Boosted by global growth and a jump in its subscriber base, fleet management and vehicle recovery group Cartrack has announced a 20% increase in revenue, to R1-billion, for the year ended February 29. Operating profit improved by 19% to R344.8-million.

Cartrack has a presence in 21 countries in Africa, Europe, Asia and the Middle East.

The 2016 financial year saw the group’s global active subscriber base grow by 17%, or some 72 000 units, to 502 849 units.

“This is in line with our expectations and provides a good platform for significant global, scalable growth,” said CEO Zak Calisto.

Contract subscription revenue grew by 20% and continued to represent 84% of total revenue.

The fleet management subscriber base expanded by 60 580 units, representing 56% of Cartrack’s active contract base, compared with 51% in the 2015 financial year.

Revenue from international operations grew 25% to R256.9-million, or 26% of global revenue.

Despite the sharp decline in the rand, the net effect of currency fluctuations on Cartrack’s global business had a positive impact on consolidated profit before tax of around R13-million.

The South African business accounted for 74% of revenue.

Despite the economic slowdown, declining new-vehicle sales and lower consumer confidence, the local business achieved record yearly unit sales, with the subscriber base growing by 16%, to 391 000 units.

Revenue grew by 19% while operating profit increased by 16%.

Cartrack had been selected to provide a customised telematics solution to the South African arm of MAN Truck & Bus, the German commercial vehicle manufacturer.

Operating expenses in South Africa increased at a faster rate than revenue, as the company had to build sales and distribution channels, while there was also a higher incidence of debtor default, largely by cash-strapped consumers.

Calisto said consumer defaults in South Africa had increased by around 50% in the period under review, which was indicative of an economy under “huge pressure”.

He expected the situation to worsen next year.

However, he emphasised that the number of defaults had been within “expected ranges” and “factored into pricing”, adding that he did not view the defaults as a threat to the business.

Markets in the rest of Africa were affected by declining global demand and subdued commodity prices. The unexpected high and rapid depreciation of local currencies and inflation also had a negative impact.

These economic conditions resulted in higher debtor defaults, specifically in respect of subscribers at the lower end of the price spectrum. Parastatals were also taking longer to pay.

Despite this, the subscriber base in Africa grew by 10% and revenue increased by 22%.

Operating profit increased 29% to R56.5- million.

In Europe, Cartrack saw a 23% jump in the subscriber base, while revenue grew by 12%.

Stringent cost management and the strengthening of the euro against the rand contributed to a 53% increase in operating profit.

The 2016 financial year was the first full year of operation for six of Cartrack’s Asian entities.

This segment lifted revenue 134% to R27.6-million.

The well-established Singapore operation increased its profitability on the back of solid subscriber growth.

However, the other newly established entities recorded losses, as the overhead expenditure on the infrastructure build of each operation was increased to support the planned sales growth, culminating in operating losses of R12-million.

Breakeven was expected within around three years of the start of trading.

No new international businesses were acquired or started during 2016 as Cartrack focused on establishing the new operations in Asia.

That said, Cartrack’s start-up of a fleet management business in the US was “imminent”, noted Calisto.

“This market holds huge potential.”