SOURCE: Net 1 UEPS Technologies, Inc.

Net 1 UEPS Technologies, Inc.

August 20, 2015 16:05 ET

Net 1 UEPS Technologies, Inc. Reports Fourth Quarter and Full Year 2015 Results

JOHANNESBURG, SOUTH AFRICA--(Marketwired - August 20, 2015) -

  • Q4 2015 Revenue and FEPS of $164 million and $0.58, a constant currency increase after adjusting for the SASSA recovery in 2014, of 22% and 30%, respectively;
  • Strategic investments in Hong Kong and Nigeria-based businesses and ZAZOO partnerships with Funifi and BitX; and
  • Cash and equivalents of $117.6 million as of June 30, 2015, and operating cash flow of $31.8 million in Q4 2015.

Net 1 UEPS Technologies, Inc. (NASDAQ: UEPS) (JSE: NT1) today released results for the fourth quarter and full-year fiscal 2015.

 
Summary Financial Metrics
    
   Three months ended June 30,
   2015  2014  % change in USD  % change in ZAR
(All figures in USD '000s except per share data)           
Revenue  164,286  182,753  (10%)  4%
             
 Revenue excluding SASSA recovery(1)(2)  164,286  156,118  5%  22%
             
GAAP net income  23,914  28,584  (16%)  (3%)
             
Fundamental net income(1)  27,233  44,362  (39%)  (29%)
             
 Fundamental net income excluding SASSA recovery(1)  27,233  25,185  8%  24%
             
GAAP earnings per share ($)  0.51  0.59  (13%)  1%
             
Fundamental earnings per share ($)(1)  0.58  0.91  (36%)  (26%)
             
 Fundamental earnings per share excluding SASSA recovery(1)  0.58  0.52  12%  30%
             
Fully-diluted shares outstanding ('000's)  46,944  48,855  (4%)  (4%)
             
Average period USD/ ZAR exchange rate  12.04  10.42  16%   
    
    
   Year ended June 30,
   2015  2014  % change in USD  % change in ZAR
(All figures in USD '000s except per share data)           
Revenue  625,979  581,656  8%  18%
             
 Revenue excluding SASSA recovery(1)(2)  625,979  555,021  13%  24%
             
GAAP net income  94,735  70,111  35%  49%
             
Fundamental net income(1)  108,205  101,343  7%  17%
             
 Fundamental net income excluding SASSA recovery(1)  108,205  82,166  32%  45%
             
GAAP earnings per share ($)  2.03  1.51  34%  48%
             
Fundamental earnings per share ($)(1)  2.32  2.18  6%  17%
             
 Fundamental earnings per share excluding SASSA recovery(1)  2.32  1.77  31%  44%
             
Fully-diluted shares outstanding ('000's)  46,913  46,603  1%  1%
             
Average period USD/ ZAR exchange rate  11.43  10.40  10%   
         

(1) Revenue excluding SASSA recovery, Fundamental net income, Fundamental net income excluding SASSA recovery, Fundamental earnings per share and Fundamental earnings per share excluding SASSA recovery are non-GAAP measures and are described below under "Use of Non-GAAP Measures -- Fundamental net income and fundamental earnings per share." See Attachment B for a reconciliation of GAAP net income to fundamental net income and earnings per share.

(2) Revenue excluding SASSA recovery is Revenue earned during 2014 less approximately $26.6 million received from SASSA related to the recovery of additional implementation costs incurred during the beneficiary re-registration process in fiscal 2012 and 2013

Factors impacting comparability of our Q4 2015 and Q4 2014 results

  • Unfavorable impact from the strengthening of the US dollar against the ZAR: The US dollar appreciated by 16% against the ZAR during Q4 2015, which negatively impacted our reported results;
  • Higher revenue resulting from an increase in low-margin prepaid airtime and electricity sales: Our revenue has increased as a result of the growth of our prepaid electricity and prepaid airtime offering during Q4 2015, with prepaid airtime having lower margins compared with our other South African businesses;
  • Increased contribution by KSNET: Our results were positively impacted by growth in our South Korean operations;
  • Growth in financial services: The expansion of our financial services offering resulted in higher year-over-year revenue and operating income from UEPS-based lending during Q4 2015;
  • Ad hoc hardware sales in fiscal 2015: We sold more terminals and cards during Q4 2015 as a result of ad hoc orders received from our customers;
  • $26.6 million recovery of expenses and 2014 implementation costs: In Q4 2014, we received approximately $26.6 million, or approximately $19.1 million, net of tax, from SASSA related to the recovery of additional implementation costs incurred during the beneficiary re-registration process in fiscal 2012 and 2013; and
  • Fair value charge resulting from issue of equity instruments pursuant to BEE transactions: The fair value non-cash charge of $11.3 million related to our BEE transactions adversely impacted our reported results during Q4 2014.

