Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today
released results for the first fiscal quarter ended September 30,
2019.
Q1 2020 Highlights:
- Revenue of $80.8 million, GAAP EPS
of $(0.08) and Fundamental EPS of $(0.02);
- Operating loss of $2.7 million and
adjusted EBITDA of $2.8 million;
- South African operations remained
stable and KSNET operating and EBITDA margin improved further
versus Q4 2019;
- Exercised option to acquire an
additional 35% of Bank Frick, which accelerates our ability to
provide a vertically integrated fintech solution in Europe.
“During the first quarter we made meaningful
progress towards the monetization of some of our assets,
accomplished several objectives towards commercial launch of
various new products internationally, and positioned our South
African operations for growth as liquidity becomes available,” said
Herman Kotzé, CEO. “In the near term we will continue to push
forward on our multiple corporate actions to improve our liquidity,
in turn allowing us to reduce liabilities, reinvest in our growth
businesses, and return capital to shareholders.”
“Though our Q1 2020 results benefited from
certain ad-hoc technology and telecom product sales, most of our
key South African businesses remained stable or posted modest
growth compared to Q4 2019, while KSNET showed tangible
improvements in its profitability as a result of the
transformational actions that we have implemented. Until we have
clearer visibility on the quantum and timing of various liquidity
events, we believe for fiscal 2020 it is prudent for us to
reiterate our guidance of adjusted EBITDA of at least $16 million,
using a constant currency base of ZAR 14.27/$1, driven by growth in
South Korea and South Africa, and reduced losses from our IPG
business,” said Alex Smith, CFO.
Summary Financial Metrics
|
|
|
|
% change in USD |
|
% change in ZAR |
|
Q1 2020 |
|
Q1 2019 |
|
Q4 2019 |
|
Q1 ’20vs Q1 ’19 |
|
Q1 ’20vs Q4 ’19 |
|
Q1 ’20vs Q1 ’19 |
|
Q1 ’20vsQ4 ’19 |
|
|
|
|
|
|
|
|
(All figures in USD ‘000s except
per share data) |
|
|
|
|
|
|
|
Revenue(1) |
80,756 |
|
|
125,884 |
|
|
51,472 |
|
|
(36 |
%) |
|
57 |
% |
|
(36 |
%) |
|
62 |
% |
|
|
|
|
|
|
|
|
GAAP operating (loss) income |
(2,734 |
) |
|
896 |
|
|
(49,646 |
) |
|
nm |
|
|
(94 |
%) |
|
(403 |
%) |
|
(94 |
%) |
|
|
|
|
|
|
|
|
Adjusted (negative)
EBITDA(2) |
2,837 |
|
|
13,240 |
|
|
(749 |
) |
|
(79 |
%) |
|
nm |
|
|
(79 |
%) |
|
nm |
|
|
|
|
|
|
|
|
|
GAAP (loss) earnings per share
($) |
(0.08 |
) |
|
(0.09 |
) |
|
(3.23 |
) |
|
(11 |
%) |
|
(98 |
%) |
|
(254 |
%) |
|
(98 |
%) |
Continuing |
(0.08 |
) |
|
(0.12 |
) |
|
(3.23 |
) |
|
(33 |
%) |
|
(98 |
%) |
|
(96 |
%) |
|
(98 |
%) |
Discontinued |
- |
|
|
0.03 |
|
|
- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
|
|
|
|
|
|
|
Fundamental (loss) earnings per
share ($)(2) |
(0.02 |
) |
|
0.01 |
|
|
(3.05 |
) |
|
nm |
|
|
(99 |
%) |
|
(255 |
%) |
|
(99 |
%) |
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
(‘000’s) |
56,568 |
|
|
56,773 |
|
|
56,804 |
|
|
(0 |
%) |
|
(0 |
%) |
|
nm |
|
|
nm |
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate |
14.75 |
|
|
14.86 |
|
|
14.29 |
|
|
(1 |
%) |
|
3 |
% |
|
nm |
|
|
nm |
|
(1) Revenue for Q4 2019, includes revenue that
has been reversed of $19.7 million (ZAR 277.6 million) as a result
of the Supreme Court ruling discussed in Note 13 to our audited
consolidated financial statements on Form 10-K for the year ended
June 30, 2019.
(2) Adjusted (negative) EBITDA, fundamental loss
(earnings) and fundamental (loss) earnings per share are non-GAAP
measures and are described below under “Use of Non-GAAP
Measures—negative EBITDA and Adjusted negative EBITDA, and
—Fundamental net (loss) income and fundamental (loss) earnings per
share.” See Attachment B for a reconciliation of GAAP operating
(loss) income to negative EBITDA and Adjusted negative EBITDA, and
GAAP net (loss) income to fundamental net (loss) income and (loss)
earnings per share.
