UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934

 

For the month of April, 2022

 

Commission File Number: 001-40300

 

KAROOOOO LTD.

(Exact name of registrant as specified in its charter)

 

1 Harbourfront Avenue

Keppel Bay Tower #14-07
Singapore 098632

+65 6255 4151

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F    ☒            Form 40-F    ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Karooooo Ltd.
   
  By: /s/ Isaias (Zak) Jose Calisto
    Name:  Isaias (Zak) Jose Calisto
    Title: Chief Executive Officer

 

Date: April 27, 2022

 

1

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Press release, dated April 27, 2022 - Karooooo Ltd. Announces Fourth Quarter and Full Year 2022 Unaudited Financial Results

 

 

2

 

Exhibit 99.1

 

 

SINGAPORE (April 27, 2022) Karooooo Limited (“Karooooo”), that owns 100% of Cartrack, 100% of Carzuka and 70.1% of Picup, today reported results for the fourth quarter and full year of its financial year ended February 28, 2022 (“2022”).

 

Karooooo is a leading provider of an on-the-ground operations Internet of Things (”IoT”) SaaS cloud that maximizes the value of data by providing insightful real-time data analytics and business intelligence reports. Its offering extends beyond connected vehicles and equipment, assisting diverse enterprise customers in digitally transforming their on-the-ground operations, including systems integrations, fleet administration, field worker management, video-based safety, risk mitigation, delivery management and ESG compliance and reporting.

  

“In our first year as a NASDAQ listed company, we are pleased with our resilience and execution, delivering another quarter of strong subscriber growth, contributing to our subscriber base increasing by 17% in 2022 despite the persistent challenging operating environment. Further, we made good inroads in delivering on our core strategic priorities, building for relevance and sustainability. As a technology partner, we continue to improve our platform and enhance our value proposition to our customers, giving them a competitive advantage in the dynamic and challenging environment they operate in.

 

Total revenue for 2022 is up 20% which equates to a 23% increase on a constant currency basis (a non-IFRS measure). Our decade-plus track record of growth, sustained profitability and a highly cash-generative business model, coupled with consistent innovation and strong customer acquisition, continues. At the end of 2022 we had more than 88,000 commercial customers (2021: 75,000+)

 

We are excited about what we have built and continue to build. Our evolving end-to-end all-inclusive IoT platform, vertically integrated business model, established infrastructure, expanding distribution network and ability to execute and scale gives me comfort that we can continue scaling our customer base. On the back of the billions of data points we collect, we are pleased with the progress made in improving our offering to assist our customers with the digitalization of their operations.

 

Execution on core strategic priorities in 2022 included the expansion of partnerships with Original Equipment Manufacturers (“OEMs”) which are a springboard for future collaboration, given our shared commitment to continually enhance the distinctive value proposition we offer our customers.

 

We are always evaluating the trade-off between our strong unit economics and our intended accelerated investment for growth as we now believe that we are transitioning towards an unpredictable COVID-19 endemic. This provides us with the opportunity to accelerate our investment in sales and marketing to drive customer acquisition. We are well positioned to materially increase our spend on sales and marketing to achieve even stronger growth given that our Lifetime Value of Customer relationships (“LTV”) to Customer Acquisition Costs (“CAC”) ratio (a non-IFRS measure) is over nine times and we have consistently beaten the rule of 40 (a non-IFRS measure), in the last four quarters.

 

 

 

 

Our disciplined approach to capital allocation allows us to be profitable and highly cash-generative. Plenty of runway exists to remain profitable should we accelerate our revenue growth rate in excess of our average historical growth rate.

 

Karooooo reported a net cash and cash equivalents balance of ZAR718 million at the end of 2022 (2021: ZAR76 million) after raising ZAR349 million of net proceeds when Karooooo listed on the NASDAQ in April 2021 and after paying ZAR70 million when acquiring Picup in September 2021. Given our profitability, inherently cash-generative business model and our strong balance sheet, the board has declared a dividend of 60 U.S. cents per share which shall be payable entirely out of Karooooo’s retained earnings. Although Karooooo’s reporting currency is ZAR, its statutory filings in Singapore are in USD, as a result of which dividends are declared in USD.“ Zak Calisto, CEO and Founder.

 

Summary of Corporate Action taken in 2022

 

February 28, 2021: Karooooo was a privately owned company fully owned by Zak Calisto (founder and CEO of Cartrack) and Cartrack was listed as a public company on the Johannesburg Stock Exchange (JSE). Karooooo was a non-operating entity, with its only asset being 68.1% of Cartrack owning 203,328,943 of Cartrack’s 298,766,000 ordinary shares in issue.

 

April 01 - 15, 2021: Karooooo listed on the NASDAQ with 20,332,894 founder ordinary shares and with 1,207,500 newly issued ordinary shares to public shareholders.

 

April 21, 2021: On April 21, 2021 Karooooo bought out all of the minority shareholders of Cartrack and delisted Cartrack from the JSE. In terms of the reinvestment offer, investors who elected to remain invested in Cartrack received 1 Karooooo ordinary share for every 10 Cartrack ordinary shares owned on the JSE prior to the finalization of the reinvestment offer. Karooooo concluded an inward secondary listing on the JSE on this date (April 21, 2021) and issued a further 9,410,712 ordinary shares to eligible Cartrack shareholders. 99% of all minority shareholders bought out by Karooooo opted to reinvest the proceeds of the sale of their Cartrack shares into Karooooo.

 

Impact of the above on Karooooo Limited ordinary shares summarized in tabular format:

 

Date     Financial reporting period   Number of listed Karooooo Ordinary shares in issue   Commentary
February 28, 2021   Year-end 2021   -    
April 01, 2021     20,332,894   Karooooo listed on the NASDAQ, founder ordinary shares
April 01, 2021       1,050,000   Karooooo’s IPO on the NASDAQ, issuing ordinary shares to the public
April 15, 2021   First quarter 2022   157,500   Underwriters of its initial public offering exercised their option to purchase 157,500 ordinary shares from Karooooo
April 21, 2021       9,410,712   In terms of the reinvestment offer, Karooooo concluded its secondary inward listing on the JSE issuing ordinary shares to eligible Cartrack shareholders. 99% of all minority shareholders bought out by Karooooo opted to reinvest the proceeds of the sale of their Cartrack shares into Karooooo.
Total since April 21, 2021 to date       30,951,106    
February 28, 2022   Year-end 2022   30,951,106   Karooooo ordinary shares in issue

 

Karooooo strategically acquired 70.1% of Picup in September 2021. Given that Cartrack’s mobility open eco system platform allows for seamless integration into third party systems, Picup, a logistics cloud-based disruptive technology company located in South Africa, has been working with Cartrack to address the challenges of last-mile delivery through an integrated offering. As we think beyond connected vehicles, it is imperative that our cloud platform is a comprehensive mobility solution that addresses the needs of both our existing and future enterprise customers. Picup helps enterprises scale their operations without having to unnecessarily invest in additional assets. Our customers that use the Cartrack Delivery functionality on our platform are now able to have a one-stop cloud platform to manage their fleets with the option of using crowd-sourced drivers when faced with surplus demand.