Comments and Outlook

"I am thrilled with our 2015 performance as we were able to execute on our strategy extremely well. The continued local and international interest we receive as a result of our proven ability to implement state of the art, functional and robust solutions that allow for the financial inclusion of all citizens, as well as our card and mobile centric solutions that can be provided individually or in unison, provides us with a bespoke end-to-end financial technology solution relevant to both developed and developing world economies," said Dr. Belamant, Chairman and CEO. "Our ZAZOO initiative is gaining momentum as demonstrated by its financial performance, and its latest agreements with companies such as Uber, Microsoft, and BitX and our investment in T24. ZAZOO's pipeline has numerous other deals and it is well positioned to grow exponentially over a short period of time. We also believe that our entry into Nigeria via our investment in One Credit provides us the opportunity to deploy our entire solution in this vast, under-penetrated and profitable economy," he concluded.

"Our financial and operating performance, including the increased investment in our newer growth and international initiatives, continues to track the strategic developments in our business," said Herman Kotzé, Chief Financial Officer of Net1. "We expect to sustain the momentum in our business and continue our product, client and geographic diversification, and for fiscal 2016 anticipate our fundamental earnings per share to be at least $2.57, assuming an updated constant currency base of ZAR11.43/$1 and a share count of 46.7 million shares," he concluded.

Results of Operations by Segment and Liquidity

Our operating metrics will be updated and posted on our website (www.net1.com).

South African transaction processing

Segment revenue was $59.8 million in Q4 2015, down 32% compared with Q4 2014 in USD and down 22% on a constant currency basis. In ZAR, revenue increased 12% in fiscal 2015 compared to fiscal 2014 (after excluding the impact of the recovery in fiscal 2014 of implementation costs related to our SASSA contract). The increase in segment revenues, exclusive of such recovery, was primarily due to more low-margin transaction fees generated from beneficiaries using the South African National Payment System and more inter-segment transaction processing activities. In addition, revenue from the distribution of social welfare grants grew modestly during the year and was in-line with the increase in unique welfare cardholder recipients, net of removal of invalid and fraudulent beneficiaries, offset by the loss of MediKredit revenue as a result of the sale of that business.

Segment operating income margin was 19% and 44%, respectively, and decreased primarily due to the recovery of SASSA implementation costs in 2014. Segment operating income margin excluding the recovery of implementation costs was 20% for Q4 2014.

International transaction processing

Segment revenue was $42.6 million in Q4 2015, up 1% compared with Q4 2014 in USD and 17% on a constant currency basis. Revenue increased primarily due to increased transaction processing activities in South Korea during Q4 2015. Operating income during the year to date fiscal 2015 was higher due to increase in revenue contribution from KSNET, but partially offset by ZAZOO start-up costs in the UK and India. Segment operating income margin in Q4 2015 and Q4 2014 was 17% and 16%, respectively.

Financial inclusion and applied technologies

Segment revenue was $73.0 million in Q4 2015, up 14% compared with Q4 2014 in USD and 32% on a constant currency basis. Financial inclusion and applied technologies revenue and operating income increased primarily due to higher prepaid airtime sales driven by the rollout of our prepaid airtime product, an increase in the number of UEPS-based loans as we rolled out our product nationally, more ad hoc terminal and card sales and, in ZAR, an increase in intersegment revenues. Smart Life did not contribute to operating income in fiscal 2015 and 2014 due to the FSB suspension of its license. Smart Life resumed operating activities in early fiscal 2016, following the upliftment of suspension of its license by the FSB. Segment operating income margin was 27% and 28%, respectively, and decreased primarily as a result of more low-margin prepaid airtime and hardware sales.

