| Summary of significant accounting policies | 2.
Summary of significant accounting policies The
principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These accounting
policies have been consistently applied to all the years presented, unless otherwise stated. Basis
of preparation and consolidation The
Company’s consolidated financial statements for the years ended March 31, 2023 and 2024 are prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”) and Regulation S-X Rule 3-05. They should be read in conjunction
with the accompanying notes thereto. All subsidiaries have been consolidated, including variable interest entities (“VIEs”)
of which the Company is deemed to be the primary beneficiary. Inter-company transactions, balances and unrealized gains on transactions
between group companies are eliminated. Unrealized losses are also eliminated except to the extent the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies
adopted by the Company. All subsidiaries have the same reporting dates as the Company. Use
of estimates The
preparation of consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the
amounts reported and disclosed. Significant estimates include, but are not limited to, allowances for doubtful accounts, the assessment
of expected cash flows used in evaluating goodwill and long-lived assets for impairment, the amortization period for deferred commissions,
the determination of useful lives of the Company’s customer relationships, contingencies, the classification of devices and other
hardware as in-vehicle devices (equipment) versus inventory based on the future expectation of the different types of customer contracts,
income and deferred taxes, unrecognized tax benefits and valuation allowances on deferred tax assets. Actual results could differ from
those estimates, and such differences may be material to the consolidated financial statements. We
have considered the impact of rising inflation, fuel prices, global politics, sanctions and the impact thereof on global trade on the
estimates and assumptions used. As of March 31, 2024, we have taken into account the impact of the above on goodwill sensitivities and
impairment assessments. However, future changes in economic conditions could have an impact on future estimates and judgements used. Revenue
from contracts with customers Significant
judgments Revenue
is recognized upon transfer of control of distinct promised products and/or services to customers in an amount that reflects the consideration
that the Company expects to receive in exchange for those products and/or services. The Company enters into contracts that include the
supply of fleet and mobile asset management equipment. For such contracts, the Company utilizes significant judgment to determine whether
control of the equipment has transferred to the customer, and in instances where it does, it recognizes revenue in accordance with Revenue
from Contracts with Customers Recognition
and measurement The
Company provides fleet and mobile asset management solutions to its customers, and its principal revenue streams are (1) Subscription
and (2) Hardware and other. Subscription revenue is recognized over time and hardware and other revenue is recognized at a point-in-time. To
provide services to customers, a device is required which collects and transmits information collected from the vehicle or other asset.
Fleet customers may also obtain other items of hardware, virtually all of which are functionally dependent on the device. Some customers
obtain control of the device and other hardware (where legal title transfers to the customer); while other customers do not (where legal
title remains with the Company). A contract arises on the acceptance of a customer’s purchase order, which is typically executed
in writing. In
instances where the customer obtains control of the device and other hardware, which is typically upon installation or delivery to the
customer, the device, the other hardware, the installation thereof and the service are each accounted for as separate performance obligations.
The total transaction price is allocated to each performance obligation using relative stand-alone selling prices. Revenue allocated
to the device and other hardware is recognized upon delivery, and revenue allocated to installation is recognized once
the installation is complete, since installation is completed within a day. Revenue related to the service performance obligation (subscription)
is recognized on a straight-line basis over the expected contractual term, since we consistently deliver telematics services on a continuous
basis over that period. In
instances where the customer does not obtain control of the device and other hardware, which is functionally dependent on the device,
there is only a single performance obligation, namely the service. The customer is not able to direct the use of these items, and accordingly
these contracts do not contain leases. In these instances, the devices and other hardware are used by the Company to provide the services.
The total revenue from these contracts is recognized as subscription revenue on a straight-line basis over the
expected contractual term, since we consistently deliver telematics services on a continuous basis over that period. Revenue
is presented net of discounts, value added tax, returns and after eliminating sales within the Company. The
Company distributes devices and other hardware 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 Company. The obligation to supply the service and the credit
risk rests with the Company. The subscription revenue is recognized when the service is rendered. The
Company also sells hardware to motor vehicle dealerships for fitment into their vehicle trading stock. These dealerships purchase the
hardware from the Company and are considered to act as a principal in the contract 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 Company. 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
Company distributes devices and other hardware to enterprise fleet customers through value-added resellers. Value-added resellers are
considered to act as a principal for the sale of hardware to the end customer, and revenue is recognized by the Company upon sale of
the hardware unit to the resellers. Value-added resellers are also considered to act as a principal for the provision of the service
to end customers because, even though the resellers do not provide the service themselves, the resellers control the right to receive
the service before that right is transferred to the end customer, the resellers have the primary responsibility for fulfilling the promise
to provide the service to the end customer, and the resellers have full discretion in establishing the prices charged to the end customer.
