Wrap Text
Net 1 UEPS Technologies, Inc. Reports Third Quarter 2016 Results
Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
(“Net1” or “the Company”)
Net 1 UEPS Technologies, Inc. Reports Third Quarter 2016 Results
JOHANNESBURG, May 6, 2016 – Net11 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the
third quarter of fiscal 2016.
* Q3 2016 Revenue of $134.7 million, a constant currency increase of 20%;
* Q3 2016 FEPS of $0.43, which includes an adverse impact of $2.1 million, or $0.045 per share, attributable to taxes;
* Repurchase of 1,328,699 shares of Net1 common stock for approximately $12.7 million.
Summary Financial Metrics
Three months ended March 31,
% change % change
2016 2015 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 134,736 151,121 (11%) 20%
GAAP net income 18,420 24,358 (24%) 2%
Fundamental net income (1) 19,787 26,519 (25%) 1%
GAAP earnings per share ($) 0.40 0.52 (24%) 2%
Fundamental earnings per share ($) (1) 0.43 0.57 (25%) 1%
Fully-diluted shares outstanding (‘000’s) 46,430 46,739 (1%)
Average period USD/ ZAR exchange rate 15.82 11.74 35%
Nine months ended March 31,
% change % change
2016 2015 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 439,490 461,693 (5%) 20%
GAAP net income 58,098 70,821 (18%) 4%
Fundamental net income (1) 65,978 80,985 (19%) 3%
GAAP earnings per share ($) 1.24 1.51 (18%) 4%
Fundamental earnings per share ($) (1) 1.41 1.73 (18%) 3%
Fully-diluted shares outstanding (‘000’s) 47,074 46,907 - -
Average period USD/ ZAR exchange rate 14.17 11.23 26%
(1) Fundamental net income and earnings per share are non-GAAP measures and are described below under “Use of Non-GAAP
Measures—Fundamental net income and fundamental earnings per share.” See Attachment B for a reconciliation of GAAP net income to
fundamental net income and earnings per share.
Factors impacting comparability of our Q3 2016 and Q3 2015 results
* Unfavorable impact from the strengthening of the U.S. dollar against primary functional currencies: The U.S.
dollar appreciated by 35% against the ZAR and 9% against the KRW during Q3 2016, which negatively impacted
our reported results;
* Continued growth in airtime revenue and transaction fees: We continued to grow our financial inclusion services
offerings during Q3 2016, which has resulted in higher revenues and operating income, primarily from more sales of
low-margin prepaid airtime and an increase in transaction fees;
* Ongoing contributions from EPE and Smart Life and expansion of branch network: Our EPE and Smart Life
offerings contributed to an increase in revenue in ZAR, as well as an associated increase in establishment costs for
our branch network;
* Gain on acquisition of T24: We recognized a fair value adjustment gain of $1.9 million related to the acquisition of
T24. We accounted for T24 as an equity method investment prior to obtaining control and recognized a gain arising
from the consolidation and purchase accounting adjustments related to the T24 acquisition;
* Tax impact of dividends from South African subsidiary: Our income tax expense includes approximately $2.1
million related to the tax impact, including withholding taxes, resulting from further distributions from our South
African subsidiary during fiscal 2016, which helped reduce the impact of a weakened ZAR on our reported cash
balances. The conversion of a significant portion of our ZAR cash reserves to USD has again negatively impacted
our interest income due to the material difference between ZAR and USD deposit rates; and
* Q3 2015 results include a refund related to Korean industry-wide litigation: Our results for Q3 2015 were
positively impacted by a refund of $1.7 million that had been paid several years ago in connection with industry-
wide litigation that has now been finalized.
“We have made measurable strides on our international expansion initiatives over the past few months, given new ZAZOO
project launches in the UK and India, becoming a certified third-party processor in Europe, conclusion of our strategic
investment by the IFC, and acquisitions that will allow us to own a larger share of the value chain as we pursue opportunities
globally,” said Serge Belamant, Chairman and CEO of Net1. “Meanwhile in South Africa, our core new offerings such as
EasyPay Everywhere, financial services and ZAZOO continue to scale. Given the building blocks we have put in place and
partnerships with multinationals like IFC and MasterCard, we are confident that fiscal 2017 will be a watershed year for Net1
as it relates to building a sizeable and sustainable international business,” he concluded.
