Net 1 UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today announced
results for the fourth quarter and full-year fiscal 2013.
Summary Financial Metrics
Three months ended June 30,
----------------------------------------------
% change % change
2013 2012 in USD in ZAR
---------- ---------- ---------- ----------
(All figures in USD '000s
except per share data)
Revenue 117,882 107,616 10% 25%
GAAP net income (loss) 8,285 (7,977) nm nm
Fundamental net income (1) 12,598 12,208 3% 21%
GAAP earnings (loss) per
share ($) 0.18 (0.17) nm nm
Fundamental earnings per
share ($) (1) 0.28 0.27 5% 22%
Fully-diluted shares
outstanding ('000's) 45,713 45,542 1%
Average period USD/ ZAR
exchange rate 9.19 8.03 14%
Fiscal year ended June 30,
----------------------------------------------
% change % change
2013 2012 in USD in ZAR
---------- ---------- ---------- ----------
(All figures in USD '000s
except per share data)
Revenue 452,147 390,264 16% 31%
GAAP net income 12,977 44,651 (71%) (67%)
Fundamental net income (1) 34,822 64,094 (46%) (38%)
GAAP earnings per share ($) 0.28 0.99 (71%) (67%)
Fundamental earnings per
share ($) (1) 0.76 1.42 (46%) (39%)
Fully-diluted shares
outstanding ('000's) 45,678 45,232 1%
Average period USD/ ZAR
exchange rate 8.71 7.72 13%
(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 (loss) to fundamental net income and earnings per share.
Factors impacting comparability of our Q4 2013 and Q4 2012
results
-- Unfavorable impact from the strengthening of the US dollar: The US
dollar appreciated by 14% against the ZAR during Q4 2013 which
negatively impacted our reported results;
-- SASSA implementation costs: Our SASSA contract implementation and smart
card costs of $9.0 million were 15% higher in ZAR when compared to Q4
2012;
-- DOJ and SEC investigation-related expenses: We incurred DOJ and SEC
investigation-related expenses of $1.2 million, pre-tax, during Q4 2013;
-- Fair value charge resulting from issue of equity instrument pursuant to
BEE transaction: We recorded a fair value charge of $14.2 million
related to our BEE transaction which negatively impacted our reported
results during Q4 2012; and
-- Capital gain paid related to intercompany transaction: We incurred a
non-recurring capital gains tax of $1.5 million resulting from an
intercompany capital transaction in South Africa in Q4 2012.
Comments and Outlook
"I am very pleased to report that we have completed our bulk
enrollment on time despite higher than anticipated volumes. This
incredibly complex and complicated exercise and its undeniable
success, has once again validated SASSA's decision to award this
nationally critical tender to us. It is not surprising that
MasterCard this week declared the implementation as the best
government social grants payment program worldwide," said Dr. Serge
Belamant, Chairman and Chief Executive Officer of Net1. "My
congratulations go out to my entire workforce! Net1 is now ready to
execute on its strategic plans and has commenced with the
deployment of both our financial and mobile services, and the early
results look extremely impressive. We continue to optimize our
company so as to capitalize on the businesses that can leverage our
infrastructure and have the potential to add substantial value to
our shareholders," he concluded.
"Our one-time implementation costs are now effectively behind us
and we therefore expect to demonstrate a marked improvement in
profitability during fiscal 2014," said Herman Kotze, Chief
Financial Officer of Net1. "For fiscal 2014, we expect fundamental
earnings per share of at least $1.50, assuming a constant currency
base of ZAR 8.71/$1 and a share count of approximately 45.7 million
shares. Our guidance also assumes the lost revenue and operating
income from the roughly 370,000 beneficiaries on SASSA's database
who have not re-registered and whose grants will likely be
cancelled in September 2013," he concluded.
Completion of SASSA contract bulk enrollment
We completed the second phase of bulk enrollment by April 30,
2013, in accordance with the implementation plan agreed with SASSA.