Accordingly, subscription revenue is recognized as the service is provided to the resellers. Contract
liabilities (deferred revenue) Timing
of revenue recognition may differ from the timing of invoicing customers or collecting payments from customers. Typically, corporate
customers pay in arrears, while consumer customers pay in advance. When
customers are invoiced in advance for subscription services that will be provided over periods of more than one month, or pay in advance
of service periods of more than one month, deferred revenue liabilities, or contract liabilities,
In
all other instances, the Company has a right to consideration for subscription services from customers in an amount that corresponds
directly with the value to customers of the Company’s performance completed to date. Therefore, revenue is recognized for the amount
to which the Company has a right to invoice as a practical expedient. The transaction price estimated therefore does not include any
estimated amounts of variable consideration that are constrained. Estimates of variable consideration constrained may include fixed or
variable price escalations based on an index; amounts charged for de-and-re-installations, installation cancellations, wasted time and
waiting time and amounts charged for actual data usage and/or actual satellite access, amongst others. These estimates will simply be
recognized as revenue as and when they occur. The future subscription services will be provided over varying periods from 1
to 60
months. Contracts
for which the Company deferred
revenue liability Deferred
commissions Commissions
incurred to acquire contracts are capitalized and amortized, unless the amortization period is 12 months or less. The commission capitalized
is attributed to the specific performance obligations in the related 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. 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 is amortized over the expected life of the 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. Commission capitalized that is attributable to
hardware or installation is amortized in full at the time the related hardware, or installation, revenue is recognized. Recurring
commission is commission which is payable for each month the customer remains with the Company. The amount capitalized 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. As
of March 31, 2023 and 2024, deferred commissions amounted to $ 6.0
million and $ 9.1
mill ion
respectively, which are included within Other assets on the Balance Sheet. Amortization
expense of external commissions capitalized is recognized in cost of sales, while that of internal commissions earned by the Company’s
sales personnel is recognized in sales and marketing costs. Commissions not capitalized under the 12-month practical expedient are also
classified in the same manner. Foreign
currency Functional
and reporting currency Each
subsidiary is consolidated by translating its assets, liabilities and results into the functional currency of its immediate parent company,
and subsequently the consolidated position, determined in South African Rand, is translated into U.S. Dollars (reporting currency). Assets
and liabilities are translated into U.S. Dollars using the exchange rates in effect at the balance sheet date. Equity items are translated
at historical exchange rates, while income and expense items are translated using average exchange rates for the period. Foreign currency
translation adjustments are reported in stockholders’ equity as a component of accumulated other comprehensive income/loss until
disposal. The
movement in the foreign currency translation adjustments is as follows (in thousands): Schedule
of foreign currency translation adjustments
2023 2024
As of March 31,
2023 2024
Cumulative foreign currency translation adjustments, beginning of year $ 3,909 $ (13,399 )
Foreign currency translation losses for the year, net of tax (17,308 ) (2,749 )
Cumulative foreign currency translation adjustments, end of year $ (13,399 ) $ (16,148 ) Transactions
and balances Transactions
in foreign currencies are initially recorded by the Company and its subsidiaries in their respective functional currencies using the
exchange rates at the dates of the transactions. Foreign currency monetary assets and liabilities are translated at exchange rates in
effect at the balance sheet date. All resulting foreign exchange gains and losses are recognized in Other income/expense in the Statement
of Income. However, gains and losses arising on long-term monetary assets held by a group entity in a foreign subsidiary for which settlement
is neither planned nor anticipated within the foreseeable future, form part of the net investment of the foreign operation. These foreign
exchange gains and losses are recognized as part of the foreign currency translation adjustments in accumulated other comprehensive income/loss
until disposal. Financial
Assets Cash
and cash equivalents Cash
and cash equivalents comprise cash on hand and deposits held on call with banks; all of which are available for use by the Company and
have an original maturity of less than three months. Restricted
cash Restricted
cash comprises deposits backing guarantees issued by financial institutions on behalf of the Company in respect of the Company’s
obligations under certain lease, supply and other agreements, and cash held by MiX Telematics Enterprise BEE Trust (a VIE which is consolidated).