 

2

 

 

Karooooo Ltd. Announces Fourth Quarter and Full Year 2022 Unaudited Financial Results

 

Fourth Quarter 2022 Highlights:

 

(Comparisons are relative to the Fourth Quarter 2021, unless otherwise stated)

 

SCALE

 

1,525,972 subscribers in total as at February 28, 2022, up 17% (2021: 1,306,000)

 

55,587 net subscriber additions in the fourth quarter (Q4 2021: 59,911)

 

Karooooo’s strong growth momentum in the number of subscribers carried through for 2022. The growing demand by small to large enterprises wanting to digitally transform their business to remain competitive prevailed throughout 2022. Despite persistent changing and challenging operating conditions, Karooooo’s operational resilience, coupled with its profitable and robust business model, drove new customer additions, delivering continuous growth in the total number of subscribers (connected vehicles and equipment on our platform).

 

As expected, and a follow-on from the third quarter of 2022, the growth of our subscriber base was predominantly negatively impacted by higher-than-normal churn given the termination of customers that have not been able to economically survive the pandemic. Although the COVID-19 endemic remains unpredictable, we believe the lagging effects of COVID-19 will soon normalize, with minimal impact expected by the third quarter of the 2023 financial year.

 

GROWTH

 

Total revenue increased 20% to ZAR742 million (Q4 2021: ZAR616 million)

 

Total revenue increased 21% on a constant currency basis (a non-IFRS measure)

 

Subscription revenue increased 17% to ZAR671 million (Q4 2021: ZAR574 million)

 

Subscription revenue increased 17% on a constant currency basis (a non-IFRS measure)

 

SaaS Annualized Recurring Revenue (“ARR”), (a non-IFRS measure), increased 15% to ZAR2,727 million as at February 2022 (February 2021: ZAR2,377 million).

 

3

 

 

Fourth Quarter 2022 Financial Overview

 

Supplemental Financial Information and Business Metrics

 

   Cartrack   Picup   Carzuka  

Karooooo IFRS

Reported

 
   Q4 2022  

Quarter-on-Quarter

Change

   Q4 2021   Q4 2022   Q4 2022  

Karooooo Quarter-on-Quarter

Change

 
Statement of Profit and Loss (ZAR Thousands)
Revenue   685,907    11%   615,741    23,579    32,163    741,649    20%
Subscription revenue   669,687    17%   573,976    1,028    -    670,715    17%
Other revenue1   16,220    (61%)   41,765    22,551    32,163    70,934    70%
Cost of sales   (237,343)   15%   (206,276)   (17,419)   (28,536)   (283,298)   37%
Gross profit   448,564    10%   409,465    6,160    3,627    458,351    12%
Other income   97    (88%)   810    (73)   -    24    (97%)
Operating expenses2   (294,430)   18%   (249,688)   (7,968)   (7,376)   (309,774)   24%
Sales and marketing   (75,905)   17%   (64,849)   (252)   (3,811)   (79,968)   23%
General and administration2   (153,999)   18%   (130,523)   (6,149)   (2,110)   (162,258)   24%
Research and development   (39,964)   34%   (29,723)   (1,567)   (1,381)   (42,912)   44%
Expected credit losses on financial assets   (24,562)   0%   (24,593)   -    (74)   (24,636)   0%
Operating profit2   154,231    (4%)   160,587    (1,881)   (3,749)   148,601    (7%)
Adjusted EBITDA   303,070    13%   268,580    (1,825)   (3,689)   297,556    11%
Margins (%)
Gross profit margin   65%        66%   26%   11%   62%     
Operating profit margin2   22%        26%   (8%)   (12%)   20%     
Adjusted EBITDA margin   44%        44%   (8%)   (11%)   40%     

 

1.Cartrack had a higher-than-normal increase in non-subscription based revenue in the fourth quarter of 2021 (the prior period), relating to the sale of telematics devices to a large enterprise customer opting for a non-bundled contract. Cartrack remains focused on bundled sales.

 

4

 

 

2.During the quarter Cartrack management uncovered collusion between a few insurance brokers and certain staff members. This resulted in a once-off write-off of capitalized commission assets of ZAR15 million through profit and loss. The write-off is recognized as an exceptional item in general and administration operating expenses in the fourth quarter of 2022 (“once-off exceptional item”). If excluding this once off exceptional item Cartrack’s:

 

Operating expenses increased 12%

 

General and administration operating expenses increased 6% to ZAR139 million, in line with management expectations

 

Operating profit increased 6% to ZAR170 million

 

Operating profit margin is 25%

 

Subscription Revenue and Total Revenue

 

Karooooo achieved revenue growth of 20% and subscription revenue growth of 17% in the fourth quarter of 2022. Subscription revenue growth was driven by Cartrack’s robust business model that delivered 17% growth in the number of subscribers to 1,525,972.

 

Carzuka generated ZAR32 million during the fourth quarter with this vertical currently in beta phase, gaining traction and expected to launch in May 2022. Picup, a logistics cloud-based disruptive technology company, that has been working with Cartrack to address the challenges of on-the-ground distribution for large enterprises requiring systems integrations, payment gateways, third-party long-haul services and crowd-sourced drivers in order to scale and meet their operational needs, generated ZAR24 million during the quarter. Picup positively tendered for sizeable new customer contracts and expanded its relationships with some of its existing customers with increased software integrations.

 

Cartrack has high revenue visibility with subscription revenue accounting for 98% of its total revenue (Q4 2021: 93%)

 

In ZAR, SaaS ARR (a non-IFRS measure), increased 15% to ZAR2,727 million as at February 28, 2022, compared to ZAR2,377 million as at February 28, 2021. In USD, SaaS ARR (a non-IFRS measure), increased 13% to USD177.1 million as at February 28, 2022, compared to USD156.8 million as at February 28, 2021. SaaS ARR was driven by the 17% increase in subscribers marginally offset by a slightly weaker ZAR, with the ZAR to USD exchange rate of ZAR15.40 at the end of February 2022 compared to ZAR15.16 at the end of February 2021. Amounts in ZAR have been translated to USD using exchange rates as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System on February 28, 2022.

 

Operating Expenses

 

Cartrack’s sales and marketing operating expenses increased 17% during the quarter. Sales and marketing basic salaries, a major component thereof, increasing 23%. Sales and marketing basic salaries are a major component of the cost of acquiring new customers and are not expensed over the expected life span of a customer, but rather when incurred. While the investment into sales and marketing headcount has materialized in part, management expects to see the benefit thereof, via growth in customer acquisition into 2023 and beyond. We believe that the continued and strategic investment in enhancing our vertically integrated sales and marketing capabilities to leverage our go-to-market strategy drives customer acquisition and places us well for long term growth.

 

During the quarter Cartrack management uncovered collusion between a few insurance brokers and certain staff members. This resulted in a once-off write-off of capitalized commission assets of ZAR15 million. The once-off write-off is recognized as an exceptional item in general and administration operating expenses in the fourth quarter of 2022 (“once-off exceptional item”). Internal mitigation procedures have been implemented, criminal charges against parties involved have been laid with the South African Police Service (SAPS) and relevant staff members have been dismissed. Cartrack’s operating expenses increased 18% to ZAR294 million. Excluding expected credit losses and the once-off exceptional item, Cartrack’s operating expenses increased 13% to ZAR255 million.

 

5

 

 

Excluding the once-off exceptional item mentioned above, Cartrack’s general and administration operating expenses increased 6% to ZAR139 million compared to the fourth quarter of 2021. An excellent result given continued subscriber growth favorably offset by continued realization of economies of scale and increased staff productivity as a result of the on-going investment in internal systems.

