Home Substantial portion MIX TELEMATICS LTD MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

MIX TELEMATICS LTD MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the accompanying notes included in Item 8 of this annual report
on Form 10-K.

This discussion contains forward-looking statements that involve risks,
uncertainties and assumptions. Our future results may vary materially from those
indicated as a result of the risks that affect our business, including, among
others, those identified in "Forward-Looking Statements" and "Item 1A. Risk
Factors".

                                    Overview

We are a leading global provider of connected fleet and mobile asset solutions
delivered as Software as a Service ("SaaS"). Our solutions deliver a measurable
return by enabling our customers to manage, optimize and protect their
investments in commercial fleets or personal vehicles. We generate actionable
insights that enable a wide range of customers, from large enterprise fleets to
small fleet operators and consumers, to reduce fuel and other operating costs,
improve efficiency, enhance regulatory compliance, enhance driver safety, manage
risk and mitigate theft. Our solutions mostly rely on our proprietary, highly
scalable technology platforms, which allow us to collect, analyze and deliver
information based on data from our customers' vehicles. Using an intuitive,
web-based interface, dashboards or mobile apps, our fleet customers can access
large volumes of real-time and historical data, monitor the location and status
of their drivers and vehicles and analyze a wide number of key metrics across
their fleet operations.

We were founded in 1996 and we have offices in South Africa, the United Kingdom,
the United States, Uganda, Brazil, Australia, Romania and the United Arab
Emirates as well as a network of more than 130 fleet value-added resellers
worldwide. MiX Telematics shares are publicly traded on the Johannesburg Stock
Exchange (JSE: MIX) and MiX Telematics American Depositary Shares are listed on
the New York Stock Exchange (NYSE: MIXT).

We derive the majority of our revenues from subscriptions to our fleet and
mobile asset management solutions. Our subscriptions generally include access to
our SaaS solutions, connectivity, and in many cases, use of an in-vehicle
device. We also generate revenues from the sale of in-vehicle devices, which
enable customers to use our subscription-based solutions, installation services
of our in-vehicle-devices and driver training for fleet customers. We generate
sales through the efforts of our direct sales teams, staffed in our regional
sales offices, and through our global network of distributors and dealers. Our
direct sales teams focus on marketing our fleet solutions to global and
multinational enterprise accounts and to other large customer accounts located
in regions of the world where we maintain a direct sales presence. Our direct
sales teams have industry expertise across multiple industries, including oil
and gas, transportation and logistics, government and municipal, bus and coach,
rental and leasing, and utilities. In some markets, we rely on a network of
distributors and dealers to sell our solutions on our behalf. Our distributors
and dealers also install our in-vehicle devices and provide training, technical
support and ongoing maintenance for the customers they support.


Impact of COVID-19

We have considered the impact of COVID-19 including its impact on expected
credit losses and potential goodwill impairments, however numerous uncertainties
remain, including the severity of the disease, the duration of the outbreak,
actions that may be taken by governmental authorities, the impact on our
customers and other factors identified in Item 1A. "Risk Factors - The extent to
which the COVID-19 outbreak and measures taken in response thereto impact our
business, results of operations and financial condition will depend on future
developments, which are highly uncertain and are difficult to predict." in this
Form 10-K.

Businesses, employees and operations

The majority of our employees have returned to our offices and we have
implemented protocols to promote social distancing and enhance sanitary measures
in our offices and facilities to conform to government restrictions and best
practices encouraged by governmental and regulatory authorities.


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COVID-19 has disrupted the operations of our customers and channel partners, our
operations and the results of our operations. The nature and extent of the
crisis, multiple variants and waves of the virus, the public health measures to
contain it, the progress and effectiveness of vaccination programs, different
levels of restrictions and the resultant economic impact may differ between
regions and remains uncertain.

Cash and Liquidity

Based on our internal projections we believe that we have sufficient cash
reserves to support us for the foreseeable future. Further details on our cash
resources and borrowings available under our credit facilities are provided in
the liquidity and capital resources section below.

Financial position and impairments

We have taken into account the impact of COVID-19, to the extent possible, on
our financial statements as of reporting date. 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, as well as expected credit losses. Refer to note 2 to
the Consolidated Financial Statements for additional information regarding
Goodwill sensitivities. We will continue to evaluate the nature and extent of
the impact to our business, consolidated results of operations, and financial
condition.

                  Key Financial Measures and Operating Metrics

In addition to financial measures based on our consolidated financial statements, we monitor our business activities using various financial and non-financial metrics.

Subscription revenue

Subscription revenue represents subscription fees for our solutions, which
include the use of our SaaS fleet management solutions, connectivity, and in
many cases, our in-vehicle devices. Our subscription revenue is driven primarily
by the number of subscribers and the monthly price per subscriber, which varies
depending on the services and features customers require, hardware options,
customer size and geographic location.

In fiscal year 2022 subscription revenue has decreased as a percentage of total
revenue due to an increase in hardware and other revenue. A key driver of our
recent hardware revenue improvement has been the new MiX Vision AI solution,
which is seeing strong adoption. In fiscal years 2020, 2021 and 2022,
subscription revenue represented 87.6%, 89.3% and 86.2% respectively, of our
total revenue. In fiscal years 2020, 2021 and 2022, our top 10 customers
represented 23.7%, 21.8% and 16.6% respectively, of our subscription revenue.

The subscribers

Subscribers represent the total number of discrete services we provide to customers at the end of the period.

                                Fiscal Year Ended March 31,
                     2020                  2021                 2022
Subscribers       818,487               744,677               815,165



                       Factors Affecting Our Performance

Level of subscription revenue and hardware revenue

In fiscal year 2022 subscription revenue has decreased as a percentage of total
revenue due to an increase in hardware and other revenue. In fiscal year 2022,
subscription-based revenues accounted for 86.2% of our total revenues, down from
89.3% in 2021 and 87.6% in 2020.

We believe that we are well positioned to grow our base of subscribers, by
adding both fully-bundled subscriptions; subscriptions where the hardware has
been purchased upfront and various add-on solutions that can drive incremental
average revenue per user ("ARPU") expansion over time. We intend to maintain our
investment in sales and marketing and continue to attract new subscribers by
introducing attractive new features and services.

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Additionally, we believe we have the opportunity to expand our fleet management market share among our existing customer base by demonstrating our value proposition, growing with the customer, introducing new innovative value-added solutions and replacing existing fleet management solutions.

Exchange rate fluctuations

Revenue from our international operations has historically represented a
substantial portion of our total revenue. Accordingly, changes in exchange
rates, and in particular a strengthening of the U.S. Dollar, will negatively
affect our reported income and expenses as expressed in U.S. Dollars (our
reporting currency). The South African Rand is the functional currency for the
Company. Currency fluctuations in the South African Rand may positively or
negatively impact our reported income and expenses due to the effects of
translating the functional currency of our foreign subsidiaries into Rand at
different average exchange rates and then translating into our reporting
currency of U.S. Dollars.

In fiscal year 2022, the rand strengthened by 9.2% against the WE dollar and 5.0% against the pound sterling, as shown in the table below.

