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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
—————————
FORM 10-Q
—————————
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020

or

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ____ to ____

Commission File Number: 001-36027

MIX TELEMATICS LIMITED
(Exact name of Registrant as specified in its charter)

Republic of South AfricaNot Applicable
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
750 Park of Commerce Blvd
Suite 100Boca Raton
Florida33487
(Address of principal executive offices)(Zip Code)
+1(877)585-1088
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
American Depositary Shares, each representing
25 Ordinary Shares, no par value
MIXTNew York Stock Exchange
Ordinary Shares, no par valueNew York Stock Exchange (for listing purposes only)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of October 16, 2020, the registrant had 604,880,384 ordinary shares, of no par value, outstanding.



TABLE OF CONTENTS
 
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (unaudited)
Condensed Consolidated Statements of Income (unaudited)
Condensed Consolidated Statements of Comprehensive Income (unaudited)
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
Condensed Consolidated Statements of Cash Flows (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
 


2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
March 31,
2020
September 30,
2020
ASSETS
Current assets:
Cash and cash equivalents$17,953 $33,836 
Restricted cash699798
Accounts receivables, net of allowances for doubtful accounts of $3.6 million and $4.3 million, respectively
24,10018,876
Inventory, net3,271 3,742
Prepaid expenses and other current assets7,3756,802
Total current assets53,39864,054
Property and equipment, net30,01927,167
Goodwill37,92339,603
Intangible assets, net15,00716,059
Deferred tax assets3,108 3,497
Other assets4,200 4,070
Total assets$143,655 $154,450 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt$2,367 $3,185 
Accounts payables5,251 4,863
Accrued expenses and other liabilities14,83918,835
Deferred revenue5,0774,521
Total current liabilities27,53431,404
Deferred tax liabilities11,43610,540
Long-term accrued expenses and other liabilities5,6605,053
Total liabilities44,63046,997
Commitments and contingencies
Stockholders’ equity:
MiX Telematics Limited stockholders’ equity
Preferred stock: 100 million shares authorized but not issued
  
Common stock: 600.9 million and 604.9 million no-par value shares issued and outstanding as of March 31, 2020 and September 30, 2020, respectively
66,522 67,347 
Less treasury stock at cost: 54 million shares as of March 31, 2020 and September 30, 2020
(17,315)(17,315)
Retained earnings67,482 70,846 
Accumulated other comprehensive loss(11,070)(7,425)
Additional paid-in capital(6,599)(6,005)
Total MiX Telematics Limited stockholders’ equity99,020 107,448 
Non-controlling interest5 5 
Total stockholders’ equity99,025 107,453 
Total liabilities and stockholders’ equity$143,655 $154,450 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3



MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

Three Months Ended September 30,Six Months Ended September 30,
2019202020192020
Revenue
Subscription$32,099 $27,623 $63,737 $53,498 
Hardware and other4,562 3,325 9,207 4,947 
Total revenue36,661 30,948 72,944 58,445 
Cost of revenue
Subscriptions9,417 7,676 18,712 15,025 
Hardware and other3,028 2,621 5,961 3,850 
Total cost of revenue12,445 10,297 24,673 18,875 
Gross profit24,216 20,651 48,271 39,570 
Operating expenses
Sales and marketing3,148 2,447 6,729 5,193 
Administration and other14,616 13,631 29,402 27,122 
Total operating expenses17,764 16,078 36,131 32,315 
Income from operations6,452 4,573 12,140 7,255 
Other (expense)/income(52)(77)323 (175)
Net interest income/(expense)4 (70)77 (140)
Income before income tax expense6,404 4,426 12,540 6,940 
Income tax expense3,058 974 4,198 1,066 
Net income3,346 3,452 8,342 5,874 
Less: Net income attributable to non-controlling interest    
Net income attributable to MiX Telematics Limited$3,346 $3,452 $8,342 $5,874 
Net income per ordinary share
Basic$0.01 $0.01 $0.01 $0.01 
Diluted$0.01 $0.01 $0.01 $0.01 
Net income per American Depository Share
Basic$0.15 $0.16 $0.37 $0.27 
Diluted$0.15 $0.15 $0.36 $0.26 
Ordinary shares
Weighted average554,781 548,008 558,401 547,569 
Diluted weighted average570,011 558,951 574,606 558,829 
American Depository Shares
Weighted average22,191 21,920 22,336 21,903 
Diluted weighted average22,800 22,358 22,984 22,353 


