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Net 1 UEPS Technologies, Inc. Reports Fourth Quarter and Full Year 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 Fourth Quarter and Full Year 2016 Results
JOHANNESBURG, August 26, 2016 – Net1 (Nasdaq: UEPS; JSE: NT1) today released results for the fourth quarter and
full-year fiscal 2016.
- Q4 2016 Revenue of $151.3 million, an increase of 15% in constant currency;
- Q4 2016 FEPS of $0.51, which includes an adverse impact of $2.0 million, or $0.042 per share, attributable to taxes;
- Closed IFC transaction with the issue of 10 million shares for $107.7 million on May 11, 2016.
Summary Financial Metrics
Three months ended June 30,
% change % change
2016 2015 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 151,259 164,286 (8%) 15%
GAAP net income 24,356 23,914 2% 27%
Fundamental net income (1) 26,299 27,233 (3%) 20%
GAAP earnings per share ($) 0.48 0.51 (7%) 16%
Fundamental earnings per share ($) (1) 0.51 0.58 (12%) 10%
Fully-diluted shares outstanding (‘000’s) 51,224 46,944 10%
Average period USD/ ZAR exchange rate 15.02 12.04 25%
Year ended June 30,
% change % change
2016 2015 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 590,749 625,979 (6%) 19%
GAAP net income 82,454 94,735 (13%) 10%
Fundamental net income (1) 92,113 108,205 (15%) 7%
GAAP earnings per share ($) 1.72 2.03 (15%) 7%
Fundamental earnings per share ($) (1) 1.92 2.32 (17%) 5%
Fully-diluted shares outstanding (‘000’s) 48,105 46,913 3% 3%
Average period USD/ ZAR exchange rate 14.38 11.43 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 Q4 2016 and Q4 2015 results
- Unfavorable impact from the strengthening of the U.S. dollar against primary functional currencies: The U.S.
dollar appreciated by 26% against the ZAR and 9% against the KRW during Q4 2016, which negatively impacted
our reported results;
- Higher financial services revenue and transaction fees: We experienced growth in lending revenues due to an
increase in the number of loans extended, 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;
- Increase in ad hoc terminal and card sales: Our reported results were positively impacted by higher ad hoc
terminal and card sales during Q4, 2016;
- Gain on change in accounting for Finbond: We recognized a gain of $1.6 million, net of tax, related to the change
to the equity method of accounting from available-for-sale method for Finbond ;
- Tax impact of dividends from South African subsidiary: Our income tax expense includes approximately $2.0
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 also had a negative impact on
our interest income due to the material difference between ZAR and USD deposit rates; and
- Issue of 10 million shares of our common stock: Our earnings per share and fundamental earnings per share for Q4
2016 were adversely impacted by the issuance of 10 million shares of our common stock to IFC Investors, partially
offset by modestly higher interest income due to the cash consideration received for the share issue.
“As a disruptive force providing technology-based solutions to facilitate financial inclusion, we have built a business model
that is defensible, differentiated, sustainable and socially responsible, and that once again has delivered top and bottom line
constant currency growth despite on-going political and regulatory interference in South Africa, and macroeconomic events
globally,” said Serge Belamant, Chairman and CEO of Net1. “Being disruptive is not for the fainthearted, but we believe that
unless norms, cartels and traditional thinking are challenged, progress will be obstructed at the cost of those who need it most.
In fiscal 2017, we will continue to grow our South African businesses, but will also directly market and sell our UEPS/EMV
solutions, and their related financial products, in other developing economies with the help of our partners like the IFC,
further aided by focused acquisitions. We have spent the past few months on the restructuring and building of our
management teams, and are now ready and able to scale our operations internationally,” he concluded.
“During fiscal 2017, we expect to implement our strategic plan by investing between $15 and $20 million on building out our
direct international sales force, management teams and infrastructure; establishing a presence in new countries and further
developing our products across Europe and many emerging countries in Africa, Asia and Latin America. These investments
will be a drag on our reported results but the resultant top line benefits should start to accrue in the second half of fiscal 2017,
and more meaningfully in fiscal 2018 and beyond,” said Herman Kotze, Chief Financial Officer of Net1. “In South Africa,
we expect our CPS business to remain flat, while our financial inclusion businesses should continue to grow in excess of
15%. As a result of these factors, and taking into consideration the approximately 10 million shares issued to the IFC in May
2016, for fiscal 2017, we anticipate our fundamental earnings per share to be at least $1.65. Our guidance assumes that our
existing contract with SASSA remains in effect for the full year on the existing terms and conditions, an updated constant
currency base of ZAR 14.38/$1, a share count of 54.1 million shares, and a tax rate between 33%-35%,” he concluded.