                                                        Average exchange 

rate for the year ended March, 31st,

                                                         2020                    2021                   2022
South African Rand for U.S. Dollars (per $1.00)                14.78                  16.37                  14.86
% movement                                                    7.5  %                10.8  %                (9.2) %
South African Rand for British Pound (per £1.00)               18.78                  21.35                  20.29
% movement                                                    4.2  %                13.7  %                (5.0) %



We expect continued exchange rate volatility in the South African Rand against
other major currencies. The South African Rand has been even more volatile due
to the uncertain economic conditions in South Africa, the war in Ukraine and
sanctions against Russia. As of June 10, 2022, the South African Rand/U.S.
Dollar exchange rate was 15.66, 5.4% higher than the average exchange rate for
fiscal year 2022.

Mix of subscribers with different revenue and cost savings

We offer services to a wide range of customers, from large enterprise vehicle
fleets to small fleet operators and consumers. The subscription revenue and cost
per subscriber and the subscriber retention pattern differ by type of
subscriber. For example, our entry-level consumer solution, Beam-e, is
characterized by lower revenue and lower cost per subscriber compared to our
large enterprise solutions. Small fleet and consumer customers will enter into
and terminate contracts much more frequently than our enterprise customers,
thereby affecting subscriber retention. As the mix of our subscriber base
evolves, the average revenue per subscriber and average cost per subscriber is
likely to change.

Variable economic conditions in our markets

We seek to capitalize on opportunities and manage risks in our key markets,
which are geographically dispersed with subscribers located in more than 120
countries worldwide. Overall, we believe that our presence across multiple
geographic markets and our exposure to multiple economies provides us with
diversification from the risk of changing economic conditions in any one country
or region. Other macroeconomic factors, such as expectations for future crude
oil and natural gas prices, affect our customers' spending habits. Prolonged or
substantial declines in crude oil and/or natural gas prices, or the perception
that such prices will decrease in the future, negatively impacts our net
subscriber growth and hardware sales in this sector. In addition to
macroeconomic changes, performance in any given region may vary due to multiple
factors, including growth in subscribers, the overall profile of the customer
base (for example, in Africa, we have a significant consumer subscriber base),
the services and hardware options selected by particular subscribers and our
distribution strategy in the region.

Changing regional conditions require management to formulate strategic responses that protect our financial position and maintain our balanced approach to generating revenue growth, profitability and cash flow.

Changing customer needs and Continuous investment in technology

We continuously analyze market trends and opportunities in the various geographies in which we operate and have identified an opportunity to increase subscription revenue growth through the addition of new products and services in some of the regions in which we operate. Our investment in software development is at the heart of our business strategy. Our

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software teams employ an agile software development methodology. We have made a
significant investment in product development, and we have routinely been among
the first to market with innovative solutions and features that cater to the
needs of our customers. For example, major updates to the MiX Vision solution
were made in fiscal year 2021 and MiX Vision AI was launched in fiscal year
2022.

Long sales cycle for our enterprise fleet management solutions

From period to period, our revenues may fluctuate depending upon the customer
contracts we have secured. The typical sales cycle for large enterprise fleet
management solutions contracts may be long, especially in comparison to the
sales cycle for our consumer solutions. It may also be difficult for us to
predict the timing of when we will enter into enterprise fleet management
contracts.

Longer sales cycles for large contracts, for both customers who purchase
in-vehicle devices and those who opt for the fully bundled option, may affect
the comparability of financial results in certain segments. Our revenue may
fluctuate from period to period depending on the level and timing of hardware
sales, while subscription revenue growth is also impacted by the timing of the
rollout of large enterprise fleets. We are focused on mitigating these long
sales cycles and the associated volatility by enhancing our sales pipeline
management process, by increasing our sales and marketing investment levels
across all geographical segments and by diversifying our customer segment focus.

Investment in sales and marketing

We offer our solutions in over 120 countries through a combination of our direct
and indirect marketing efforts. Our sales and marketing strategy is segmented by
geographic region and customer type in order to cost effectively target and
acquire new customers. In certain regions, we sell subscriptions of our fleet
management solutions to large enterprise fleets through our direct sales force.
In other regions, and for sales to small fleet operators and consumers, we work
with an extensive distribution network of regional partners and national
distribution dealers. Through our central services organization headquartered in
South Africa, we provide optimized marketing, product management, technical and
distribution support to each of our regional sales and marketing operations. We
continue to focus on growth and expect to continue to invest in sales and
marketing to grow our customer base and to expand within existing customers.

Basis of presentation and key elements of our results of operations

In fiscal year 2022, we managed our business in six segments which include
Africa, Americas, Brazil, Europe and the Middle East and Australasia (our
regional sales offices ("RSOs")), and our 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 as the Chief Executive Officer who makes 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 income before income tax expense excluding net interest income/expense, net
foreign exchange gains/losses, net loss/profit on sale of property, plant and
equipment, depreciation, amortization, operating lease costs, stock-based
compensation costs, restructuring costs, legal costs associated with patent
infringement, gains or losses on the disposal or impairments of long-lived
assets and corporate and consolidation entries. Product development costs are
capitalized and amortized and this amortization is excluded from Segment
Adjusted EBITDA. The adjusted EBITDA definition has been updated also to exclude
legal costs relating to a patent infringement matter that arose during fiscal
year 2022.

In determining Segment Adjusted EBITDA, 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.

Each RSO's results reflect the external revenue earned, as well as the Segment
Adjusted EBITDA earned (or loss incurred) before the remaining CSO and corporate
costs allocations. Segment assets are not disclosed because such information is
not reviewed by the CODM.

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Revenue

The majority of our revenue is subscription-based. Consequently, growth in
subscribers influences our subscription revenue growth. However, other factors,
including, but not limited to, the types of new subscribers we add and the
timing of entry into subscription contracts also play a significant role. The
price and terms of our customer subscription contracts vary based on a number of
factors, including fleet size, hardware options, geographic region and
distribution channel. In addition, we derive revenue from the sale of in-vehicle
devices, which are used to collect, generate and transmit the data used to
enable our SaaS solutions.

Our customer contracts typically have a three to five year initial term.
Following the initial term, most fleet customers elect to renew for fixed terms
ranging from one to five years. Our third party dealers are typically billed
monthly based on active connections. Some of our customer agreements, including
our consumer subscriptions, provide for automatic monthly or yearly renewals
unless the customer elects not to renew its subscription. Our consumer customer
contracts in South Africa are governed by the Consumer Protection Act, which
allows customers to cancel without paying the full balance of the contract
amount. Our fleet contracts and our customer contracts outside of South Africa
are generally non-cancellable.

Revenue Cost and Gross Margin

Cost of revenue associated with our subscription revenue consists primarily of
costs related to cellular communications, infrastructure hosting, third-party
data providers, service contract maintenance costs, commission expense related
to third party dealers or distributors (commission is capitalized and amortized,
on a straight-line basis, unless the amortization period is 12 months or less)
and depreciation of our capitalized installed in-vehicle devices. Cost of sales
associated with our hardware revenue includes the cost of the in-vehicle
devices, cost of hardware warranty, shipping costs, custom duties, and
commission expense related to third party dealers or distributors. We capitalize
the cost of in-vehicle devices utilized to service customers, for customers
selecting our bundled option, and we depreciate these costs from the date of
installation over their expected useful lives.