Cash held by the Trust is to be used solely for the benefit of its beneficiaries. As at March 31, 2023 and 2024, the cash held by the
Trust comprised $ 0.6
million and $ 0.7
million, respectively. Accounts
receivables Accounts
receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Since the terms of
payment are not more than 12 months, accounts receivables are recognized initially at their transaction price. Subsequent to initial
recognition, accounts receivables are measured at amortized cost using the effective interest method, less an allowance for doubtful
accounts, which reflects expected credit losses. Allowance
for doubtful accounts The
allowance for doubtful accounts on accounts receivables is calculated by considering all relevant information, internal and external
about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts
of future economic conditions to appropriately reflect the risk of losses over the remaining contractual lives of the assets. Historical
loss rates, calculated as actual losses over a period as a percentage of revenue, are adjusted for current conditions and management’s
expectations about future economic conditions. The
allowance is measured on a collective basis where management groups their customers appropriately based on their credit risk characteristics. The
allowance for doubtful accounts is a valuation account and the asset’s carrying amount is reduced and the amount of the loss is
recognized in the Consolidated Statements of Income. Subse quent
recoveries, if any, are credited to the allowance. A Loans
to external parties Loans
to external parties are recognized initially at fair value, and subsequently at amortized cost using the effective interest method, less
expected credit losses over the lifetime of the loan. Expected
credit losses are determined using management’s estimate of the probability of default and the value of the underlying security.
Loans to external parties are included within Other assets on the Consolidated Balance Sheet. Concentration
of Credit Risk Cre dit
risk arises from restricted cash, cash and cash equivalents as well as credit exposures to customers and loans to external parties. An allo is
provided for individual accounts. Management regularly reviews receipts and the fair value of loans to external parties. Expected credit
losses are provided for accordingly. Fair
value measurements Other
than the c ontingent consideration, t nature. The fair value
of the loans to external parties is determined using unobservable market data (Level 3 inputs), that represent management s
estimate of current interest rates that a commercial lender would charge the borrower When
certain triggering events occur, the Company is required to assess non-financial assets for impairment. When impaired, non-financial
assets are written down to fair value. The Company uses valuation approaches that maximize the use of observable inputs and minimize
the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants
would use in pricing the asset in the principal or most advantageous market. Fair
value is determined in accordance with ASC 820, Fair Value Measurement 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). Inventories Inventories
comprise of components and finished goods which are stated at the lower of cost and net realizable value. Cost is determined using a
first-in, first-out, actual cost or weighted average cost basis. The cost of inventories includes the cost of manufacturing as charged
by third parties and excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business
less reasonably predictable costs of completion, disposal and transportation, and is based upon assumptions about future demand and market
conditions. Impairments of inventory are not subsequently reversed. During the years ended March 31, 2023 and 2024, $ 0.8
million and $ 0.6
m illion
Inventories
comprise of the following (in thousands): Schedule of inventories
2023 2024
As of March 31,
2023 2024
Components $ 3,131 $ 875
Finished goods 3,146 4,316
Total inventories 6,277 5,191
Less: Accumulated write-down to net realizable value (1,341 ) (1,049 )
Inventory, net $ 4,936 $ 4,142 Property,
plant and equipment Property,
plant and equipment are 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 of property, plant and equipment. 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 Company and the cost of the item can be measured reliably. Repairs and maintenance
are charged to the Consolidated Statements of Income 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, are capitalized as property, plant and equipment. The Company depreciates installed in-vehicle devices on a straight-line basis
over their expected useful lives, commencing upon installation, wh ereas uninstalled in-vehicle
devices are not depreciated until installed. The related depreciation expense is recorded as part of cost of sales in the Consolidated
Statements of Income. Depreciation is calculated using the straight-line method to reduce the cost of the asset to its residual value
over its estimated useful life, as follows: Schedule
of property, plant and equipment
Plant
and equipment 1
- 8
years
Motor
vehicles 3
- 7
years
Furniture,
fixtures and equipment 1
- 10
years
Computer
and radio equipment 1
- 7
years
In-vehicle
devices installed 1
- 8
years The
assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains
or losses on disposal or retirement are recognized within Other income/expenses in the Consolidated Statements of Income. Leases The
Company as a lessee The
