Net 1 UEPS Technologies, Inc. Reports Third Quarter 2014 Results
- Revenue and Fundamental EPS of $138 million and $0.47, a
constant currency increase of 60% and 1,070% respectively;
- BEE transactions implemented after quarter-end, and 4.4
million shares issued to BEE partners.
JOHANNESBURG, SOUTH AFRICA--(Marketwired - May 8, 2014) - Net 1
UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today released
results for the third quarter of fiscal 2014.
Summary Financial Metrics |
|
|
Three months ended March 31, |
|
2014 |
2013 |
% change in USD |
% change in ZAR |
(All figures in USD '000s except per share data) |
|
|
|
|
|
|
|
Revenue |
138,126 |
111,141 |
|
24 |
% |
60 |
% |
GAAP net income (loss) |
17,182 |
(4,681 |
) |
nm |
|
nm |
|
Fundamental net income (1) |
21,688 |
2,362 |
|
818 |
% |
1,079 |
% |
GAAP earnings (loss) per share ($) |
0.38 |
(0.10 |
) |
nm |
|
nm |
|
Fundamental earnings per share ($) (1) |
0.47 |
0.05 |
|
840 |
% |
1,070 |
% |
Fully-diluted shares outstanding ('000's) |
45,954 |
45,597 |
|
1 |
% |
|
|
Average period USD/ ZAR exchange rate |
10.87 |
8.47 |
|
28 |
% |
|
|
|
|
|
Nine months ended March 31, |
|
2014 |
2013 |
% change in USD |
% change in ZAR |
(All figures in USD '000s except per share data) |
|
|
|
|
|
|
Revenue |
398,903 |
334,265 |
19 |
% |
46 |
% |
GAAP net income |
41,527 |
4,692 |
785 |
% |
986 |
% |
Fundamental net income (1) |
57,009 |
21,897 |
160 |
% |
220 |
% |
GAAP earnings per share ($) |
0.91 |
0.10 |
781 |
% |
981 |
% |
Fundamental earnings per share ($) (1) |
1.25 |
0.48 |
160 |
% |
218 |
% |
Fully-diluted shares outstanding ('000's) |
45,997 |
45,593 |
1 |
% |
|
|
Average period USD/ ZAR exchange rate |
10.38 |
8.46 |
23 |
% |
|
|
|
|
|
|
|
|
|
(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 (loss) per
share. |
Factors impacting comparability of our Q3 2014 and Q3 2013
results
- Unfavorable impact from the strengthening of the US dollar
against the ZAR: The US dollar appreciated by 28% against the
ZAR during Q3 2014, which negatively impacted our reported
results;
- SASSA implementation complete: Our SASSA contract
implementation is complete. We incurred implementation-related
expenditure, including smart card costs, of approximately $20.6
million during Q3 2013;
- Increased contribution by KSNET: Our results were
positively impacted by growth in our Korean operations;
- Growth in financial services: The year-over-year
expansion of our financial services offering during Q3 2014,
resulted in higher revenue and operating income from UEPS-based
lending;
- Ad hoc hardware sales in fiscal 2014: We sold more
terminals and cards during Q3 2014 as a result of ad hoc orders
received from our customers;
- 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 Q3 2014, which has lower margins compared with our other
South African businesses;
- Lower US government investigation-related and US lawsuit
expenses: We incurred lower US government
investigation-related expenses during Q3 2014 compared to during
2013, which was partially offset by an increase in US
lawsuit-related expenses; and
- Fiscal 2013 bad debt provision: In fiscal 2013 we
provided $2.3 million related to the expired NUETS Iraqi customer
contracts.
Comments and Outlook
"I am delighted with the quality of our third quarter
performance," said Dr. Serge Belamant, Chairman and CEO of Net1.
"Despite the many distractions faced by the Company during the last
two years, our staff members have maintained focus and, once again,
demonstrated our ability to deliver sterling results under adverse
circumstances. I commend all of those Net1 employees who remain
loyal and committed to ensure we deliver the highest level of
service and continue to expand our business activities in physical
and virtual payment technologies, both locally and
internationally."