Corporate/eliminations

The decrease in our corporate expenses in Q4 2015 resulted primarily from the non-cash charge related to the equity instruments issued pursuant to our BEE transactions in Q4 2014 and lower US government investigation and US lawsuit expenses, partially offset by increases in general corporate audit fees, executive emoluments and other corporate head office-related expenses.

Cash flow and liquidity

At June 30, 2015, we had cash and cash equivalents of $117.6 million, up from $58.7 million at June 30, 2014. The increase in our cash balances from June 30, 2014, was primarily due to the expansion of all of our core businesses, and to a lesser extent, to the cash conservation resulting from the sale of loss-incurring businesses, offset by provisional tax payments, investments, capital expenditures and the scheduled Korean debt repayment in October 2014.

Excluding the impact of interest received, interest paid under our Korean debt and taxes, the increase in cash from operating activities resulted from improved trading activity during fiscal 2015. During fiscal 2015, we paid interest of $3.6 million under our South Korean debt facility. Capital expenditures for Q4 2015 and 2014 were $11.6 million and $6.6 million, respectively, and have increased primarily due to the acquisition of more payment processing terminals in South Korea and ATMs in South Africa.

Use of Non-GAAP Measures

US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using the non-GAAP measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP measures.

Fundamental net income and fundamental earnings per share

Fundamental net income and earnings per share is GAAP net income and earnings per share adjusted for (1) the amortization of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3) unusual non-recurring items, including the amortization of KSNET debt facility fees and US government investigations-related and US lawsuit expenses; as well as in fiscal 2015, a refund (net of taxes) related to Korean industry-wide litigation that has now been finalized and in fiscal 2014, the equity instruments charged related to our December 2014 BEE transactions, transaction-related costs and the net loss on deconsolidation of subsidiaries and business, net of tax.

Fundamental net income excluding SASSA recovery and fundamental earnings per share excluding SASSA recovery is Fundamental net income and earnings per share less the recovery received from SASSA in 2014 of $19.2 million, after taxes.

Management believes that the fundamental net income and earnings per share, as well as the fundamental net income and earnings per share excluding SASSA recovery, metrics enhances its own evaluation, as well as an investor's understanding, of our financial performance.

Attachment B presents the reconciliation between GAAP net income and earnings per share, basic, to fundamental net income and earnings per share, basic and to fundamental net income and earnings per share, basic excluding recovery from SASSA.

Headline earnings per share ("HEPS")

The inclusion of HEPS in this press release is a requirement of our listing on the JSE. HEPS basic and diluted is calculated using net income which has been determined based on GAAP. Accordingly, this may differ to 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, including but not limited to, International Financial Reporting Standards.

HEPS basic and diluted is calculated as GAAP net income adjusted for the profit on sale of property, plant and equipment, and, in fiscal 2014, the net loss on deconsolidation of subsidiaries and asset group, net of related tax effects. Attachment C presents the reconciliation between our net income used to calculate earnings per share basic and diluted and HEPS basic and diluted and the calculation of the denominator for headline diluted earnings per share.

Conference Call

We will host a conference call to review Q4 2015 results on August 21, 2015, at 8:00 Eastern Time. To participate in the call, dial 1-855-481-5362 (US and Canada), 0808-162-4061 (U.K. only) or 0-800-200-648 (South Africa only) ten minutes prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on the Net1 homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through September 13, 2015.

Fiscal 2016 earnings call dates

We expect to host quarterly conference calls to review our fiscal 2016 quarterly results in accordance with the schedule provided in the table below:

    
Conference call to review quarter ended:  Tentative date
    
September 30, 2015 (Q1, 2016)  November 6, 2015
December 31, 2015 (Q2, 2016)  February 5, 2016
March 31, 2016 (Q3, 2016)  May 6, 2016
June 30, 2016 (Q4, 2016)  August 26, 2016
   

The dates provided above are tentative and we will confirm the final dates and dial-in details closer to the quarterly conference call date.

About Net1 (www.net1.com)

Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System ("UEPS") or utilize its proprietary mobile technologies. The Company operates market-leading payment processors in South Africa and the Republic of Korea.

UEPS permits the Company to facilitate biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. Net1's UEPS/EMV solution is interoperable with global EMV standards that seamlessly enable access to all the UEPS functionality in a traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification.