 

Cartrack’s R&D operating expenses increased 34% compared to the fourth quarter of 2021, given the planned investment in building for the future. We continue to investment in improving, enriching and expanding our connected cloud.

 

With Picup and Carzuka both on a Path to Profitability (“P2P”), operating expenses of ZAR8 million and ZAR7 million respectively were incurred during the quarter (Q4 2021: Nil). Karooooo is investing for the future in building Carzuka and Picup for scale, supported by the group’s strong cash flow generative business model and the ability to leverage the untapped network effects of the Cartrack platform. The business models of Picup and Carzuka have delivered promising results supporting scalability and good growth trajectory in the future.

 

Operating Profit and Earnings per Share

 

With strong subscriber and subscription revenue growth despite the challenging operating environment, offset by the group’s investment for future growth, Cartrack delivered operating profit of ZAR154 million (Q4 2021: ZAR161 million). Excluding the impact of the once-off exceptional item, Cartrack’s operating profit increased 6% to ZAR170 million.

 

In building for the future, Picup and Carzuka incurred operating losses of ZAR2 million and ZAR4 million respectively in the fourth quarter of 2022 (FY 2021: Nil).

 

Karooooo’s earnings per share increased 7% to ZAR3.11 in the fourth quarter of 2022 (Q4 2021: ZAR2.92).

 

Adjusted EBITDA and Adjusted EBITDA margin

 

Cartrack’s Adjusted EBITDA (a non-IFRS measure) increased 13% to ZAR303 million (Q4 2021: ZAR269 million). In line with Karooooo’s planned investment for future growth and as set out in management’s guidance range for 2022, Cartrack’s Adjusted EBITDA margin (a non-IFRS measure) was 44% for the quarter (Q4 2021: 44%).

 

Full Year 2022 Highlights:

 

(Comparisons are relative to the Full Year 2021, unless otherwise stated)

 

6

 

 

SCALE 

 

219,972 net subscriber additions for 2022, up 23% (2021: 179,485)

 

GROWTH

 

Total revenue increased 20% to ZAR2,746 million (2021: ZAR2,291 million)

 

Total revenue increased 23% on a constant currency basis (a non-IFRS measure)

 

  Subscription revenue increased 16% to ZAR2,568 million (2021: ZAR2,209 million)

 

Subscription revenue increased 19% on a constant currency basis (a non-IFRS measure)

 

Full Year 2022 Financial Overview

 

Supplemental Financial Information and Business Metrics

 

   Cartrack   Picup   Carzuka  

Karooooo IFRS

Total Reported

 
   2022   Year-on-Year Change   2021   2022   2022  

Karooooo

Year-on-Year Change

 
Statement of Profit and Loss (ZAR Thousands)
Revenue   2,636,800    15%   2,290,543    42,041    67,310    2,746,151    20%
Subscription revenue   2,565,745    16%   2,209,017    2,420    -    2,568,165    16%
Other revenue   71,055    (13%)   81,526    39,621    67,310    177,986    118%
Cost of sales   (832,197)   24%   (670,523)   (31,151)   (59,213)   (922,561)   38%
Gross profit   1,804,603    11%   1,620,020    10,890    8,097    1,823,590    13%
Other income   1,823    (16%)   2,166    18    -    1,841    (15%)
Operating expenses   (1,091,090)   22%   (895,624)   (13,817)   (21,399)   (1,126,306)   26%
Sales and marketing   (321,723)   35%   (238,110)   (423)   (11,113)   (333,259)   40%
General and administration   (539,617)   13%   (476,534)   (10,435)   (5,275)   (555,327)   17%
Research and development   (141,396)   41%   (100,138)   (2,959)   (4,883)   (149,238)   49%
Expected credit losses on financial assets   (88,354)   9%   (80,842)   -    (128)   (88,482)   9%
Operating profit   715,336    (2%)   726,562    (2,909)   (13,302)   699,125    (4%)
Adjusted EBITDA   1,227,798    9%   1,125,354    (2,808)   (13,205)   1,211,785    8%
Margins (%)
Gross profit margin   68%        71%   26%   12%   66%     
Operating profit margin   27%        32%   (7%)   (20%)   25%     
Adjusted EBITDA margin   47%        49%   (7%)   (20%)   44%     

 

1.If excluding the once off exceptional item relating to the write-off of capitalized commission assets in the fourth quarter of 2022, Cartrack’s:

 

Operating expenses increased 20%

 

General and administration operating expenses increased 10% to ZAR524 million, in line with management expectations

 

Operating profit increased 1% to ZAR731 million

 

Operating profit margin is 28%

 

7

 

 

Subscription Revenue and Total Revenue

 

Karooooo achieved revenue growth of 20% in 2022. This result comprises subscription revenue growth of 16% driven by Cartrack’s robust business model that delivered 17% growth in the number of subscribers to 1,525,972, bolstered by the revenue contribution from Carzuka (ZAR67 million) and Picup (ZAR42 million).

 

The ZAR strengthened 9% on average against the basket of currencies in which Karooooo operates. On a constant currency basis (a non-IFRS measure) revenue grew 23% and subscription revenue by 19%. New customer additions contributed to the net increase of 219,972 in subscribers in 2022, 23% higher than the increase of 179,485 subscribers in 2021.

 

Cartrack has high revenue visibility with subscription revenue accounting for 97% of its total revenue (FY21: 96%)

 

Gross profit margin

 

Cartrack’s gross profit margin decreased to 68% in 2022 (2021: 71%). Cartrack’s strong revenue growth was negatively impacted by a 24% increase in cost of sales as a result of economic headwinds and the higher-than-normal churn given the termination of customers that have not been able to economically survive the pandemic, increasing the write-off of related telematics devices (accounted for as Property Plant and equipment). With most of these write-offs now accounted for, in our view, gross profit margin expansion in the 2023 financial year is probable.

 

Operating Expenses

 

Given the continued preparation for future growth, Cartrack’s sales and marketing operating expenses increased 35% compared to 2021 with a significant recruitment drive focused mainly on sales and customer experience. Sales and marketing basic salaries are a major component of the cost of acquiring new customers and are not expensed over the expected life span of a customer, but rather when incurred. This component increased 45% in 2022.

 

Cartrack’s low cost of subscriber acquisition benefits from its vertically integrated business model, which allows it to control service levels, costs, improve efficiencies and be in direct contact with customers instead of relying on third parties.

 

       2022   Change %   2021 
Management’s assessment of Cartrack’s cost of acquiring a subscriber   ZAR    2,070    (1%)   2,093 
Sales commission and telematics devices (Capitalized)1   ZAR    1,352    (6%)   1,433 
Sales and marketing operating expenses (Non-capitalized) 2   ZAR    718    9%   660 

 

1.Costs capitalized and depreciated through cost of sales over the expected useful life of the subscriber (60 months)
2.Costs expensed through operating expenses when incurred

 

8

 

 

The cost of acquiring a subscriber (connected vehicles and equipment on our platform) includes: the capitalized cost of the telematics equipment used for collecting raw data together with any labor related costs for automotive technicians and the cost of the direct sales commissions which were ZAR1,352 in 2022 (2021: ZAR1,433); and the non-capitalized marketing costs and sales salaries and associated costs which are expensed in the month incurred which were ZAR718 in 2022 (2021: ZAR660).