Purchase of shares under 10b5-1 plan and unscheduled Korean debt repayment
As of August 24, 2016, we had repurchased approximately 1.2 million shares of our common stock under our $50 million
10b5-1 plan that we adopted on June 29, 2016 and that expires at the end of August 2016.
On July 29, 2016, we prepaid KRW 30 billion (approximately $26.0 million, translated at exchange rates applicable as of
June 30, 2016) of our Korean debt facility. We had outstanding long-term debt of KRW 30.0 billion following this
unscheduled payment, and a replenished revolver facility of KRW 10 billion which expires in 2018.
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 $53.6 million in Q4 2016, down 10% compared with Q4 2015 in USD, but 12% 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 Q4 2016 and 2015 was 24% and 19%,
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 Q4 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 $47.2 million in Q4 2016, up 11% compared with Q4 2015 in USD, and up 38% on a constant currency
basis. Revenue increased in constant currency primarily due to higher transaction volume at KSNET during Q4 2016 and the
contribution from Transact24 and Masterpayment from April 2016. Operating income during Q4 2016 was higher primarily
due to higher processing activity at KSNET, partially offset by an increase in depreciation expenses at KSNET and ongoing
ZAZOO start-up costs. Operating income margin for Q4 2016 and 2015 was constant at 17%.
Financial inclusion and applied technologies
Segment revenue was $62.1 million in Q4 2016, down 15% compared with Q4 2015 in USD and up 6% on a constant
currency basis. In ZAR, Financial inclusion and applied technologies revenue and operating income increased primarily due
to more ad hoc terminal and card sales, more insurance policies sold and higher lending service fees, partially offset by lower
sales of prepaid airtime and other value-added services . Operating income for Q4 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 22% and 27% during Q4 2016
and 2015, respectively, and has decreased primarily due to establishment costs for Smart Life, expansion of our branch
network and an increase in inter-segment charges.
Corporate/eliminations
Our corporate expenses have decreased largely due to the impact of the stronger USD on goods and services procured in
other currencies, primarily the ZAR, lower amortization costs and the gain resulting from the change in accounting for
Finbond, partially offset by modest increases in USD denominated goods and services purchased from third parties and
directors’ fees.
Cash flow and liquidity
At June 30, 2016, we had cash and cash equivalents of $223.6 million, up from $117.6 million at June 30, 2015. The increase
in our cash balances from June 30, 2015, was primarily due to the cash received from issue of our common stock to the IFC
Investors and 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 Q4 2016 and 2015 were $7.1
million and $11.6 million, respectively, and have decreased primarily due to the acquisition of fewer payment processing
terminals in South Korea. During Q4 2016, we paid $25.9 million for 100% of the issued and outstanding shares of
Masterpayment. We received approximately $107.7 million from the issuance of approximately 10 million shares of our
common stock to the IFC Investors. Finally, we paid $2.7 million related to the repurchase of our common stock under our
buy-back authorization and made a scheduled Korean long-term debt repayment of $8.7 million
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 Transact24, a gain resulting
from the change in accounting for Finbond and costs related to 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 Transact24 and a gain resulting from the change in
accounting for Finbond. Attachment C presents the reconciliation between our net income used to calculate earnings per
share basic and diluted and HEPS basic and diluted and the calculation of the denominator for headline diluted earnings per
share.
Conference Call
We will host a conference call to review Q4 2016 results on August 26, 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 September 18, 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.