Having substantially concluded bulk enrollment in fiscal 2013, our
temporary employee headcount, which peaked at approximately 5,500
employees for most of fiscal 2013, has since declined to 1,392 at
June 30, 2013.
As of June 30, 2013, we had enrolled a total of 21.7 million
people, which comprises approximately 9.5 million grant recipient
cardholders and 12.2 million beneficiaries associated with these
recipient cardholders in accordance with our second phase
enrollment schedule, and issued them our UEPS/EMV smart card.
During fiscal 2013, we incurred direct implementation expenses of
approximately $56.2 million (ZAR 488.3 million), including staff,
travel, temporary infrastructure hire, fixed premises hire for
enrollment and stationery costs. We are unable to quantify the
value of time spent by our executives and pension and welfare
operations managers and staff that service the five provinces in
which we operated under the previous contract and that have
assisted in the implementation of the national contract. During
fiscal 2012, we incurred direct implementation expenses of
approximately $10.9 million (ZAR 83.9 million). We also expensed
$10.3 million (ZAR 90.2 million) related to the cost of the
UEPS/EMV smart cards issued during fiscal 2013, which is not
included in the $56.2 million (ZAR 488.3 million) of direct
implementation expenses described above. We did not expense any
smart cards in fiscal 2012.
We also incurred approximately $6.9 million in capital
expenditures related to the implementation during fiscal 2013.
Since inception of the implementation we have incurred cumulative
capital expenditures of $28.1 million. We have substantially
completed the bulk enrollment of recipient cardholders and
beneficiaries and do not expect any further significant capital
expenditures related to this process.
SASSA has sent termination notices to all cardholder recipients
and beneficiaries who had not presented themselves for enrollment
during May, June and July 2013 in terms of the Promotion of
Administrative Justice Act. As of July 30, 2013, there were an
estimated 372,870 former grant recipient cardholders who had not
presented themselves for enrollment. The grants applicable to these
grant recipient cardholders will be suspended with effect from
September 2013 and these beneficiaries will have to re-apply for
their grants. Our revenue for fiscal 2014 will decline to the
extent that these beneficiaries do not re-apply for their grants,
but such decline may be offset by the amount of new grant recipient
cardholders approved by SASSA.
SASSA tender award litigation
On March 27, 2013, a full bench of the South African Supreme
Court of Appeal dismissed AllPay Consolidated Investment Holdings
(Pty) Ltd's appeal against the earlier ruling by the North Gauteng
High Court that SASSA's award of the tender to us would not be set
aside. Accordingly, our SASSA contract to distribute social welfare
grants to ten million South Africans every month, for a period of
five years, remains in full force and effect. On April 18, 2013,
AllPay applied for leave to appeal to the South African
Constitutional Court, the highest court in the country, against the
judgment of the Supreme Court. We and SASSA have opposed AllPay's
application. The hearing has been scheduled for September 10, 2013.
Both the application for leave to appeal and appeal itself will be
argued on September 10, 2013. We cannot predict when or how the
Constitutional Court will rule on the matter.
Results of Operations by Segment and Liquidity
Our frequently asked questions and operating metrics will be
updated and posted on our website (www.net1.com).
South African transaction-based activities
Segment revenue was $59.3 million in Q4 2013, up 1% compared
with Q4 2012 in USD and up 16% on a constant currency basis. In
ZAR, the increases in segment revenue were primarily due to higher
revenues earned under our SASSA contract and higher transaction
volumes at our South African transaction processors. Segment
operating income margin was 15% and 9%, respectively, and increased
primarily due to increase in transaction volumes. Excluding
amortization of acquisition-related intangibles, Q4 2013 segment
operating income margin was 16% compared with 12% in Q4 2012.