We expect that cost of revenue as a percentage of revenue will vary from period
to period depending on our revenue mix, including the proportion of our revenue
attributable to our subscription-based services. Subscription revenue generates
a higher gross profit margin than hardware and other revenue. The majority of
the other components of our cost of revenue are variable and are affected by the
number of subscribers, the composition of our subscriber base, and the number of
new subscriptions sold in the period.

Functionnary costs

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and wages to sales
and marketing employees, commissions paid to employees, travel-related expenses,
and advertising and promotional costs. We pay our sales employees commissions
based on achieving subscription targets and we capitalize commission and
amortize it (unless the amortization period is 12 months or less). Advertising
costs consist primarily of costs for print, radio, television and digital
advertising, search engine optimization, promotions, public relations, customer
events, tradeshows and sponsorships. We expense advertising costs as incurred.
We plan to continue to invest in sales and marketing in order to grow our sales
and build brand and category awareness.

Administrative and other costs

Administration and other charges consist primarily of salaries and wages for
administrative staff, travel costs, professional fees (including audit and legal
fees), real estate leasing costs, expensed research and development costs and
depreciation of fixed assets including vehicles and office equipment and
amortization of intangible assets. We expect that administration and other
charges will increase in absolute terms as we continue to grow our business.

Research and development

For additional information regarding research and development, technology and intellectual property, please see “Item 1. Business”.

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Taxes

In fiscal years 2020, 2021 and 2022, our effective tax rates were 47.2%, 15.3% and 33.1% respectively, compared to a South African statutory rate of 28%. Taxation mainly consists of normal statutory income tax paid or payable and deferred tax on any temporary differences.

Our effective tax rate may vary primarily according to the mix of profits made
in various jurisdictions and the impact of certain non-deductible/non-taxable
foreign exchange movements, net of tax. As a result, significant variances in
future periods may occur. A reconciliation of the actual tax rate to the South
African tax rate of 28% is disclosed in note 11 to the consolidated financial
statements.


































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                             Results of operations

The following table presents certain consolidated income statement data:

                                                                                For the year ended March 31,
                                                                   2020                  2021                  2022

                                                                                       (In thousands)

Total revenue                                                $      145,650          $ 126,894          $          143,294

Total cost of revenue                                                53,015             43,865                      51,859
Gross profit                                                         92,635             83,029                      91,435

Sales and marketing                                                  13,324             11,344                      15,436

Administration and other                                             58,263             53,487                      61,550
Income from operations                                               21,048             18,198                      14,449
Other expense                                                           299                897                         574
Net interest income/(expense)                                            67                (72)                      (510)
Income tax expense                                                    9,829              2,634                       4,418
Net income                                                           10,987             14,595                       8,947

Less: Net income attributable to non-controlling                          -                  -                           -

interest

Net income attributable to MiX Telematics Limited            $       10,987          $  14,595          $            8,947

The following table presents, as a percentage of sales, the data from the consolidated statements of income:

                                                                                For the year ended March 31,
                                                                   2020                  2021                  2022
                                                                                        (Percentage)
Total revenue                                                           100.0%             100.0%                   100.0%
Total cost of revenue                                                     36.4               34.6                     36.2
Gross profit                                                              63.6               65.4                     63.8
Sales and marketing                                                        9.1                8.9                     10.8

Administration and other                                                  40.0               42.2                     43.0
Income from operations                                                    14.5               14.3                     10.1
Other expense                                                              0.2                0.7                      0.4
Net interest income/(expense)                                                -              (0.1)                    (0.4)
Income tax expense                                                         6.7                2.0                      3.1
Net income                                                                 7.5               11.5                      6.2

Less: Net income attributable to non-controlling
interest                                                                     -                  -                        -
Net income attributable to MiX Telematics Limited                          7.5               11.5                      6.2





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Operating results for fiscal year 2021 compared to fiscal year 2022

Revenue
                                                      For the year ended March 31,
                                                   2021                   2022                     % Change           % Change at
                                                                                                                   constant currency
                                                           (In thousands, except for percentages)
Subscription revenue                        $       113,351          $    123,573                          9.0  %              2.8  %
Hardware and other revenue                           13,543                19,721                         45.6  %             41.2  %
                                            $       126,894          $    143,294                         12.9  %              6.9  %


Our total turnover increased by $16.4 million or 12.9%, from fiscal 2021 to fiscal 2022. The main factors that affected our revenue growth were as follows:

•Subscription revenue increased by 9.0% to $123.6 million, compared to $113.4
million for fiscal year 2021. Subscription revenue represented 86.2% of our
total revenue for fiscal year 2022 compared to 89.3% for the prior year.
Subscription revenues increased by 2.8% on a constant currency basis, year over
year. During fiscal year 2022, our subscriber base grew by a net 70,500
subscribers to 815,200 subscribers at March 31, 2022.

The majority of our revenues and subscription revenues are derived from
currencies other than the U.S. Dollar. Accordingly, the weakening of the U.S.
Dollar against these currencies (in particular against the South African Rand)
following currency volatility, has positively impacted our revenue and
subscription revenues reported in U.S. Dollars. Compared to fiscal year 2021,
the South African Rand strengthened by 9% against the U.S. Dollar. The Rand/U.S.
Dollar exchange rate averaged R14.86 in fiscal year 2022 compared to an average
of R16.37 during fiscal year 2021. The impact of translating foreign currencies
to U.S. Dollars at the average exchange rates during fiscal year 2022 led to a
6.2% increase in reported U.S. Dollar subscription revenues.

•Hardware and other revenue increased by $6.2 million, or 45.6%, from fiscal
year 2021 to fiscal year 2022. Our fiscal year 2022 hardware revenue strength
has been due to the new MiX Vision AI solution, which is seeing strong adoption,
as well as the improvement in trading conditions in line with economic recovery
from the pandemic.

The impact of converting foreign currencies into WE Dollars at average exchange rates in fiscal 2022 resulted in a 6.0% increase in WE
Income in dollars.

The breakdown of third-party revenue by segment is shown in the table below:

                                                                            For the Year Ended March 31,
                                         2021               2022                2021                2022           2021                 2022
                                                                                   (In thousands)
                                              Total Revenue                      Subscription Revenue            Hardware and other revenue
Africa                               $  67,948          $  83,176         

$62,453 $74,778 $5,495 $8,398
Americas

                                18,981             15,574               18,211             14,036               770             1,538
Middle East and Australasia             21,237             22,554               16,558             16,950             4,679             5,604
Europe                                  14,579             17,254               12,138             13,509             2,441             3,745
Brazil                                   4,064              4,654                3,922              4,253               142               401
CSO                                         85                 82                   69                 47                16                35
Total                                $ 126,894          $ 143,294          $   113,351          $ 123,573    $       13,543          $ 19,721



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In the Africa segment, subscription revenue increased by $12.3 million or 19.7%.
On a constant currency basis, the increase in subscription revenue was 9.5% as a
result of a 10.6% increase in subscribers since April 1, 2021. Hardware and
other revenue increased by $2.9 million or 52.8%. Total revenue increased by
$15.2 million or 22.4%. On a constant currency basis, total revenue growth was
12.4%.

In the Americas segment, subscription revenue declined by $4.2 million or 22.9%
despite a 8.1% increase in subscribers since April 1, 2021. Included in fiscal
year 2021 subscription revenue reported was a once off contract modification fee
of $1.1 million, pertaining to the reduction of existing subscriber contracts of
a major energy sector customer following a reduction of their fleet due to
prevailing economic conditions. Hardware and other revenue increased by $0.8
million or 99.7%. Total revenue declined by $3.4 million or 18.0%.