Condensed Consolidated Statements of Operations
Unaudited (A)
Three months ended Year ended
June 30, June 30,
2016 2015 2016 2015
(In thousands, except per share data) (In thousands, except per share data)
REVENUE $ 151,259 $ 164,286 $ 590,749 $ 625,979
EXPENSE
Cost of goods sold, IT processing, servicing
and support 70,785 80,582 290,101 297,856
Selling, general and administration 37,879 40,797 145,886 158,919
Depreciation and amortization 10,412 10,294 40,394 40,685
OPERATING INCOME 32,183 32,613 114,368 128,519
INTEREST INCOME 4,008 4,467 15,292 16,355
INTEREST EXPENSE 543 1,096 3,423 4,456
INCOME BEFORE INCOME TAX EXPENSE 35,648 35,984 126,237 140,418
INCOME TAX EXPENSE 10,774 11,980 42,080 44,136
NET INCOME BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS 24,874 24,004 84,157 96,282
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS 61 219 639 452
NET INCOME 24,935 24,223 84,796 96,734
LESS NET INCOME ATTRIBUTABLE TO
NON-CONTROLLING INTEREST 579 309 2,342 1,999
NET INCOME ATTRIBUTABLE TO NET1 $ 24,356 $ 23,914 $ 82,454 $ 94,735
Net income per share, in United States dollars
Basic earnings attributable to Net1
shareholders $0.48 $0.51 $1.72 $2.03
Diluted earnings attributable to Net1
shareholders $0.48 $0.51 $1.71 $2.02
(A) – Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
(A) (A)
June 30, June 30,
2016 2015
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 223,644 $ 117,583
Pre-funded social welfare grants receivable 1,580 2,306
Accounts receivable, net of allowances of – 2016: $1,669; 2015: $1,956 (B) 107,805 121,335
Finance loans receivable, net of allowances of – 2016: $4,494; 2015: $4,227 37,009 40,373
Inventory 10,004 12,979
Deferred income taxes 6,956 7,298
Total current assets before settlement assets 386,998 301,874
Settlement assets (C) 536,725 692,442
Total current assets 923,723 994,316
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of –
2016: $99,969; 2015: $94,014 54,977 52,320
EQUITY-ACCOUNTED INVESTMENTS 25,645 14,329
GOODWILL 179,478 166,437
INTANGIBLE ASSETS, net of accumulated amortization of – 2016: $91,208; 2015:
$84,668 48,556 47,124
OTHER LONG-TERM ASSETS, including reinsurance assets (B) 31,121 42,430
TOTAL ASSETS 1,263,500 1,316,956
LIABILITIES
CURRENT LIABILITIES
Accounts payable 14,097 21,453
Other payables 37,479 45,595
Current portion of long-term borrowings 8,675 8,863
Income taxes payable 5,235 6,287
Total current liabilities before settlement obligations 65,486 82,198
Settlement obligations (C) 536,725 692,442
Total current liabilities 602,211 774,640
DEFERRED INCOME TAXES 12,559 10,564
LONG-TERM BORROWINGS 43,134 50,762
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 2,376 2,205
TOTAL LIABILITIES 660,280 838,171
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury - 2016: 55,271,954; 2015:
46,679,565 74 64
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury: 2016: -; 2015: - - -
ADDITIONAL PAID-IN-CAPITAL 223,978 213,896
TREASURY SHARES, AT COST: 2016: 20,483,932; 2015: 18,057,228 (241,627) (214,520)
ACCUMULATED OTHER COMPREHENSIVE LOSS (189,700) (139,181)
RETAINED EARNINGS 700,322 617,868
TOTAL NET1 EQUITY 493,047 478,127
REDEEMABLE COMMON STOCK 107,672 -
NON-CONTROLLING INTEREST 2,501 658
TOTAL EQUITY 603,220 478,785
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,263,500 $ 1,316,956
(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.
(C) As described in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K, we - have restated our
settlement assets and obligations balances. The restatement resulted in an increase in settlement assets and obligations as of June 30, 2015, of $30.5
million.