 

Cartrack’s average cost of acquiring a subscriber decreased 1% to ZAR2,070 (2021: ZAR2,093) in 2022. As set out in the table above, the component expensed upfront when incurred in accordance with IFRS accounting standards, being sales and marketing basic salaries, increased 9%, opposed to the capitalized component which decreased 6% in 2022. The impact of the increase in upfront expenditure per subscriber acquired in 2022 equated to ZAR26 million additional expenses taken through profit and loss in 2022, in accordance with IFRS accounting. In management’s modelling of unit economics, the full cost incurred in acquiring a subscriber (sales commission, telematics devices and sales and marketing operating expenses) is expensed through profit and loss over the expected useful life of the subscriber.

 

We believe that the continued and strategic investment in enhancing our vertically integrated sales and marketing capabilities to leverage our go-to-market strategy drives customer acquisition and places us well for long term growth and margin expansion. The group had net subscriber additions of 219,972 in 2022, 23% higher than in 2021, primarily as a result of an increased investment in sales and marketing expenditure which takes approximately 6 months to translate into customer acquisition. While the investment into sales and marketing headcount has materialized in part, management expects to see further benefit thereof, via growth in customer acquisition, in the first two quarters of 2023 and beyond.

 

Excluding the once-off exceptional item, Cartrack’s general and administration operating expenses increased 10% to ZAR524 million (2021: ZAR 477 million) as a result of growth, favorably offset by continued realization of economies of scale and increased staff productivity as a result of investment in internal systems.

 

Cartrack’s R&D operating expenses increased 41% compared to 2021 as the group continued its investment for improvement, enrichment and expansion of its connected cloud in 2022.

 

With Picup and Carzuka both on a Path to Profitability (“P2P”), operating expenses of ZAR14 million and ZAR21 million respectively were incurred in 2022 (2021: Nil). Karooooo is investing for the future in building Carzuka and Picup for scale, supported by the group’s strong cash flow generative business model and the ability to leverage the untapped network effects of the Cartrack platform. The business models of Picup and Carzuka have delivered promising results supporting scalability and good growth trajectory in the future.

 

The trend in Cartrack’s expenses as a relative portion of subscription revenue reported below are in accordance with Karooooo’s long-term financial goals set out upon listing on the NASDAQ in April, 2021 and are reflective of the Group’s accelerated growth strategy by investing for growth.

 

Sales and marketing expenses as a percentage of subscription revenue increased to 12.5% (2021: 10.8%)

 

R&D expenses as a percentage of subscription revenue increased to 5.5% (2021: 4.5%)

 

General and administration expenses1 as a percentage of subscription revenue decreased to 20.4% (2021:  21.6%)

 

1.Excluding the once-off exceptional item

 

9

 

 

Operating Profit, Earnings per Share and Adjusted Earnings per share

 

With strong subscriber and revenue growth despite the challenging operating environment (including the third wave of COVID-19 infections in December 2021 and social unrest experienced in South Africa in July 2021) offset by the group’s investment for future growth, Cartrack delivered ZAR715 million operating profit (2021: ZAR727 million). Excluding the impact of once-off exceptional item, Cartrack’s operating profit increased 1% to ZAR731 million in 2022.

 

In building for the future, Picup and Carzuka incurred operating losses of ZAR3 million and ZAR13 million respectively in 2022 (2021: Nil).

 

Karooooo’s earnings per share decreased 3% to ZAR15.24 in 2022 (2021: ZAR15.65), impacted negatively by ZAR0.52 per share attributable to the once-off exceptional item expensed in 2022. Excluding the impact thereof, earnings per share increased 1% to ZAR15.76 (2021: ZAR15.65).

 

The ZAR6 million dividend withholding taxation incurred when Cartrack declared a dividend to Karooooo in June 2021 also negatively impacted earnings per share by ZAR0.20 per share in 2022.

 

Adjusted EBITDA and Adjusted EBITDA margin

 

Cartrack’s Adjusted EBITDA (a non-IFRS measure) increased 9% to ZAR1,228 million (2021: ZAR1,125 million). In line with Karooooo’s planned investment for future growth and as set out in management’s guidance range for 2022, Cartrack’s Adjusted EBITDA margin (a non-IFRS measure), was 47% in 2022.

 

Outlook

 

Karooooo has a history of consistent organic growth, scalability, strong earnings and financial discipline. The group has been highly cash-generative with most of its revenues recurring in nature and has operated with high operating and Adjusted EBITDA margins.

 

Karooooo ended quarter four and full year 2022 with good momentum. Management currently expects the group to continue growing within the following ranges for the full year 2023 (compared to full year 2022):

 

Number of subscribers between 1,700,000 and 1,900,000

 

Subscription revenue between ZAR2.95 billion and ZAR3.1 billion

 

Cartrack’s Adjusted EBITDA margin between 45% and 50%

 

Operating in a growing and largely underpenetrated market and with the tailwind of customers seeking software solutions to successfully digitalize their businesses and improve their operations, we believe Karooooo is well positioned for growth.

 

10

 

 

Karooooo’s multiple levers for expansion are supported by a proven, robust and consistently profitable business model, further enhanced by its strong balance sheet and strong cash position.

 

The intended investment in marketing and sales, coupled with the realization of economies of scale across business segments, is expected to generate robust results in the future.

 

Actual results may differ materially from Karooooo’s Outlook as a result of the pandemic and exchange rate fluctuations, among other factors described under “Forward-Looking Statements” below.

 

Balance Sheet, Liquidity and cash flow

 

Our approach to capital allocation allows Karooooo to be profitable and highly cash-generative. Plenty of runway exists to remain profitable should we accelerate our revenue growth rate in excess of our average historical growth rate.

 

The group’s Capital Allocation Committee has adopted a cash management policy whereby Karooooo’s excess cash reserves on hand will be held in US Dollars, which will be translated into ZAR for reporting purposes.

 

Cash and cash equivalents as at February 28, 2022

 

Karooooo reported a net cash and cash equivalents balance of ZAR718 million at the end of 2022 (2021: ZAR76 million) after raising ZAR349 million of net proceeds when Karooooo listed on the NASDAQ in April 2021 and paying ZAR70 million when acquiring Picup in September 2021. Given our profitability, inherently cash-generative business model and our strong balance sheet, the board has declared a dividend of 60 U.S. cents per share which shall be payable entirely out of the Karooooo’s retained earnings.

 

As at February 28, 2022, the group has bank facilities for growth initiatives and other general corporate purposes comprised of: ZAR925 million with The Standard Bank of South Africa Limited and ZAR75 million with Mercantile Bank, a division of Capitec Bank Limited.

 

After paying this declared dividend, management believes the group has sufficient cash and cash equivalents to invest for accelerated growth in 2023. Should additional investment for growth be required in the 2024 financial year, we would consider optimization of our capital structure by way of utilizing our available funding line.

 

Free Cash Flow (a non-IFRS measure)

 

Despite Karooooo’s continued and strategic investment into customer acquisition and long-term growth it generated ZAR932 million in cash from operating activities (2021: ZAR938 million). Karooooo’s investment for growth contributed to the 23% increase in net subscriber additions to 219,972 in 2022 (2021: 179,485). Karooooo invested ZAR553 million into PPE and infrastructure during 2022, 16% more than the ZAR478 million invested in 2021.