Net1's mobile technologies include its proprietary mobile payments solution - MVC, which offers secure mobile-based payments, as well as mobile banking and prepaid value-added services in developed and emerging countries. The Company intends to deploy its varied mobile solutions through its ZAZOO business unit, which is an aggregation of innovative technology companies and is based in the United Kingdom.

Net1 has a primary listing on the NASDAQ and a secondary listing on the Johannesburg Stock Exchange.

Forward-Looking Statements

This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.

 
NET 1 UEPS TECHNOLOGIES, INC.
Consolidated Statements of Operations
 
   Unaudited  (A)
   Three months ended  Year ended
   June 30,  June 30,
   2015  2014  2015  2014
   (In thousands, except per share data)  (In thousands, except per share data)
                 
REVENUE  $164,286  $182,753  $625,979  $581,656
                 
EXPENSE                
                 
 Cost of goods sold, IT processing, servicing and support   80,582   72,641   297,856   260,232
                  
 Selling, general and administration   40,797   46,156   158,919   168,072
                  
 Equity instruments issued pursuant to BEE transactions   -   11,268   -   11,268
                  
 Depreciation and amortization   10,294   10,041   40,685   40,286
                 
OPERATING INCOME   32,613   42,647   128,519   101,798
                 
INTEREST INCOME   4,467   4,824   16,355   14,817
                 
INTEREST EXPENSE   1,096   1,761   4,456   7,473
                 
INCOME BEFORE INCOME TAX EXPENSE   35,984   45,710   140,418   109,142
                 
INCOME TAX EXPENSE   11,980   17,260   44,136   39,379
                 
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS   24,004   28,450   96,282   69,763
                 
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS   219   96   452   298
                 
NET INCOME   24,223   28,546   96,734   70,061
                 
LESS (ADD): NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   309   (38)   1,999   (50)
                 
NET INCOME ATTRIBUTABLE TO NET1  $23,914  $28,584  $94,735  $70,111
                 
Net income per share, in United States dollars                
 Basic earnings attributable to Net1 shareholders  $0.51  $0.59  $2.03  $1.51
 Diluted earnings attributable to Net1 shareholders  $0.51  $0.59  $2.02  $1.50
                 
(A) - Derived from audited financial statements            
 
  
   
NET 1 UEPS TECHNOLOGIES, INC.  
Consolidated Balance Sheets  
  
   (A)   (A)  
   June 30,   June 30,  
   2015   2014  
   (In thousands, except share data)  
ASSETS  
CURRENT ASSETS           
 Cash and cash equivalents  $117,583   $58,672  
 Pre-funded social welfare grants receivable   2,306    4,809  
 Accounts receivable, net of allowances   148,768    148,067  
 Finance loans receivable, net of allowances   40,373    53,124  
 Inventory   12,979    10,785  
 Deferred income taxes   7,298    7,451  
  Total current assets before settlement assets   329,307    282,908  
   Settlement assets   661,916    725,987  
    Total current assets   991,223    1,008,895  
PROPERTY, PLANT AND EQUIPMENT, net   52,320    47,797  
EQUITY-ACCOUNTED INVESTMENTS   14,329    878  
GOODWILL   166,437    186,576  
INTANGIBLE ASSETS, net   47,124    68,514  
OTHER LONG-TERM ASSETS, including reinsurance assets   14,997    38,285  
 TOTAL ASSETS   1,286,430    1,350,945  
    40,570       
LIABILITIES  
CURRENT LIABILITIES           
 Accounts payable   21,453    17,101  
 Other payables   45,595    42,257  
 Current portion of long-term borrowings   8,863    14,789  
 Income taxes payable   6,287    7,676  
  Total current liabilities before settlement obligations   82,198    81,823  
   Settlement obligations   661,916    725,987  
    Total current liabilities   744,114    807,810  
DEFERRED INCOME TAXES   10,564    15,522  
LONG-TERM BORROWINGS   50,762    62,388  
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities   2,205    23,477  
 TOTAL LIABILITIES   807,645    909,197  
COMMITMENTS AND CONTINGENCIES           
            