Subscription revenue in the Middle East and Australasia segment increased by
$0.4 million or 2.4%. On a constant currency basis, the increase in subscription
revenue was 0.5%. Subscribers increased by 3.5% since April 1, 2021. Hardware
and other revenue increased by $0.9 million or 19.8%. Total revenue increased by
$1.3 million or 6.2%. Total revenue in constant currency increased by 4.1%.

In the Europe segment, subscription revenue increased by $1.4 million or 11.3%.
On a constant currency basis, the growth in subscription revenue was 9.9%.
Subscribers increased by 10.0% since April 1, 2021. Hardware and other revenues
increased by $1.3 million or 53.4%. Total revenue increased by $2.7 million or
18.4%. On a constant currency basis total revenue growth was 16.9%.

In the Brazil segment, subscription revenue increased by $0.3 million or 8.4%.
On a constant currency basis, subscription revenue increased by 7.2%.
Subscribers increased by 4.4% since April 1, 2021. Hardware and other revenue
increased by $0.3 million or 182.4%. Total revenue increased by $0.6 million or
14.5%. On a constant currency basis, total revenue increased by 13.2%.

Revenue Cost and Gross Margin

                                                                    For the year ended March 31,
                                                                     2021                    2022
                                                               (In

thousands, except for percentages)

Cost of revenue - subscription                                $      33,414            $         36,683
Cost of revenue - hardware and other                                 10,451                      15,176

Gross profit                                                  $      83,029            $         91,435
Gross profit margin                                                    65.4    %               63.8   %
Gross profit margin - subscription                                     70.5    %               70.3   %
Gross profit margin - hardware and other                               22.8    %               23.0   %


Compared to an increase in total revenue of $16.4 million or 12.9%, cost of
revenues increased by $8.0 million or 18.2%, from fiscal year 2021 to fiscal
year 2022. This, together with the higher levels of hardware and other revenue,
resulted in a lower gross profit margin of 63.8% in fiscal year 2022 compared to
65.4% in fiscal year 2021.

Subscription revenue, which generates a higher gross profit margin than hardware and other revenue, contributed 86.2% of total revenue in fiscal 2022, compared to 89.3% in fiscal 2022. financial year 2021.

During fiscal year 2022, hardware and other margins were higher than in fiscal
year 2021, mainly due to the geographical sales mix and the distribution
channels. Hardware sales via our dealer channel and the MiX Vision AI attract
lower gross margins.

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Sales and Marketing

                                            For the year ended March 31,
                                         2021                                   2022
                                       (In thousands, except for percentages)

Sales and marketing           $              11,344                          $   15,436
As a percentage of revenue                      8.9    %                       10.8   %


Sales and marketing costs increased by $4.1 million, or 36.1%, from fiscal year
2021 to fiscal year 2022 against a 12.9% increase in total revenue. The increase
in fiscal year 2022 was primarily as a result of increases of $1.9 million in
advertising costs, $1.5 million in employee costs, $0.2 million in bonuses, $0.2
million in travel costs and other increases of $0.3 million, none of which were
individually significant. In fiscal year 2022, sales and marketing costs
represented 10.8% of revenue compared to 8.9% of revenue in fiscal year 2021.

Administrative and other expenses

                                       For the year ended March 31,
                                            2021                       2022
                                  (In thousands, except for percentages)

Administration and other     $                            53,487    $   61,550
As a percentage of revenue                               42.2  %      43.0   %


Administrative and other expenses increased by $8.1 millioni.e. 15.1%, from fiscal year 2021 to fiscal year 2022.

The increase mainly relates to increases of $3.4 million in salaries and wages,
$1.2 million in bonuses, $0.8 million in information & technology costs, $2.3
million in professional fees (including $0.6 million in legal costs associated
with patent infringement), $0.6 million in training and recruitment costs,
increases in expected credit loss provision of $0.9 million, offset by $0.9
million saving due to restructuring costs and other decreases of $0.2 million,
none of which were individually significant.
Taxation

                               For the year ended March 31,
                                    2021                      2022
                          (In thousands, except for percentages)

Income tax expense   $                             2,634    $   4,418
Effective tax rate                               15.3  %      33.1  %



Income tax expense increased by 67.7%. Our effective tax rate increased by 17.8%
to 33.1% in fiscal year 2022. A reconciliation of our effective tax rate to the
South African corporate tax rate of 28% for both fiscal years 2022 and 2021, is
presented in note 11 to the consolidated financial statements. In fiscal year
2022 the effective tax rate decreased by 3.1% as a result of certain non-taxable
foreign exchange movements on intercompany loans which have led to deferred tax
charges being recognized in the consolidated statements of income. In fiscal
year 2021 non-taxable foreign exchange differences decreased the tax rate by
19.7%.


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Operating results for fiscal year 2020 compared to fiscal year 2021

Revenue
                                                          For the year ended March 31,
                                                   2020                       2021                        % Change           % Change at
                                                                                                                          constant currency
                                                               (In thousands, except for percentages)
Subscription revenue                        $        127,570          $             113,351                     (11.1) %             (6.1) %
Hardware and other revenue                            18,080                         13,543                     (25.1) %            (23.8) %
                                            $        145,650          $             126,894                     (12.9) %             (8.3) %

Our total turnover decreased by $18.8 million or 12.9%, from fiscal 2020 to fiscal 2021. The main factors affecting our revenue contraction are as follows:

•Subscription revenue decreased by 11.1% to $113.4 million, compared to $127.6
million for fiscal year 2020. Subscription revenue represented 89.3% of our
total revenue for fiscal year 2021 compared to 87.6% for the prior year.
Subscription revenues decreased by 6.1% on a constant currency basis, year over
year. The decline in constant currency subscription revenue was primarily due to
the contraction in our subscriber base as a result of economic conditions
attributable to the COVID-19 pandemic. During fiscal year 2021, our subscriber
base contracted by 73,800 subscribers to 744,700 subscribers at March 31, 2021.
We experienced fleet contraction in a number of key verticals such as the oil
and gas vertical, consumer vertical and leasing vertical which impacted both our
subscriber-count and subscription revenue line, the contraction is mainly
attributable to our low ARPU asset tracking subscribers.

The majority of our revenues and subscription revenues are derived from
currencies other than the U.S. Dollar. Accordingly, the strengthening of the
U.S. Dollar against these currencies (in particular against the South African
Rand) following currency volatility arising from the economic disruption caused
by COVID-19, has negatively impacted our revenue and subscription revenues
reported in U.S. Dollars. Compared to fiscal year 2020, the South African Rand
weakened by 11% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate
averaged R16.37 in fiscal year 2021 compared to an average of R14.78 during
fiscal year 2020. The impact of translating foreign currencies to U.S. Dollars
at the average exchange rates during fiscal year 2021 led to a 5.0% reduction in
reported U.S. Dollar subscription revenues.

•Hardware and other revenue decreased by $4.5 million, or 25.1%, from fiscal
year 2020 to fiscal year 2021 primarily as a result of a global economic
slowdown following the disruption caused by the COVID-19 pandemic. As shown in
the table below, hardware and other revenue was lower across all geographical
segments.