 

The group generated Free Cash Flow (a non-IFRS measure) of ZAR379 million in 2022 compared to ZAR460 million in 2021.

 

11

 

 

Share Capital and Reserves

 

Karooooo has 30,951,106 ordinary shares issued with a paid-up share capital of USD505,956,659 plus SGD1,000.

 

The negative common control reserve of ZAR2.7 billion on the balance sheet relates to a common control transaction on November 18, 2020 in which the loan of USD194 million from Isaias Jose Calisto was converted into Karooooo share capital and as a consequence Karooooo acquired control of Cartrack. On that date, 20,331,894 shares were issued to Isaias Jose Calisto and Karooooo registered ZAR2.7 billion paid-up capital resulting in the common control reserve.

 

The ZAR3.6 billion negative capital reserve on the balance sheet relates to the buyout of 95,350,657 Cartrack shares at ZAR42.00 per share from minorities when Cartrack delisted from the JSE totaling ZAR4.0 billion, offset by the ZAR0.4 billion previously reported in the non-controlling interest. The ZAR0.4 billion relates to the net asset value of the 95,350,637 Cartrack minority shares bought by Karooooo.

 

Taxes, Dividend Policy and Dividend Declaration

 

Karooooo is headquartered and incorporated in Singapore where dividends are tax exempt.

 

Dividend policy as previously reported

 

Any future determination to pay cash dividends will be at the discretion of the board of directors and will depend on many factors, including general and economic conditions, financial condition and operating results, available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, including restrictive covenants contained in our financing agreements, the ability of the group’s subsidiaries to distribute funds to Karooooo and such other factors as the board of directors may deem relevant. The board may, by ordinary resolution, declare dividends at a general meeting of its shareholders, but no dividend shall be payable except out of our profits, and the amount of any such dividend shall not exceed the amount recommended by the board of directors. Subject to Karooooo’s constitution and in accordance with the Singapore Companies Act, the board of directors may, without the approval of shareholders, declare and pay interim dividends, but any final dividends the board declares must be approved by an ordinary resolution at a general meeting of shareholders.

 

Dividend Declaration

 

In accordance with the stated dividend policy above, an interim dividend of 60 U.S. cents per ordinary share, pertaining to the first quarter of Karooooo’s 2023 financial year, will be paid on September 12, 2022 to shareholders on record as at the close of business on September 02, 2022. Although Karooooo’s reporting currency is ZAR, its statutory filings in Singapore are reported in USD, as a result of which dividends are declared in USD. The details with respect to the dividends declared for holders of our ordinary shares are as follows:

 

    NASDAQ   JSE
Declaration date   Wednesday, April 27, 2022   Thursday, April 28, 2022
Date of currency conversion and confirmation of record date announcement   Thursday, August 18, 2022   Friday, August 19, 2022
Last date to trade cum dividend   Wednesday, August 31, 2022   Tuesday, August 30, 2022
Shares commence trading Ex-dividend   Thursday, September 01, 2022   Wednesday, August 31, 2022
Record date   Friday, September 02, 2022   Friday, September 02, 2022
Dividend payment date   Monday, September 12, 2022   Monday, September 12, 2022

 

12

 

 

Shareholders registered on the South African section of the share register will not be allowed to dematerialize or rematerialize their shareholdings between Wednesday, 31 August 2022 and Friday, 02 September 2022, both dates inclusive, and transfers between the NASDAQ and South African register will not be permitted between Friday, 19 August 2022 and Friday 02, September 2022, both days inclusive.

 

A summary of the tax considerations applicable to South African shareholders will be included in the currency conversion and confirmation of record date announcement which is expected to be published on Friday, 19 August 2022.

 

Full Year 2022 Segmental Overview

 

South Africa

 

This segment, being less impacted by COVID-19 operating restrictions, allowed Karooooo to leverage its strong market position and well-established national distribution network to deliver strong subscriber growth in the year, contributing to Karooooo’s robust financial performance. Cartrack’s Revenue and subscription revenue in South Africa increased by 20% and 21% respectively, compared to 2021. At the end of 2022, South Africa had 1,185,528 subscribers, up 17% compared to the end of 2021, a result supported by our consistent investment for growth. We believe that we are the largest and fastest growing enterprise mobility SaaS provider in South Africa.

 

Carzuka, still in a beta phase, generated ZAR67 million during the year. This supports our belief that the business model of Carzuka is sustainable, scalable and has a major growth trajectory in the future. We continue to be excited about its launch and grow increasingly confident in this business model.

 

Picup earned ZAR42 million of revenue in the second half of 2022, which is encouraging for our new acquisition made in September 2021.

 

Asia Pacific, Middle East and United States

 

This segment is the second largest revenue contributor and we have the view that Southeast Asia presents the greatest opportunity in the medium to long term given its populous and fast-growing economies that remain considerably underpenetrated. Our business model, which is scalable, is envisioned to provide sustainable income to the group in these economies which have been identified as a target for our growth prospects as an internationally recognized brand.

 

Unlike South Africa in 2022, Asia’s lockdown restrictions continued to remain stringent with extremely difficult travel and subdued economic activity, locally and from abroad, given the lingering presence of COVID-19.

 

Despite persistent operating restrictions resulting in the inability to deploy talent and efficiently transfer knowledge into the Asia Pacific region, the number of subscribers in this segment grew 22% to 145,143 at the end of 2022 (2021: 118,936). This translated into 14% growth in subscription revenue on a constant currency basis (a non-IFRS measure) compared to 2021, negatively impacted by the tough economic headwinds in the region.

 

Our market share in these highly fragmented markets, coupled with our increasingly scalable established operating model, continues to show growth and presents meaningful support for our decision to expand into these markets. Looking ahead, we now believe the COVID-19 imposed operating disruptions in Asia will lift, if not already so, and management is poised to rebuild and scale operations, encompassing talent attraction, recruitment and brand enhancement translating into customer acquisition in Southeast Asia. Management remains cognizant that it will take approximately 12 months to gain traction to pre COVID-19 levels and has already increased the pace of its investment for growth in Southeast Asia in the fourth quarter of 2022.

 

13

 

 

The Group’s strategic office in the United States continues to yield many key insights that have positively contributed to the Group.

 

Europe

 

The European segment delivered robust subscription revenue growth of 16% on a constant currency basis (a non-IFRS measure) driven by subscriber growth of 15%.

 

Karooooo’s intended expansion strategy in Europe remains encouraging with 127,336 subscribers across the region at the end of 2022 (2021: 111,091). Karooooo plans to increase the pace of its investment for growth in Europe in 2023 which will comprise reordering teams and expansion of our presence on the ground so that we are positioned to expand into new European markets in nine to fifteen months’ time.

 

Africa (excluding South Africa)

 

This segment remains a positive cash generator and is strategic to Karooooo’s operations in Eastern and Southern Africa. The number of subscribers increased 9% to 67,965 (2021: 62,222) however subscription revenue decreased 2% on a constant currency basis (a non-IFRS measure). The reality is that customers in Africa are facing cash flow and operational difficulties which are driven by the after effect of the COVID-19 pandemic and the economic downturn experienced on the African continent. Significant operational reorganization made in the fourth quarter of 2022 is expected to gain traction into the 2023 financial year and has already resulted in encouraging customer additions in Africa. This includes the expansion of partnerships with OEMs which are a springboard for future collaboration, given our shared commitment to continually enhance the distinctive value proposition we offer our customers across Africa and the rest of the world.