International transaction-based activities
KSNET continues to contribute the majority of our revenues and
operating income in this operating segment. Segment revenue was
$35.6 million in Q4 2013, up 15% compared with Q4 2012 in USD and
31% on a constant currency basis. The increase in segment revenue
and operating income was primarily due to increased
transaction-based revenues in Korea partially offset by start up
expenses related to our VCC and XeoHealth initiatives. NUETS did
not contribute as a result of the non-renewal of its Iraqi
customer's contract in Q3 2013. Excluding the amortization of
intangibles, Q4 2013 operating income margin was 13% compared to
10% during Q4 2012.
Smart card accounts
Segment revenue was $11.8 million in Q4 2013, up 43% compared
with Q4 2012 in USD and 64% on a constant currency basis and
increased as a result of the increase in smart card accounts. Q4
2013 segment operating income margin was 29%, compared to 28%
during Q4 2012.
Financial services
UEPS-based lending contributes the majority of the revenue and
operating income in this operating segment. Segment revenue was
$2.1 million in Q4 2013, up 16% compared with Q4 2012 in USD and
33% higher on a constant currency basis, principally due to an
increase in lending activities. Q4 2013 segment operating income
margin was 17% compared with 54% during Q4 2012 primarily due to
the allocation of UEPS-based lending corporate administration and
overhead expenses to this segment from South African
transaction-based activities. We have allocated all fiscal 2013
expenses to this segment in Q4 2013. We expect to allocate expenses
to this operating segment on a quarterly basis in fiscal 2014 and
therefore we expect an improved margin in Q1 2014 compared with Q4
2013. Smart Life did not contribute to operating income in the
fourth quarter of fiscal 2013 as it continues to be restricted from
issuing new insurance policies as a result of the suspension of its
license in Q3 2013.
Hardware, software and related technology sales
Segment revenue was $9.2 million in Q4 2013, up 12% compared
with Q4 2012 in USD and 28% on a constant currency basis. In
constant currency, the increase in revenue resulted primarily from
an increase in royalty fees and ad hoc hardware sales, offset by a
lower contribution from most other major contributors to this
segment. Excluding amortization of all intangibles, segment
operating income margin was 25% compared to 26% during Q4 2012.
Corporate/eliminations
The decrease in our corporate expenses resulted primarily from
the $14.2 million BEE transaction equity instrument charge incurred
in Q4 2012, offset by legal fees we incurred in connection with the
DOJ and SEC investigations and higher other corporate head
office-related expenses.
Cash flow and liquidity
At June 30, 2013, we had cash and cash equivalents of $53.7
million, up from $39.0 million at June 30, 2012. The increase in
our cash balances from June 30, 2012 was primarily due to cash
generated from operations, offset by implementation costs and
capital expenditures incurred to implement our SASSA contract,
scheduled repayments of our Korean debt and the acquisitions of
Pbel and SmartSwitch Botswana. For Q4 2013, net cash provided by
operating activities was $24.9 million compared with net cash used
by operating activities was $22.6 million in Q4 2012.
Excluding the impact of interest received, interest paid under
our Korean debt and taxes paid, the increase in cash provided by
operating activities resulted from improved cash generated from
operations, partially offset, in ZAR, by higher implementation
costs related to our SASSA contract. Capital expenditures for Q4
2013 and 2012 were $6 million and $16 million, respectively, and
have decreased primarily due to lower capital expenditures related
to our SASSA contract implementation in Q4 2013.
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 (loss) 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
(loss) and earnings (loss) 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, as well as (a) in fiscal 2013, DOJ and SEC
investigations-related expenses and acquisition-related costs; and
(b) in fiscal 2012, the effects of a change in South African tax
law and the creation of a valuation allowance related to foreign
tax credits, equity instrument charge related to our BEE
transaction, capital gains taxes paid resulting from an
intercompany capital transaction in South Africa, the profit on
liquidation of SmartSwitch Nigeria and loss on sale of 10% of Smart
Life. 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/ headline loss 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 (loss) which has been determined based on GAAP.