Factors impacting comparability of our
Q1 2020 and Q1 2019 results
- Decline in
revenue: Our revenues declined 36% in ZAR primarily due to
the deconsolidation of DNI, the expiration of our SASSA contract,
the significant decline in EPE account numbers driven by SASSA’s
auto-migration of accounts to SAPO, and a reduction in EPE-related
financial and value-added services and transaction fees due to a
smaller customer base, but partially offset by higher ad hoc
terminal and prepaid airtime sales;
- Ongoing operating
losses: We continue to experience operating losses
primarily in South Africa as a result of lower revenues, coupled
with a high-fixed cost infrastructure, but achieved our targeted
break-even EBITDA for the quarter;
- Lower net interest
expense: Net interest expense decreased due to the
settlement of our long-term debt in the second half of fiscal 2019,
but partially offset by lower average cash balances and higher
short-term borrowing to fund ATMs;
- Adverse foreign exchange
movements: The U.S. dollar appreciated 6% against the KRW
during fiscal 2020, which adversely impacted our reported
results.
Results of Operations by Segment and
Liquidity
South African transaction
processing
Segment revenue was $19.4 million in Q1 2020,
down 49% on a constant currency basis compared with Q1 2019 but up
from $18.9 million in Q4 2019. The decrease in segment revenue and
operating income was primarily due to the termination of our SASSA
contract at the end of Q1 2019. Our revenue and operating income
was also adversely impacted by the significant reduction in the
number of SASSA grant recipients with SASSA-branded Grindrod cards
linked to Grindrod bank accounts as well as a lower number of EPE
accounts. These decreases in revenue and operating income were
partially offset by higher transaction revenue as a result of
increased usage of our ATMs. Our South African transaction
processing operating segment activities have been adversely
impacted by the loss of EPE customers as a result of SASSA’s
auto-migration of accounts to SAPO. Our operating (loss) margin for
Q1 2020 and 2019 was (17.4%) and (9.3%), respectively.
International transaction
processing
Segment revenue was $34.0 million in Q1 2020,
down 14% on a constant currency basis compared with Q1 2019 and
down from $36.4 million in Q4 2019. Segment revenue was lower
during the first quarter of fiscal 2020, primarily due to an
ongoing contraction in IPG transactions processed, specifically
meaningfully lower crypto-exchange and China processing activity,
modestly lower KSNET revenue as a result of lower transaction
values processed and the impact of the weaker KRW/ USD exchange
rate on reported KSNET revenue. Operating income during Q1 2020 has
improved compared with Q1 2019 due to a reduction in expenses
incurred by KSNET and IPG. Operating income margin for Q1 2020 and
2019 was 11.1% and 7.0%, respectively, due to improving
profitability at KSNET and reduction of costs at IPG.
Financial inclusion and applied
technologies
Segment revenue was $30.1 million in Q1 2020,
down 44% on a constant currency basis compared with Q1 2019 but up
from $17.6 million in Q4 2019. Segment revenue decreased primarily
due to the deconsolidation of DNI, lower lending revenue as a
result of our lending book and insurance revenue as a result of
fewer customers, and a decrease in inter-segment revenues,
partially offset by higher ad hoc technology and telecom product
sales. Operating income was significantly lower than Q1 2019,
primarily due to the deconsolidation of DNI and lower revenue
generation and higher expenses incurred to maintain and expand our
financial service infrastructure, partially offset by the ad hoc
sales referred to previously. Operating income margin for the
Financial inclusion and applied technologies segment was 5.0% and
21.2% during Q1 2020 and 2019, respectively.
Corporate/eliminations
Our corporate expenses decreased primarily due
to lower amortization expense as a result of the deconsolidation of
DNI, partially offset by higher non-employee director expenses,
transaction-related expenditures and external service provider
fees.
Cash flow and liquidity
At September 30, 2019, our cash and cash
equivalents were $42.0 million and comprised of KRW-denominated
balances of KRW 31.7 billion ($26.5 million), ZAR-denominated
balances of ZAR 145.8 million ($9.6 million), U.S.
dollar-denominated balances of $2.0 million, and other currency
deposits, primarily Botswana pula, of $3.0 million, all amounts
translated at exchange rates applicable as of September 30, 2019.
The decrease in our unrestricted cash balances from June 30,
2019, was primarily due to weaker trading activities, capital
expenditures, an additional investment in V2, which was partially
offset by utilization of our long-term borrowings and repayment of
a loan outstanding by DNI.
Excluding the impact of interest received,
interest paid under our South Africa debt and taxes, the decrease
in cash provided is primarily due to significantly weaker trading
activity during Q1 2020 compared to Q1 2019, as well as the
purchase of $12.3 million of Cell C prepaid airtime that is subject
to sale restrictions utilizing our borrowings (refer below under
financial activities and to Note 3 to our condensed consolidated
financial statements). Capital expenditures for Q1 2020 and 2019
were $2.6 million and $3.1 million, respectively, and Q1 2020
capital expenditures relate primarily to the acquisition of
additional ATMs in South Africa.