The accompanying notes are an integral part of these condensed consolidated financial statements.
4



MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(In thousands)
(Unaudited)

Three Months Ended September 30,Six Months Ended September 30,
2019202020192020
Net income$3,346 $3,452 $8,342 $5,874 
Other comprehensive (loss)/income
Foreign currency translation adjustments, net of tax(5,573)1,561 (3,846)3,645 
Total comprehensive (loss)/income(2,227)5,013 4,496 9,519 
Less: Total comprehensive income attributable to non-controlling interest    
Total comprehensive (loss)/income attributable to MiX Telematics Limited$(2,227)$5,013 $4,496 $9,519 

The accompanying notes are an integral part of these condensed consolidated financial statements.






































5



MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

Three Months Ended September 30, 2019 and 2020
Common StockTreasury StockAccumulated Other Comprehensive Income/(Loss)Additional Paid-In CapitalRetained EarningsTotal MiX Telematics Limited Stockholders’ EquityNon-Controlling InterestTotal Stockholder’s Equity
SharesAmount
Balance as of July 1, 2019602,472$68,200 $(9,227)$3,820 $(6,791)$65,943 $121,945 $5 $121,950 
Net income— — — — — 3,346 3,346 — 3,346 
Other comprehensive loss— — — (5,573)— — (5,573)— (5,573)
Issuance of common stock in relation to stock options and SARs exercised1,464 — — — — — — —  
Stock-based compensation— — — — 346 — 346 — 346 
Dividends of 4 South African cents (0.3 U.S. cents) per ordinary share declared
— — — — — (1,532)(1,532)— (1,532)
Purchase of treasury stock— — (8,222)— — — (8,222)— (8,222)
Balance as of September 30, 2019603,936 $68,200 $(17,449)$(1,753)$(6,445)$67,757 $110,310 $5 $110,315 
Balance as of July 1, 2020601,019$66,522 $(17,315)$(8,986)$(6,306)$68,687 $102,602 $5 $102,607 
Net income— — — — — 3,452 3,452 — 3,452 
Other comprehensive income— — — 1,561 — — 1,561 — 1,561 
Issuance of common stock in relation to stock options and SARs exercised3,861 825 — — — — 825 — 825 
Stock-based compensation— — — — 301 — 301 — 301 
Dividends of 4 South African cents (0.3 U.S. cents) per ordinary share declared
— — — — — (1,293)(1,293)— (1,293)
Balance as of September 30, 2020604,880 $67,347 $(17,315)$(7,425)$(6,005)$70,846 $107,448 $5 $107,453 











6



MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

Six Months Ended September 30, 2019 and 2020
Common StockTreasury StockAccumulated Other Comprehensive Income/(Loss)Additional Paid-In CapitalRetained EarningsTotal MiX Telematics Limited Stockholders’ EquityNon-Controlling InterestTotal Stockholder’s Equity
SharesAmount
Balance as of April 1, 2019601,948 $68,200 $(9,227)$2,115 $(6,902)$62,750 $116,936 $5 $116,941 
Adjustment on initial application of
ASC 326, net of tax
— — — (22)— (240)(262)— (262)
Net income— — — — — 8,342 8,342 — 8,342 
Other comprehensive income— — — (3,846)— — (3,846)— (3,846)
Issuance of common stock in relation to stock options and SARs exercised1,988 — — — — — — —  
Stock-based compensation— — — — 457 — 457 — 457 
Dividends of 4 South African cents (0.2 U.S. cents) per ordinary share declared
— — — — — (3,095)(3,095)— (3,095)
Purchase of treasury stock— — (8,222)— — — (8,222)— (8,222)
Balance as of September 30, 2019603,936 $68,200 $(17,449)$(1,753)$(6,445)$67,757 $110,310 $5 $110,315 
Balance as of April 1, 2020600,934 $66,522 $(17,315)$(11,070)$(6,599)$67,482 $99,020 $5 $99,025 
Net income— — — — — 5,874 5,874 — 5,874 
Other comprehensive income— — — 3,645 — — 3,645 — 3,645 
Issuance of common stock in relation to stock options and SARs exercised3,946 825 — — — — 825 — 825 
Stock-based compensation— — — — 594 — 594 — 594 
Dividends of 4 South African cents (0.2 U.S. cents) per ordinary share declared
— — (2,510)(2,510)— (2,510)
Balance as of September 30, 2020604,880 $67,347 $(17,315)$(7,425)$(6,005)$70,846 $107,448 $5 $107,453 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7



MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Six Months Ended September 30,
20192020
Cash flows from operating activities
Cash generated from operations$17,218 $22,295 
Interest received419 206 
Interest paid(156)(153)
Income tax paid(2,915)(1,590)
Net cash provided by operating activities14,566 20,758 
Cash flows from investing activities
Acquisition of property and equipment – in-vehicle devices
(8,422)(2,590)
Acquisition of property and equipment – other
(516)(160)
Proceeds from the sale of property and equipment1,327  
Acquisition of intangible assets(2,641)(1,972)
Loans to external parties(350) 
Net cash used in investing activities (10,602)(4,722)
Cash flows from financing activities
Proceeds from issuance of ordinary shares in relation to stock options exercised 825 
Cash paid for ordinary shares repurchased(8,222) 
Cash paid on dividends to MiX Telematics Limited stockholders(3,084)(2,506)
Movement in short-term debt539 740 
Net cash used in financing activities(10,767)(941)
Net (decrease)/increase in cash and cash equivalents, and restricted cash(6,803)15,095 
Cash and cash equivalents, and restricted cash at beginning of the period27,838 18,652 
Effect of exchange rate changes on cash and cash equivalents, and restricted cash(294)887 
Cash and cash equivalents, and restricted cash at end of the period$20,741 $34,634 

The accompanying notes are an integral part of these condensed consolidated financial statements.



8


MIX TELEMATICS LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Summary of Significant Accounting Policies

Nature of the Business

MiX Telematics Limited (the "Company") is a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service ("SaaS"). The Company’s solutions provide enterprise fleets, small fleets and consumers with solutions for safety, efficiency, risk and security.

The Company is incorporated and domiciled in South Africa, with the principal executive office in Boca Raton, Florida.

Basis of preparation and consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and reflect, in the opinion of management, all adjustments, consisting of normal recurring adjustments and accruals, which are necessary for a fair statement of the results of the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC"). The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended March 31, 2020 filed with the SEC on July 23, 2020.

Use of estimates
The preparation of condensed 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.

As of September 30, 2020, the global outbreak of COVID-19 has had and, we believe, will continue to have an adverse impact on global economies and financial markets. We have taken into account the impact of COVID-19, to the extent possible, on our financial statements. However, future changes in economic conditions related to COVID-19 could have an impact on future estimates and judgements used, particularly those relating to goodwill sensitivities and impairment assessments.

Summary of significant accounting policies

There have been no changes to the Company’s significant accounting policies disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020, filed with the SEC on July 23, 2020, that have had a material impact on the Company’s Condensed Consolidated Financial Statements and related notes.


2. Revenue from contracts with customers

The Company provides fleet and mobile asset management solutions. The 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.



9



Contract modifications
As a result of the adverse impact that the COVID-19 pandemic has had on certain of the Company’s customers, various pricing concessions relating to subscriptions, in the form of payment holidays and discounts on monthly billings, were granted during the six months ended September 30, 2020. These pricing concessions were accounted for as contract modifications under ASC 606 Revenue from Contracts with Customers ("ASC 606"), which had the effect of reducing the transaction prices allocated to the remaining distinct performance obligations in the contracts. Accordingly, the effect of the pricing concessions is being recognized as those remaining subscription services are provided. A contract asset of $0.6 million, representing amounts that will only be billed in future periods, was recognized as of September 30, 2020, and is included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet.

Contract liabilities
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, contract liabilities are recorded. Deferred revenue as of March 31, 2020 and September 30, 2020 was $5.1 million and $4.5 million, respectively. During the quarter ended September 30, 2019 and September 30, 2020, revenue of $0.9 million and $0.6 million, respectively, was recognized which was included in the deferred revenue balances at the beginning of each quarter. Revenue of $2.8 million and $1.7 million was recognized for the six months ended September 30, 2019 and September 30, 2020, respectively, which had been included in deferred revenue balances at the beginning of each such financial year.

Contract acquisition costs
Commissions payable to sales employees and external third parties which are incurred to acquire contracts are capitalized and amortized, unless the amortization period is 12 months or less, in which instance they are expensed immediately. Deferred commissions were $3.6 million and $3.5 million as of March 31, 2020 and September 30, 2020, respectively, and are included in Other assets on the Condensed Consolidated Balance Sheet.