Accordingly, this may differ to the headline earnings (loss) 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 (loss)
adjusted for the loss (profit) on sale of property, plant and
equipment, net of related tax effects, the loss attributable to the
sale of 10% of Smart Life and the profit on liquidation of
SmartSwitch Nigeria. Attachment C presents the reconciliation
between our net income (loss) used to calculate earnings (loss) 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 2013 results on
August 23, 2013, at 8:00 Eastern Time. To participate in the call,
dial 1-866-652-5200 (U.S. only), 1-855-669-9657 (Canada only),
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 22,
2013.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that
leverage its Universal Electronic Payment System, or 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 also completely 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,
Republic of Korea, and Ghana. In addition, Net1's proprietary
Mobile Virtual Card technology offers secure mobile payments and
banking services in developed and emerging countries while its
MediKredit and XeoHealth subsidiaries provide its proprietary 5010
and ICD-10 compliant real-time claims adjudication system.
Net1 has a primary listing on the Nasdaq and a secondary listing
on the JSE Limited.
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.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Fiscal year ended
---------------------- ----------------------
June 30, June 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(In thousands, except (In thousands, except
per share data) per share data)
REVENUE $ 117,882 $ 107,616 $ 452,147 $ 390,264
EXPENSE
Cost of goods sold, IT
processing, servicing and
support 53,045 41,395 196,834 141,000
Selling, general and
administration 41,698 45,107 191,552 137,404
Equity instrument issued
pursuant to BEE
transaction - 14,211 - 14,211
Depreciation and
amortization 9,548 9,305 40,599 36,499
--------- --------- --------- ---------
OPERATING INCOME (LOSS) 13,591 (2,402) 23,162 61,150
INTEREST INCOME 3,888 2,595 12,083 8,576
INTEREST EXPENSE 1,849 2,130 7,966 9,345
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE 15,630 (1,937) 27,279 60,381
INCOME TAX EXPENSE 7,484 6,151 14,656 15,936
--------- --------- --------- ---------
NET INCOME (LOSS) BEFORE
EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS 8,146 (8,088) 12,623 44,445
EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS 147 120 351 220
--------- --------- --------- ---------
NET INCOME (LOSS) 8,293 (7,968) 12,974 44,665
LESS (ADD) NET INCOME (LOSS)
ATTRIBUTABLE TO NON-
CONTROLLING INTEREST 8 9 (3) 14
--------- --------- --------- ---------
NET INCOME (LOSS)
ATTRIBUTABLE TO NET1 $ 8,285 $ (7,977) $ 12,977 $ 44,651
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share,
in United States dollars
Basic earnings (loss)
attributable to Net1
shareholders $0.18 $(0.17) $0.28 $0.99
Diluted earnings (loss)
attributable to Net1
shareholders $0.18 $(0.17) $0.28 $0.99
NET 1 UEPS TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
Unaudited (A)
June 30, June 30,
2013 2012
-------------- --------------
-------------- --------------
(In thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 53,665 $ 39,123
Pre-funded social welfare grants receivable 2,934 9,684
Accounts receivable, net of allowances 102,614 101,918
Finance loans receivable 8,350 8,141
Inventory 12,222 10,779
Deferred income taxes 4,938 5,591
------------ ------------
Total current assets before settlement
assets 184,723 175,236
Settlement assets 752,476 409,166
------------ ------------
Total current assets 937,199 584,402
PROPERTY, PLANT AND EQUIPMENT, net 48,301 52,616
EQUITY-ACCOUNTED INVESTMENTS 1,183 1,508
GOODWILL 175,806 182,737
INTANGIBLE ASSETS, net 77,257 93,930
OTHER LONG-TERM ASSETS, including
reinsurance assets 36,576 40,700
------------ ------------
TOTAL ASSETS 1,276,322 955,893
------------ ------------
------------ ------------
40,570
LIABILITIES
CURRENT LIABILITIES
Accounts payable 26,567 13,172
Other payables 33,808 40,167
Current portion of long-term borrowings 14,209 14,019
Income taxes payable 2,275 6,019
------------ ------------
Total current liabilities before
settlement obligations 76,859 73,377
Settlement obligations 752,476 409,166
------------ ------------