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Unaudited (A)
Three months ended Year ended
June 30, June 30,
2016 2015 2016 2015
(In thousands) (In thousands)
Cash flows from operating activities
Net Income $ 24,935 $ 24,223 $ 84,796 $ 96,734
Depreciation and amortization 10,412 10,294 40,394 40,685
Earnings from equity-accounted investments (61) (219) (639) (452)
Fair value adjustment (94) 518 519 248
Interest payable 132 7 1,829 1,283
Facility fee amortized 35 38 138 208
Gain on release from accumulated other
comprehensive income (2,176) - (2,176) -
Gain on fair value of Transact24 - - (1,909) -
Profit on disposal of property, plant and equipment (173) (1) (286) (296)
Stock compensation charge, net of forfeitures 953 513 3,598 3,195
Decrease (Increase) in accounts and finance loans
receivable, and pre-funded grants receivable 11,810 (4,135) (3,401) 1,399
Decrease (Increase) in inventory 1,496 (1,075) 1,001 (3,846)
(Decrease) Increase in accounts payable and other
payables (9,403) 6,804 (7,840) (850)
(Decrease) Increase in taxes payable (2,681) (3,507) 763 606
(Decrease) Increase in deferred taxes 21 (1,631) (235) (3,656)
Net cash provided by operating activities 35,206 31,829 116,552 135,258
Cash flows from investing activities
Capital expenditures (7,099) (11,614) (35,797) (36,436)
Proceeds from disposal of property, plant and
equipment 596 80 1,349 857
Acquisitions, net of cash acquired (14,101) - (15,767) -
Acquisition of available for sale securities - - (8,900) -
Acquisition of equity of equity-accounted
investment - (13,200) - (13,200)
Proceeds from sale of business - - - 1,895
Other investing activities, net - - (5) (29)
Net change in settlement assets (B) (161,343) (24,314) 53,364 (33,870)
Net cash used in investing activities (181,947) (49,048) (5,756) (80,783)
Cash flows from financing activities
Proceeds from issue of common stock 107,682 265 111,444 2,045
Acquisition of treasury stock (2,725) - (26,637) (9,151)
Acquisition of interests in non-controlling interests (11,189) - (11,189) -
Repayment of long-term borrowings (8,716) - (8,716) (14,128)
Long-term borrowings obtained - 789 2,107 3,765
Sale of equity to non-controlling interest - - 1,407
Dividends paid to non-controlling interest - - - (1,024)
Net change in settlement obligations (B) 161,343 24,314 (53,364) 33,870
Net cash provided by financing activities 246,395 25,368 13,645 16,784
Effect of exchange rate changes on cash 721 (1,568) (18,380) (12,348)
Net increase in cash and cash equivalents 100,375 6,581 106,061 58,911
Cash and cash equivalents – beginning of period 123,269 111,002 117,583 58,672
Cash and cash equivalents – end of period $ 223,644 $ 117,583 $ 223,644 $ 117,583
(A) – Derived from audited financial statements
(B) – As described in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K, we have restated our
settlement assets and obligations balances. The restatement resulted in an increase in cash flows from investing activities and an increase in cash flows
from financing activities of $21.3 million during F2015, and an increase in cash flows from investing activities and an increase in cash flows from
financing activities of $1.5 million during Q4, 2015.
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended June 30, 2016 and 2015 and March 31, 2016
Change – constant
Change - actual exchange rate(1)
Q4 ‘16 Q4 ‘16 Q4 ‘16 Q4 ‘16
vs vs vs vs
Key segmental data, in $ ’000, Q4 ‘16 Q4 ‘15 Q3 ‘16 Q4‘15 Q3 ‘16 Q4‘15 Q3 ‘16
Revenue:
South African transaction processing ........... $53,577 $59,774 $50,594 (10%) 6% 12% 1%
International transaction processing ............. 47,154 42,573 40,588 11% 16% 38% 10%
Financial inclusion and applied
technologies .................................................. 62,071 73,042 54,286 (15%) 14% 6% 9%
Subtotal: Operating segments .............. 162,802 175,389 145,468 (7%) 12% 16% 6%
Intersegment eliminations .................... (11,543) (11,103) (10,732) 4% 8% 30% 2%
Consolidated revenue ................... $151,259 $164,286 $134,736 (8%) 12% 15% 7%
Operating income (loss):
South African transaction processing ........... $12,662 $11,268 $13,133 12% (4%) 40% (8%)
International transaction processing ............. 7,793 7,134 4,813 9% 62% 36% 54%
Financial inclusion and applied
technologies .................................................. 13,457 19,385 11,469 (31%) 17% (13%) 11%
Subtotal: Operating segments .............. 33,912 37,787 29,415 (10%) 15% 12% 9%
Corporate/Eliminations ........................ (1,729) (5,174) (3,224) (67%) (46%) (58%) (49%)
Consolidated operating income ... $32,183 $32,613 $26,191 (1%) 23% 23% 17%
Operating income margin (%)
South African transaction processing ........... 24% 19% 26%
International transaction processing ............. 17% 17% 12%
Financial inclusion and applied
technologies .................................................. 22% 27% 21%
Consolidated operating margin ............ 21% 20% 19%
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during
the Q4 2016 also prevailed during Q4 2015 and Q3 2016.