Operating metrics and supplemental
presentation for Q1 2020 Results
A supplemental presentation and operating
metrics for Q1 2020 will be posted to the Investor Relations page
of our website – ir.net1.com prior to our earnings call on Friday,
November 8, 2019.
Conference Call
We will host a conference call to review these
results on November 8, 2019, at 8:00 a.m. Eastern Time. To
participate in the call, dial 1-508-924-4326 (US and Canada),
0333-300-1418 (U.K. only) or 080-020-0648 (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 December 1,
2019.
Use of Non-GAAP Measures
U.S. securities laws require that when we
publish any non-GAAP measures, we disclose the reason for using
these non-GAAP measures and provide reconciliations to the directly
comparable GAAP measures. The presentation of EBITDA, adjusted
EBITDA, fundamental net (loss) income and fundamental (loss)
earnings per share and headline (loss) earnings per share are
non-GAAP measures.
EBITDA and adjusted EBITDA
Earnings before interest, tax, depreciation and
amortization (“EBITDA”) is GAAP operating (loss) income adjusted
for depreciation and amortization and, if applicable, impairment
losses. Adjusted EBITDA is EBITDA adjusted for costs related to
acquisitions and transactions consummated or ultimately not
pursued.
Fundamental net (loss) income and fundamental (loss)
earnings per share
Fundamental net (loss) income and (loss)
earnings per share is GAAP net (loss) income and (loss) earnings
per share adjusted for the amortization of acquisition-related
intangible assets (net of deferred taxes), the amortization of
intangible assets (net of deferred taxes) related to
equity-accounted investments, stock-based compensation charges, the
amortization of debt facility fees and unusual non-recurring items,
including costs related to acquisitions and transactions
consummated or ultimately not pursued.
Fundamental net (loss) income and (loss)
earnings per share for fiscal 2019 also includes an adjustment for
the non-controlling interest portion of the amortization of
intangible assets (net of deferred taxes).
We provide earnings guidance only on a non-GAAP
basis and do not provide a reconciliation of forward-looking
adjusted EBITDA guidance to the most directly comparable GAAP
financial measures because of the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliation, the amounts of which, based on past
experience, could be material.
Management believes that the EBITDA, adjusted
EBITDA, fundamental net (loss) income and (loss) 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 operating income and EBITDA and
adjusted EBITDA; and GAAP net (loss) income and (loss) earnings per
share and fundamental net (loss) income and (loss) earnings per
share.
Headline (loss) earnings per share
(“H(L)EPS”)
The inclusion of H(L)EPS in this press release
is a requirement of our listing on the JSE. H(L)EPS basic and
diluted is calculated using net (loss) income which has been
determined based on GAAP. Accordingly, this may differ to the
headline (loss) 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.
H(L)EPS basic and diluted is calculated as GAAP
net (loss) income adjusted for the impairment loss and (profit)
loss on sale of property, plant and equipment. Attachment C
presents the reconciliation between our net (loss) income used to
calculate (loss) earnings per share basic and diluted and HE(L)PS
basic and diluted and the calculation of the denominator for
headline diluted (loss) earnings per share.
About Net1
Net1 is a leading provider of transaction
processing services, financial inclusion products and services and
secure payment technology. Net1 operates market-leading payment
processors in South Africa and the Republic of Korea.
Net1 offers debit, credit and prepaid processing and issuing
services for all major payment networks. In South Africa, Net1
provides innovative low-cost financial inclusion products,
including banking, lending and insurance and through DNI is a
leading distributor of mobile subscriber starter packs for Cell C,
a South African mobile network operator. Net1 leverages its
strategic equity investments in Finbond and Bank Frick (both
regulated banks), and Cell C to introduce products to new customers
and geographies.
Net1 has a primary listing on NASDAQ (NasdaqGS:
UEPS) and a secondary listing on the Johannesburg Stock Exchange
(JSE: NT1). Visit www.net1.com for additional information about
Net1.
Forward-Looking Statements
This announcement contains forward-looking
statements that involve known and unknown risks and uncertainties.
A discussion of various factors that may 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.
