Net 1 UEPS Technologies Inc.

NASDAQ : UEPS
JSE : NT1


Net 1 UEPS Technologies Inc.

August 28, 2014 16:05 ET

Net1 UEPS Technologies, Inc. Reports 2014 Fourth Quarter and Full Year Results

- Q4 2014 Revenue and FEPS of $183 million and $0.91, a constant currency increase of 76% and 275% respectively;

- Received $26.6 million in cash from SASSA related to recovery of implementation expenses;

- Recognized a $11.3 million non-cash charge related to 2014 BEE transactions; and

- Reportable operating segments reduced from five to three.

JOHANNESBURG, SOUTH AFRICA--(Marketwired - Aug. 28, 2014) - Net 1 UEPS Technologies, Inc. (NASDAQ:UEPS)(JSE:NT1) today released results for the fourth quarter and full-year fiscal 2014.

Summary Financial Metrics

Three months ended June 30,
2014 2013 % change in USD % change in ZAR
(All figures in USD '000s except per share data)
Revenue 182,753 117,882 55% 76%
GAAP net income 28,584 8,285 245% 291%
Fundamental net income (1) 44,386 12,598 252% 301%
GAAP earnings per share ($) 0.59 0.18 223% 266%
Fundamental earnings per share ($) (1) 0.91 0.28 225% 275%
Fully-diluted shares outstanding ('000's) 48,855 45,713 7%
Average period USD/ ZAR exchange rate 10.42 9.19 13%
Year ended June 30,
2014 2013 % change in USD % change in ZAR
(All figures in USD '000s except per share data)
Revenue 581,656 452,147 29% 54%
GAAP net income 70,111 12,977 440% 545%
Fundamental net income (1) 100,539 34,822 189% 245%
GAAP earnings per share ($) 1.51 0.28 430% 532%
Fundamental earnings per share ($) (1) 2.16 0.76 184% 238%
Fully-diluted shares outstanding ('000's) 46,603 45,678 2%
Average period USD/ ZAR exchange rate 10.40 8.71 19%

(1) Fundamental net income and earnings per share 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.

Factors impacting comparability of our Q4 2014 and Q4 2013 results

  • Unfavorable impact from the strengthening of the US dollar against the ZAR: The US dollar appreciated by 13% against the ZAR during Q4 2014, which negatively impacted our reported results;
  • $26.6 million recovery of expenses and 2013 implementation costs: Our SASSA contract implementation is complete. 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. Q4 2013 results include implementation-related expenditure, including smart card costs, of approximately $9.0 million;
  • 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;
  • 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 2014;
  • Ad hoc hardware sales in fiscal 2014: We sold more terminals and cards during Q4 2014 as a result of ad hoc orders received from our customers; and
  • 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 airtime offering during Q4 2014, which has lower margins compared with our other South African businesses.

Comments and Outlook

"Our results once again demonstrate our ability to implement large and complex national projects efficiently, and to rationalize our cost structure in order to drive margin improvement. We can achieve such results due to our superior technological solutions and their ability to adapt seamlessly to the ever-changing needs of our markets and our customers. More importantly, we have been able to focus our attention on our growth strategy targeting international markets. This strategy is mobile- and payment-centric, and is designed to deliver solutions that incorporate a number of "killer" applications in the space of money transfers, loyalty programs, electronic wallets and secure CNP payments," said Dr. Serge Belamant, Chairman and CEO of Net1. "Our new streamlined operational teams are ready for significant expansion not only locally but globally as well. This new focused approach will allow us to diversify our risk profile from a geographical, currency and customer point of view. I am delighted with our personnel and their commitments, and strongly believe that we are now entering a period of sustained growth that will result in continued shareholder value creation," he concluded.

"I am proud of our financial achievements in fiscal 2014, which have provided the catalyst for our expected growth trajectory in fiscal 2015," said Herman Kotzé, Chief Financial Officer of Net1. "For fiscal 2015, we expect fundamental earnings per share of at least $1.92, assuming a constant currency base of ZAR 10.40/$1 and a share count of 46 million shares. Our fiscal 2014 fundamental earnings per share included approximately $0.40 related to the recovery of our SASSA implementation costs, which will not recur in fiscal 2015," he concluded.