 

Change to the Board of directors of Karooooo (“Board”)

 

Appointment of Chief Financial Officer

 

Given his relocation from Singapore to Europe, Mr. Morné Grundlingh, Chief Financial Officer (CFO) of Karooooo, has decided to step down as CFO by June 30, 2022. Effective the same day, the company will appoint Ms Hoeshin Goy (Hoe Shin) as Karooooo’s CFO and an executive director to the Board. Hoe Shin is a registered Chartered Accountant based in Singapore. Hoe Shin joined Ernst & Young LLP in 2004 and was with the firm until 2009.  She has extensive experience in audit, full spectrum finance and group financial reporting throughout the span of her career. Hoe Shin was the Director of Consolidation and Group Reporting for DFS Group, under the Selective Retailing Maison of LVMH.

 

Webinar Information

 

Karooooo management will host a Zoom webinar on Thursday, April 28, 2022 at 08:00 a.m. Eastern Time (02:00 p.m. South African time; 08:00 p.m. Singaporean time). 

 

Investors are invited to join the Zoom at: https://us02web.zoom.us/j/89427800885

 

Webinar ID: 894 2780 0885

 

Telephone:

 

US (New York) Toll-free: +1 646 558 8656

 

South Africa Toll-free: +27 87 551 7702

 

A replay will be available at www.karooooo.com approximately three hours after the conclusion of the live event.

 

IFRS Accounting

 

We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The summary consolidated financial information presented has been derived from the consolidated financial statements of Karooooo.

 

About Karooooo

 

Karooooo, headquartered in Singapore, is a leading global provider of an on-the-ground operational IoT SaaS cloud that maximizes the value of transportation, operations and workflow data by providing insightful real-time data analytics to over 1,525,000 connected vehicles and equipment. Karooooo assists thousands of enterprise customers in digitally transforming their on-the-ground operations. The Cartrack (wholly owned by Karooooo) SaaS platform provides customers with differentiated insights and data analytics to optimize their business operations and workforce, increase efficiency, decrease costs, improve safety, monitor environmental impact, assist with regulatory compliance and manage risk. For more information, visit www.karooooo.com.

 

Investor Relations Contact IR@karooooo.com
   
Media Contact media@karooooo.com

 

14

 

 

KAROOOOO LTD.
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
(UNAUDITED)

 

  

Three Months Ended

February 28,

  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
Revenue   741,649    615,741    2,746,151    2,290,543 
Cost of sales   (283,298)   (206,276)   (922,561)   (670,523)
Gross profit   458,351    409,465    1,823,590    1,620,020 
Other income   24    810    1,841    2,166 
Operating expenses   (309,774)   (249,688)   (1,126,306)   (895,624)
Sales and marketing   (79,968)   (64,849)   (333,259)   (238,110)
General and administration   (162,258)   (130,523)   (555,327)   (476,534)
Research and development   (42,912)   (29,723)   (149,238)   (100,138)
Expected credit losses on financial assets   (24,636)   (24,593)   (88,482)   (80,842)
Operating profit   148,601    160,587    699,125    726,562 
Initial public offering costs (“IPO”)   -    (25,570)   (10,288)   (25,570)
Finance income   2,227    506    6,083    4,358 
Finance costs   (3,665)   (4,469)   (12,331)   (9,302)
Fair value changes to derivative assets   (506)   -    (506)   - 
Profit before taxation   146,657    131,054    682,083    696,048 
Taxation   (49,441)   (28,498)   (205,476)   (198,628)
Profit for the period   97,216    102,556    476,607    497,420 
                     
Profit attributable to:                    
Owners of the parent   96,329    59,308    449,953    318,183 
Non-controlling interest   887    43,248    26,654    179,237 
    97,216    102,556    476,607    497,420 
                     
Earnings per share                    
Basic and diluted earnings per share (ZAR)   3.11    2.92    15.24    15.65 
                     
Adjusted Earnings per share (a non-IFRS measure)                    
Adjusted Basic and diluted earnings per share (ZAR) (a non-IFRS measure)   3.61    4.17    16.11    16.91 

 

15

 

 

KAROOOOO LTD.
RECONCILIATION OF PROFIT TO ADJUSTED PROFIT (A NON-IFRS MEASURE)
(UNAUDITED)
 

 

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
Profit for the period   97,216    102,556    476,607    497,420 
IPO costs   -    25,570    10,288    25,570 
Capitalized commission assets written-off   15,301    -    15,301    - 
Adjusted profit (a non-IFRS measure)   112,517    128,126    502,196    522,990 

 

KAROOOOO LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

   As of
February 28,
2022
   As of
February 28,
2021
 
   (Unaudited)     
   (ZAR Thousands) 
ASSETS    
Non-current assets        
Goodwill   186,384    124,152 
Intangible assets   77,031    59,339 
Property, plant and equipment   1,390,659    1,137,192 
Capitalized commission assets   231,537    201,075 
Deferred tax assets   58,383    47,046 
Loans to related parties   19,400    19,400 
Long-term prepayment   9,722    - 
Non-current financial asset   1,359    - 
Total non-current assets   1,974,475    1,588,204 
Current assets          
Inventories   25,369    - 
Trade and other receivables and prepayments   333,886    324,170 
Taxation   8,818    15,412 
Cash and cash equivalents   731,748    104,937 
Other financial assets   15,305    882,420 
Total current assets   1,115,126    1,326,939 
Total assets   3,089,601    2,915,143 
EQUITY AND LIABILITIES          
Equity          
Share capital   7,142,853    2,739,629 
Foreign currency translation reserve   28,776    9,705 
Retained earnings   1,276,523    815,215 
Capital reserve1   (3,587,640)   - 
Common control reserve2   (2,709,236)   (2,709,236)
Equity attributable to equity holders of parent   2,151,276    855,313 
Non-controlling interest   22,905    427,133 
Total equity   2,174,181    1,282,446 
Liabilities          
Non-current liabilities          
Term loans   71,194    10,468 
Lease liabilities   64,784    60,283 
Deferred revenue   108,256    85,655 
Deferred tax liabilities   47,063    42,024 
Total non-current liabilities   291,297    198,430 
Current liabilities          
Term loans   18,156    5,462 
Trade and other payables   281,866    281,882 
Loans from related parties   2,134    891,977 
Lease liabilities   47,294    38,401 
Taxation   40,918    25,615 
Provision for warranties   1,885    981 
Deferred revenue   218,148    161,110 
Bank overdraft   13,722    28,839 
Total current liabilities   624,123    1,434,267 
Total liabilities   915,420    1,632,697 
Total equity and liabilities   3,089,601    2,915,143 

 

1.The ZAR3.6 billion negative capital reserve on the balance sheet relates to the buyout of 95,350,657 Cartrack shares at ZAR42.00 per share from minorities when Cartrack delisted from the JSE totaling ZAR4.0 billion, offset by the ZAR0.4 billion previously reported in the Non-controlling interest reserve line item. The ZAR0.4 billion relates to the net asset value of the 95,350,657 Cartrack minority shares bought by Karooooo.