Investor Relations Contact: Dhruv ChopraGroup
Vice President, Investor RelationsPhone: +1 917-767-6722Email:
dchopra@net1.com
Media Relations Contact:Bridget
von HoldtBusiness Director – BCWPhone: +27-82-610-0650Email:
bridget.vonholdt@bm-africa.com
|
NET 1 UEPS TECHNOLOGIES, INC. |
Unaudited Condensed Consolidated Statements of
Operations |
|
|
Three months ended |
|
|
|
September 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(In thousands, except per share data) |
|
|
|
|
|
REVENUE |
$ |
|
80,756 |
|
$ |
|
125,884 |
|
|
|
|
|
|
EXPENSE |
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT processing, servicing and support |
|
|
46,794 |
|
|
|
72,316 |
|
|
|
|
|
|
Selling, general and administration |
|
|
31,931 |
|
|
|
41,878 |
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,765 |
|
|
|
10,794 |
|
|
|
|
|
|
OPERATING (LOSS) INCOME |
|
|
(2,734 |
) |
|
|
896 |
|
|
|
|
|
|
INTEREST INCOME |
|
|
651 |
|
|
|
1,876 |
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
1,355 |
|
|
|
2,759 |
|
|
|
|
|
|
(LOSS) INCOME BEFORE INCOME TAX
EXPENSE |
|
|
(3,438 |
) |
|
|
13 |
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
|
2,017 |
|
|
|
6,490 |
|
|
|
|
|
|
NET LOSS BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS |
|
|
(5,455 |
) |
|
|
(6,477 |
) |
|
|
|
|
|
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS |
|
|
1,063 |
|
|
|
1,373 |
|
|
|
|
|
|
NET (LOSS) INCOME |
|
|
(4,392 |
) |
|
|
(5,104 |
) |
Continuing |
|
|
(4,392 |
) |
|
|
(8,743 |
) |
Discontinued |
|
|
- |
|
|
|
3,639 |
|
|
|
|
|
|
LESS (ADD) NET INCOME (LOSS)
ATTRIBUTABLE TO NON-CONTROLLING INTEREST |
|
|
- |
|
|
|
95 |
|
Continuing |
|
|
- |
|
|
|
(1,598 |
) |
Discontinued |
|
|
- |
|
|
|
1,693 |
|
|
|
|
|
|
NET (LOSS) INCOME ATTRIBUTABLE TO
NET1 |
|
|
(4,392 |
) |
|
|
(5,199 |
) |
Continuing |
|
|
(4,392 |
) |
|
|
(7,145 |
) |
Discontinued |
$ |
|
- |
|
$ |
|
1,946 |
|
|
|
|
|
|
Net (loss) income per
share, in U.S. dollars |
|
|
|
|
Basic (loss) earnings attributable to Net1 shareholders |
|
|
$(0.08 |
) |
|
|
$(0.09 |
) |
Continuing |
|
|
$(0.08 |
) |
|
|
$(0.12 |
) |
Discontinued |
|
|
$- |
|
|
|
$0.03 |
|
Diluted (loss) earnings attributable to Net1 shareholders |
|
|
$(0.08 |
) |
|
|
$(0.09 |
) |
Continuing |
|
|
$(0.08 |
) |
|
|
$(0.12 |
) |
Discontinued |
|
|
$- |
|
|
|
$0.03 |
|
|
|
|
|
|
NET 1 UEPS TECHNOLOGIES, INC. |
Unaudited Condensed Consolidated Balance
Sheets |
|
September 30, |
|
June 30, |
|
2019 |
|
|
2019(A) |
|
|
|
(In thousands, except share data) |
ASSETS |
CURRENT ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ |
41,976 |
|
|
$ |
46,065 |
|
Restricted cash |
|
68,823 |
|
|
|
75,446 |
|
Accounts receivable, net and other receivables |
|
71,280 |
|
|
|
72,494 |
|
Finance loans receivable, net |
|
29,776 |
|
|
|
30,631 |
|
Inventory |
|
19,059 |
|
|
|
7,535 |
|
Total current assets before settlement assets |
|
230,914 |
|
|
|
232,171 |
|
Settlement assets |
|
73,635 |
|
|
|
63,479 |
|
Total current assets |
|
304,549 |
|
|
|
295,650 |
|
PROPERTY, PLANT AND EQUIPMENT,
net of accumulated depreciation of – September: $114,153; June:
$117,866 |
|
17,324 |
|
|
|
18,554 |
|
OPERATING LEASE RIGHT-OF-USE
ASSETS |
|
5,757 |
|
|
|
- |
|
EQUITY-ACCOUNTED INVESTMENTS |
|
146,833 |
|
|
|
151,116 |
|
GOODWILL |
|
142,800 |
|
|
|
149,387 |
|
INTANGIBLE ASSETS, net of
accumulated amortization of – September: $124,148; June:
$117,866 |
|
9,561 |
|
|
|
11,889 |
|
DEFERRED INCOME TAXES |
|
2,287 |
|
|
|
2,151 |
|
OTHER LONG-TERM ASSETS, including
reinsurance assets |
|
42,001 |