"We believe that the publication of any new SASSA tender may
take some time and we are ready to propose an enhanced version of
our current UEPS/EMV solution, which would continue to provide
SASSA with the business functionality which they described in
detail during the legal processes. We are proud that our technology
has already saved the public purse in excess of ZAR 3 billion ($286
million) per annum, with the removal of more than a million invalid
grants. In the mean time, we will continue to optimize our cost
structures and focus on the marketing of our complementary and
supplementary products in order to diversify our business and
enhance our profitability," he concluded.
"We expect the momentum from the execution of our strategy to
continue driving top and bottom line growth," said Herman Kotzé,
Chief Financial Officer of Net1. "For fiscal 2014, we now expect
fundamental earnings per share of at least $1.90, assuming a
constant currency base of ZAR 8.71/$1. The share count assumption
in our guidance includes the 4.4 million shares that were issued as
part of our BEE transaction on April 16, 2014," he concluded.
South African Constitutional Court remedy related to SASSA
tender
On April 17, 2014, the South African Constitutional Court ruled
on the appropriate remedy following its declaration on November 29,
2013, that the tender process followed by the South African Social
Security Agency, or SASSA, in awarding a contract to us was
constitutionally invalid. The declaration of invalidity of our
contract was upheld, but suspended until a new tender is awarded,
or for the remainder of the existing contract period if no tender
is awarded. SASSA is required to initiate a new tender process
within 30 days of the Court's ruling and any award must be for a
period of five years. If a new tender is not awarded, the
declaration of invalidity of our current contract will be further
suspended until the completion of the five-year period for which
the contract was originally awarded.
Implementation of December 2013 BEE transaction
On April 16, 2014 we implemented our Relationship Agreements
with our BEE partners, concluded during December 2013, and we have
accordingly issued 4,400,000 shares to the BEE partners.
Under the Relationship Agreements, we issued 4,100,000 shares of
our common stock to Business Venture Investments 1567 Proprietary
Limited (RF) and 300,000 shares to Born Free Investments 272
Proprietary Limited at a price of ZAR 60.00 per share. In order to
facilitate the transactions, one of our wholly owned subsidiaries
lent the funds to the BEE partners to effect the purchase of the
BEE shares.
Results of Operations by Segment and Liquidity
Our operating metrics will be updated and posted on our website
(www.net1.com).
South African transaction-based activities
Segment revenue was $64.9 million in Q3 2014, up 10% compared
with Q3 2013 in USD and up 41% on a constant currency basis. In
ZAR, increase in segment revenue was primarily due to more
low-margin transaction fees generated from beneficiaries using the
South African National Payment System, incremental prepaid airtime
sales driven by the rollout of our prepaid airtime product, and
reflects the elimination of inter-company transactions. Segment
operating income margin was 17% and (7)%, respectively, and
increased primarily due to the absence of SASSA implementation
costs in Q3 2014. Excluding amortization of acquisition-related
intangibles, Q3 2014 segment operating income margin was 19%
compared with (5) % in Q3 2013.
International transaction-based activities
KSNET contributes the majority of our revenues and operating
income in this segment. Segment revenue was $34.9 million in Q3
2014, up 6% compared with Q3 2013 in USD and 36% on a constant
currency basis. Revenue increased primarily due to KSNET's revenue
growth during Q3 2014 and was partially offset by the expiration
and non-renewal of NUETS' contract with its Iraqi customer in Q3
2013. Operating income during Q3 2014 was higher due to increase in
revenue contribution from KSNET and due to the NUETS Iraqi customer
bad debt provision in fiscal 2013, but partially offset by ongoing
losses related to our XeoHealth launch in the United States and at
Net1 Virtual Card, as well as ongoing competition in the Korean
marketplace. Excluding the amortization of intangibles, Q3 2014
operating income margin was 13% compared to 6% during Q3 2013.
Smart card accounts
Segment revenue was $10.6 million in Q3 2014, up 23% compared
with Q3 2013 in USD and 57% on a constant currency basis driven
exclusively by the increase in the number of smart card accounts.
Segment operating income margin from providing smart card accounts
for each of Q3 2014 and 2013 was 29% and 28%, respectively.
Financial services
UEPS-based lending contributes the majority of the revenue and
operating income in this segment. Segment revenue was $11.1 million
in Q3 2014, up 572% compared with Q3 2013 in USD and 763% higher on
a constant currency basis, principally due to the increase in the
number of loans granted as we rolled out our product nationally.