Total current liabilities 829,335 482,543
DEFERRED INCOME TAXES 18,727 20,988
LONG-TERM BORROWINGS 66,632 79,760
OTHER LONG-TERM LIABILITIES, including
insurance policy liabilities 21,659 25,791
------------ ------------
TOTAL LIABILITIES 936,353 609,082
------------ ------------
COMMITMENTS AND CONTINGENCIES
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par
value;
Issued and outstanding shares, net of
treasury - 2013: 45,592,550; 2012:
45,548,902 59 59
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001
par value;
Issued and outstanding shares, net of
treasury: March: -; June: - - -
ADDITIONAL PAID-IN-CAPITAL 160,670 155,350
TREASURY SHARES, AT COST: 2013: 13,455,090;
2012: 13,455,090 (175,823) (175,823)
ACCUMULATED OTHER COMPREHENSIVE LOSS (100,858) (75,722)
RETAINED EARNINGS 452,618 439,641
------------ ------------
TOTAL NET1 EQUITY 336,666 343,505
NON-CONTROLLING INTEREST 3,303 3,306
------------ ------------
TOTAL EQUITY 339,969 346,811
------------ ------------
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 1,276,322 $ 955,893
------------ ------------
------------ ------------
(A) - Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended Fiscal year ended
---------------------- ----------------------
June 30, June 30,
-------------------- --------------------
2013 2012 2013 2012
--------- --------- --------- ---------
(In thousands) (In thousands)
Cash flows from operating
activities
Net income (loss) $ 8,293 $ (7,968) $ 12,974 $ 44,665
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 9,548 9,305 40,599 36,499
Loss from equity-accounted
investments (147) (120) (351) (220)
Fair value adjustments 223 (1,392) 631 (3,375)
Interest payable 950 4,354 4,313 8,823
Profit on disposal of
property, plant and
equipment 193 (7) 110 (64)
Net loss on sale of 10% of
Smart Life - - - 81
Profit on liquidation of
Smartswitch Nigeria - - - (3,994)
Realized loss on sale of
investments related to
insurance business - - - 25
Stock-based compensation
charge 582 893 3,907 2,775
Fair value of BBEE equity
instrument - 14,211 - 14,211
Facility fee amortized 67 (126) 302 389
Decrease in accounts
receivable, pre-funded
social welfare grants
receivable and finance loans
receivable (1,739) (16,653) (5,726) (31,974)
Increase in inventory (630) (4,940) (2,890) (5,271)
Increase in accounts payable
and other payables 9,868 (16,731) 8,113 (18,496)
(Decrease) Increase in taxes
payable (3,102) (2,147) (2,748) (7,483)
Increase (Decrease) in
deferred taxes 816 (1,257) (3,317) (16,185)
--------- --------- --------- ---------
Net cash provided by (used
in) operating activities 24,922 (22,578) 55,917 20,406
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (5,644) (15,702) (22,747) (39,167)
Proceeds from disposal of
property, plant and
equipment 123 379 510 764
Acquisitions, net of cash
acquired - - (2,143) (6,154)
Repayment of loan by equity-
accounted investment - - 3 122
Settlement from former
shareholders of KSNET - - - 4,945
Acquisition of available for
sale securities - 29 - (948)
Purchase of investments
related to insurance
business - - - (2,320)
Proceeds from maturity of
investments related to
insurance business - - - 2,321
Other investing activity Net - - 545 (1)
Net change in settlement
assets (255,565) (381,062) (423,984) (252,101)
--------- --------- --------- ---------
Net cash used in investing
activities (261,086) (396,356) (447,816) (292,539)
--------- --------- --------- ---------
Cash flows from financing
activities
Repayment of long-term
borrowings (7,201) (7,145) (14,508) (19,172)
Proceeds from issue of common
stock - - 240 -
Acquisition of treasury stock - - - (1,129)
Proceeds on sale of 10% of
Smart Life - - - 107
Net change in settlement
obligations 255,565 381,062 423,984 252,101
--------- --------- --------- ---------
Net cash provided by
financing activities 248,364 373,917 409,716 231,907
--------- --------- --------- ---------
Effect of exchange rate
changes on cash (1,151) (4,109) (3,275) (15,914)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents 11,049 (49,126) 14,542 (56,140)
Cash and cash equivalents -
beginning of period 42,616 88,250 39,123 95,263
--------- --------- --------- ---------
Cash and cash equivalents -
end of period $ 53,665 $ 39,124 $ 53,665 $ 39,123
--------- --------- --------- ---------
--------- --------- --------- ---------
Net 1 UEPS Technologies Inc.
