX Telematics Limited is the parent company of the MiX Telematics Group of companies outlined below. All of the entities listed below have been consolidated.



Name	Principal activity	Place of incorporation	Legal % ownership
Name	Principal activity	Place of incorporation	March 31, 2019 %	March 31, 2018 %

Direct
MiX Telematics Investments Proprietary Limited	Treasury company	RSA	100	100
MiX Telematics Africa Proprietary Limited	Asset tracking and fleet management products and services	RSA	100	100
MiX Telematics International Proprietary Limited	Fleet management products and services and research and development	RSA	100	100
MiX Telematics Europe Limited	Fleet management products and services	UK	100	100
MiX Telematics North America Incorporated	Fleet management products and services	USA	100	100
MiX Telematics Serviços De Telemetria E Rastreamento De Veículos Do Brazil Limitada	Fleet management products and services	Brazil	95	95

Indirect
MiX Telematics Middle East FZE	Fleet management products and services	UAE	100	100
MiX Telematics Enterprise SA Proprietary Limited⁽¹⁾	Fleet management products and services	RSA	85.1	85.1
MiX Telematics Fleet Support Services Proprietary Limited	Fleet management products and services	RSA	100	100
MiX Telematics East Africa Limited	Fleet management products and services	Uganda	99.9	99.9
MiX Telematics Romania SRL⁽²⁾	Fleet management services	Romania	99	99
MiX Telematics (Thailand) Limited	Fleet management products and services	Thailand	100	100
MiX Telematics Australasia Proprietary Limited	Fleet management products and services	Australia	100	100
MiX Telematics Serviços De Telemetria E Rastreamento De Veículos Do Brazil Limitada(3)	Fleet management products and services	Brazil	5	5
MiX Telematics Sociedad De Responsabilidad Limitada De Capital Variable	Dormant	Mexico	100	—

⁽¹⁾

The remaining shareholding in this company is owned by a structured entity, the MiX Telematics Enterprise BEE Trust (which holds a 14.9% interest in MiX Telematics Enterprise SA Proprietary Limited), which has been fully consolidated. Control of the structured entity was assessed when IFRS 10 Consolidated Financial Statements was adopted with effect from April 1, 2013 and there was no change to the historical accounting treatment applied by the Group. This trust was set up in prior years to invest in the specified Group company and to hold such investment for its beneficiaries.


⁽²⁾	During fiscal 2015, MiX Telematics Middle East FZE incorporated MiX Telematics Romania SRL and obtained a 99% interest therein. The 1% non-controlling interest is held by management.


⁽³⁾	MiX Investments Proprietary Limited acquired Edge’s 5% equity interest in MiX Brazil during fiscal 2018.

106

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	H.S. freshman Avg

March 31, 2019
R’000

March 31, 2018
R’000

Inventory – finished goods