 

2.The negative common control reserve of ZAR2.7 billion on the balance sheet relates to a common control transaction on November 18, 2020 in which the loan of USD194 million from Isaias Jose Calisto was converted into Karooooo share capital and as a consequence Karooooo acquired control of Cartrack. On that date, 20,331,894 shares were issued to Isaias Jose Calisto and Karooooo registered ZAR2.7 billion paid-up capital resulting in the common control reserve.

  

16

 

 

KAROOOOO LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

 

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
             
Net cash flows from operating activities   181,550    144,302    931,706    937,851 
Net cash flows utilized by investing activities   (114,938)   (106,965)   (658,217)   (517,691)
Net cash flows from/(utilized by) financing activities1   (105,560)   (16,201)   334,972    (486,012)
Net cash and cash equivalents movements for the period   (38,948)   21,136    608,461    (65,852)
Cash and cash equivalents as at the beginning of the period   798,687    66,708    76,098    146,591 
Translation differences on cash and cash equivalents   (41,713)   (11,746)   33,467    (4,641)
Total cash and cash equivalents at the end of the period   718,026    76,098    718,026    76,098 

 

1.Net cash flows from financing activities for the twelve months ended February 28, 2022 includes ZAR349 million of net proceeds from the corporate action in April 2021.

 

KAROOOOO LTD.
RECONCILIATION OF FREE CASH FLOW (A NON-IFRS MEASURE)
(UNAUDITED)

  

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
Net cash generated from operating activities   181,550    144,302    931,706    937,851 
Less: purchase of property, plant and equipment   (108,001)   (95,002)   (552,634)   (478,036)
Free Cash Flow (a non-IFRS measure)   73,549    49,300    379,072    459,815 

 

KAROOOOO LTD.
RECONCILIATION OF PROFIT FOR THE PERIOD TO ADJUSTED EBITDA (A NON-IFRS MEASURE)
(UNAUDITED)

 

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
Profit for the period   97,216    102,556    476,607    497,420 
Taxation   49,441    28,498    205,476    198,628 
Finance income   (2,227)   (506)   (6,083)   (4,358)
Finance costs   3,665    4,469    12,331    9,302 
Fair value changes to derivative assets   506    -    506    - 
Depreciation of property, plant and equipment and amortization of intangible assets   133,654    107,993    497,359    398,792 
IPO costs   -    25,570    10,288    25,570 
Capitalized commission assets written-off   15,301    -    15,301    - 
Adjusted EBITDA (a non-IFRS measure)   297,556    268,580    1,211,785    1,125,354 
Profit margin   13%   17%   17%   22%
Adjusted EBITDA margin (a non-IFRS measure)   40%   44%   44%   49%

 

17

 

 

KAROOOOO LTD.
RECONCILIATION OF BASIC AND DILUTED EARNINGS AND ADJUSTED EARNINGS PER SHARE

(A NON-IFRS MEASURE)
(UNAUDITED)

 

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
Reconciliation between basic earnings and adjusted earnings (a non-IFRS measure)                
Profit attributable to ordinary shareholders   96,329    59,308    449,953    318,183 
Adjust for:                    
IPO costs   -    25,570    10,288    25,570 
Capitalized commission assets written-off   15,301    -    15,301    - 
Adjusted profit attributable to ordinary shareholders (a non-IFRS measure)   111,630    84,878    475,542    343,753 
                     
Weighted average number of ordinary shares in issue at period end (000’s) on which the per share figures have been calculated   30,951    20,333    29,528    20,333 
                     
Basic and diluted earnings per share   3.11    2.92    15.24    15.65 
                     

Adjusted basic and diluted earnings per share (a non-IFRS measure)

   3.61    4.17    16.10    16.91 

 

The inclusion of HEPS, a non-IFRS measure, in this announcement is a requirement of our inward listing on the JSE. Basic and diluted HEPS is calculated using profit attributable to ordinary shareholders which has been determined based on IFRS. Accordingly, this may differ from the headline earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework.

 

Basic or diluted HEPS is calculated using profit attributable to shareholders adjusted for (gain)/loss on disposal of property, plant and equipment divided by the weighted average number of ordinary shares in issue.

 

We have provided a reconciliation between our profit attributable to shareholders used to calculate basic and diluted earnings per share and headline earnings used to calculate the HEPS and have included the weighted average number of shares in issue for the period.

 

18

 

 

KAROOOOO LTD.
RECONCILIATION OF BASIC AND DILUTED EARNINGS PER SHARE TO HEADLINE EARNINGS PER SHARE

(A NON-IFRS MEASURE)
(UNAUDITED)

 

   Three Months Ended February 28,  

Year Ended

February 28,

 
   2022   2021   2022   2021 
   (ZAR Thousands) 
                 
Reconciliation between basic earnings to headline earnings (a non-IFRS measure)                
Profit attributable to ordinary shareholders   96,329    59,308    449,953    318,183 
Adjust for:                    
(Gain)/loss on disposal of property, plant and equipment   (313)   (445)   (1,150)   (1,191)
Tax effect on (gain)/loss on disposal of property, plant and equipment   87    125    322    333 
Headline earnings (a non-IFRS measure)   96,103    58,988    449,125    317,325 
                     
Weighted average number of ordinary shares in issue at period end (000’s) on which the per share figures have been calculated   30,951    20,333    29,528    20,333 
                     
Basic and diluted earnings per share   3.11    2.92    15.24    15.65 
                     
Basic and diluted headline earnings per share (a non-IFRS measure)   3.11    2.90    15.21    15.61 

  

CONSTANT CURRENCY

 

Constant currency information has been presented to illustrate the impact of changes in currency rates on the Group’s results. The tables below provide the unaudited constant currency reconciliation to the reported measure for the periods presented.

 

Three Months Ended February 28, 2022

 

The constant currency information has been determined by adjusting the current financial reporting period results to the results reported for the three months ended February 28, 2021, using the average of the monthly exchange rates applicable to that period. The measurement has been performed for each of the Group’s operating currencies.

 

SUBSCRIPTION REVENUE  Three Months Ended February 28, 
   2022   2021   Year-on-Year Change 
   (ZAR Thousands)   Percentage 
Subscription revenue as reported   670,715    573,976    17%
Conversion impact of other currencies   354    -    - 
Subscription revenue on a constant currency basis   671,069    573,976    17%

 

TOTAL REVENUE  Three Months Ended February 28, 
   2022   2021   Year-on-Year Change 
   (ZAR Thousands)   Percentage 
Total revenue as reported   741,649    615,741    20%
Conversion impact of other currencies   510    -    1%
Total revenue on a constant currency basis   742,159    615,741    21%

 

Year Ended February 28, 2022

 

The constant currency information has been determined by adjusting the current financial reporting period results to the results reported for the year ended February 28, 2021, using the average of the monthly exchange rates applicable to that period. The measurement has been performed for each of the Group’s operating currencies.

 

SUBSCRIPTION REVENUE  Year Ended February 28, 
   2022   2021   Year-on-Year Change 
   (ZAR Thousands)   Percentage 
Subscription revenue as reported   2,568,165    2,209,017    16%
Conversion impact of other currencies   59,437    -    3%
Subscription revenue on a constant currency basis   2,627,602    2,209,017    19%

 

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TOTAL REVENUE   Year Ended February 28,  
    2022     2021     Year-on-Year Change  
    (ZAR Thousands)     Percentage  
Total revenue as reported     2,746,151       2,290,543       20 %
Conversion impact of other currencies     61,301       -       3 %
Total revenue on a constant currency basis     2,807,452       2,290,543       23 %

 

DEFINITIONS

 

Adjusted Profit

 

Adjusted profit (a non-IFRS measure), is defined as, profit after tax defined by IFRS excluding the impact of non-recurring operational expenses relating to IPO costs of ZAR36 million expensed (ZAR26 million in the fourth quarter of 2021 and ZAR10 million in the first quarter of 2022) and a once-off write-off of capitalized commission assets of ZAR15 million through profit and loss (“once-off exceptional item”).