“Similar to Q2, we converted a meaningful further portion of our South African cash reserves to USD in Q3, in order to limit
the impact of the ongoing volatility of the ZAR,” said Herman Kotze, Chief Financial Officer of Net1. “This resulted in
withholding and other tax-related adjustments, as well as lower tax-effected interest income due to the differential between
ZAR and USD deposit rates, of approximately $0.05 to our EPS for Q3 2016. The impact of all these distributions during the
year for fiscal 2016, is estimated to have an adverse impact of $0.18 on our fundamental EPS. As a result, for fiscal 2016, we
now expect fundamental earnings per share of at least $2.40 using our constant currency base of ZAR 11.43/$1 and a share
count of 46.7 million shares. However, the IFC transaction, which is expected to close on May 11, 2016, will result in the
issuance of 9.98 million shares. We therefore anticipate our Q4 2016 weighted average share count to be approximately 51.1
million shares” he concluded.
Closing of transaction with IFC parties for the issue of approximately 10 million shares for $107.7 million
All the closing conditions for the share subscription transaction with the International Finance Corporation (“IFC”) and three
funds managed by IFC Asset Management Company (together with IFC, the “IFC Parties”), as announced on April 11, 2016,
have been met and approval of same has been received from the IFC Parties. Pursuant to the terms of the subscription
agreement, the transaction is expected to close on May 11, 2016. The IFC Parties have agreed to subscribe for 9.98 million
shares of our common stock at a subscription price of $10.79 per share, for total proceeds of $107.7 million. The subscription
price represented a 20.6% premium over the closing price of our shares on Nasdaq on April 8, 2016 (the trading day before
the agreement was concluded). The IFC Parties will have an 18% interest in our company following closing of the
transaction. We will use the proceeds of the investment primarily for the expansion of our business and technological
solutions in emerging markets across the globe.
Results of Operations by Segment and Liquidity
Our operating metrics will be updated and posted on our website (www.net1.com).
South African transaction processing
Segment revenue was $50.6 million in Q3 2016, down 13% compared with Q3 2015 in USD, but 18% higher on a constant
currency basis. In ZAR, the increase in segment revenue and operating income was primarily due to higher EPE transaction
revenue as a result of increased usage of our ATMs, more low-margin transaction fees generated from card holders using the
South African National Payment System, increased inter-segment transaction processing activities, and a modest increase in
the number of social welfare grants distributed. Our operating income margin for Q3 2016 and 2015 was 26% and 23%,
respectively, and was higher primarily due to higher EPE revenue as a result of increased ATM transactions, an increase in
inter-segment transaction processing activities, an increase in the number of beneficiaries paid in Q3 2016 and a modest
increase in the margin of transaction fees generated from cardholders using the South African National Payment System,
partially offset by annual salary increases granted to our South African employees.
International transaction processing
Segment revenue was $40.6 million in Q3 2016, up 6% compared with Q3 2015 in USD, and up 43% on a constant currency
basis. Revenue increased in constant currency primarily due to higher transaction volume at KSNET during Q3 2016 and the
inclusion of T24 from January 2016. Operating income during Q3 2016 was lower due to an increase in depreciation expenses
at KSNET and ongoing ZAZOO start-up costs in the UK and India, but was partially offset by increase in revenue
contribution from KSNET and a positive contribution by T24 and XeoHealth. Operating income and operating income margin
for Q3 2015, was positively impacted by a refund of approximately $1.7 million that had been paid several years ago in
connection with industry-wide litigation. Operating income margin for Q3 2016 and 2015 was 12% and 17%, respectively.
Financial inclusion and applied technologies
Segment revenue was $54.3 million in Q3 2016, down 19% compared with Q3 2015 in USD and up 9% on a constant
currency basis. In ZAR, Financial inclusion and applied technologies revenue and operating income increased primarily due
to higher prepaid airtime and other value-added services sales, and, in ZAR, an increase in inter-segment revenues, offset by
fewer ad hoc terminal and card sales and lower lending service fees. Operating income for Q3 2016, was also adversely
impacted by establishment costs for Smart Life and expansion of our branch network as well as an increase in inter-segment
charges. Operating income margin for the Financial inclusion and applied technologies segment was 21% and 27%,
respectively, during Q3 2016 and 2015, and has decreased primarily due to establishment costs for Smart Life, expansion of
our branch network, annual salary increases for our South African employees and an increase in inter-segment charges.
Corporate/eliminations
Our corporate expenses have decreased primarily due to the impact of the stronger USD on goods and services procured in
other currencies, primarily the ZAR, the gain related to the acquisition of T24 and lower amortization costs, partially offset
by modest increases in USD denominated goods and services purchased from third parties and directors’ fees.