|
|
|
44,189 |
|
TOTAL ASSETS |
|
671,112 |
|
|
|
672,936 |
|
|
|
|
|
|
|
LIABILITIES |
CURRENT LIABILITIES |
|
|
|
|
|
Short-term credit facilities for ATM funding |
|
68,823 |
|
|
|
75,446 |
|
Short-term credit facilities |
|
10,256 |
|
|
|
9,544 |
|
Accounts payable |
|
13,771 |
|
|
|
17,005 |
|
Other payables |
|
61,498 |
|
|
|
66,449 |
|
Operating lease right-of-use lease liability – current |
|
4,493 |
|
|
|
- |
|
Current portion of long-term borrowings |
|
14,510 |
|
|
|
- |
|
Income taxes payable |
|
7,260 |
|
|
|
6,223 |
|
Total current liabilities before settlement obligations |
|
180,611 |
|
|
|
174,667 |
|
Settlement obligations |
|
73,635 |
|
|
|
63,479 |
|
Total current liabilities |
|
254,246 |
|
|
|
238,146 |
|
DEFERRED INCOME TAXES |
|
4,580 |
|
|
|
4,682 |
|
RIGHT-OF-USE OPERATING LEASE
LIABILTY – LONG-TERM |
|
1,439 |
|
|
|
- |
|
OTHER LONG-TERM LIABILITIES,
including insurance policy liabilities |
|
3,047 |
|
|
|
3,007 |
|
TOTAL LIABILITIES |
|
263,312 |
|
|
|
245,835 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
REDEEMABLE COMMON STOCK |
|
107,672 |
|
|
|
107,672 |
|
|
|
|
|
|
|
EQUITY |
COMMON STOCK |
|
|
|
|
|
Authorized: 200,000,000 with $0.001 par value; |
|
|
|
|
|
Issued and outstanding shares, net of treasury - September:
56,568,425; June: 56,568,425 |
|
80 |
|
|
|
80 |
|
PREFERRED STOCK |
|
|
|
|
|
Authorized shares: 50,000,000 with $0.001 par value; |
|
|
|
|
|
Issued and outstanding shares, net of treasury: September: -; June:
- |
|
- |
|
|
|
- |
|
ADDITIONAL PAID-IN-CAPITAL |
|
277,455 |
|
|
|
276,997 |
|
TREASURY SHARES, AT COST:
September: 24,891,292; June: 24,891,292 |
|
(286,951 |
) |
|
|
(286,951 |
) |
ACCUMULATED OTHER COMPREHENSIVE
LOSS |
|
(214,640 |
) |
|
|
(199,273 |
) |
RETAINED EARNINGS |
|
524,184 |
|
|
|
528,576 |
|
TOTAL NET1 EQUITY |
|
300,128 |
|
|
|
319,429 |
|
NON-CONTROLLING INTEREST |
|
- |
|
|
|
- |
|
TOTAL EQUITY |
|
300,128 |
|
|
|
319,429 |
|
|
|
|
|
|
|
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND
SHAREHOLDERS’ EQUITY |
$ |
671,112 |
|
|
$ |
672,936 |
|
|
|
|
|
|
|
(A) – Derived from
audited financial statements |
NET 1 UEPS TECHNOLOGIES, INC. |
Unaudited Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
Three months ended |
|
|
|
September 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(In thousands) |
|
|
|
|
|
Cash flows from operating
activities |
|
|
|
|
Net (loss) income |
$ |
(4,392 |
) |
|
$ |
(5,104 |
) |
Depreciation and
amortization |
|
4,765 |
|
|
|
10,794 |
|
Allowance for doubtful
accounts receivable charged |
|
512 |
|
|
|
833 |
|
Earnings from equity-accounted
investments |
|
(1,063 |
) |
|
|
(1,373 |
) |
Interest on Cedar Cell
note |
|
- |
|
|
|
(156 |
) |
Fair value adjustments and
foreign currency re-measurements |
|
87 |
|
|
|
(82 |
) |
Interest payable |
|
632 |
|
|
|
110 |
|
Facility fee amortized |
|
- |
|
|
|
87 |
|
Profit on disposal of
property, plant and equipment |
|
(154 |
) |
|
|
(127 |
) |
Stock-based compensation charge,
net |
|
387 |
|
|
|
587 |
|
Dividends received from equity
accounted investments |
|
1,068 |
|
|
|
- |
|
(Increase) Decrease in accounts
receivable, pre-funded social welfare grants receivable and finance
loans receivable |
|
(5,666 |
) |
|
|
13,463 |
|
(Increase) Decrease in
inventory |
|
(12,313 |
) |
|
|
2,185 |
|
Decrease in accounts payable and
other payables |
|
(3,396 |
) |
|
|
(9,480 |
) |
Increase in taxes payable |
|
1,288 |
|
|
|
8,354 |
|
Decrease in deferred taxes |
|
(88 |
) |
|
|
(3,634 |
) |
Net cash (used in) provided by operating