The following is a summary of the amortization expense recognized (in thousands):

Three Months Ended September 30,Six Months Ended September 30,
2019202020192020
Amortization recognized during the quarter:$(863)$(782)$(1,674)$(1,475)
Cost of revenue (external commissions)
(622)(563)(1,202)(1,048)
Sales and marketing (internal commissions)
(241)(219)(472)(427)

3. Credit risk related to accounts receivables

The movements in the allowance for doubtful accounts are as follows (in thousands):

Six Months Ended September 30,
20192020
Balance at April 1$3,019 $3,602 
Bad debt provision1,554 2,273 
Write-offs, net of recoveries
(287)(1,748)
Foreign currency translation differences(162)153 
Balance at September 30$4,124 $4,280 


Overview of the Company’s exposure to credit risk from customers

The maximum exposure to credit risk at the reporting date is the carrying value of each receivable and loan to external parties, net of impairment losses where relevant. Other than 18% of the gross receivable balance relating to four debtors as of
10


September 30, 2020 (as of March 31, 2020: 15% of the gross receivable balance relating to four debtors), the Company has no significant concentration of credit risk, due to its spread of customers across various operations and geographical locations.

The Company does not hold any collateral as security.

Net accounts receivables as of March 31, 2020 and September 30, 2020 of $2.9 million and $1.3 million, respectively, are pledged as security for the Company’s overdraft facilities.


4. Property and equipment

Property and equipment comprises owned and right of use assets. The Company leases many assets including property, vehicles, machinery and IT equipment.

The cost and accumulated depreciation of owned equipment are as follows (in thousands):


March 31,
2020
September 30,
2020
Owned equipment
Equipment, vehicles and other$6,114 $6,461 
In-vehicle devices52,824 53,564 
Less: accumulated depreciation and impairments(35,397)(39,033)
Owned equipment, net$23,541 $20,992 

Total depreciation expense related to owned equipment during the three months ended September 30, 2019 and 2020 was $3.4 million and $3.0 million, respectively. Depreciation relating to owned equipment was $6.7 million and $5.8 million during the six months ended September 30, 2019 and 2020, respectively. Depreciation expense related to in-vehicle devices is included in subscription cost of revenue.

The cost and accumulated depreciation of right-of-use property and equipment are as follows (in thousands):

March 31,
2020
September 30,
2020
Right-of-use assets
Property$7,724 $8,073 
Equipment, vehicles and other250 191 
Less: accumulated depreciation(1,496)(2,089)
Right of use property and equipment, net$6,478 $6,175 



5. Intangible assets

Intangible assets comprise the following (in thousands):

As of March 31, 2020As of September 30, 2020
Useful life (in years)Gross Carrying amountAccumulated amortizationNetGross Carrying amountAccumulated amortizationNet
Patents and trademarks
3 - 20
$76 $(45)$31 $60 $(31)$29 
Customer relationships
2 - 15
2,600 (2,068)532 2,643 (2,195)448 
Internal-use software, technology and other
1 - 18
26,508 (12,064)14,444 29,785 (14,203)15,582 
Total$29,184 $(14,177)$15,007 $32,488 $(16,429)$16,059 
11




For the three months ended September 30, 2019 and 2020, amortization expense of $0.9 million, and $0.9 million was recognized, respectively. Amortization expense was $1.9 million, and $1.7 million for the six months ended September 30, 2019 and 2020, respectively.


6. Accrued expenses and other liabilities

Accrued expenses comprise the following (in thousands):

March 31,
2020
September 30,
2020
Current:
Product warranties $601 $600 
Maintenance357 504 
Employee-related accruals5,296 7,096 
Lease liabilities1,094 1,489 
Accrued income tax payable736 1,546 
Other accruals6,755 7,600 
Total current$14,839 $18,835 
Non-current:
Lease liabilities$5,413 $4,824 
Other liabilities247 229 
Total non-current$5,660 $5,053 

Product warranties
The Company 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. The table below provides details of the movement in the accrual (in thousands):

Six Months Ended September 30,
20192020
Product warranties
Balance at April 1$777 $616 
Statement of Income charge156 43 
Utilized(268)(81)
Foreign currency translation difference(28)33 
Balance at September 30$637 $611 
Non-current portion (included in other liabilities)$18 $11 
Current portion$619 $600 


7. Income taxes

Our income tax provision reflects our estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events which are recorded in the period they occur. The estimates are re-evaluated each quarter based on our estimated tax expense for the full fiscal year.