Cash flow and liquidity
At March 31, 2016, we had cash and cash equivalents of $123.3 million, down from $117.6 million at June 30, 2015. The
increase in our cash balances from June 30, 2015, was primarily due to the expansion of all of our core businesses, partially
offset by the strengthening of the U.S. dollar against our primary functional currencies, repurchase of shares of our common
stock, provisional tax payments, acquisitions and capital expenditures.
Excluding the impact of interest received, interest paid under our Korean debt and taxes, the increase in cash from operating
activities resulted from improved trading activity during fiscal 2016. Capital expenditures for Q3 2016 and 2015 were $8.1
million and $6.3 million, respectively, and have increased primarily due to the acquisition of more payment processing
terminals in South Korea and ATMs in South Africa. During Q3 2016, we acquired 1,328,699 shares of our common stock
for approximately $12.7 million. In addition, we exercised our rights under the Finbond Group Limited, or Finbond, rights
offer and paid approximately $8.9 million (ZAR 136.1 million) for 40,733,723 shares. We also paid approximately $1.7
million, net of cash received, for approximately 56% of T24’s ordinary shares that we did not previously own.
Use of Non-GAAP Measures
US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using the non-GAAP
measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income
and fundamental earnings per share and headline earnings per share are non-GAAP measures.
Fundamental net income and fundamental earnings per share
Fundamental net income and earnings per share is GAAP net income and earnings per share adjusted for (1) the amortization
of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3) unusual non-
recurring items, including the amortization of KSNET debt facility fees and US government investigations-related and US
lawsuit expenses as well as, in fiscal 2016, a fair value gain resulting from the acquisition of T24 and costs related the IFC
transaction and to acquisitions consummated or ultimately not pursued, and in fiscal 2015, a refund ( net of taxes) related to
Korean industry-wide litigation that has now been finalized. Management believes that the fundamental net income and
earnings per share metric enhances its own evaluation, as well as an investor’s understanding, of our financial performance.
Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share.
Headline earnings per share (“HEPS”)
The inclusion of HEPS in this press release is a requirement of our listing on the JSE. HEPS basic and diluted is calculated
using net income which has been determined based on GAAP. Accordingly, this may differ to the headline earnings per share
calculation of other companies listed on the JSE as these companies may report their financial results under a different
financial reporting framework, including but not limited to, International Financial Reporting Standards.
HEPS basic and diluted is calculated as GAAP net income adjusted for the profit on sale of property, plant and equipment,
and in fiscal 2016, a fair value gain resulting from the acquisition of T24. Attachment C presents the reconciliation between
our net income used to calculate earnings per share basic and diluted and HEPS basic and diluted and the calculation of the
denominator for headline diluted earnings per share.
Conference Call
We will host a conference call to review Q3 2016 results on May 6, 2016, 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 May 29, 2016.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System (“UEPS”) or
utilize its proprietary mobile technologies. The Company operates market-leading payment processors in South Africa
and the Republic of Korea. Through Transact24, Net1 offers debit, credit and prepaid processing and issuing services for
Visa, MasterCard and ChinaUnionPay in China and other territories across Asia-Pacific, Europe and Africa, and the United
States. Through Masterpayment, Net1 provides payment processing and enables working capital financing in Europe.
UEPS permits the Company to facilitate biometrically secure, real-time electronic transaction processing to unbanked and
under-banked populations of developing economies around the world in an online or offline environment. Net1’s UEPS/EMV
solution is interoperable with global EMV standards that seamlessly enable access to all the UEPS functionality in a
traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll,
remittances, voting and identification.
Net1’s mobile technologies include its proprietary mobile payments solution - MVC, which offers secure mobile-based
payments, as well as mobile banking and prepaid value-added services in developed and emerging countries. The Company
intends to deploy its varied mobile solutions through its ZAZOO business unit, which is an aggregation of innovative
technology companies and is based in the United Kingdom.
Net1 has a primary listing on the NASDAQ and a secondary listing on the Johannesburg Stock Exchange.
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A
discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially
from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange
Commission. We undertake no obligation to revise any of these statements to reflect future events.
Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1 917-767-6722
Email: dchopra@net1.com
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Nine months ended
March 31, March 31,
2016 2015 2016 2015
(In thousands, except per share data) (In thousands, except per share data)
REVENUE $ 134,736 $ 151,121 $ 439,490 $ 461,693
EXPENSE
Cost of goods sold, IT processing, servicing
and support 63,266 71,094 219,316 217,274
Selling, general and administration 35,998 38,001 108,007 118,122
Depreciation and amortization 9,281 10,060 29,982 30,391
OPERATING INCOME 26,191 31,966 82,185 95,906
INTEREST INCOME 3,345 4,211 11,284 11,888
INTEREST EXPENSE 852 941 2,880 3,360
INCOME BEFORE INCOME TAX EXPENSE 28,684 35,236 90,589 104,434
INCOME TAX EXPENSE 9,816 10,305 31,306 32,156
NET INCOME BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS 18,868 24,931 59,283 72,278
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS 2 65 578 233
NET INCOME 18,870 24,996 59,861 72,511
LESS NET INCOME ATTRIBUTABLE TO
NON-CONTROLLING INTEREST 450 638 1,763 1,690
NET INCOME ATTRIBUTABLE TO NET1 $ 18,420 $ 24,358 $ 58,098 $ 70,821
Net income per share, in United States dollars
Basic earnings attributable to Net1
shareholders $0.40 $0.52 $1.24 $1.51
Diluted earnings attributable to Net1
shareholders $0.40 $0.52 $1.23 $1.51
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
Unaudited (A)
March 31, June 30,
2016 2015
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 123,269 $ 117,583
Pre-funded social welfare grants receivable 1,560 2,306
Accounts receivable, net of allowances of – March: $3,538; June: $1,956 (B) 111,637 121,335
Finance loans receivable, net of allowances of – March: $4,587; June: $4,227 43,596 40,373
Inventory 11,555 12,979
Deferred income taxes 5,777 7,298
Total current assets before settlement assets 297,394 301,874
Settlement assets 484,535 661,916
Total current assets 781,929 963,790
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of –
March: $106,200; June: $94,014 56,110 52,320
EQUITY-ACCOUNTED INVESTMENTS 11,259 14,329
GOODWILL 163,338 166,437
INTANGIBLE ASSETS, net of accumulated amortization of – March: $88,760;
June: $84,668 41,870 47,124
OTHER LONG-TERM ASSETS, including reinsurance assets (B) 49,299 42,430
TOTAL ASSETS 1,103,805 1,286,430
LIABILITIES
CURRENT LIABILITIES
Accounts payable 14,880 21,453
Other payables 44,748 45,595
Current portion of long-term borrowings 8,752 8,863
Income taxes payable 7,940 6,287
Total current liabilities before settlement obligations 76,320 82,198
Settlement obligations 484,535 661,916
Total current liabilities 560,855 744,114
DEFERRED INCOME TAXES 9,407 10,564
LONG-TERM BORROWINGS 52,269 50,762
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 1,708 2,205
TOTAL LIABILITIES 624,239 807,645
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury - March: 45,636,435; June:
46,679,565 64 64
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 224,347 213,896
TREASURY SHARES, AT COST: March: 20,135,140; June: 18,057,228 (238,432) (214,520)
ACCUMULATED OTHER COMPREHENSIVE LOSS (184,382) (139,181)
RETAINED EARNINGS 675,966 617,868
TOTAL NET1 EQUITY 477,563 478,127
NON-CONTROLLING INTEREST 2,003 658
TOTAL EQUITY 479,566 478,785
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,103,805 $ 1,286,430
(A) – Derived from audited financial statements -
-
(B) – We have restated amounts in our unaudited condensed consolidated balance sheet as at June 30, 2015. We have decreased accounts receivable, net
of allowances and increased other long-term assets by approximately $27.4 million. This restatement has no impact on our previously reported
consolidated statement of operations, consolidated statements of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows.