The year-over-year increase in operating income was partially
offset by the higher UEPS-based lending operating cost base in
fiscal 2014 and the re-allocation of UEPS-based lending corporate
and administration overhead expenses to this segment. Smart Life
did not contribute to operating income in Q3 2014 as it is
currently unable to issue new insurance policies as a result of the
suspension of its license by the Financial Services Board in fiscal
2013.
Hardware, software and related technology sales
Segment revenue was $16.6 million in Q3 2014, up 90% compared
with Q3 2013 in USD and 144% on a constant currency basis. The
increase in revenue and operating income resulted from higher ad
hoc terminal and smart card sales. Excluding amortization of all
intangibles, segment operating income margin was 24% compared to
20% during Q3 2013.
Corporate/eliminations
The decrease in our corporate expenses resulted primarily from
lower legal fees incurred in connection with the US government
investigations compared to Q3 2013, partially offset by higher
other corporate head office-related expenses.
Cash flow and liquidity
At March 31, 2013, we had cash and cash equivalents of $30.9
million, down from $53.7 million at June 30, 2013. The decrease in
our cash balances from June 30, 2013, was primarily due to the
expansion of our UEPS-based lending business, working capital
changes, the repayment of a portion of our Korean debt and
acquisition of all of the remaining shares of KSNET that we did not
already own.
Excluding the impact of interest received, interest paid under
our Korean debt and taxes, 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 related to our
SASSA contract in fiscal 2014. Capital expenditures for Q3 2014 and
2013 were $4.8 million and $5.1 million, respectively, and have
increased primarily due to the acquisition of more payment
processing terminals in 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
(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 and US government investigations-related and US
lawsuit expenses, as well as in fiscal 2013, acquisition-related
costs. 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 (loss) and earnings (loss) per share.
Headline earnings (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 profit on sale of property, plant and equipment,
net of related tax effects. 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 (loss) per share.
Conference Call
We will host a conference call to review Q3 2014 results on May
9, 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 June 1, 2014.
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 |
|
Nine months ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
(In thousands, except per share data) |
|
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
$ |
138,126 |
|
$ |
111,141 |
|
$ |
398,903 |
|
$ |
334,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods sold, IT processing, servicing and support |
|
63,149 |
|
|
51,461 |
|
|
187,591 |
|
|
143,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration |
|
40,586 |
|
|
53,846 |
|
|
121,916 |
|
|
149,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
10,442 |
|
|
10,560 |
|
|
30,245 |
|
|
31,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS) |
|
23,949 |
|
|
(4,726 |
) |
|
59,151 |
|
|
9,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME |
|
3,438 |
|
|
2,515 |
|
|
9,993 |
|
|