Year ended June 30, 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 ............................... $212,574 236,452 (10%) 13%
International transaction processing ................................. 169,807 164,554 3% 30%
Financial inclusion and applied technologies ................... 249,403 272,600 (9%) 15%
Subtotal: Operating segments .................................. 631,784 673,606 (6%) 18%
Intersegment eliminations ........................................ (41,035) (47,627) (14%) 8%
Consolidated revenue ....................................... $590,749 625,979 (6%) 19%
Operating income:
South African transaction processing ............................... $51,386 51,008 1% 27%
International transaction processing ................................. 23,389 26,805 (13%) 10%
Financial inclusion and applied technologies ................... 54,999 72,725 (24%) (5%)
Subtotal: Operating segments .................................. 129,774 150,538 (14%) 9%
Corporate/Eliminations ............................................ (15,406) (22,019) (30%) (12%)
Consolidated operating income ....................... $114,368 128,519 (11%) 12%
Operating income margin (%)
South African transaction processing ............................... 24% 22%
International transaction processing ................................. 14% 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 fiscal 2016 also prevailed during 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 June 30, 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................................................ 24,356 23,914 0.48 0.51 365,778 288,035 7.16 6.18
Intangible asset amortization, net. 2,213 2,751 33,229 33,131
Accounting change for Finbond ... (1,732) - (26,011) -
Stock-based compensation charge 954 513 14,327 6,179
Transaction costs.......................... 473 - 7,104 -
Facility fees for KSNET debt ...... 35 38 526 458
US government investigations-
related and US lawsuit expenses .. - 17 - 205
Fundamental ...................... 26,299 27,233 0.51 0.58 394,953 328,008 7.73 7.04
Year ended June 30, 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................................................ 82,454 94,735 1.72 2.03 1,186,035 1,082,584 24.78 23.17
Intangible asset amortization, net. 8,413 11,263 120,989 128,708
Stock-based compensation charge 3,598 3,195 51,754 36,511
Gain resulting from acquisition of
Transact24.................................... (1,909) - (27,459) -
Accounting change for Finbond ... (1,732) - (24,913) -
Transaction costs.......................... 1,018 - 14,643 -
US government investigations-
related and US lawsuit expenses .. 133 158 1,913 1,806
Facility fees for KSNET debt ...... 138 208 1,985 2,377
Refund related to litigation
finalized in Korea, net .................. - (1,354) - (15,473)
Fundamental ...................... 92,113 108,205 1.92 2.32 1,324,947 1,236,513 27.68 26.46
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net income used to calculate earnings per share basic and diluted and headline earnings per share
basic and diluted:
Three months ended June 30, 2016 and 2015
2016 2015
Net income (USD’000).......................................................................................................... 24,356 23,914
Adjustments: ..........................................................................................................................
Accounting change for Finbond ....................................................................................... (1,732) -
Profit on sale of property, plant and equipment ............................................................... (173) (64)
Tax effects on above ........................................................................................................ 48 18
Net income used to calculate headline earnings (USD’000) ................................................. 22,499 23,868
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 51,118 46,620
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 51,224 46,944
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 0.44 0.51
Diluted, in USD ............................................................................................................... 0.44 0.51
Year ended June 30, 2016 and 2015
2016 2015
Net income (USD’000).......................................................................................................... 82,454 94,735
Adjustments: ..........................................................................................................................
Gain resulting from acquisition of Transact24................................................................. (1,909) -
Accounting change for Finbond ....................................................................................... (2,176) -
Profit on sale of property, plant and equipment ............................................................... (286) (296)
Tax effects on above ........................................................................................................ 524 83
Net income used to calculate headline earnings (USD’000) ................................................. 78,607 94,522
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 47,863 46,733
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 48,105 46,913
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 1.64 2.02
Diluted, in USD ............................................................................................................... 1.63 2.01
Calculation of the denominator for headline diluted earnings per share
Q4 ‘16 Q4 ‘15 F2016 F2015
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest under GAAP ............................. 51,118 46,620 47,863 46,733
Effect of dilutive securities under GAAP ................................. 106 324 242 180
Denominator for headline diluted earnings per share ............ 51,224 46,944 48,105 46,913
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
August 26, 2016
Sponsor:
Deutsche Securities (SA) Proprietary Limited
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