 

Adjusted Earnings per Share

 

Adjusted earnings per share, (a non-IFRS measure) is defined as, earnings per share defined by IFRS excluding the impact of non-recurring operational expenses relating to IPO costs of ZAR36 million expensed (ZAR26 million in the fourth quarter of 2021 and ZAR10 million in the first quarter of 2022) and a once-off write-off of capitalized commission assets of ZAR15 million through profit and loss, (“once-off exceptional item”).

 

Adjusted EBITDA

 

We define Adjusted EBITDA (a non-IFRS measure) as profit less finance income, plus finance costs, taxation, depreciation and amortization, plus once-off IPO costs, plus a once-off write-off of capitalized commission assets of ZAR15 million through profit and loss, (“once-off exceptional item”). In addition to our results determined in accordance with IFRS, we believe Adjusted EBITDA (a non-IFRS measure) is useful in evaluating our operating performance. We use Adjusted EBITDA in our operational and financial decision-making and believe Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial measure and the reconciliation of Adjusted EBITDA to profit, its most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.

 

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Adjusted EBITDA Margin

 

We define Adjusted EBITDA Margin (a non-IFRS measure) as Adjusted EBITDA (a non-IFRS measure) divided by revenue. In addition to our results determined in accordance with IFRS, we believe Adjusted EBITDA Margin (a non-IFRS measure) is useful in evaluating our operating performance. We use Adjusted EBITDA Margin in our operational and financial decision-making and believe Adjusted EBITDA Margin is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS.

 

Annualized Recurring Revenue (SaaS ARR)

 

SaaS ARR (a non-IFRS measure) is defined as the annual run-rate subscription revenue of subscription agreements from all customers at a point in time, calculated by taking the monthly subscription revenue for all customers during that month and multiplying by twelve.

 

Average Revenue per Subscriber per month (ARPU)

 

ARPU (a non-IFRS measure) is calculated on a quarterly basis by dividing the cumulative subscription revenue for the quarter by the average of the opening subscriber balance at the beginning of the quarter and closing subscriber balance at the end of the quarter and dividing this by three.

  

Cartrack Holdings (“Cartrack”)

 

Earnings per share

 

Basic earnings per share in accordance with IFRS.

 

Free Cash Flow

 

We define Free Cash Flow (a non-IFRS measure) as net cash generated from operating activities less purchases of property, plant and equipment. In addition to our results determined in accordance with IFRS, we believe Free Cash Flow (a non-IFRS measure), is useful in evaluating our operating performance. We believe that Free Cash Flow is a useful indicators of liquidity and the ability of the Group to turn revenues into Free Cash Flow, respectively, that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property, plant and equipment, can be used for strategic initiatives, including investing in our business, and strengthening our financial position. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial measure and the reconciliation of Free Cash Flow to net cash generated operating activities and net cash generated from operating activities as a percentage of revenue, their most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.

 

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Picup Technologies (Pty) Ltd (“Picup”)

 

Rule of 40

 

The sum of revenue growth and operating margin for a period of 12-months sum to greater than 40.

 

Unit economics

 

These are non-IFRS financial measures that are used as reference of Cartrack’s performance.

 

Lifetime value (LTV of a Customer) of customer relationships to customer acquisition costs (CAC)

 

We calculate the LTV of our customer relationships as of a measurement date by dividing (i) the product of our subscription revenue gross margin measured over the past twelve months, and the difference between our current period SaaS ARR and prior comparative period (twelve months) SaaS ARR by (ii) the percentage of SaaS ARR lost as a result of customer churn over the past twelve months. We calculate our CAC as our annual sales and marketing expense measured over the past twelve months.

 

Lifetime value (LTV of a Subscriber), cost of acquiring a subscriber (CAS) and cost of servicing a subscriber (CSS)

 

It is important to distinguish between the subscriber contract life cycle (the life cycle of a vehicle or other equipment on our connected cloud) and the customer lifecycle (one customer normally has multiple ongoing subscriber contract life cycles as customers de-fleet and re-fleet their vehicle parc and other equipment on our connected cloud).

 

We calculate the LTV of a subscriber by multiplying the ARPU with the expected contract life cycle months, multiplied by the subscription revenue gross margin percentage, which is defined as gross profit relating to subscription revenue divided by subscription revenue.

 

We calculate CAS, which is calculated on a per subscriber basis, as (i) sales and marketing expenses, plus (ii) sales commissions, plus (iii) cost of installing IOT equipment, divided by (iv) the average subscriber base for such period.

 

We calculate CSS, which is calculated on a per subscriber basis, as (i) operating expenses excluding estimated general business expansion costs, plus (ii) costs of sales that relates to subscription revenue, less (iii) all costs used to calculate CAS, divided by (iv) the average subscriber balance for such period.

 

We estimate our long term unit economics operational profit by multiplying i) the product of the expected life cycle of a subscriber on our connected cloud by ARPU, minus ii) CAS added to the product of the expected life cycle of a subscriber on our connected cloud by CSS.

 

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Forward-Looking Statements

 

The information in this announcement (which includes any oral statements made in connection therewith, as applicable) includes “forward-looking statements.” Forward-looking statements are based on our beliefs and assumptions and on information currently available to us, and include, without limitation, statements regarding our business, financial condition, strategy, results of operations, certain of our plans, objectives, assumptions, expectations, prospects and beliefs and statements regarding other future events or prospects, including outlook statements. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “potential,” “assume,” “continue,” “may,” “will,” “should,” “could,” “shall,” “risk” or the negative of these terms or similar expressions that are predictions of or indicate future events and future trends.

 

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. In addition, even if our results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.

 

Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements are disclosed under the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” sections of the Annual Report on Form 20-F filed on June 28, 2021.

 

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this announcement. We disclaim any duty to update and do not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this announcement.

 

Non-IFRS Financial Measures

 

This announcement includes certain non-IFRS financial measures. These non-IFRS financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative or superior to IFRS measures. You should be aware that our announcement of these measures may not be comparable to similarly-titled measures used by other companies.

 

Market and Industry Data

 

We include statements and information in this announcement concerning our industry ranking and the markets in which we operate, including our general expectations and market opportunity, which are based on information from independent industry organizations and other third-party sources (including a third-party market study, industry publications, surveys and forecasts). While Karooooo believes these third-party sources to be reliable as of the date of this announcement, we have not independently verified any third-party information and such information is inherently imprecise. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of risks. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

Trademarks and Trade Names

 

In our key markets, we have rights to use, or hold, certain trademarks relating to Cartrack, or the respective applications for trademark registration are underway. We do not hold or have rights to any other additional patents, trademarks or licenses, that, if absent, would have had a material adverse effect on our business operations. Solely for convenience, trademarks and trade names referred to in this announcement may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ tradenames, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this announcement is the property of its respective holder.

 

 

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