Company recognizes a right-of-use asset and a lease liability at the lease commencement date for all leases except for those that have
a lease term of 12 months or less and do not contain a purchase option that is reasonably certain to be exercised. The lease payments
associated with these leases are recognized as an expense on a straight-line basis over the lease term. Right-of
use assets are initially measured at cost, which comprises the initial amount of the related lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received. All
of the Company’s leases which are capitalized are classified as operating leases. This means that the right-of-use asset is depreciated
in such a manner, that together with the interest charge on the lease liability, the Company achieves a straight-line total lease expense
over the lease period. Lease
payments included in the measurement of the lease liability comprise the following:
● fixed
payments; and
● lease
payments in an optional renewal period if the Company is reasonably certain to exercise an extension option. The
lease liability is measured at commencement based on the present value of lease payments over the lease term using the relevant group
entity’s incremental borrowing rate at inception of the lease. The lease liability is remeasured when the Company changes its assessment
of whether an extension option will be exercised, when a termination notice is served, or when there are other changes to the terms of
the lease such as rent concessions or an extension to the lease term that was not initially catered for in the lease agreemen t. When
the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset. The adjustment
is recorded in the Consolidated Statements of Income once the carrying amount of the right-of-use asset has been reduced to zero. The
Company presents right-of-use assets within Property, plant and equipment, and lease liabilities within Accrued expenses and other liabilities,
on the Consolidated Balance Sheets. Goodwill Goodwill
is tested for possible impairment at least annually, or when circumstances change that would more likely than not reduce the fair value
of a reporting unit below its carrying value. Qualitative factors are first assessed to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying value. Goodwill is allocated to a reporting unit for the purpose of
impairment testing. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying
value, the carrying value of the reporting unit, to which goodwill has been allocated, is compared to its fair value, and a goodwill
impairment charge is recognized for the amount (if any) by which the carrying value exceeds the
fair value, limited to the amount of the goodwill. No impairments
of goodwill existed as of the most recent testing date of March 31, 2024 or the previous testing date of March 31, 2023. Reconciliation
of Total Goodwill The
following table is a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period: Schedule
of reconciliation of carrying amount of goodwill
2023 2024
As of March 31,
2023 2024
Goodwill
Opening balance $ 44,434 $ 39,258
Business acquired 1,441 —
Foreign currency translation difference (6,617 ) (1,032 )
Balance as of March 31 $ 39,258 $ 38,226 The
allocation of goodwill to reportable segments is as follows (in thousands): Schedule of goodwill to reportable segments
2023 2024
As of March 31,
2023 2024
Central Services Organization $ 5,736 $ 5,463
Europe 8,078 8,254
Middle East and Australasia 4,364 4,364
Africa 19,639 18,704
Americas 1,441 1,441
Total $ 39,258 $ 38,226 Sensitivity
of goodwill to impairment as of March 31, 2024 was as follows:
Central Services Organization Africa Europe Middle East and Australasia Americas
Fair value of reporting unit exceeded its carrying amount by 457.3 % 101.7 % 16.9 % 52.1 % 21.7 %
Post-tax discount rate used to determine fair value 16.3 % 16.3 % 11.4 % 12.2 % 11.7 %
Growth rate used to extrapolate cash flow beyond the budget period 4.7 % 4.7 % 1.5 % 2.3 % 2.0 %
The following mutually exclusive changes will result in nil headroom
Post-tax discount rate applied to the expected cash flow projections 37.1 % 25.7 % 13.0 % 18.0 % 14.3 %
Decrease in the cash flow projections of 82.1 % 50.4 % 16.9 % 52.1 % 17.8 % If
the growth rate in any reporting entity is changed to zero, this does not result in any impairment. Although there were no impairments
of goodwill as of March 31, 2024, significant judgement was exercised in determining the fair value of each reporting unit. In particular,
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 on which the impairment tests were performed could be negatively impacted. The
Americas reporting unit has been assessed to be the most sensitive to changes in assumptions. A simultaneous increase of 1.7 %
in discount rate and a decrease of 1.7 %
in terminal growth rate results in an impairment for the Americas reporting unit. If the cash flows and revenue growth rate for the Americas
segment do not meet management projections it could result in an impairment. Intangible
assets Patents
and trademarks 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 which range
from 3
to 10
years. 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 ranging from 1
to 10
years and reflects the pattern in which
future economic benefits of the customer relationship are expected to be generated. 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. Internal-use
software and technology The
Company capitalizes as intangible assets, internal-use software acquired or developed solely to meet the Company’s internal needs.