EQUITY  
 COMMON STOCK           
  Authorized: 200,000,000 with $0.001 par value;           
  Issued and outstanding shares, net of treasury - 2015: 46,679,565; 2014: 47,819,299   64    63  
 PREFERRED STOCK           
  Authorized shares: 50,000,000 with $0.001 par value;           
  Issued and outstanding shares, net of treasury: 2015: -; 2014: -   -    -  
 ADDITIONAL PAID-IN-CAPITAL   213,896    202,401  
 TREASURY SHARES, AT COST: 2015: 18,057,228; 2014: 15,883,212   (214,520 )  (200,681 )
 ACCUMULATED OTHER COMPREHENSIVE LOSS   (139,181 )  (82,741 )
 RETAINED EARNINGS   617,868    522,729  
  TOTAL NET1 EQUITY   478,127    441,771  
  NON-CONTROLLING INTEREST   658    (23 )
   TOTAL EQUITY   478,785    441,748  
            
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $1,286,430   $1,350,945  
            
(A) - Derived from audited financial statements        
            
   
NET 1 UEPS TECHNOLOGIES, INC.  
Consolidated Statements of Cash Flows  
                  
   Unaudited   A  
   Three months ended   Year ended  
   June 30,   June 30,  
   2015   2014   2015   2014  
   (In thousands)   (In thousands)  
                  
Cash flows from operating activities                     
Net income  $24,223   $28,546   $96,734   $70,061  
Adjustments to reconcile net income to net cash provided by operating activities:                     
 Depreciation and amortization   10,294    10,041    40,685    40,286  
 Earnings from equity-accounted investments   (219 )  (96 )  (452 )  (298 )
 Fair value adjustment   518    (104 )  248    (55 )
 Interest payable   7    404    1,283    2,100  
 Facility fee amortized   38    81    208    738  
 Profit on disposal of property, plant and equipment   (1 )  (392 )  (296 )  (434 )
 Profit on deconsolidation of subsidiaries and business   -    55    -    55  
 Stock compensation charge, net of forfeitures   513    898    3,195    3,718  
 Fair value of BEE equity instruments granted   -    11,268    -    11,268  
 (Increase) Decrease in accounts and finance loans receivable, and pre-funded grants receivable   (4,135 )  (33,926 )  1,399    (101,447 )
 (Increase) Decrease in inventory   (1,075 )  (199 )  (3,846 )  780  
 Increase (Decrease) in accounts payable and other payables   6,804    23,566    (850 )  12,671  
 (Decrease) Increase in taxes payable   (3,507 )  (3,908 )  606    5,523  
 Decrease in deferred taxes   (1,631 )  (4,802 )  (3,656 )  (7,821 )
  Net cash provided by operating activities   31,829    31,432    135,258    37,145  
                      
Cash flows from investing activities                     
Capital expenditures   (11,614 )  (6,597 )  (36,436 )  (23,906 )
Proceeds from disposal of property, plant and equipment   80    866    857    2,990  
Net cash outflow from sale of MediKredit   -    (669 )  -    (669 )
Proceeds from sale of business   -    186    1,895    186  
(Acquisition of equity of)/ capital reduction/ repayment of loan by equity-accounted investment   (13,200 )  564    (13,200 )  539  
Other investing activities, net   -    -    (29 )  570  
Net change in settlement assets   (22,853 )  20,059    (12,570 )  (1,350 )
  Net cash (used in) provided by investing activities   (47,587 )  14,409    (59,483 )  (21,640 )
                      
Cash flows from financing activities                     
Repayment of long-term borrowings   -    -    (14,128 )  (87,008 )
Long-term borrowings obtained   789    1,044    3,765    73,677  
Acquisition of treasury stock   -    -    (9,151 )  -  
Sale of equity to non-controlling interest   -    -    1,407    -  
Dividends paid to non-controlling interest   -    -    (1,024 )  -  
Proceeds from issue of common stock   265    110    2,045    198  
Payment of facility fee   -    -    -    (872 )
Proceeds from bank overdraft   -    -    -    24,580  
Repayment of bank overdraft   -    -    -    (23,335 )
Acquisition of interests in KSNET   -    -    -    (1,968 )
Net change in settlement obligations   22,853    (20,059 )  12,570    1,350  
  Net cash provided by (used in) financing activities   23,907    (18,905 )  (4,516 )  (13,378 )
                      