Attachment A
Operating segment revenue, operating income and operating
margin:
Three months ended June 30, 2013 and 2012 and March 31, 2013
Change -
constant
exchange
Change - actual rate(1)
---------------- ---------------
Key segmental Q4 '13 Q4 '13 Q4 '13 Q4 '13
data, in $ vs vs vs vs
'000, Q4 '13 Q4 '12 Q3 '13 Q4'12 Q3 '13 Q4'12 Q3 '13
-------- -------- -------- ------- ------- ------- -------
Revenue:
SA
transaction-
based
activities $59,268 $58,434 $59,009 1% 0% 16% 9%
International
transaction-
based
activities 35,600 31,003 33,119 15% 7% 31% 17%
Smart card
accounts 11,750 8,189 8,657 43% 36% 64% 47%
Financial
services 2,062 1,777 1,651 16% 25% 33% 36%
Hardware,
software and
related
technology
sales 9,202 8,213 8,705 12% 6% 28% 15%
-------- -------- --------
Total
consolidated
revenue $117,882 $107,616 $111,141 10% 6% 25% 15%
-------- -------- --------
Consolidated
operating
income (loss):
SA
transaction-
based
activities $9,060 $5,181 ($4,197) 75% nm 100% nm
-------- -------- ----------------------------------------
Operating
income
(loss)
excluding
amortization 9,632 6,809 (3,127) 41% nm 62% nm
Amortization
of
intangible
assets (572) (1,628) (1,070) (65%) (47%) (60%) (42%)
-------- -------- ----------------------------------------
International
transaction-
based
activities 1,365 137 (1,362) 896% nm 1,039% nm
-------- -------- ----------------------------------------
Operating
income
excluding
amortization 4,536 3,130 1,866 45% 143% 66% 164%
Amortization
of
intangible
assets (3,171) (2,993) (3,228) 6% (2%) 21% 7%
-------- -------- ----------------------------------------
Smart card
accounts 3,349 2,333 2,467 44% 36% 64% 47%
Financial
services 354 951 1,147 (63%) (69%) (57%) (67%)
Hardware,
software and
related
technology
sales 2,216 2,074 1,699 7% 30% 22% 42%
-------- -------- ----------------------------------------
Operating
income
(loss)
excluding
amortization 2,295 2,164 1,785 6% 29% 21% 40%
Amortization
of
intangible
assets (79) (90) (86) (12%) (8%) 0% (0%)
----------------- ----------------------------------------
Corporate/
Eliminations (2,753) (13,078) (4,480) (79%) (39%) (76%) (33%)
-------- -------- --------
Total
operating
income
(loss) $13,591 ($2,402) ($4,726) nm nm nm nm
-------- -------- --------
Operating
income margin
(%)
SA
transaction-
based
activities 15% 9% (7%)
International
transaction-
based
activities 4% 0% (4%)
International
transaction-
based
activities
excluding
amortization 13% 10% 6%
Smart card
accounts 29% 28% 28%
Financial
services 17% 54% 69%
Hardware,
software and
related
technology
sales 24% 25% 20%
Overall
operating
margin 12% (2%) (4%)
(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 2013 also prevailed during the fourth quarter of fiscal
2012 and the third quarter of fiscal 2013.