Transactions in preparation for any new potential SASSA tender

On August 27, 2014, we entered into a sale and subscription agreement with Business Venture Investments No 1567 (Proprietary) Limited (RF) ("BVI"), one of our BEE partners, in preparation for any new potential SASSA tender. Pursuant to the sale and subscription agreement: (i) we repurchased BVI's remaining 1,837,432, shares of Net1 common stock for approximately $9.2 million in cash (translated at exchange rates prevailing as of August 27, 2014) and (ii) BVI has subscribed for new ordinary shares of CPS representing approximately 12.5% of CPS' ordinary shares outstanding after the subscription for $1.4 million in cash (translated at exchange rates prevailing as of August 27, 2014). In connection with transactions described above, the CPS shareholder agreement that was negotiated as part of the original December 2013 Relationship Agreement became effective.

Change to internal reporting structure and restatement of previously reported information

In June 2014 we streamlined our operating structure and accordingly our reporting segments have been consolidated from five to three: South African transaction processing, International transaction processing and Financial inclusion and applied technologies. Previously reported information has been restated. For further information refer to Note 23 to our 2014 annual financial statements contained in our report on Form 10-K filed with the United States Securities and Exchange Commission on August 28, 2014. Attachment D presents our quarterly operating segment revenue and operating income results for fiscal 2014, 2013 and 2012.

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

The South African transaction processing segment consists mainly of pension and welfare benefit distribution services provided to the South African government, and transaction processing for retailers, utilities, medical-related claim service customers and banks.

Segment revenue was $88.3 million in Q4 2014, up 52% compared with Q4 2013 in USD and up 72% on a constant currency basis. In ZAR, increase in segment revenue was primarily due to the recovery of $26.6 million in implementation costs related to our SASSA contract and more low-margin transaction fees generated from beneficiaries using the South African National Payment System. Segment operating income margin was 44% and (0)%, respectively, and increased primarily due to the recovery of SASSA implementation costs. Segment operating income margin excluding the recovery of implementation costs was 20% for Q4 2014.

International transaction processing

The International transaction processing segment consists mainly of payment processing services to merchants and card issuers in South Korea. The segment also generates transaction fee revenue from transaction processing of UEPS-enabled smartcards in Botswana and transaction processing of medical-related claims in the United States. KSNET contributes the majority of our revenues and operating income in this segment. Segment revenue was $42.2 million in Q4 2014, up 17% compared with Q4 2013 in USD and 32% on a constant currency basis. Revenue increased primarily due to increased transaction processing activities in South Korea during Q4 2014. Operating income in Q4 2014 was higher due to an increase in revenue contribution from KSNET, which was partially offset by ongoing losses related to our XeoHealth launch in the United States, as well as ongoing competition in the South Korean marketplace. Segment operating income margin in Q4 2014 and Q4 2013 was 16% and 15%, respectively.

Financial inclusion and applied technologies

The Financial inclusion and applied technologies segment includes our smart card accounts, lending and life insurance businesses. This segment also includes the economics from merchants and card holders using our merchant acquiring system, the sale of prepaid products (electricity and airtime) and the sale of hardware and software.

Segment revenue was $64.1 million in Q4 2014, up 116% compared with Q4 2013 in USD and 146% on a constant currency basis, and increased primarily due to higher mobile-based prepaid airtime sales, an increase in the number of UEPS-based loans as we rolled out our product nationally, an increase in intersegment revenues and more ad hoc terminal and smart card sales. Segment operating income margin was 28% and 48%, respectively, and decreased primarily as a result of more low-margin prepaid airtime and hardware sales.

Corporate/eliminations

Corporate/eliminations includes our head office cost center, the amortization of acquisition-related intangible assets and once-off events, including in 2014, the equity instrument charges related to our BEE transactions, and the net loss for the deconsolidation of subsidiaries and businesses.

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

Cash flow and liquidity

At June 30, 2014, we had cash and cash equivalents of $58.7 million, up from $53.7 million at June 30, 2013. The increase in our cash balances from June 30, 2013, was primarily due to higher cash generated from our core business and the recovery of implementation costs from SASSA, which was partially offset by higher corporate tax payments, the expansion of our UEPS-based lending business, acquisition of terminals to maintain and expand our South Korean business activities, the repayment of a portion of our South Korean debt and acquisition of substantially all of the remaining shares of KSNET that we did not already own.

Excluding the impact of interest received, interest paid under our South Korean debt, taxes and recovery of implementation costs from SASSA, the decrease in cash from operating activities resulted from the expansion of our UEPS-based lending book, offset by cash inflows from improved trading activity and the substantial elimination of implementation costs in fiscal 2014. Capital expenditures for Q4 2014 and 2013 were $6.6 million and $5.6 million, respectively, and have increased primarily due to the acquisition of more payment processing terminals in South Korea.