8,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
1,734 |
|
|
2,023 |
|
|
5,712 |
|
|
6,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAX EXPENSE |
|
25,653 |
|
|
(4,234 |
) |
|
63,432 |
|
|
11,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
8,535 |
|
|
472 |
|
|
22,119 |
|
|
7,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) BEFORE EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS |
|
17,118 |
|
|
(4,706 |
) |
|
41,313 |
|
|
4,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS |
|
52 |
|
|
22 |
|
|
202 |
|
|
204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
17,170 |
|
|
(4,684 |
) |
|
41,515 |
|
|
4,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING
INTEREST |
|
(12 |
) |
|
(3 |
) |
|
(12 |
) |
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO NET1 |
$ |
17,182 |
|
$ |
(4,681 |
) |
$ |
41,527 |
|
$ |
4,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, in United States
dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings (loss) attributable to Net1 shareholders |
|
$0.38 |
|
|
$(0.10 |
) |
|
$0.91 |
|
|
$0.10 |
|
|
Diluted earnings (loss) attributable to Net1 shareholders |
|
$0.37 |
|
|
$(0.10 |
) |
|
$0.90 |
|
|
$0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS TECHNOLOGIES, INC. |
|
Unaudited Condensed Consolidated Balance Sheets |
|
|
|
|
Unaudited |
|
(A) |
|
|
March 31, |
|
June 30, |
|
|
2014 |
|
2013 |
|
|
(In thousands, except share data) |
|
ASSETS |
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
30,875 |
|
$ |
53,665 |
|
|
Pre-funded social welfare grants receivable |
|
4,728 |
|
|
2,934 |
|
|
Accounts receivable, net of allowances of - March:
$1,592; June: $4,701 |
|
132,356 |
|
|
102,614 |
|
|
Finance loans receivable, net of allowances of - March:
$1,815; June: $- |
|
42,379 |
|
|
8,350 |
|
|
Inventory |
|
10,491 |
|
|
12,222 |
|
|
Deferred income taxes |
|
5,350 |
|
|
4,938 |
|
|
|
Total current assets before settlement assets |
|
226,179 |
|
|
184,723 |
|
|
|
|
Settlement assets |
|
744,782 |
|
|
752,476 |
|
|
|
|
|
Total
current assets |
|
970,961 |
|
|
937,199 |
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of - March: $92,314; June: $84,808 |
|
46,150 |
|
|
48,301 |
|
EQUITY-ACCOUNTED INVESTMENTS |
|
1,347 |
|
|
1,183 |
|
GOODWILL |
|
179,832 |
|
|
175,806 |
|
INTANGIBLE ASSETS, net |
|
69,265 |
|
|
77,257 |
|
OTHER LONG-TERM ASSETS, including reinsurance
assets |
|
34,338 |
|
|
36,576 |
|
|
TOTAL ASSETS |
|
1,301,893 |
|
|
1,276,322 |
|
|
|
40,570 |
|
|
|
|
LIABILITIES |
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Bank overdraft |
|
- |
|
|
- |
|
|
Accounts payable |
|
14,592 |
|
|
26,567 |
|
|
Other payables |
|
35,682 |
|
|
33,808 |
|
|
Current portion of long-term borrowings |
|
14,005 |
|
|
14,209 |
|
|
Income taxes payable |
|
11,749 |
|
|
2,275 |
|
|
|
Total current liabilities before settlement
obligations |
|
76,028 |
|
|
76,859 |
|
|
|
|
Settlement obligations |
|
744,782 |
|
|
752,476 |
|
|
|
|
|
Total
current liabilities |
|
820,810 |
|
|
829,335 |
|
DEFERRED INCOME TAXES |
|
17,343 |
|
|
18,727 |
|
LONG-TERM BORROWINGS |
|
58,061 |
|
|
66,632 |
|
OTHER LONG-TERM LIABILITIES, including insurance policy
liabilities |
|
20,117 |
|
|
21,659 |
|
|
TOTAL LIABILITIES |
|
916,331 |
|
|
936,353 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
COMMON STOCK |
|
|
|
|
|
|
|
Authorized: 200,000,000 with $0.001 par value; |
|
|
|
|
|
|
|