The impact of converting foreign currencies into WE Dollars at average exchange rates in fiscal 2021 resulted in a 4.6% reduction in WE
Income in dollars.

The breakdown of third-party revenue by segment is shown in the table below:

                                                                            For the Year Ended March 31,
                                         2020               2021                2020                2021           2020                 2021
                                                                                   (In thousands)
                                              Total Revenue                      Subscription Revenue            Hardware and other revenue
Africa                               $  76,756          $  67,948         

$70,886 $62,453 $5,870 $5,495
Americas

                                24,529             18,981               22,322             18,211             2,207               770
Middle East and Australasia             23,130             21,237               17,389             16,558             5,741             4,679
Europe                                  15,027             14,579               11,682             12,138             3,345             2,441
Brazil                                   5,795              4,064                5,181              3,922               614               142
CSO                                        413                 85                  110                 69               303                16
Total                                $ 145,650          $ 126,894          $   127,570          $ 113,351    $       18,080          $ 13,543



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In the Africa segment, subscription revenue decreased by $8.4 million or 11.9%.
On a constant currency basis, the contraction in subscription revenue was 3.4%
as a result of a 10.1% decrease in subscribers since April 1, 2020. Hardware and
other revenue decreased by $0.4 million or 6.4%. Total revenue decreased by $8.8
million or 11.5%. On a constant currency basis, total revenue contraction was
3.1%.

In the Americas segment, subscription revenue declined by $4.1 million or 18.4%
as a result of both a 27.7% decrease in subscribers since April 1, 2020 and as a
result of economic conditions in the oil and gas vertical. Included in fiscal
year 2021 subscription revenue reported above is revenue of $1.1 million
pertaining to the reduction of existing subscriber contracts of a significant
energy sector customer, following a reduction of their fleet due to current
economic conditions. Hardware and other revenue declined by $1.4 million or
65.1%. Total revenue declined by $5.5 million or 22.6%.

Subscription revenue in the Middle East and Australasia segment declined by $0.8
million or 4.8%. On a constant currency basis, the decline in subscription
revenue was 7.2%. Subscribers decreased by 1.8% since April 1, 2020. Hardware
and other revenue declined by $1.1 million or 18.5%. Total revenue declined by
$1.9 million or 8.2%. Total revenue in constant currency declined by 10.7%.

In the Europe segment, subscription revenue growth was $0.5 million or 3.9%. On
a constant currency basis, the growth in subscription revenue was 0.3%.
Subscribers increased by 0.5% since April 1, 2020. Total revenue decreased by
$0.4 million or 3.0%, due to a decrease in hardware and other revenues of $0.9
million compared to fiscal year 2020. Total revenue decreased by 6.4% on a
constant currency basis.

In the Brazil segment, subscription revenue declined by $1.3 million or 24.3%.
On a constant currency basis, subscription revenue decreased by 0.5%.
Subscribers increased by 3.9% since April 1, 2020 which was offset by pricing
concessions granted to customers as a result of economic conditions attributable
to the COVID-19 pandemic. Hardware and other revenue declined by $0.5 million or
76.9%. Total revenue declined by $1.7 million or 29.9%. On a constant currency
basis, total revenue decreased by 7.8%.

Revenue Cost and Gross Margin

                                                                    For the year ended March 31,
                                                                     2020                    2021
                                                               (In

thousands, except for percentages)

Cost of revenue - subscription                                $      39,828            $         33,414
Cost of revenue - hardware and other                                 13,187                      10,451

Gross profit                                                  $      92,635            $         83,029
Gross profit margin                                                    63.6    %               65.4   %
Gross profit margin - subscription                                     68.8    %               70.5   %
Gross profit margin - hardware and other                               27.1    %               22.8   %


Compared to a decline in total revenues of $18.8 million i.e. 12.9%, the cost of sales decreased by $9.2 million i.e. 17.3%, from fiscal year 2020 to fiscal year 2021.

Subscription revenue, which generates a higher gross profit margin than hardware
and other revenue, contributed 89.3% of total revenue in fiscal year 2021
compared to 87.6% in fiscal year 2020. Fiscal year 2020 included $2.0 million
in-vehicle device accelerated depreciation which resulted in an increased
subscription revenue margin in fiscal year 2021 compared to fiscal year 2020.

In fiscal 2021, hardware and other margins were lower than in fiscal 2021, primarily due to the geographic distribution of sales and distribution channels. Hardware sales through our reseller network generate lower gross margins.

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Sales and Marketing

                                        For the year ended March 31,
                                             2020                       2021
                                   (In thousands, except for percentages)

Sales and marketing           $                            13,324    $   11,344
As a percentage of revenue                                 9.1  %       8.9   %


Sales and marketing costs decreased by $2.0 million, or 14.9%, from fiscal year
2020 to fiscal year 2021 against a 12.9% decrease in total revenue. The decrease
in fiscal year 2021 was primarily as a result of savings of $1.0 million in
employee costs, $0.7 million in travel costs and other decreases of $0.3
million, none of which were individually significant. In fiscal year 2021, sales
and marketing costs represented 8.9% of revenue compared to 9.1% of revenue in
fiscal year 2020.

Administrative and other expenses

                                       For the year ended March 31,
                                            2020                       2021
                                  (In thousands, except for percentages)

Administration and other     $                            58,263    $   53,487
As a percentage of revenue                               40.0  %      42.2   %

Administrative and other expenses decreased by $4.8 millioni.e. 8.2%, from fiscal year 2020 to fiscal year 2021.

The decrease mainly relates to savings of $4.1 million in salaries and wages,
travel costs of $0.8 million and decreases in expected credit loss provision of
$1.0 million, offset by restructuring costs of $1.1 million.
Taxation

                               For the year ended March 31,
                                    2020                      2021
                          (In thousands, except for percentages)

Income tax expense   $                             9,829    $   2,634
Effective tax rate                               47.2  %      15.3  %


Income tax expense decreased by 73.2%. Our effective tax rate decreased by 31.9%
to 15.3% in fiscal year 2021. A reconciliation of our effective tax rate to the
South African corporate tax rate of 28% for both fiscal years 2021 and 2020, is
presented in note 11 to the consolidated financial statements. In fiscal year
2021 the effective tax rate decreased by 19.7% as a result of certain
non-taxable foreign exchange movements on intercompany loans which have led to
deferred tax charges being recognized in the consolidated statements of income.
In fiscal year 2020 non-deductible foreign exchange differences increased the
tax rate by 19.6%.

Inflation Risk

We do not believe that inflation had a material effect on our business,
financial condition or results of operations in the last three fiscal years.
Current economic projections remain uncertain as a result of the COVID-19
pandemic sweeping around the world, a sudden and sharp surge in global inflation
mainly as a result of global supply chain constraints, global politics,
sanctions and the impact thereof on global trade. If our costs were to become
subject to significant inflationary pressures, we may not be able to fully
offset these higher costs through price increases. Our inability to do so could
harm our business, financial condition and results of operations. Refer to Item
1A. "Risk Factors" for further information regarding inflation risk.

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                          Non-GAAP Financial Measures
We use certain measures to assess the financial performance of our business.
Certain of these measures are termed "non-GAAP measures" because they exclude
amounts that are included in, or include amounts that are excluded from, the
most directly comparable measure calculated and presented in accordance with
GAAP, or are calculated using financial measures that are not calculated in
accordance with GAAP. These non-GAAP measures include adjusted EBITDA, adjusted
EBITDA margin, adjusted net income, adjusted net income per share, free cash
flow and constant currency information.