activities |
|
(18,333 |
) |
|
|
16,457 |
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Capital expenditures |
|
(2,624 |
) |
|
|
(3,118 |
) |
Proceeds from disposal of
property, plant and equipment |
|
213 |
|
|
|
274 |
|
Investment in equity of
equity-accounted investments |
|
(1,250 |
) |
|
|
- |
|
Repayment of loans by
equity-accounted investments |
|
4,268 |
|
|
|
- |
|
Proceeds on return of
investment |
|
- |
|
|
|
284 |
|
Net change in settlement
assets |
|
(13,509 |
) |
|
|
75,931 |
|
Net cash (used in) provided by investing
activities |
|
(12,902 |
) |
|
|
73,371 |
|
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
Proceeds from bank overdraft |
|
183,674 |
|
|
|
84,655 |
|
Repayment of bank overdraft |
|
(184,829 |
) |
|
|
- |
|
Long-term borrowings
utilized |
|
14,798 |
|
|
|
(10,260 |
) |
Repayment of long-term
borrowings |
|
- |
|
|
|
7,801 |
|
Payment of guarantee fee |
|
(148 |
) |
|
|
- |
|
Other financing activities |
|
(26 |
) |
|
|
(1,729 |
) |
Dividends paid to non-controlling
interest |
|
- |
|
|
|
(136 |
) |
Net change in settlement
obligations |
|
13,509 |
|
|
|
(75,931 |
) |
Net cash provided by financing activities |
|
26,978 |
|
|
|
4,400 |
|
|
|
|
|
|
Effect of exchange rate changes
on cash |
|
(6,455 |
) |
|
|
(949 |
) |
Net (decrease) increase
in cash, cash equivalents and restricted cash |
|
(10,712 |
) |
|
|
93,279 |
|
Cash, cash equivalents
and restricted cash – beginning |
|
121,511 |
|
|
|
90,054 |
|
Cash, cash equivalents
and restricted cash – end of period (1) |
$ |
110,799 |
|
|
$ |
183,333 |
|
|
|
|
|
|
(1) Cash, cash equivalents and restricted cash
as of September 30, 2019, includes restricted cash of approximately
$68.8 million related to cash withdrawn from the Company’s various
debt facilities to fund ATMs. This cash may only be used to fund
ATMs and is considered restricted as to use and therefore is
classified as restricted cash. Net 1 UEPS Technologies,
Inc.
Attachment A
Operating segment revenue, operating
income and operating margin:
Three months ended September 30, 2019
and 2018 and June 30, 2019
|
|
|
|
|
|
Change - actual |
|
Change – constantexchange
rate(1) |
Key segmental data, in ’000, except margins |
Q1 ‘20 |
|
|
Q1 ‘19 |
|
|
Q4 ‘19 |
|
Q1
‘20vsQ1‘19 |
|
Q1 ‘20vsQ4
‘19 |
|
Q1
‘20vsQ1‘19 |
|
Q1 ‘20vsQ4
‘19 |
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
South African transaction processing |
|
$19,399 |
|
|
|
|
$37,749 |
|
|
|
|
$18,945 |
|
|
(49 |
%) |
|
2 |
% |
|
(49 |
%) |
|
6 |
% |
International transaction
processing |
|
34,017 |
|
|
|
|
39,387 |
|
|
|
|
36,399 |
|
|
(14 |
%) |
|
(7 |
%) |
|
(14 |
%) |
|
(4 |
%) |
Financial inclusion and applied
technologies |
|
30,145 |
|
|
|
|
53,206 |
|
|
|
|
17,573 |
|
|
(43 |
%) |
|
72 |
% |
|
(44 |
%) |
|
77 |
% |
Continuing |
|
30,145 |
|
|
|
|
34,419 |
|
|
|
|
17,573 |
|
|
(12 |
%) |
|
72 |
% |
|
(13 |
%) |
|
77 |
% |
Discontinued |
|
- |
|
|
|
|
18,787 |
|
|
|
|
- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Subtotal: Operating segments |
|
83,561 |
|
|
|
|
130,342 |
|
|
|
|
72,917 |
|
|
(36 |
%) |
|
15 |
% |
|
(36 |
%) |
|
18 |
% |
Intersegment eliminations and revenue refund |
|
(2,805 |
) |
|
|
|
(4,458 |
) |
|
|
|
(21,445 |
) |
|
(37 |
%) |
|
(87 |
%) |
|
(38 |
%) |
|
(86 |
%) |
Consolidated revenue |
|
80,756 |
|
|
|
|
125,884 |
|
|
|
|
51,472 |
|
|
(36 |
%) |
|
57 |
% |
|
(36 |
%) |
|
62 |
% |
Continuing |
|
80,756 |
|
|
|
|
107,097 |
|
|
|
|
51,472 |
|
|
(25 |
%) |
|
57 |
% |
|
(25 |
%) |
|
62 |
% |
Discontinued |
|
$- |
|
|
|
|