Issued and outstanding shares, net of treasury - March:
45,783,342; June: 45,592,550 |
|
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 |
|
165,076 |
|
|
160,670 |
|
TREASURY SHARES, AT COST: March: 13,455,090; June:
13,455,090 |
|
(175,823 |
) |
|
(175,823 |
) |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
(97,910 |
) |
|
(100,858 |
) |
RETAINED EARNINGS |
|
494,145 |
|
|
452,618 |
|
|
TOTAL NET1 EQUITY |
|
385,547 |
|
|
336,666 |
|
|
NON-CONTROLLING INTEREST |
|
15 |
|
|
3,303 |
|
|
|
TOTAL EQUITY |
|
385,562 |
|
|
339,969 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,301,893 |
|
$ |
1,276,322 |
|
|
|
|
|
|
|
|
(A) - Derived from audited financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS TECHNOLOGIES, INC. |
|
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
(In thousands) |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
17,170 |
|
$ |
(4,684 |
) |
$ |
41,515 |
|
$ |
4,681 |
|
Depreciation and amortization |
|
10,442 |
|
|
10,560 |
|
|
30,245 |
|
|
31,051 |
|
Earnings from equity-accounted investments |
|
(52 |
) |
|
(22 |
) |
|
(202 |
) |
|
(204 |
) |
Fair value adjustments |
|
110 |
|
|
(299 |
) |
|
49 |
|
|
408 |
|
Interest payable |
|
30 |
|
|
1,054 |
|
|
1,696 |
|
|
3,363 |
|
(Profit) loss on disposal of property, plant and
equipment |
|
(26 |
) |
|
3 |
|
|
(42 |
) |
|
(83 |
) |
Stock-based compensation charge |
|
922 |
|
|
1,092 |
|
|
2,820 |
|
|
3,325 |
|
Facility fee amortized |
|
79 |
|
|
71 |
|
|
657 |
|
|
235 |
|
Increase in accounts receivable, pre-funded social
welfare grants receivable and finance loans receivable |
|
(6,443 |
) |
|
(4,818 |
) |
|
(67,521 |
) |
|
(3,987 |
) |
Decrease (Increase) in inventory |
|
2,821 |
|
|
4,949 |
|
|
979 |
|
|
(2,260 |
) |
Increase (Decrease) in accounts payable and other
payables |
|
2,656 |
|
|
4,533 |
|
|
(10,895 |
) |
|
(1,755 |
) |
Increase in taxes payable |
|
8,069 |
|
|
948 |
|
|
9,431 |
|
|
354 |
|
Decrease in deferred taxes |
|
(1,141 |
) |
|
(1,201 |
) |
|
(3,019 |
) |
|
(4,133 |
) |
|
Net cash provided by operating activities |
|
34,637 |
|
|
12,186 |
|
|
5,713 |
|
|
30,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
(4,848 |
) |
|
(5,053 |
) |
|
(17,309 |
) |
|
(17,103 |
) |
Proceeds from disposal of property, plant and
equipment |
|
123 |
|
|
31 |
|
|
2,124 |
|
|
387 |
|
Acquisitions, net of cash acquired |
|
- |
|
|
- |
|
|
- |
|
|
(2,143 |
) |
(Investment in equity in) Repayment of loan by
equity-accounted investment |
|
(25 |
) |
|
- |
|
|
(25 |
) |
|
3 |
|
Proceeds from maturity of investments related to
insurance business |
|
- |
|
|
- |
|
|
- |
|
|
545 |
|
Other investing activities, ne3t |
|
571 |
|
|
- |
|
|
(570 |
) |
|
- |
|
Net change in settlement assets |
|
(277,912 |
) |
|
(156,363 |
) |
|
(21,409 |
) |
|
(168,419 |
) |
|
Net cash used in investing activities |
|
(282,091 |
) |
|
(161,385 |
) |
|
(36,049 |
) |
|
(186,730 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings obtained |
|
1,028 |
|
|
- |
|
|
72,633 |
|
|
- |
|
Repayment of long-term borrowings |
|
- |
|
|
- |
|
|
(87,008 |
) |
|
(7,307 |
) |
Payment of facility fee |
|
- |
|
|
- |
|
|
(872 |
) |
|
- |
|
Proceeds from bank overdraft |
|
- |
|
|
- |
|
|
24,580 |
|
|
- |
|
Repayment of bank overdraft |
|
(23,335 |
) |
|
- |
|
|
(23,335 |
) |
|
- |
|
Acquisition of interests in KSNET |
|
- |
|
|
- |
|
|
(1,968 |
) |
|
- |
|
Proceeds from issue of common stock |
|
88 |