Fiscal year ended June 30, 2013 and 2012
Change -
constant
Change - exchange
actual rate(1)
---------- ----------
Key segmental data, in '000, F2013 F2013
except margins vs vs
F2013 F2012 F2012 F2012
---------- ---------- ---------- ----------
Revenue:
SA transaction-based
activities $240,405 $201,207 19% 35%
International transaction-
based activities 133,481 118,281 13% 27%
Smart card accounts 36,990 31,263 18% 34%
Financial services 6,545 8,121 (19%) (9%)
Hardware, software and
related technology sales 34,726 31,392 11% 25%
---------- ----------
Total consolidated revenue $452,147 $390,264 16% 31%
---------- ----------
Consolidated operating
income (loss):
SA transaction-based
activities $13,196 $49,824 (74%) (70%)
---------- ---------- ---------------------
Operating income excluding
amortization 17,687 55,995 (68%) (64%)
Amortization of intangible
assets (4,491) (6,171) (27%) (18%)
---------- ---------- ---------------------
International transaction-
based activities 34 1,257 (97%) (97%)
---------- ---------- ---------------------
Operating income excluding
amortization 13,436 14,272 (6%) 6%
Amortization of intangible
assets (13,402) (13,015) 3% 16%
---------- ---------- ---------------------
Smart card accounts 10,543 12,820 (18%) (7%)
Financial services 3,646 4,636 (21%) (11%)
Hardware, software and
related technology sales 6,694 3,619 85% 109%
---------- ---------- ---------------------
Operating income excluding
amortization 7,023 3,990 76% 99%
Amortization of intangible
assets (329) (371) (11%) 0%
---------- ---------- ---------------------
Corporate/ Eliminations (10,951) (11,006) (0%) 12%
---------- ----------
Total operating income $23,162 $61,150 (62%) (57%)
---------- ----------
Operating income margin (%)
SA transaction-based
activities 5% 25%
International transaction-
based activities 0% 1%
International transaction-
based activities excluding
amortization 10% 12%
Smart card accounts 29% 41%
Financial services 56% 57%
Hardware, software and
related technology sales 19% 12%
Overall operating margin 5% 16%
(1) - This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during fiscal 2013 also
prevailed during fiscal 2012.
Net 1 UEPS Technologies Inc.
Attachment B
Reconciliation of GAAP net income (loss) and earnings (loss) per
share, basic, to fundamental net income and earnings per share,
basic:
Three months ended June 30, 2013 and 2012
Net income E(L)PS, E(L)PS,
(loss) basic Net income (loss) basic
(USD'000) (USD) (ZAR'000) (ZAR)
---------------- ------------ ----------------- -----------
2013 2012 2013 2012 2013 2012 2013 2012
------ --------- ----- ------ ------- --------- ----- -----
GAAP (1.40
8,285 (7,977) 0.18 (0.17) 76,109 (64,078) 1.67 )
Intangible asset
amortization,
net 2,888 3,532 26,520 28,381
Stock-based
compensation
charge 582 893 5,346 7,173
Facility fees
for KSNET debt 67 84 615 675
DOJ and SEC
investigations-
related
expenses 776 - 7,129 -
BEE charge - 14,211 - 112,066
Capital taxes
paid - 1,465 - 11,768
---------------- -----------------
Fundamental 12,598 12,208 0.28 0.27 115,719 95,985 2.54 2.09
---------------- -----------------
---------------- -----------------
Fiscal year ended June 30, 2013 and 2012
EPS,
Net income EPS, basic Net income basic
(USD'000) (USD) (ZAR'000) (ZAR)
---------------- ------------ ----------------- -----------
2013 2012 2013 2012 2013 2012 2013 2012
------ --------------- ------ ------- --------- ----- -----
GAAP 12,977 44,651 0.28 0.99 113,035 344,643 2.48 7.63