Effect of exchange rate changes on cash   (1,568 )  861    (12,348 )  2,880  
Net increase in cash and cash equivalents   6,581    27,797    58,911    5,007  
Cash and cash equivalents - beginning of year   111,002    30,875    58,672    53,665  
Cash and cash equivalents at end of year  $117,583   $58,672   $117,583   $58,672  
                      
(A) - Derived from audited financial statements                
                 
                 
                 

Net 1 UEPS Technologies, Inc.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended June 30, 2015 and 2014 and March 31, 2015

                      
               Change - actual   Change - constant exchange rate(1)  
Key segmental data, in $ '000,  Q4 '15   Q4 '14   Q3 '15   Q4'15
vs
Q4'14
  Q4'15
vs
Q3'15
  Q4'15
vs
Q4'14
  Q4'15
vs
Q3'15
 
Revenue:                             
South African transaction processing  $59,774   $88,265   $57,999   (32% ) 3%   (22% ) 6%  
International transaction processing  42,573   42,201   38,311   1%   11%   17%   14%  
Financial inclusion and applied technologies  73,042   64,093   66,830   14%   9%   32%   12%  
 Subtotal: Operating segments  175,389   194,559   163,140   (10% ) 8%   4%   10%  
 Intersegment eliminations  (11,103 ) (11,806 ) (12,019 ) (6% ) (8% ) 9%   (5% )
  Consolidated revenue  $164,286   $182,753   $151,121   (10% ) 9%   4%   12%  
                              
Operating income (loss):                             
South African transaction processing  $11,268   $38,675   $13,218   (71% ) (15% ) (66% ) (13% )
International transaction processing  7,134   6,647   6,579   7%   8%   24%   11%  
Financial inclusion and applied technologies  19,385   18,126   17,906   7%   8%   24%   11%  
 Subtotal: Operating segments  37,787   63,448   37,703   (40% ) 0%   (31% ) 3%  
 Corporate/Eliminations  (5,174 ) (20,801 ) (5,737 ) (75% ) (10% ) (71% ) (7% )
  Consolidated operating income  $32,613   $42,647   $31,966   (24% ) 2%   (12% ) 5%  
                              
Operating income margin (%)                             
South African transaction processing  19%   44%   23%                  
International transaction processing  17%   16%   17%                  
Financial inclusion and applied technologies  27%   28%   27%                  
 Consolidated operating margin  20%   23%   21%                  
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the fourth quarter of fiscal 2015 also prevailed during the fourth quarter of fiscal 2014 and the third quarter of fiscal 2015.
 
 
 
Year ended June 30, 2015 and 2014
                  
           Change - actual   Change - constant exchange rate(1)  
Key segmental data, in '000, except margins  F2015   F2014   F2015
vs
F2015
  F2015
vs
F2015
 
Revenue:                 
South African transaction processing  236,452   261,577   (10% ) (1% )
International transaction processing  164,554   152,725   8%   18%  
Financial inclusion and applied technologies  272,600   207,595   31%   44%  
 Subtotal: Operating segments  673,606   621,897   8%   19%  
 Intersegment eliminations  (47,627 ) (40,241 ) 18%   30%  
  Consolidated revenue  625,979   581,656   8%   18%  
                  
Operating income (loss):                 
South African transaction processing  51,008   61,401   (17% ) (9% )
International transaction processing  26,805   21,952   22%   34%  
Financial inclusion and applied technologies  72,725   60,685   20%   32%  
 Subtotal: Operating segments  150,538   144,038   5%   15%  
 Corporate/Eliminations  (22,019 ) (42,240 ) (48% ) (43% )
  Consolidated operating income  128,519   101,798   26%   39%  
                  
Operating income margin (%)                 
South African transaction processing  22%   23%          
International transaction processing  16%   14%          
Financial inclusion and applied technologies  27%   29%          
 Overall operating margin  21%   18%          
                  
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2015 also prevailed during fiscal 2014.

Net 1 UEPS Technologies, Inc.