|
|
- |
|
|
88 |
|
|
240 |
|
Net change in settlement obligations |
|
277,912 |
|
|
156,363 |
|
|
21,409 |
|
|
168,419 |
|
|
Net cash provided by financing activities |
|
255,693 |
|
|
156,363 |
|
|
5,527 |
|
|
161,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
274 |
|
|
(2,664 |
) |
|
2,019 |
|
|
(2,124 |
) |
Net increase (decrease) in cash and cash
equivalents |
|
8,513 |
|
|
4,500 |
|
|
(22,790 |
) |
|
3,493 |
|
Cash and cash equivalents - beginning of period |
|
22,362 |
|
|
38,116 |
|
|
53,665 |
|
|
39,123 |
|
Cash and cash equivalents - end of period |
$ |
30,875 |
|
$ |
42,616 |
|
$ |
30,875 |
|
$ |
42,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating
margin:
Three months ended March 31, 2014 and 2013 and December 31,
2013
|
|
|
|
|
|
|
|
|
Change - actual |
|
Change - constant exchange rate(1) |
|
Key segmental data, in $ '000, |
Q3 '14 |
|
|
Q3 '13 |
|
|
Q2 '14 |
|
Q3 '14 vs Q3 '13 |
|
Q3 '14 vs Q2 '14 |
|
Q3 '14 vs Q3 '13 |
|
Q3 '14 vs Q2 '14 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$64,864 |
|
|
$59,009 |
|
|
$72,237 |
|
10% |
|
(10% |
) |
41% |
|
(4% |
) |
|
International transaction-based activities |
34,994 |
|
|
33,119 |
|
|
37,288 |
|
6% |
|
(6% |
) |
36% |
|
0% |
|
|
Smart card accounts |
10,612 |
|
|
8,657 |
|
|
11,237 |
|
23% |
|
(6% |
) |
57% |
|
1% |
|
|
Financial services |
11,099 |
|
|
1,651 |
|
|
6,199 |
|
572% |
|
79% |
|
763% |
|
92% |
|
|
Hardware, software and related technology sales |
16,557 |
|
|
8,705 |
|
|
10,322 |
|
90% |
|
60% |
|
144% |
|
72% |
|
|
|
Total
consolidated revenue |
$138,126 |
|
|
$111,141 |
|
|
$137,283 |
|
24% |
|
1% |
|
60% |
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$11,145 |
|
|
($4,197 |
) |
|
$13,398 |
|
nm |
|
(17% |
) |
nm |
|
(11% |
) |
|
|
Operating income (loss) excluding amortization |
12,308 |
|
|
(3,127 |
) |
|
13,916 |
|
nm |
|
(12% |
) |
nm |
|
(5% |
) |
|
|
Amortization of intangible assets |
(1,163 |
) |
|
(1,070 |
) |
|
(518 |
) |
9% |
|
125% |
|
40% |
|
140% |
|
|
International transaction-based activities |
1,322 |
|
|
(1,362 |
) |
|
1,365 |
|
nm |
|
(3% |
) |
nm |
|
4% |
|
|
|
Operating income excluding amortization |
4,680 |
|
|
1,866 |
|
|
4,883 |
|
151% |
|
(4% |
) |
222% |
|
3% |
|
|
|
Amortization of intangible assets |
(3,358 |
) |
|
(3,228 |
) |
|
(3,518 |
) |
4% |
|
(5% |
) |
34% |
|
2% |
|
|
Smart card accounts |
3,025 |
|
|
2,467 |
|
|
3,203 |
|
23% |
|
(6% |
) |
57% |
|
1% |
|
|
Financial services |
5,119 |
|
|
1,147 |
|
|
1,727 |
|
346% |
|
196% |
|
473% |
|
217% |
|
|
Hardware, software and related technology sales |
4,000 |
|
|
1,699 |
|
|
1,592 |
|
135% |
|
151% |
|
202% |
|
169% |
|
|
|
Operating income (loss) excluding amortization |
4,066 |
|
|
1,785 |
|
|
1,663 |
|
128% |
|
144% |
|
193% |
|
162% |
|
|
|
Amortization of intangible assets |
(66 |
) |
|
(86 |
) |
|
(71 |
) |
(23% |
) |
(7% |
) |
(1% |
) |
(0% |
) |
|
Corporate/ Eliminations |
(662 |
) |
|
(4,480 |
) |
|
(2,483 |
) |
(85% |
) |
(73% |
) |
(81% |
) |
(71% |
) |
|
|
Total
operating income (loss) |
$23,949 |
|
|
($4,726 |
) |
|
$18,802 |
|
nm |
|
27% |
|
nm |
|
36% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
17% |
|
|
(7% |
) |
|
19% |
|
|
|
|
|
|
|
|
|
|
International transaction-based activities |
4% |
|
|
(4% |
) |
|
4% |
|
|
|
|
|
|
|
|
|
|
International transaction-based activities excluding
amortization |
13% |
|
|
6% |
|
|
13% |
|
|
|
|
|
|
|
|
|
|