Intangible asset
amortization,
net 13,679 14,602 119,155 112,719
Stock-based
compensation
charge 3,907 2,775 34,032 21,419
Facility fees
for KSNET debt 302 389 2,631 3,003
DOJ and SEC
investigations-
related
expenses 3,888 - 33,866 -
Acquisition-
related costs 69 - 601 -
Change in tax
law - (18,315) - (150,373)
BEE charge - 14,211 - 112,066
Create FTC
valuation
allowance - 8,232 - 67,588
Capital taxes
paid - (3,994) - (30,828)
Profit on
liquidation of
subsidiary - 1,465 - 11,308
Loss on sale of
10% of Smart
Life - 78 - 602
---------------- -----------------
Fundamental 34,822 64,094 0.76 1.42 303,320 492,147 6.66 10.89
---------------- -----------------
---------------- -----------------
Net 1 UEPS Technologies Inc.
Attachment C
Reconciliation of net income (loss) used to calculate earnings
(loss) per share basic and diluted and headline earnings (loss) per
share basic and diluted:
Three months ended June 30, 2013 and 2012
2013 2012
------------ ------------
Net income (loss) (USD'000) 8,285 (7,977)
Adjustments:
Loss (Profit) on sale of property, plant and
equipment 193 (7)
Tax effects on above (54) 2
------------ ------------
Net income (loss) used to calculate headline
earnings (USD'000) 8,424 (7,982)
------------ ------------
------------ ------------
Weighted average number of shares used to
calculate net income (loss) per share basic
earnings (loss) and headline earnings (loss)
per share basic earnings (loss) ('000) 45,593 45,498
Weighted average number of shares used to
calculate net income (loss) per share diluted
earnings (loss) and headline earnings (loss)
per share diluted earnings (loss) ('000) 45,713 45,542
Headline earnings (loss) per share:
Basic, in USD 0.18 (0.17)
Diluted, in USD 0.18 (0.17)
Fiscal year ended June 30, 2013 and 2012
2013 2012
------------ ------------
Net income (USD'000) 12,977 44,651
Adjustments:
Profit on liquidation of SmartSwitch Nigeria - (3,994)
Loss on sale of 10% of Smart Life - 78
Loss (Profit) on sale of property, plant and
equipment 110 (64)
Tax effects on above (31) 18
------------ ------------
Net income used to calculate headline earnings
(USD'000) 13,056 40,689
------------ ------------
------------ ------------
Weighted average number of shares used to
calculate net income per share basic earnings
and headline earnings per share basic
earnings ('000) 45,553 45,187
Weighted average number of shares used to
calculate net income per share diluted
earnings and headline earnings per share
diluted earnings ('000) 45,678 45,232
Headline earnings per share:
Basic, in USD 0.28 0.90
Diluted, in USD 0.28 0.90
Calculation of the denominator for headline diluted earnings per
share
Q4 '13 Q4 '12 F2013 F2012
-------- -------- -------- --------
Basic weighted-average common shares
outstanding and unvested restricted
shares expected to vest under GAAP 45,593 45,498 45,553 45,187
Effect of dilutive securities under
GAAP 120 44 125 45
-------- -------- -------- --------
Denominator for headline diluted
earnings per share 45,713 45,542 45,678 45,232
-------- -------- -------- --------
-------- -------- -------- --------
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 (loss) per share diluted because we
do not use the two-class method to calculate headline earnings
(loss) per share diluted.
Contacts: Net 1 UEPS Technologies Inc. Dhruv Chopra Managing
Director +1-917-767-6722dchopra@net1.com www.net1.com
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