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, transaction-related costs and US government investigations-related and US lawsuit expenses; as well as in fiscal 2014, the equity instruments charged related to our December 2013 BEE transactions and the net loss on deconsolidation of subsidiaries and business, net of tax. Management believes that the fundamental net income and earnings per share metric enhances its own evaluation, as well as an investor's understanding, of our financial performance. Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share.

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 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 2014 results on August 29, 2014, 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 21, 2014.

Fiscal 2015 earnings call dates

We expect to host quarterly conference calls to review our fiscal 2015 quarterly results in accordance with the schedule provided in the table below:

Conference call to review quarter ended: Tentative date
September 30, 2014 (Q1, 2015) November 7, 2014
December 31, 2014 (Q2, 2015) February 6, 2015
March 31, 2015 (Q3, 2015) May 8, 2015
June 30, 2015 (Q4, 2015) August 21, 2015

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"), 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 permit 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 operates market-leading payment processors in South Africa and the Republic of Korea. In addition, Net1's proprietary MVC technology offers secure mobile payments and banking services in developed and emerging countries.

Net1 has a primary listing on 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,
2014 2013 2014 2013
(In thousands, except per share data) (In thousands, except per share data)
REVENUE $ 182,753 $ 117,882 $ 581,656 $ 452,147
EXPENSE
Cost of goods sold, IT processing, servicing and support 72,641 53,045 260,232 196,834
Selling, general and administration 46,156 41,698 168,072 191,552
Equity instruments issued pursuant to BEE transactions 11,268 - 11,268 -
Depreciation and amortization 10,041 9,548 40,286 40,599
OPERATING INCOME 42,647 13,591 101,798 23,162
INTEREST INCOME 4,824 3,888 14,817 12,083
INTEREST EXPENSE 1,761 1,849 7,473 7,966
INCOME BEFORE INCOME TAX EXPENSE 45,710 15,630 109,142 27,279
INCOME TAX EXPENSE 17,260 7,484 39,379 14,656
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS 28,450 8,146 69,763 12,623
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS 96 147 298 351
NET INCOME 28,546 8,293 70,061 12,974
ADD (LESS) NET LOSS (INCOME) ATTRIBUTABLE TO NON-CONTROLLING INTEREST (38) 8 (50) (3)
NET INCOME ATTRIBUTABLE TO NET1 $ 28,584 $ 8,285 $ 70,111 $ 12,977
Net income per share, in United States dollars
Basic earnings attributable to Net1 shareholders $0.59 $0.18 $1.51 $0.28
Diluted earnings attributable to Net1 shareholders $0.59 $0.18 $1.50 $0.28
(A) - Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES, INC.
Consolidated Balance Sheets
(A) (A)
June 30, June 30,
2014 2013
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 58,672 $ 53,665
Pre-funded social welfare grants receivable 4,809 2,934
Accounts receivable, net of allowances 148,067 102,614
Finance loans receivable, net of allowances 53,124 8,350
Inventory 10,785 12,222
Deferred income taxes 7,451 4,938
Total current assets before settlement assets 282,908 184,723
Settlement assets 725,987 752,476
Total current assets 1,008,895 937,199
PROPERTY, PLANT AND EQUIPMENT, net 47,797 48,301
EQUITY-ACCOUNTED INVESTMENTS 878 1,183
GOODWILL 186,576 175,806
INTANGIBLE ASSETS, net 68,514 77,257
OTHER LONG-TERM ASSETS, including reinsurance assets 38,285 36,576
TOTAL ASSETS 1,350,945 1,276,322
40,570
LIABILITIES
CURRENT LIABILITIES
Accounts payable 17,101 26,567
Other payables 42,257 33,808
Current portion of long-term borrowings 14,789 14,209
Income taxes payable 7,676 2,275
Total current liabilities before settlement obligations 81,823 76,859
Settlement obligations 725,987 752,476
Total current liabilities 807,810 829,335
DEFERRED INCOME TAXES 15,522 18,727
LONG-TERM BORROWINGS 62,388 66,632
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 23,477 21,659
TOTAL LIABILITIES 909,197 936,353
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury - 2014: 47,819,299; 2013: 45,592,550 63 59
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury: 2014: -; 2013: - - -
ADDITIONAL PAID-IN-CAPITAL 202,401 160,670
TREASURY SHARES, AT COST: 2014: 15,883,212; 2013: 13,455,090 (200,681) (175,823)
ACCUMULATED OTHER COMPREHENSIVE LOSS (82,741) (100,858)
RETAINED EARNINGS 522,729 452,618
TOTAL NET1 EQUITY 441,771 336,666
NON-CONTROLLING INTEREST (23) 3,303
TOTAL EQUITY 441,748 339,969
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,350,945 $ 1,276,322
(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,
2014 2013 2014 2013
(In thousands) (In thousands)
Cash flows from operating activities
Net income $ 28,546 $ 8,293 $ 70,061 $ 12,974
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,041 9,548 40,286 40,599
Earnings from equity-accounted investments (96) (147) (298) (351)
Fair value adjustment (104) 223 (55) 631
Interest payable 404 950 2,100 4,313
Facility fee amortized 81 67 738 302
(Profit) Loss on disposal of property, plant and equipment (392) 193 (434) 110
Loss on deconsolidation of subsidiaries and business 55 - 55 -
Stock compensation charge, net of forfeitures 898 582 3,718 3,907
Fair value of BEE equity instruments granted 11,268 - 11,268 -
Increase in accounts and finance loans receivable, and pre-funded grants receivable (33,926) (1,739) (101,447) (5,726)
(Increase) Decrease in inventory (199) (630) 780 (2,890)
Increase in accounts payable and other payables 23,566 9,868 12,671 8,113
(Decrease) Increase in taxes payable (3,908) (3,102) 5,523 (2,748)
(Decrease) Increase in deferred taxes (4,802) 816 (7,821) (3,317)
Net cash provided by operating activities 31,432 24,922 37,145 55,917
Cash flows from investing activities
Capital expenditures (6,597) (5,644) (23,906) (22,747)
Proceeds from disposal of property, plant and equipment 866 123 2,990 510
Net cash outflow from sale of MediKredit (669) - (669) -
Proceeds from sale of business 186 - 186 -
Capital reduction/ repayment of loan by equity-accounted investment 564 - 539 3
Acquisitions, net of cash acquired - - - (2,143)
Other investing activities, net - - 570 545
Net change in settlement assets 20,059 (255,565) (1,350) (423,984)
Net cash provided by (used in) investing activities 14,409 (261,086) (21,640) (447,816)
Cash flows from financing activities
Repayment of long-term borrowings - (7,201) (87,008) (14,508)
Long-term borrowings obtained 1,044 - 73,677 -
Proceeds from bank overdraft - - 24,580 -
Repayment of bank overdraft - - (23,335) -
Acquisition of interests in KSNET - - (1,968) -
Payment of facility fee - - (872) -
Proceeds from issue of common stock 110 - 198 240
Net change in settlement obligations (20,059) 255,565 1,350 423,984
Net cash (used in) provided by financing activities (18,905) 248,364 (13,378) 409,716
Effect of exchange rate changes on cash 861 (1,151) 2,880 (3,275)
Net increase in cash and cash equivalents 27,797 11,049 5,007 14,542
Cash and cash equivalents - beginning of period 30,875 42,616 53,665 39,123
Cash and cash equivalents - end of period $ 58,672 $ 53,665 $ 58,672 $ 53,665
(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, 2014 and 2013 and March 31, 2014