Smart card accounts |
29% |
|
|
28% |
|
|
29% |
|
|
|
|
|
|
|
|
|
|
Financial services |
46% |
|
|
69% |
|
|
28% |
|
|
|
|
|
|
|
|
|
|
Hardware, software and related technology sales |
24% |
|
|
20% |
|
|
15% |
|
|
|
|
|
|
|
|
|
|
Overall operating margin |
17% |
|
|
(4% |
) |
|
14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
- This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during the third
quarter of fiscal 2014 also prevailed during the third quarter of
fiscal 2013 and the second quarter of fiscal 2014. |
Nine months ended March 31, 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: |
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$200,133 |
|
|
$181,137 |
|
|
10% |
|
36% |
|
|
International transaction-based activities |
109,099 |
|
|
97,881 |
|
|
11% |
|
37% |
|
|
Smart card accounts |
33,178 |
|
|
25,240 |
|
|
31% |
|
61% |
|
|
Financial services |
19,725 |
|
|
4,483 |
|
|
340% |
|
440% |
|
|
Hardware, software and related technology sales |
36,768 |
|
|
25,524 |
|
|
44% |
|
77% |
|
|
|
Total
consolidated revenue |
$398,903 |
|
|
$334,265 |
|
|
19% |
|
46% |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$37,825 |
|
|
$4,136 |
|
|
815% |
|
1,022% |
|
|
|
Operating income excluding amortization |
40,057 |
|
|
8,139 |
|
|
392% |
|
504% |
|
|
|
Amortization of intangible assets |
(2,232 |
) |
|
(4,003 |
) |
|
(44% |
) |
(32% |
) |
|
International transaction-based activities |
4,738 |
|
|
(1,331 |
) |
|
nm |
|
nm |
|
|
|
Operating income excluding amortization |
14,751 |
|
|
8,366 |
|
|
76% |
|
116% |
|
|
|
Amortization of intangible assets |
(10,013 |
) |
|
(9,697 |
) |
|
3% |
|
27% |
|
|
Smart card accounts |
9,456 |
|
|
7,194 |
|
|
31% |
|
61% |
|
|
Financial services |
6,902 |
|
|
3,292 |
|
|
110% |
|
157% |
|
|
Hardware, software and related technology sales |
8,540 |
|
|
4,478 |
|
|
91% |
|
134% |
|
|
|
Operating income excluding amortization |
8,748 |
|
|
4,732 |
|
|
85% |
|
127% |
|
|
|
Amortization of intangible assets |
(208 |
) |
|
(254 |
) |
|
(18% |
) |
1% |
|
|
Corporate/ Eliminations |
(8,310 |
) |
|
(8,198 |
) |
|
1% |
|
24% |
|
|
|
Total
operating income |
$59,151 |
|
|
$9,571 |
|
|
518% |
|
658% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
19% |
|
|
2% |
|
|
|
|
|
|
|
International transaction-based activities |
4% |
|
|
(1% |
) |
|
|
|
|
|
|
International transaction-based activities excluding
amortization |
14% |
|
|
9% |
|
|
|
|
|
|
|
Smart card accounts |
29% |
|
|
29% |
|
|
|
|
|
|
|
Financial services |
35% |
|
|
73% |
|
|
|
|
|
|
|
Hardware, software and related technology sales |
23% |
|
|
18% |
|
|
|
|
|
|
|
Overall operating margin |
15% |
|
|
3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
- This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during the year
to date fiscal 2014 also prevailed during the year to date fiscal
2013. |
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 March 31, 2014 and 2013
|
Net income (USD'000) |
|
E(L)PS, basic (USD) |
|
Net income (ZAR'000) |
|
E(L)PS, basic (ZAR) |
|
|
2014 |
2013 |
|
2014 |
2013 |
|
2014 |
2013 |
|
2014 |
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
17,182 |
(4,681 |
) |
0.38 |
(0.10 |
) |
186,842 |
(39,632 |
) |
4.08 |
(0.87 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net |
3,443 |
3,295 |
|
|
|
|
37,431 |
27,898 |
|
|
|
|
|
Stock-based compensation charge |
922 |
1,092 |
|
|
|
|
10,026 |
9,245 |
|