Attachment B

Reconciliation of GAAP net income and earnings per share, basic, to fundamental net income and earnings per share, basic and to fundamental net income and earnings per share, basic excluding recovery from SASSA:

 
Three months ended June 30, 2015 and 2014
             
   Net income
(USD'000)
 EPS,
basic
(USD)
 Net income
(ZAR'000)
 EPS,
 basic
(ZAR)
   2015   2014  2015  2014  2015   2014  2015  2014
                           
GAAP  23,914   28,584  0.51  0.59  288,035   297,897  6.18  6.12
                           
Intangible asset amortization, net  2,751   2,960        33,131   30,842      
Stock-based compensation charge  513   898        6,179   9,359      
Facility fees for KSNET debt  38   79        458   823      
US government investigations-related and US lawsuit expenses  17   53        205   552      
BEE equity instruments charge  -   11,268        -   118,740      
Net loss on deconsolidation of subsidiaries and business, net of tax  -   443        -   4,617      
Transaction-related costs  -   77        -   802      
 Fundamental  27,233   44,362  0.58  0.91  328,008   463,632  7.04  9.52
Recovery from SASSA, net of tax  -   19,177        -   199,861      
 Fundamental excluding recovery from SASSA, net of tax  27,233   25,185  0.58  0.52  328,008   263,771  7.04  5.42
                           
                   
                   
Year ended June 30, 2015 and 2014                  
                   
   Net income
(USD'000)
 EPS, basic
(USD)
 Net income
(ZAR'000)
 EPS,
 basic
(ZAR)
   2015   2014  2015  2014  2015   2014  2015  2014
                           
GAAP  94,735   70,111  2.03  1.51  1,082,584   728,916  23.17  15.68
                           
Intangible asset amortization, net  11,263   12,490        128,708   129,846      
Stock-based compensation charge  3,195   3,718        36,511   38,655      
Refund for KSNET litigation  (1,354 ) -        (15,473 ) -      
Facility fees for KSNET debt  208   657        2,377   6,831      
US government investigations-related and US lawsuit expenses  158   2,579        1,806   26,813      
BEE equity instruments charge  -   11,268        -   118,740      
Net loss on deconsolidation of subsidiaries and business, net of tax  -   443        -   4,606      
Transaction-related costs  -   77        -   806      
 Fundamental  108,205   101,343  2.32  2.18  1,236,513   1,055,213  26.46  22.70
Recovery from SASSA, net of tax  -   19,177        -   199,861      
 Fundamental excluding recovery from SASSA, net of tax  108,205   82,166  2.32  1.77  1,236,513   855,352  26.46  18.40
                           

Net 1 UEPS Technologies, Inc.

Attachment C

Reconciliation of net income used to calculate earnings per share basic and diluted and headline earnings per share basic and diluted:

 
Three months ended June 30, 2015 and 2014
          
   2015   2014  
          
Net income (USD'000)  23,914   28,584  
Adjustments:         
 Profit on sale of property, plant and equipment  (1 ) (392 )
 Loss on deconsolidation of subsidiaries and business  -   55  
 Tax effects on above  -   (287 )
          
Net income used to calculate headline earnings (USD'000)  23,913   27,960  
          
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)  46,620   48,695  
          
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)  46,944   48,855  
          
Headline earnings per share:         
 Basic, in USD  0.51   0.57  
 Diluted, in USD  0.51   0.57  
       
       
       
Year ended June 30, 2015 and 2014      
   2015   2014  
          
Net income (USD'000)  94,735   70,111  
Adjustments:         
 Profit on sale of property, plant and equipment  (296 ) (434 )
 Loss on deconsolidation of subsidiaries and business  -   55  
 Tax effects on above  83   (276 )
          
Net income used to calculate headline earnings (USD'000)  94,522   69,456  
          
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)  46,733   46,484  
          
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)  46,913   46,603  
          
Headline earnings per share:         
 Basic, in USD  2.02   1.49  
 Diluted, in USD  2.01   1.49  
        
 
 
Calculation of the denominator for headline diluted earnings per share
             
   Q4 '15  Q4 '14  F2015  F2014
             
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP  46,620  48,695  46,733  46,484
 Effect of dilutive securities under GAAP  324  160  180  119
  Denominator for headline diluted earnings per share  46,944  48,855  46,913  46,603
         

Weighted average number of shares used to calculate headline earnings per share diluted represent the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully-diluted shares outstanding to calculate headline earnings per share diluted because we do not use the two-class method to calculate headline earnings per share diluted.

Contact Information

  • Investor Relations Contact:
    Dhruv Chopra
    Head of Investor Relations
    Phone: +1 917-767-6722
    Email: dchopra@net1.com