Change - actual Change - constant exchange rate(1)
Key segmental data, in $ '000, Q4 '14 Q4 '13 Q3 '14 Q4 '14
vs
Q4'13
Q4 '14
vs
Q3 '14
Q4 '14
vs
Q4'13
Q4 '14
vs
Q3 '14
Revenue:
South African transaction processing $88,265 $58,196 $57,397 52% 54% 72% 47%
International transaction processing 42,201 36,193 35,245 17% 20% 32% 15%
Financial inclusion and applied technologies 64,093 29,609 56,226 116% 14% 146% 9%
Subtotal: Operating segments 194,559 123,998 148,868 57% 31% 78% 25%
Intersegment eliminations (11,806) (6,116) (10,742) 93% 10% 119% 5%
Consolidated revenue $182,753 $117,882 $138,126 55% 32% 76% 27%
Operating income (loss):
South African transaction processing $38,675 ($197) $9,137 nm 323% nm 306%
International transaction processing 6,647 5,263 4,642 26% 43% 43% 37%
Financial inclusion and applied technologies 18,126 14,254 16,459 27% 10% 44% 6%
Subtotal: Operating segments 63,448 19,320 30,238 228% 110% 273% 101%
Corporate/Elimi-nations (20,801) (5,729) (6,289) 263% 231% 312% 217%
Consolidated operating income (loss) $42,647 $13,591 $23,949 214% 78% 256% 71%
Operating income margin (%)
South African transaction processing 44% (0%) 16%
International transaction processing 16% 15% 13%
Financial inclusion and applied technologies 28% 48% 29%
Consolidated operating margin 23% 12% 17%
(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 2014 also prevailed during the fourth quarter of fiscal 2013 and the third quarter of fiscal 2014.