Costs, excluding general and administrative costs such as general overheads, legal, research, business process engineering and data conversion
costs, are capitalized from the date on which management implicitly or explicitly authorizes, or commits to fund, the project, and it
is probable that the project will be completed and the software will perform the intended function (application development stage). All
costs incurred during the preliminary development stage are expensed. Capitalization ceases when the project is substantially complete
and the software is ready for its intended use. Costs,
including annual licenses, associated with maintaining computer software programs, and training costs are expensed as incurred. Costs
incurred for upgrades and enhancements (modifications to existing internal-use software that provides additional functionality) are capitalized
during the application development sta ge. Software
capitalized is amortized on a straight-line basis over its estimated useful life ranging from 1
to 20
years, commencing
on the date when the software is ready for its intended use. Computer
software for external use Computer
software for external use refers to the firmware that is developed by the Company for the devices and other hardware provided to its
customers. The costs of developing firmware are expensed as incurred prior to the establishment of its technological feasibility, from
which point the development costs are capitalized and recognized as intangible assets. For the periods presented, technological feasibility
could only be demonstrated shortly before the release of the firmware, and as a result, the development costs that meet the requirements
for capitalization are not material. Impairment
of long-lived assets Intangible
assets that are not ready for use are not subject to amortization but are assessed annually for impairment or more frequently if events
or changes in circumstances indicate that they might be impaired. Long-lived
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
asset is written down immediately to its fair value if its carrying amount is greater than its future undiscounted cash flows. Recognized
impairment losses are not reversed. For
the purposes of assessing impairment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable
cash flows are largely independent of the cash flows of other assets and liabilities. Impairment
losses recognized during the years ended March 31, 2023 and 2024 were $ 0.1
million or less for each year. Contingent
consideration Contingent
consideration is classified as a liability and is remeasured to fair value at each reporting date until the contingency is resolved.
Changes in fair value that are not measurement period adjustments are recognized in the Consolidated Statements of Income. Common
stock Incremental
external costs directly attributable to the issuance of new shares or the exercise of stock options are shown in equity as a deduction,
net of tax, from the proceeds. If
a G roup company purchases the Company’s equity instruments (treasury stock), then the consideration
paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to ordinary shareholders
of the Company as treasury stock until the shares are canceled or reissued. If such ordinary shares are subsequently reissued, then any
consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included
in equity attributable to ordinary shareholders of the Company. 53,816,750
of the Company’s ordinary shares
of no par value. These shares are held as treasury stock. Share
repurchases On
May 23, 2017, the Board approved a share repurchase program of up to R 270
million (equivalent o f
$ 14.3
million
as of March 31, 2024) under which the Company
could repurchase its ordinary shares, including ADSs. On December 3, 2021, the Board approved an increase to the share repurchase program
under which the Company may repurchase ordinary shares, including ADSs. Post this increase, and after giving effect to shares already
purchased under the program as at December 2, 2021, the Company could repurchase additional shares with a cumulative value of R 160
million ( $ 10.0
million ).
The total value of the whole share repurchase program post the December 3, 2021 increase is R 396.5
million ( $ 24.9
million ).
Subsequent to the approved increase in the share repurchase program shares with a value of R 6.6
million
(the equivalent of $ 0.3 million as of March 31, 2024) were
repurchased during fiscal year 2023. During fiscal year 2024 shares with a value of R 10.2
million (the
equivalent of $ 0.5 million as of March 31, 2024) were
repurchased under the share repurchase program. During
the years ended March 31, 2023 and 2024, the Company repurchased 1,166,659
and 1,716,207
shares, respectively, for an aggregate
repurchase consideration of $ 0.4
million and $ 0.5
million respectively. Subsequent to the
repurchases during fiscal year 2023 and 2024, the shares were de-listed and |