An explanation of the relevance of each of the non-GAAP measures, a
reconciliation of the non-GAAP measures to the most directly comparable measures
calculated and presented in accordance with GAAP and a discussion of their
limitations is set out below. We do not regard these non-GAAP measures as a
substitute for, or superior to, the equivalent measures calculated and presented
in accordance with GAAP or those calculated using financial measures that are
calculated in accordance with GAAP.

Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA and adjusted EBITDA margin are two of the profit measures
reviewed by the CODM. We define adjusted EBITDA as income before income taxes,
net interest income/expense, net foreign exchange gains/losses, depreciation of
property, plant and equipment including capitalized customer in-vehicle devices,
amortization of intangible assets including capitalized internal-use software
development costs and intangible assets identified as part of a business
combination, stock-based compensation costs, restructuring costs, legal costs
associated with patent infringement and profits/losses on the disposal or
impairments of assets or subsidiaries. The adjusted EBITDA definition has been
updated also to exclude legal costs relating to a patent infringement matter
that arose during fiscal year 2022. We define adjusted EBITDA margin as adjusted
EBITDA divided by total revenue.

We have included adjusted EBITDA and adjusted EBITDA margin in this Annual
Report on Form 10-K because they are key measures that our management and Board
of Directors use to understand and evaluate our core operating performance and
trends; to prepare and approve its annual budget; and to develop short and
long-term operational plans. In particular, the exclusion of certain expenses in
calculating adjusted EBITDA and adjusted EBITDA margin can provide a useful
measure for period-to-period comparisons of the Company's core business.
Accordingly, we believe that adjusted EBITDA and adjusted EBITDA margin provide
useful information to investors and others in understanding and evaluating our
operating results.

A reconciliation of net income (the most directly comparable financial measure
presented in accordance with GAAP) to adjusted EBITDA for the periods shown is
presented below.

                     Reconciliation of net income to adjusted EBITDA for the year ended March 31,

                                                                    2020                 2021                2022
                                                                                   (In thousands)
Net income                                                     $       10,987       $       14,595       $       8,947
Plus: Income tax expense                                                9,829                2,634               4,418
(Less)/plus: Net interest (income)/expense                               (67)                   72                 510
Plus: Foreign exchange losses                                             610                  959                 648
Plus: Depreciation (1)                                                 16,149               12,878              10,693
Plus: Amortization (2)                                                  3,823                3,681               4,258
Plus: Impairment of long-lived assets                                       6                    8                  47
Plus: Stock-based compensation costs                                      660                1,273               1,325

Net (minus)/plus: (profit)/loss on sale of property, plant and equipment

                                                               (270)                   13                (36)
(Less)/plus: Restructuring costs                                          (1)                1,055                 164
Plus: Legal costs associated with patent infringement                       -                    -                 591
Adjusted EBITDA                                                $       41,726       $       37,168       $      31,565
Adjusted EBITDA margin                                               28.6   %             29.3   %             22.0  %


(1) Includes depreciation of equipment held (including on-board devices). (2) Includes amortization of intangible assets (including intangible assets identified as part of a business combination).

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Our use of Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as isolated performance measures or as a substitute for analysis of our results such as presented in accordance with GAAP.

Some of these limitations are:

•although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and adjusted
EBITDA does not reflect cash capital expenditure requirements for such
replacements or for new capital expenditure requirements;

•Adjusted EBITDA does not reflect changes or cash requirements for our working capital requirements;

•Adjusted EBITDA does not take into account the potentially dilutive impact of stock-based compensation;

•Adjusted EBITDA does not reflect tax payments which may represent a reduction in the cash available to us;

• other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and

•certain of the adjustments (such as restructuring costs, impairment of
long-lived assets and others) made in calculating adjusted EBITDA are those that
management believes are not representative of our underlying operations and,
therefore, are subjective in nature.

Because of these limitations, adjusted EBITDA and adjusted EBITDA margin should
be considered alongside other financial performance measures, including income
from operations, net income and our other results.


Adjusted net income

Adjusted net income is defined as net income excluding net foreign exchange gains/losses net of tax.

Reconciliation of net income to adjusted net income

                                                                        For the year ended March 31,
                                                                  2020                 2021               2022
                                                                               (In thousands)
Net income                                                 $    10,987              $ 14,595          $   8,947
Net foreign exchange losses                                        610                   959                648
Income tax effect of net foreign exchange losses                 4,028                (3,657)              (563)
Adjusted net income                                        $    15,625              $ 11,897          $   9,032


Adjusted basic and diluted net earnings per share

Adjusted net earnings per share is defined as adjusted net earnings divided by the weighted average number of ordinary shares outstanding during the period.

We have included adjusted net income per share in this Annual Report because it
provides a useful measure for period-to-period comparisons of our core business
by excluding net foreign exchange gains/losses net of tax and associated tax
consequences from earnings. Accordingly, we believe that adjusted net income per
share provides useful information to investors and others in understanding and
evaluating our operating results.

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Reconciliation of net income and adjusted net income per share

                                                                        For 

the year has ended March, 31st,

                                                                 2020                 2021               2022
                                                                               (In thousands)
Net income                                                 $    10,987             $ 14,595          $  14,595
Net foreign exchange losses                                        610                  959                959
Income tax effect of net foreign exchange losses                 4,028               (3,657)            (3,657)
Adjusted net income                                        $    15,625      

$11,897 $9,032

Weighted average number of ordinary shares in issue
Basic ('000)                                                   553,653              549,415            551,923
Diluted ('000)                                                 567,879              560,624            563,958

Adjusted net income per share
Basic ($)                                                  $     0.028             $  0.022          $   0.016
Diluted ($)                                                $     0.028             $  0.021          $   0.016



Free Cash Flow

Free cash flow is determined as net cash provided by operating activities less
capital expenditure for investing activities. We believe that free cash flow
provides useful information to investors and others in understanding and
evaluating the Company's cash flows as it provides detail of the amount of cash
the Company generates or utilizes after accounting for all capital expenditures
including investments in in-vehicle devices.

The following table (in thousands) reconciles net cash provided by operating activities to free cash flow for the periods indicated:

                                                     For the year ended March 31,
                                                   2020              2021          2022
                                                            (In thousands)

Net cash flow generated by operating activities $28,178 $38,572

     $ 19,402
Less: Capital expenditure payments               (20,372)           (8,654)      (26,217)
Free cash flow                               $     7,806          $ 29,918      $ (6,815)



Constant Currency Information

Constant currency information has been presented in the sections below to
illustrate the impact of changes in currency rates on our results. The constant
currency information has been determined by adjusting the current financial
reporting year's results to the prior year's average exchange rates, determined
as the average of the monthly exchange rates applicable to the year. The
measurement has been performed for each of our currencies, including the South
African Rand and British Pound. The constant currency growth percentage has been
calculated by utilizing the constant currency results compared to the prior year
results.

The constant currency information represents non-GAAP information. We believe
this provides a useful basis to measure the performance of our business as it
removes distortion from the effects of foreign currency movements during the
period.