$18,787 |
|
|
|
|
$- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income: |
|
|
|
|
|
|
|
|
|
South African transaction
processing |
|
($3,385 |
) |
|
|
|
($3,513 |
) |
|
|
|
($2,474 |
) |
|
(4 |
%) |
|
37 |
% |
|
(4 |
%) |
|
41 |
% |
International transaction
processing |
|
3,790 |
|
|
|
|
2,762 |
|
|
|
|
2,209 |
|
|
37 |
% |
|
72 |
% |
|
36 |
% |
|
77 |
% |
Financial inclusion and applied
technologies |
|
1,501 |
|
|
|
|
11,302 |
|
|
|
|
(10,749 |
) |
|
(87 |
%) |
|
nm |
|
|
(87 |
%) |
|
nm |
|
Continuing |
|
1,501 |
|
|
|
|
3,470 |
|
|
|
|
(10,749 |
) |
|
(57 |
%) |
|
nm |
|
|
(57 |
%) |
|
nm |
|
Discontinued |
|
- |
|
|
|
|
7,832 |
|
|
|
|
- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Subtotal: Operating segments |
|
1,906 |
|
|
|
|
10,551 |
|
|
|
|
(11,014 |
) |
|
(82 |
%) |
|
nm |
|
|
(82 |
%) |
|
nm |
|
Corporate/Eliminations |
|
(4,640 |
) |
|
|
|
(9,655 |
) |
|
|
|
(38,632 |
) |
|
(52 |
%) |
|
(88 |
%) |
|
(52 |
%) |
|
(88 |
%) |
Continuing |
|
(4,640 |
) |
|
|
|
(7,005 |
) |
|
|
|
(38,632 |
) |
|
(34 |
%) |
|
(88 |
%) |
|
(34 |
%) |
|
(88 |
%) |
Discontinued |
|
- |
|
|
|
|
(2,650 |
) |
|
|
|
- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Consolidated operating (loss) income |
|
(2,734 |
) |
|
|
|
896 |
|
|
|
|
(49,646 |
) |
|
nm |
|
|
(94 |
%) |
|
nm |
|
|
(94 |
%) |
Continuing |
|
(2,734 |
) |
|
|
|
(4,286 |
) |
|
|
|
(49,646 |
) |
|
(36 |
%) |
|
(94 |
%) |
|
(37 |
%) |
|
(94 |
%) |
Discontinued |
|
$- |
|
|
|
|
$5,182 |
|
|
|
|
$- |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
margin (%) |
|
|
|
|
|
|
|
|
|
South African transaction
processing |
|
(17.4 |
%) |
|
|
|
(9.3 |
%) |
|
|
|
(13.1 |
%) |
|
|
|
|
|
International transaction
processing |
|
11.1 |
% |
|
|
|
7.0 |
% |
|
|
|
6.1 |
% |
|
|
|
|
|
Financial inclusion and applied
technologies |
|
5.0 |
% |
|
|
|
21.2 |
% |
|
|
|
(61.2 |
%) |
|
|
|
|
|
Continuing |
|
5.0 |
% |
|
|
|
10.1 |
% |
|
|
|
(61.2 |
%) |
|
|
|
|
|
Discontinued |
|
nm |
|
|
|
|
41.7 |
% |
|
|
|
nm |
|
|
|
|
|
|
Consolidated operating margin |
|
(3.4 |
%) |
|
|
|
0.7 |
% |
|
|
|
(96.5 |
%) |
|
|
|
|
|
Continuing |
|
(3.4 |
%) |
|
|
|
(4.0 |
%) |
|
|
|
(96.5 |
%) |
|
|
|
|
|
Discontinued |
|
nm |
|
|
|
|
27.6 |
% |
|
|
|
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
– This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during Q1 2020
also prevailed during Q1 2019 and Q4 2019. |
|
Earnings from equity-accounted
investments:
The table below presents the relative earnings
(loss) from our equity-accounted investments:
|
Q1 2020 |
|
Q1 2019 |
|
% Change |
DNI(1) |
|
$728 |
|
|
|
$- |
|
|
nm |
|
Share of net income |
|
1,463 |
|
|
|
- |
|
|
nm |
|
Amortization of intangible assets, net of deferred tax |
|
(466 |
) |
|
|
- |
|
|
nm |
|
Impairment |
|
(269 |
) |
|
|
- |
|
|
nm |
|
Bank Frick |
|
(25 |
) |
|
|
(588 |
) |
|
(96 |
%) |
Share of net income |
|
119 |
|
|
|
162 |
|
|
(27 |
%) |
Amortization of intangible assets, net of deferred tax |
|
(144 |
) |
|
|
(144 |
) |
|
- |
|
Other |
|
- |
|
|
|
(606 |
) |
|
nm |
|
Finbond |
|
491 |
|
|
|
1,875 |
|
|
(74 |
%) |
Other |
|
(131 |
) |
|
|
86 |
|
|
nm |
|
Earnings from equity-accounted investments |
|
$1,063 |
|
|
|
$1,373 |
|
|
(23 |
%) |
(1) DNI was included as an equity-accounted
investment from August 1, 2017 until June 30, 2018, the date upon
which we obtained control and commenced consolidation of DNI, and
then again from March 31, 2019. DNI is included in our Financial
inclusion and applied technologies operating segment from the
acquisition date.