|
|
|
|
Facility fees for KSNET debt |
79 |
71 |
|
|
|
|
859 |
601 |
|
|
|
|
|
US government investigations-related and US lawsuit
expenses |
62 |
2,557 |
|
|
|
|
674 |
21,648 |
|
|
|
|
|
Acquisition-related costs |
- |
28 |
|
|
|
|
- |
237 |
|
|
|
|
|
|
Fundamental |
21,688 |
2,362 |
|
0.47 |
0.05 |
|
235,832 |
19,997 |
|
5.15 |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31, 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 |
41,527 |
4,692 |
0.91 |
0.10 |
431,054 |
39,684 |
9.42 |
0.87 |
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net |
9,385 |
10,453 |
|
|
97,414 |
88,403 |
|
|
|
Stock-based compensation charge |
2,914 |
3,325 |
|
|
30,248 |
28,122 |
|
|
|
Facility fees for KSNET debt |
657 |
235 |
|
|
6,820 |
1,988 |
|
|
|
US government investigations-related and US lawsuit
expenses |
2,526 |
3,117 |
|
|
26,220 |
26,363 |
|
|
|
Acquisition-related costs |
- |
75 |
|
|
- |
634 |
|
|
|
|
Fundamental |
57,009 |
21,897 |
1.25 |
0.48 |
591,756 |
185,194 |
12.94 |
4.07 |
|
|
|
|
|
|
|
|
|
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 March 31, 2014 and 2013
|
2014 |
|
2013 |
|
|
|
|
|
|
Net income (loss) (USD'000) |
17,182 |
|
(4,681 |
) |
Adjustments: |
|
|
|
|
|
|
Profit on sale of property, plant and equipment |
(26 |
) |
3 |
|
|
|
Tax
effects on above |
7 |
|
(1 |
) |
|
|
|
|
|
Net income (loss) used to calculate headline earnings
(USD'000) |
17,163 |
|
(4,679 |
) |
|
|
|
|
|
Weighted average number of shares used to calculate net
income (loss) per share basic earnings and headline earnings (loss)
per share basic earnings ('000) |
45,776 |
|
45,545 |
|
|
|
|
|
|
Weighted average number of shares used to calculate net
income (loss) per share diluted earnings and headline earnings
(loss) per share diluted earnings ('000) |
45,954 |
|
45,597 |
|
|
|
|
|
|
Headline earnings (loss) per share: |
|
|
|
|
|
Basic, in USD |
0.37 |
|
(0.10 |
) |
|
Diluted, in USD |
0.37 |
|
(0.10 |
) |
Nine months ended March 31, 2014 and 2013
|
2014 |
|
2013 |
|
|
|
|
|
|
Net income (USD'000) |
41,527 |
|
4,692 |
|
Adjustments: |
|
|
|
|
|
Profit on sale of property, plant and equipment |
(42 |
) |
(83 |
) |
|
Tax
effects on above |
12 |
|
23 |
|
|
|
|
|
|
Net income used to calculate headline earnings
(USD'000) |
41,497 |
|
4,632 |
|
|
|
|
|
|
Weighted average number of shares used to calculate net
income per share basic earnings and headline earnings per share
basic earnings ('000) |
45,742 |
|
45,530 |
|
|
|
|
|
|
Weighted average number of shares used to calculate net
income per share diluted earnings and headline earnings per share
diluted earnings ('000) |
45,997 |
|
45,593 |
|
|
|
|
|
|
Headline earnings per share: |
|
|
|
|
|
Basic, in USD |
0.90 |
|
0.10 |
|
|
Diluted, in USD |
0.90 |
|
0.10 |
|
Calculation of the denominator for headline diluted earnings per
share
|
Q3 '14 |
Q3 '13 |
F2014 |
F2013 |
|
|
|
|
|
Basic weighted-average common shares outstanding and
unvested restricted shares expected to vest under GAAP |
45,776 |
45,545 |
45,742 |
45,530 |
|
Effect of dilutive securities under GAAP |
178 |
52 |
255 |
63 |
|
|
Denominator for headline diluted earnings per share |
45,954 |
45,597 |
45,997 |
45,593 |
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.
Investor Relations Contact:Net 1 UEPS Technologies Inc.Dhruv
ChopraHead of Investor Relations+1 917-767-6722dchopra@net1.com
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