Due to the significant portion of our customers who are invoiced in non-U.S.
Dollar denominated currencies, we also calculate our subscription revenue growth
rate on a constant currency basis, thereby removing the effect of currency
fluctuation on our results of operations.



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See discussion below for annual growth in constant currency. The following tables provide the reconciliation in constant currencies to the most directly comparable GAAP measure for the years indicated:

Subscription Revenue

                                                                  For the year ended March 31,
                                2020                 2021                    % Change              2021               2022               % Change
                                                             (In thousands, except for percentages)
Subscription revenue as
reported                    $ 127,570          $         113,351                (11.1) %       $ 113,351          $ 123,573                    9.0  %
Conversion impact of U.S.
Dollar/other currencies             -                      6,437                  5.0  %               -             (7,048)                  (6.2) %
Subscription revenue on a
constant currency basis     $ 127,570          $         119,788                 (6.1) %       $ 113,351          $ 116,525                    2.8  %



Hardware and Other Revenue

                                                                    For the year ended March 31,
                                  2020                  2021                   % Change              2021               2022              % Change
                                                               (In thousands, except for percentages)
Hardware and other revenue as
reported                      $   18,080          $         13,543                 (25.1) %       $ 13,543          $  19,721                  45.6  %
Conversion impact of U.S.
Dollar/other currencies                -                       230                   1.3  %              -               (596)                 (4.4) %
Hardware and other revenue on
a constant currency basis     $   18,080          $         13,773                 (23.8) %       $ 13,543          $  19,125                  41.2  %



Total Revenue

                                                                   For the year ended March 31,
                                2020                 2021                    % Change               2021               2022               % Change
                                                              (In thousands, except for percentages)
Total revenue as reported   $ 145,650          $         126,894                 (12.9) %       $ 126,894          $  143,294                  12.9  %
Conversion impact of U.S.
Dollar/other currencies             -                      6,667                   4.6  %               -              (7,644)                 (6.0) %
Total revenue on a constant
currency basis              $ 145,650          $         133,561                  (8.3) %       $ 126,894          $  135,650                   6.9  %






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                        Liquidity and capital resources

We believe that our cash and borrowings available under our credit facilities
will be sufficient to meet our liquidity requirements for the foreseeable
future. Liquidity risk is reduced as a result of stable income due to the
recurring nature of our income, available cash resources, as well as unutilized
facilities which are available.
The following tables provide a summary of our cash flows for each of the three
years ended March 31, 2020, 2021 and 2022:

                                                                                    Fiscal Year Ended March 31,
                                                                         2020                 2021               2022
                                                                                          (In thousands)
Net cash generated from operating activities                        $   28,178            $  38,570          $  19,402
Net cash used in investing activities                                  (19,422)              (8,650)           (26,157)
Net cash used in financing activities                                  (15,451)              (5,209)            (5,067)

Net (decrease)/increase in cash and cash equivalents and restricted cash

                                                         (6,695)              24,711            (11,822)

Cash and cash equivalents and restricted cash at the beginning of the year

                                                   27,838               18,652             46,343

Effect of changes in exchange rates on cash and cash equivalents and restricted cash

                                                     (2,491)               2,978                198

Cash, cash equivalents and restricted cash at the end of the year

                                                            $   18,652            $  46,341          $  34,719


We fund our operations, capital expenditures and acquisitions with cash generated from operating activities, cash on hand and our unused debt facilities.

Our current policy is to pay regular dividends, and we expect these dividend payments to be made on a quarterly basis.

From March 31, 20202021 and 2022, the Company had approved, but not yet contracted, capital commitments for intangible assets of $3.0 million, $4.7 million and $5.6 million respectively.

From March 31, 20202021 and 2022, the Company had approved and entered into capital commitments for property, plant and equipment of $1.8 million, $1.2 million and $14.8 million, respectively; and for the intangible fixed assets of $0.9 million, $1.3 million and $1.6 million respectively.

Capital commitments will be funded from a mix of working capital and cash and cash equivalents. Capital commitments for intangible assets relate to software and technology and capital commitments for property, plant and equipment relate primarily to embedded devices.

On May 23, 2017, the MiX Telematics Limited Board approved a share repurchase
program of up to R270 million (equivalent of $18.6 million as of March 31, 2022)
under which we may repurchase our 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 R160 million ($10.0 million). The total value of the whole
share repurchase program post the December 3, 2021 increase is R396.5 million
($24.9 million). During fiscal year 2022 shares with a value of R44.7 million
(equivalent of $3.0 million as of March 31, 2022) were repurchased under the
share repurchase program. Additional shares to the value of R115.3 million
(equivalent of $8.0 million as of March 31, 2022) may still be repurchased.

We expect any repurchases under this share repurchase program to be funded out
of existing cash resources. During fiscal year 2022, the Company repurchased
6,020,085 ordinary shares on the open market at prevailing market prices for a
cumulative consideration of $3.0 million. Refer to "Item 5. Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities" for information regarding our share repurchase program.

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Operational activities

Net cash provided by operating activities during fiscal year 2020 consisted of
our net income (after excluding non-cash charges) of $52.3 million, a net
reduction in operating assets and liabilities investments of $18.8 million, net
interest received of $0.5 million and taxes paid of $5.8 million.

Net cash provided by operating activities increased from $28.2 million in fiscal
year 2020 to $38.6 million in fiscal year 2021 which is primarily attributable
to improved cash generated from operations of $10.5 million offset by lower net
interest received of $0.1 million. The improved cash generated from operations
is primarily as a result of improved working capital management of $17.9 million
(specifically a decrease in accounts receivables of $9.2 million due to improved
management of receivables and lower revenues, an increase in accrued expenses
and other liabilities of $8.6 million, foreign currency translation adjustments
of $6.0 million, and lower capitalized commissions of $1.4 million, partially
offset by a decrease in accounts payables of $5.9 million, prepaid expenses and
other current assets of $1.6 million and an increase in inventories of $0.4
million), and an increase in net income of $3.6 million.

Net cash provided by operating activities decreased from $38.6 million in fiscal
year 2021 to $19.4 million in fiscal year 2022. This is primarily attributable
to lower cash generated from operations of $17.4 million, lower net interest
received of $0.3 million and increased taxation paid of $1.4 million. The lower
cash generated from operations is primarily as a result of a decrease in net
income of $5.6 million and a deterioration in working capital management of
$10.0 million (specifically an increase in accounts receivables of $10.3 million
due to slower collection of receivables and higher revenues, an increase in
capitalized commissions of $1.1 million due to higher revenues, an increase in
inventories of $0.5 million, a increase in prepaid expenses and other current
assets of $0.8 million and an adverse change in foreign currency translation
adjustments of $2.5 million, partially offset by an increase in accounts
payables of $3.8 million and an increase in accrued expenses and other
liabilities of $1.4 million).

Net cash provided by operating activities during fiscal year 2022 consisted of
our net income (after excluding non-cash charges) of $38.1 million, a net
reduction in operating assets and liabilities investments of $11.5 million and
taxes paid of $7.2 million.

Investing Activities

Net cash used in investing activities in fiscal year 2020 increased to $19.4
million from $19.2 million in fiscal year 2019. Net cash used in investing
activities during fiscal year 2020 primarily consisted of capital expenditures
of $20.4 million. Capital expenditures during the year included purchases of
intangible assets of $5.7 million, which included internal-use software of $3.4
million as well as computer software, technology and other intangibles of $2.3
million, and cash paid to purchase property, plant and equipment of $14.7
million, which included in-vehicle devices of $13.6 million. Net cash used in
investing activities also included $0.3 million loan advanced to third parties
offset by proceeds on sale of property, plant and equipment and intangible
assets of $1.3 million.