Net 1 UEPS Technologies,
Inc.
Attachment B
Reconciliation of GAAP operating (loss)
income to EBITDA and adjusted EBITDA:
Three months and year ended September
30, 2019 and 2018
|
Three months ended September
30, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income -
GAAP |
(2,734 |
) |
|
896 |
|
|
|
|
|
Depreciation and amortization |
4,765 |
|
|
10,794 |
|
EBITDA |
2,031 |
|
|
11,690 |
|
Transaction costs |
806 |
|
|
1,550 |
|
Adjusted EBITDA |
2,837 |
|
|
13,240 |
|
|
|
|
|
|
|
Reconciliation of GAAP net (loss) income
and (loss) earnings per share, basic, to fundamental net (loss)
income and (loss) earnings per share, basic:
Three months ended September 30, 2019
and 2018
|
Net (loss) income(USD’000) |
|
(L)EPS,
basic(USD) |
|
Net (loss) income(ZAR’000) |
|
(L)EPS, basic
(ZAR) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
(4,392 |
) |
(5,199 |
) |
(0.08 |
) |
(0.09 |
) |
|
(64,791 |
) |
(77,251 |
) |
(1.15 |
) |
(1.36 |
) |
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net |
1,413 |
|
4,481 |
|
|
|
|
20,835 |
|
66,578 |
|
|
|
Stock-based compensation charge |
387 |
|
587 |
|
|
|
|
5,709 |
|
8,722 |
|
|
|
Transaction costs |
806 |
|
1,550 |
|
|
|
|
11,890 |
|
23,031 |
|
|
|
Intangible asset amortization, net related to equity accounted
investments |
610 |
|
144 |
|
|
|
|
8,999 |
|
2,140 |
|
|
|
Intangible asset amortization, net related to non-controlling
interest |
- |
|
(876 |
) |
|
|
|
- |
|
(13,016 |
) |
|
|
Facility fees for debt |
- |
|
87 |
|
|
|
|
- |
|
1,293 |
|
|
|
Fundamental |
(1,176 |
) |
774 |
|
(0.02 |
) |
0.01 |
|
|
(17,358 |
) |
11,497 |
|
(0.31 |
) |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net (loss) used to
calculate (loss) per share basic and diluted and headline (loss)
per share basic and diluted:
Three months ended September 30, 2019
and 2018
|
2019 |
|
|
2018 |
|
|
|
|
|
Net loss (USD’000) |
(4,392 |
) |
|
(5,199 |
) |
Adjustments: |
|
|
|
Profit on sale of property, plant and equipment |
(154 |
) |
|
(127 |
) |
Tax effects on above |
43 |
|
|
36 |
|
|
|
|
|
Net loss used to calculate
headline loss (USD’000) |
(4,503 |
) |
|
(5,290 |
) |
|
|
|
|
Weighted average number of
shares used to calculate net loss per share basic loss and headline
loss per share basic loss (‘000) |
56,568 |
|
|
56,723 |
|
|
|
|
|
Weighted average number of
shares used to calculate net loss per share diluted loss and
headline loss per share diluted loss (‘000) |
56,568 |
|
|
56,773 |
|
|
|
|
|
Headline loss per share: |
|
|
|
Basic, in USD |
(0.08 |
) |
|
(0.09 |
) |
Diluted, in USD |
(0.08 |
) |
|
(0.09 |
) |
Calculation of the denominator for headline diluted loss
per share
|
Q1 ‘20 |
|
|
Q1 ‘19 |
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest under GAAP |
56,568 |
|
|
56,723 |
|
Effect of dilutive securities under GAAP |
- |
|
|
50 |
|
Denominator for headline diluted loss per share |
56,568 |
|
|
56,773 |
|
|
|
|
|
|
|
Weighted average number of shares used to
calculate headline loss 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 loss per share diluted because we
do not use the two-class method to calculate headline loss per
share diluted.
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