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended Nine months ended
March 31, March 31,
2016 2015 2016 2015
(In thousands) (In thousands)
Cash flows from operating activities
Net income $ 18,870 $ 24,996 $ 59,861 $ 72,511
Depreciation and amortization 9,281 10,060 29,982 30,391
Earnings from equity-accounted investments (2) (65) (578) (233)
Fair value adjustments (2,387) (449) 613 (270)
Interest payable 343 (23) 1,697 1,276
Profit on disposal of property, plant and equipment (29) (64) (113) (295)
Gain on fair value of T24 (1,909) - (1,909) -
Stock-based compensation charge 954 731 2,645 2,682
Facility fee amortized 34 36 103 170
Decrease (Increase) in accounts receivable, pre-
funded social welfare grants receivable and finance
loans receivable 15,914 3,379 (15,211) 5,534
Increase in inventory (340) (26) (495) (2,771)
Increase (Decrease) in accounts payable and other
payables 4,009 4,735 1,563 (7,654)
Increase in taxes payable 4,479 7,465 3,444 4,113
Decrease in deferred taxes (19) (1,467) (256) (2,025)
Net cash provided by operating activities 49,198 49,308 81,346 103,429
Cash flows from investing activities
Capital expenditures (8,053) (6,307) (28,698) (24,822)
Proceeds from disposal of property, plant and
equipment 136 163 753 777
Acquisition of available for sale securities (8,900) - (8,900) -
Acquisition, net of cash acquired (1,666) - (1,666) -
Proceeds from sale of business - - - 1,895
Other investing activities (5) - (5) (29)
Net change in settlement assets (130,782) (188,315) 112,047 10,283
Net cash (used in) provided by investing
activities (149,270) (194,459) 73,531 (11,896)
Cash flows from financing activities
Acquisition of treasury stock (12,726) - (23,912) (9,151)
Proceeds from issue of common stock - 791 3,762 1,780
Long-term borrowings utilized - 798 - 2,976
Repayment of long-term borrowings 676 - 2,107 (14,128)
Sale of equity to non-controlling interest - - - 1,407
Dividends paid to non-controlling interest - (1,024) - (1,024)
Net change in settlement obligations 130,782 188,315 (112,047) (10,283)
Net cash provided by (used in) financing
activities 118,732 188,880 (130,090) (28,423)
Effect of exchange rate changes on cash 3,192 (3,708) (19,101) (10,780)
Net increase in cash and cash equivalents 21,852 40,021 5,686 52,330
Cash and cash equivalents – beginning of period 101,417 70,981 117,583 58,672
Cash and cash equivalents – end of period $ 123,269 $ 111,002 $ 123,269 $ 111,002
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended March 31, 2016 and 2015 and December 31, 2015
Change – constant
Change - actual exchange rate(1)
Q3 ‘16 Q3 ‘16 Q3 ‘16 Q3 ‘16
vs vs vs vs
Key segmental data, in $ ’000, Q3 ‘16 Q3 ‘15 Q2 ‘16 Q3‘15 Q2 ‘16 Q3‘15 Q2 ‘16
Revenue:
South African transaction processing ........... $50,594 $57,999 $52,764 (13%) (4%) 18% 7%
International transaction processing ............. 40,588 38,311 40,836 6% (1%) 43% 11%
Financial inclusion and applied
technologies .................................................. 54,286 66,830 65,686 (19%) (17%) 9% (7%)
Subtotal: Operating segments .............. 145,468 163,140 159,286 (11%) (9%) 20% 2%
Intersegment eliminations .................... (10,732) (12,019) (9,005) (11%) 19% 20% 34%
Consolidated revenue ................... $134,736 $151,121 $150,281 (11%) (10%) 20% 0%
Operating income (loss):
South African transaction processing ........... $13,133 $13,218 $12,080 (1%) 9% 34% 22%
International transaction processing ............. 4,813 6,579 4,240 (27%) 14% (1%) 27%
Financial inclusion and applied
technologies .................................................. 11,469 17,906 13,519 (36%) (15%) (14%) (5%)
Subtotal: Operating segments .............. 29,415 37,703 29,839 (22%) (1%) 5% 10%
Corporate/Eliminations ........................ (3,224) (5,737) (5,060) (44%) (36%) (24%) (29%)
Consolidated operating income ... $26,191 $31,966 $24,779 (18%) 6% 10% 18%
Operating income margin (%)
South African transaction processing ........... 26% 23% 23%
International transaction processing ............. 12% 17% 10%
Financial inclusion and applied
technologies .................................................. 21% 27% 21%
Consolidated operating margin ............ 19% 21% 16%
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during
the Q3 2016 also prevailed during Q3 2015 and Q2 2016.