Year ended June 30, 2014 and 2013

Change - actual Change - constant exchange rate(1)
Key segmental data, in '000, except margins F2014 F2013 F2014
vs
F2013
F2014
vs
F2013
Revenue:
South African transaction processing $261,577 $242,739 8% 29%
International transaction processing 152,725 135,954 12% 34%
Financial inclusion and applied technologies 207,595 108,001 92% 129%
Subtotal: Operating segments 621,897 486,694 28% 53%
Intersegment eliminations (40,241) (34,547) 16% 39%
Consolidated revenue $581,656 $452,147 29% 54%
Operating income (loss):
South African transaction processing $61,401 ($21,316) nm nm
International transaction processing 21,952 14,208 55% 84%
Financial inclusion and applied technologies 60,685 57,491 6% 26%
Subtotal: Operating segments 144,038 50,383 186% 241%
Corporate/Eliminations (42,240) (27,221) 55% 85%
Consolidated operating income (loss) $101,798 $23,162 340% 425%
Operating income margin (%)
South African transaction processing 23% (9%)
International transaction processing 14% 10%
Financial inclusion and applied technologies 29% 53%
Overall operating margin 18% 5%
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2014 also prevailed during fiscal 2013.

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:

Three months ended June 30, 2014 and 2013

Net income
(USD'000)
EPS,
basic
(USD)
Net income
(ZAR'000)
EPS,
basic
(ZAR)
2014 2013 2014 2013 2014 2013 2014 2013
GAAP 28,584 8,285 0.59 0.18 297,897 76,109 6.12 1.67
Intangible asset amortization, net 2,960 2,888 30,842 26,520
Stock-based compensation charge 922 582 9,609 5,346
Facility fees for KSNET debt 79 67 823 615
US government investigations-related and US lawsuit expenses 53 776 552 7,129
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 - 806 -
Fundamental 44,386 12,598 0.91 0.28 463,886 115,719 9.53 2.54

Year ended June 30, 2014 and 2013

Net income
(USD'000)
EPS, basic
(USD)
Net income
(ZAR'000)
EPS,
basic
(ZAR)
2014 2013 2014 2013 2014 2013 2014 2013
GAAP 70,111 12,977 1.51 0.28 728,916 113,035 15.68 2.48
Intangible asset amortization, net 12,490 13,679 129,846 119,155
Stock-based compensation charge 2,914 3,907 30,296 34,032
Facility fees for KSNET debt 657 302 6,831 2,631
US government investigations-related and US lawsuit expenses 2,579 3,888 26,813 33,866
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 69 806 601
Fundamental 100,539 34,822 2.16 0.76 1,046,854 303,320 22.52 6.66

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, 2014 and 2013

2014 2013
Net income (USD'000) 28,584 8,285
Adjustments:
Loss on deconsolidation of subsidiaries and business 55 -
(Profit) Loss on sale of property, plant and equipment (392) 193
Tax effects on above (287) (54)
Net income used to calculate headline earnings (USD'000) 27,960 8,424
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000) 48,695 45,593
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000) 48,855 45,713
Headline earnings per share:
Basic, in USD 0.57 0.18
Diluted, in USD 0.57 0.18

Year ended June 30, 2014 and 2013

2014 2013
Net income (USD'000) 70,111 12,977
Adjustments:
Loss on deconsolidation of subsidiaries and business 55 -
(Profit) Loss on sale of property, plant and equipment (434) 110
Tax effects on above (276) (31)
Net income used to calculate headline earnings (USD'000) 69,456 13,056
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000) 46,484 45,553
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000) 46,603 45,678
Headline earnings per share:
Basic, in USD 1.49 0.29
Diluted, in USD 1.49 0.29

Calculation of the denominator for headline diluted earnings per share

Q4 '14 Q4 '13 F2014 F2013
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP 48,695 45,593 46,484 45,553
Effect of dilutive securities under GAAP 160 120 119 125
Denominator for headline diluted earnings per share 48,855 45,713 46,603 45,678

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.

Net 1 UEPS Technologies, Inc.