12


Our effective tax rate was 33.5% for the six months ended September 30, 2019 compared to 15.4% for the six months ended September 30, 2020. Our effective tax rate was 47.8% for the three months ended September 30, 2019 compared to 22.0% for the three months ended September 30, 2020. Ignoring the impact of foreign exchange gains and losses net of tax, the effective tax rate for the six months ended September 30, 2019 and 2020, was 28.6% and 29.0%, respectively, and for the three months ended September 30, 2019 and 2020, was 29.6% and 28.4%, respectively.


8. Earnings per share

Basic
Basic earnings per share is calculated by dividing the income attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares in issue during the period.

The net income and weighted average number of shares used in the calculation of basic and diluted earnings per share are as follows (in thousands, except per share data):

Three Months Ended September 30,Six Months Ended September 30,
2019202020192020
Numerator (basic)
Net income attributable to ordinary shareholders$3,346 $3,452 $8,342 $5,874 
Denominator (basic)
Weighted-average number of ordinary shares in issue554,781 548,008 558,401 547,569 
Basic earnings per share $0.01 $0.01 $0.01 $0.01 
American Depository Shares*:
Net income attributable to ordinary shareholders$3,346 $3,452 $8,342 $5,874 
Weighted-average number of American Depository Shares in issue22,191 21,920 22,336 21,903 
Basic earnings per American Depository share$0.15 $0.16 $0.37 $0.27 
*One American Depository Share is the equivalent of 25 ordinary shares.

Diluted
Diluted earnings per share is calculated by dividing the diluted income attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the period. Stock options, stock appreciation rights, performance shares and restricted share units granted to employees under the TeliMatrix Group Executive Incentive Scheme and the MiX Telematics Long-Term Incentive Plan ("LTIP") are considered to be potential ordinary shares. They have been included in the determination of diluted earnings per share if the required performance condition (if applicable) would have been met based on the performance up to the reporting date, and to the extent to which they are dilutive.
13


Three Months Ended September 30,Six Months Ended September 30,
2019202020192020
Numerator (diluted)
Diluted net income attributable to ordinary shareholders$3,346 $3,452 $8,342 $5,874 
Denominator (diluted)
Weighted-average number of ordinary shares in issue554,781 548,008 558,401 547,569 
Adjusted for:
– potentially dilutive effect of stock appreciation rights13,482 9,339 14,358 9,517 
– potentially dilutive effect of stock options and restricted share units1,748 1,604 1,847 1,743 
Diluted-weighted average number of ordinary shares in issue570,011 558,951 574,606 558,829 
Diluted earnings per share$0.01 $0.01 $0.01 $0.01 
American Depository Shares*:
Diluted net income attributable to ordinary shareholders$3,346 $3,452 $8,342 $5,874 
Diluted weighted-average number of American Depository Shares in issue22,800 22,358 22,984 22,353 
Diluted earnings per American Depository share$0.15 $0.15 $0.36 $0.26 
*One American Depository Share is the equivalent of 25 ordinary shares.


9. Segment information

The Company has 6 reportable segments, which are based on the geographical location of the 5 Regional Sales Offices ("RSOs") and also includes the Central Services Organization ("CSO"). CSO is the central services organization that wholesales products and services to RSOs which, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of hardware and software platforms and provides common marketing, product management, technical and distribution support to each of the other reportable segments. CSO is a reportable segment because it produces discrete financial information which is reviewed by the chief operating decision maker ("CODM") and has the ability to generate external revenues.

The CODM has been identified collectively as the executive committee and the Chief Executive Officer who make strategic decisions. The performance of the reportable segments has been measured and evaluated by the CODM using Segment Adjusted EBITDA, which is a measure that uses net income, determined under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board, as a starting point.

Segment assets are not disclosed because such information is not reviewed by the CODM.















14



The following table provides revenue and Segment Adjusted EBITDA (in thousands):

Three Months Ended September 30, 2019
Subscription
revenue (1)
Hardware
and other
revenue (2)
Total revenueSegment Adjusted EBITDA
Regional Sales Offices
Africa$17,868 $1,438 $19,306 $8,585 
Europe2,862 760 3,622 1,367 
Americas5,675 454 6,129 3,006 
Middle East and Australasia4,317 1,623 5,940