Net cash used in investing activities in fiscal year 2021 decreased to $8.7
million from $19.4 million in fiscal year 2020, primarily due to lower
in-vehicle devices capital expenditure as a result of lower revenues during the
COVID-19 pandemic. Net cash used in investing activities during fiscal year 2021
primarily consisted of capital expenditures of $8.7 million. Capital
expenditures during the year included purchases of intangible assets of $4.0
million, which included internal-use software of $2.8 million as well as
computer software, technology and other intangibles of $1.2 million, and cash
paid to purchase property, plant and equipment of $4.6 million, which included
in-vehicle devices of $4.2 million.

Net cash used in investing activities in fiscal year 2022 increased to $26.2
million from $8.7 million in fiscal year 2021. Net cash used in investing
activities during fiscal year 2022 primarily consisted of capital expenditures
of $26.2 million. Capital expenditures during fiscal year 2022 included
purchases of intangible assets of $5.9 million and cash paid to purchase
property, plant and equipment of $20.3 million, which included in-vehicle
devices of $18.3 million.

Fundraising activities

During fiscal 2020, the cash allocated to financing activities of $15.5 million
includes share buybacks from $9.8 milliondividends paid from $6.0 millionoffset by $0.3 million from the facilities used.

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In fiscal year 2021, the cash used in financing activities of $5.2 million
includes dividends paid of $5.4 million and $0.7 million from facilities repaid,
offset by proceeds of $0.9 million from the issue of ordinary shares in relation
to the exercise of stock options.

During fiscal 2022, the cash allocated to financing activities of $5.1 million
includes dividends paid from $5.9 million and common shares repurchased from $3.0 millionoffset by $3.9 million from the facilities used.

Credit facilities

As of March 31, 2022, our principal sources of liquidity were net cash balances
of $28.1 million (consisting of cash and cash equivalents of $33.7 million less
short-term debt (bank overdraft)) of $5.6 million) and unutilized borrowing
capacity of $1.8 million available through our credit facilities. Our principal
sources of credit are our facilities with Standard Bank Limited and Nedbank
Limited.

As of March 31, 2022, we had an overdraft facility of R64.0 million (equivalent
of $4.4 million as of March 31, 2022), a working capital facility of R25.0
million (equivalent of $1.7 million as of March 31, 2022) and an unutilized
vehicle and asset finance facility of R8.5 million (equivalent of $0.6 million
as of March 31, 2022) with Standard Bank Limited that bear interest at South
African Prime less 1.2% except for the working capital facility that bears
interest at South African Prime less 0.25%.

As of March 31, 2022, the overdraft facility was fully utilized. We use this
facility as part of our foreign currency hedging strategy. We draw down on this
facility in the applicable foreign currency in order to fix the exchange rate on
existing balance sheet foreign currency exposure that we anticipate settling in
that foreign currency. Our obligations under the overdraft facility with
Standard Bank Limited are guaranteed by MiX Telematics Limited and our
wholly-owned subsidiaries, MiX Telematics Africa Proprietary Limited and MiX
Telematics International Proprietary Limited, and secured by a pledge of
accounts receivable by MiX Telematics Limited and MiX Telematics International
Proprietary Limited.

We have a R25.0 million (equivalent of $1.7 million as of March 31, 2022)
working capital facility with Standard Bank Limited that bears interest at South
African Prime less 0.25%. As of March 31, 2022, $1.2 million of the facility was
utilized. We use this facility for working capital purposes in our Africa
operations.

We have a R10.0 million (equivalent of $0.7 million as of March 31, 2022)
facility with Nedbank Limited that bears interest at South African Prime less
2%. As of March 31, 2022, the facility was undrawn. We use this facility for
working capital purposes in our Africa operations.

Our credit facilities with Standard Bank Limited and Nedbank Limited contain
certain restrictive clauses, including without limitation, those limiting our
and our guarantor subsidiaries', as applicable, ability to, among other things,
incur indebtedness, incur liens, or sell or acquire assets or businesses. These
facilities are not subject to any financial covenants such as interest coverage
or gearing ratios.


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                   Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP.
Certain of our significant accounting policies and critical accounting estimates
are summarized below. 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 for impairment and income and deferred taxes.
Our actual results could differ from those estimates, and such differences may
be material to the consolidated financial statements. We evaluate our estimates
and assumptions on an ongoing basis.

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 assessed on a collective basis when management groups its customers appropriately based on their credit risk characteristics.

The allowance for doubtful accounts is an valuation account and the carrying amount of the asset is written down and the amount of the loss is recognized in the consolidated statements of earnings. Subsequent recoveries, if any, are credited to the allowance. Actual impairments are recorded when the asset is deemed unrecoverable after all recovery efforts have failed.

Good will

Goodwill is not amortized but 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. Goodwill is
allocated to a reporting unit for the purpose of impairment testing. 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.

The fair values of the reporting units are determined based on the use of
pre-tax cash flow projections based on approved financial budgets covering a
5-year period. These cash flows take into account market-based assumptions and
near-term expectations. The discount rates used were calculated using the
capital asset pricing model. These rates reflect specific risks relating to the
relevant reporting units. The growth rate has been determined based on the
expected long-term inflation outlook.

No impairments of goodwill existed as of the most recent testing date, March 31,
2022 or the previous testing, March 31, 2021. Given the headroom that exists in
the reporting units, we believe that a reasonable change in assumptions would
not result in any goodwill impairments. The changes in the carrying value of
goodwill during fiscal year 2021 and fiscal year 2022 are attributable only to
foreign currency translation adjustments.

Although there were no impairments of goodwill as of March 31, 2021 and 2022,
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.

Taxation

We are subject to income taxes in numerous jurisdictions. During the process of
determining our world-wide provision for income taxes, we are required to make
judgements in respect of international tax matters, including transfer pricing
and controlled foreign company legislation. Where applicable tax legislation is
subject to interpretation, management makes assessments, based on expert tax
advice, of the relevant tax that is more likely than not to be paid and provides
accordingly.

Income taxes are accounted for under the asset and liability method. Income tax
expense is recognized in the consolidated statements of income, except to the
extent that it relates to items recognized in other comprehensive income or
directly in equity. We use the portfolio approach for releasing income tax
effects from accumulated other comprehensive income.
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The current income tax charge is calculated on the basis of the tax laws and tax
rates enacted by the reporting date in the countries where we operate and
generate taxable income. Interest, and penalties, incurred on the underpayment
of income taxes is classified as interest expense, and administration expenses,
respectively.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax is measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Uncertainty generated by the current economic environment may affect the
valuation of our deferred tax assets over time. Our accounting for deferred tax
balances represent management's best estimate of future events that can be
appropriately reflected in the accounting estimate.

Deferred tax liabilities arising on investments in domestic subsidiaries are not
recognized to the extent that the investment can be recovered on a tax-free
basis; and on investments in foreign subsidiaries to the extent that the
undistributed earnings will be invested indefinitely or will be remitted in a
tax-free liquidation.
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