Attachment D

Presentation of quarterly revenue and operating income by segment for fiscal 2012 to 2014

The tables below present quarterly revenue and operating income generated by our three reportable segments for the fiscal 2014, 2013 and 2012, and reconciliations to consolidated revenue and operating income (loss), as well as the US dollar/ ZAR exchange rates applicable per fiscal quarter and year:

In United States Dollars (US GAAP)
Fiscal 2014

Operating Segment
Quarter 1
$ '000
Quarter 2
$ '000
Quarter 3
$ '000
Quarter 4
$ '000
Full
Year
$ '000
Revenue:
South African transaction processing 57,161 58,754 57,397 88,265 261,577
International transaction processing 37,541 37,738 35,245 42,201 152,725
Financial inclusion and applied technologies 36,796 50,480 56,226 64,093 207,595
Subtotal: Operating segments 131,498 146,972 148,868 194,559 621,897
Intersegment eliminations (8,004) (9,689) (10,742) (11,806) (40,241)
Consolidated revenue 123,494 137,283 138,126 182,753 581,656
Operating (loss) income:
South African transaction processing 6,461 7,128 9,137 38,675 61,401
International transaction processing 5,524 5,139 4,642 6,647 21,952
Financial inclusion and applied technologies 12,835 13,265 16,459 18,126 60,685
Subtotal: Operating segments 24,820 25,532 30,238 63,448 144,038
Corporate/Eliminations (8,420) (6,730) (6,289) (20,801) (42,240)
Consolidated operating income 16,400 18,802 23,949 42,647 101,798
Income and expense items: $1 = ZAR 10.00 10.16 10.87 10.42 10.40
In United States Dollars (US GAAP)
Fiscal 2013

Operating Segment
Quarter 1
$ '000
Quarter 2
$ '000
Quarter 3
$ '000
Quarter 4
$ '000
Full
Year
$ '000
Revenue:
South African transaction processing 62,420 61,708 60,415 58,196 242,739
International transaction processing 32,397 33,664 33,700 36,193 135,954
Financial inclusion and applied technologies 26,615 25,563 26,214 29,609 108,001
Subtotal: Operating segments 121,432 120,935 120,329 123,998 486,694
Intersegment eliminations (9,750) (9,493) (9,188) (6,116) (34,547)
Consolidated revenue 111,682 111,442 111,141 117,882 452,147
Operating (loss) income:
South African transaction processing (3,299) (6,233) (11,587) (197) (21,316)
International transaction-based activities 3,329 3,583 2,033 5,263 14,208
Financial inclusion and applied technologies 14,913 14,286 14,038 14,254 57,491
Subtotal: Operating segments 14,943 11,636 4,484 19,320 50,383
Corporate/Eliminations (5,618) (6,664) (9,210) (5,729) (27,221)
Consolidated operating income (loss) 9,325 4,972 (4,726) 13,591 23,162
Income and expense items: $1 = ZAR 8.26 8.74 8.47 9.19 8.71
In United States Dollars (US GAAP)
Fiscal 2012

Operating Segment
Quarter 1
$ '000
Quarter 2
$ '000
Quarter 3
$ '000
Quarter 4
$ '000
Full
Year
$ '000
Revenue:
South African transaction processing 45,632 43,985 43,753 61,260 194,630
International transaction processing 31,053 29,446 28,635 31,491 120,625
Financial inclusion and applied technologies 24,454 19,771 19,591 26,976 90,792
Subtotal: Operating segments 101,139 93,202 91,979 119,727 406,047
Intersegment eliminations (1,213) (1,144) (1,315) (12,111) (15,783)
Consolidated revenue 99,926 92,058 90,664 107,616 390,264
Operating (loss) income:
South African transaction processing 17,001 13,549 5,590 (2,234) 33,906
International transaction processing 4,346 3,519 3,295 3,489 14,649
Financial inclusion and applied technologies 11,968 9,479 9,078 15,359 45,884
Subtotal: Operating segments 33,315 26,547 17,963 16,614 94,439
Corporate/Eliminations (2,469) (6,319) (5,485) (19,016) (33,289)
Consolidated operating income (loss) 30,846 20,228 12,478 (2,402) 61,150
Income and expense items: $1 = ZAR 7.09 8.18 7.85 8.03 7.72

Contact Information

  • Investor Relations Contact:
    Net 1 UEPS Technologies, Inc.
    Dhruv Chopra
    Head of Investor Relations
    +1 917-767-6722
    dchopra@net1.com