Nine months ended March 31, 2016 and 2015
Change –
constant
Change - exchange
actual rate(1)
F2016 F2016
vs vs
Key segmental data, in ’000, except margins F2016 F2015 F2015 F2015
Revenue:
South African transaction processing ............................... $158,997 176,678 (10%) 14%
International transaction processing ................................. 122,653 121,981 1% 27%
Financial inclusion and applied technologies ................... 187,332 199,558 (6%) 18%
Subtotal: Operating segments .................................. 468,982 498,217 (6%) 19%
Intersegment eliminations ........................................ (29,492) (36,524) (19%) 2%
Consolidated revenue ....................................... $439,490 461,693 (5%) 20%
Operating income:
South African transaction processing ............................... $38,724 39,740 (3%) 23%
International transaction processing ................................. 15,596 19,671 (21%) 0%
Financial inclusion and applied technologies ................... 41,542 53,340 (22%) (2%)
Subtotal: Operating segments .................................. 95,862 112,751 (15%) 7%
Corporate/Eliminations ............................................ (13,677) (16,845) (19%) 2%
Consolidated operating income ....................... $82,185 95,906 (14%) 8%
Operating income margin (%)
South African transaction processing ............................... 24% 22%
International transaction processing ................................. 13% 16%
Financial inclusion and applied technologies ................... 22% 27%
Overall operating margin ......................................... 19% 21%
(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 of fiscal 2016 also prevailed during the year to date of fiscal 2015.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income and earnings per share, basic, to fundamental net income and earnings per share,
basic:
Three months ended March 31, 2016 and 2015
EPS, EPS,
Net income basic Net income basic
(USD’000) (USD) (ZAR’000) (ZAR)
2016 2015 2016 2015 2016 2015 2016 2015
GAAP................................................ 18,420 24,358 0.40 0.52 291,377 285,520 6.29 6.13
Gain resulting from acquisition of
T24 ............................................... (1,909) - (30,198) -
Intangible asset amortization, net. 1,743 2,743 27,586 32,164
Stock-based compensation charge 954 731 15,091 8,584
Transaction costs.......................... 545 - 8,621 -
Facility fees for KSNET debt ...... 34 36 538 423
Refund related to litigation
finalized in Korea, net .................. - (1,354) - (15,899)
US government investigations-
related and US lawsuit expenses .. - 5 - 59
Fundamental ...................... 19,787 26,519 0.43 0.57 313,015 310,851 6.75 6.68
Nine months ended March 31, 2016 and 2015
EPS, EPS,
Net income basic Net income basic
(USD’000) (USD) (ZAR’000) (ZAR)
2016 2015 2016 2015 2016 2015 2016 2015
GAAP................................................ 58,098 70,821 1.24 1.51 823,150 794,973 17.59 17.00
Intangible asset amortization, net. 6,182 8,525 87,588 95,694
Stock-based compensation charge 2,645 2,682 37,475 30,106
Gain resulting from acquisition of
T24 ............................................... (1,909) - (27,047) -
Transaction costs.......................... 726 - 10,286 -
US government investigations-
related and US lawsuit expenses .. 133 141 1,884 1,583
Facility fees for KSNET debt ...... 103 170 1,459 1,908
Refund related to litigation
finalized in Korea, net .................. - (1,354) - (15,199)
Fundamental ...................... 65,978 80,985 1.41 1.73 934,795 909,065 19.98 19.44
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, 2016 and 2015
2016 2015
Net income (USD’000).......................................................................................................... 18,420 24,358
Adjustments: ..........................................................................................................................
Gain resulting from acquisition of T24 ............................................................................ (1,909) -
Profit on sale of property, plant and equipment ............................................................... (29) (64)
Tax effects on above ........................................................................................................ 8 18
Net income used to calculate headline earnings (USD’000) ................................................. 16,490 24,312
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 46,341 46,561
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 46,430 46,739
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 0.36 0.52
Diluted, in USD ............................................................................................................... 0.36 0.52
Nine months ended March 31, 2016 and 2015
2016 2015
Net income (USD’000).......................................................................................................... 58,098 70,821
Adjustments: ..........................................................................................................................
Gain resulting from acquisition of T24 ............................................................................ (1,909) -
Profit on sale of property, plant and equipment ............................................................... (113) (295)
Tax effects on above ........................................................................................................ 32 83
Net income used to calculate headline earnings (USD’000) ................................................. 56,108 70,609
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 46,786 46,770
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 47,074 46,907
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 1.20 1.51
Diluted, in USD ............................................................................................................... 1.19 1.51
Calculation of the denominator for headline diluted earnings per share
Q3 ‘16 Q3 ‘15 F2016 F2015
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest under GAAP ............................. 46,341 46,561 46,786 46,770
Effect of dilutive securities under GAAP ................................. 89 178 288 137
Denominator for headline diluted earnings per share ............ 46,430 46,739 47,074 46,907
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.
Johannesburg
May 6, 2016
Sponsor:
Deutsche Securities (SA) Proprietary Limited
Date: 06/05/2016 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
