NET 1 UEPS TECHNOLOGIES INC - Net 1 UEPS Technologies, Inc. Reports Preliminary Fourth Quarter and Full Year 2018 Results

Release Date: 30/08/2018 07:05
Code(s): NT1
 
Wrap Text
Net 1 UEPS Technologies, Inc. Reports Preliminary Fourth Quarter and Full Year 2018 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 Preliminary Fourth Quarter and Full Year 2018 Results
JOHANNESBURG, August 30, 2018 – Net1 (Nasdaq: UEPS; JSE: NT1) today released preliminary unaudited results for the
fourth quarter and full-year fiscal 2018.

We are pleased to report another successful quarter and fiscal year as we embark upon our transition to a stable and growing
business, no longer dependent on our SASSA contract in South Africa. Fiscal 2018 was a turbulent year, and one where we have
positioned our company for future growth through our strategic investments and the realignment of our vast payment
infrastructure servicing the rural communities in South Africa. We achieved this result despite the deferral of significant revenue
related to Q4 activities under our SASSA contract, until we receive pricing confirmation from the Constitutional Court.

Fiscal 2018 highlights include:
- Revenue of $612.9 million, and Fundamental EPS of $2.00 ($1.56 excluding fair value adjustments);
- Adjusted EBITDA of $127.2 million;
- Added 0.9 million new EPE accounts. Total accounts as of June 30 were 2.9 million; and
- Spent $291.5 million on strategic investments and acquisitions, including Cell C, DNI and Bank Frick.

Q4 2018 highlights include:
- Revenue of $149.2 million and Fundamental EPS of $0.22 ($0.29 excluding fair value adjustments);
- Adjusted EBITDA of $24.3 million;
- EPE account growth in the quarter of 0.4 million, to a total of 2.9 million at June 30; and
- Stabilization in South Korea and repositioning of the International Payments Group.

Investment portfolio performance:
- Our preliminary results include our share of DNI's net income for 11 months of ZAR 258.4 million, which was well
  ahead of its budget and our previously reported guidance for DNI;
- Cell C reported double-digit service revenue and EBITDA growth in the six months ended June 30, 2018;
- Bank Frick continues to rapidly expand its operations, carrying forward the momentum from last year; and
- Finbond generated revenue and net income of $161.9 million (66% increase) and $19.2 million (98% increase) for its
  fiscal year ended February 28, 2018.

We achieved the aforementioned results despite CPS revenue declining 81% year-over-year in the fourth quarter, as a result of the
declining number of grant recipients we paid during the phase-out period of our SASSA contract, which is scheduled to terminate
on September 30, 2018.

Looking ahead, and as we have said previously, we expect FY2019 to be both a transitional and a transformational year. While
there is still considerable near-term uncertainty in our South African consumer related businesses, which includes EPE and other
commercial banking accounts, as well as financial inclusion and lifestyle products, we are confident the strategy that we have
implemented over the last few years will yield returns for our shareholders.

"It is with great excitement that we are counting down the days to the end of our SASSA contract on September 30, 2018," said
Herman Kotzé, CEO of Net1. "While many investors have been concerned that the end of this relationship would severely impact
our other South African businesses, I can happily point to our solid Q4 we achieved despite a nearly 80% decline at CPS, as well
as our guidance for fiscal 2019. Furthermore, the elimination of the negative impact that this contract has had on our business,
management's time and shareholder value, should provide a meaningful lift to product refinement and R&D going forward. We
see many opportunities as we look ahead to the next several years. We expect to demonstrate our capabilities as a strong financial
technology and services business with the proven ability to be the last mile provider of transacting, value added and financial
services to the under-serviced individuals and businesses in our markets, regardless of their location. I am confident that our deep
understanding and expertise in the areas of off-line payment systems, biometrics and blockchain applications will be leveraged to
affirm our status as an innovative global fintech business," he concluded.

Preliminary Summary Financial Metrics
                                                                         Fiscal year ended June 30,
                                                                                        % change    % change
                                                                    2018        2017      in USD      in ZAR
(All figures in USD '000s except per share data)
Revenue                                                          612,889     610,066          0%        (6%)
GAAP operating income                                             58,949      97,043       (39%)       (43%)
Adjusted EBITDA (1)                                              127,155     150,018       (15%)       (21%)
GAAP net income                                                   39,150      72,954       (46%)       (50%)
Fundamental net income (1)                                       113,823      94,721         20%         12%
GAAP earnings per share ($)                                         0.69        1.34       (48%)       (52%)
Fundamental earnings per share ($) (1)                              2.00        1.74         15%          8%
Fully-diluted shares outstanding ('000's)                         56,858      54,648          4%
Average period USD/ ZAR exchange rate                              12.70       13.62        (7%)

                                                                         Three months ended June 30,
                                                                                       % change     % change
                                                                    2018        2017     in USD       in ZAR
(All figures in USD '000s except per share data)
Revenue                                                          149,194     155,056        (4%)       (16%)
GAAP operating income                                             10,072      14,726       (32%)       (41%)
Adjusted EBITDA (1)                                               24,301      35,143       (31%)       (40%)
GAAP net income                                                    7,036      11,289       (38%)       (46%)
Fundamental net income (1)                                        12,687      23,185       (45%)       (48%)
GAAP earnings per share ($)                                         0.12        0.20       (37%)       (46%)
Fundamental earnings per share ($) (1)                              0.22        0.41       (46%)       (48%)
Fully-diluted shares outstanding ('000's)                         56,816      57,249        (1%)
Average period USD/ ZAR exchange rate                              11.45       13.19       (13%)

(1) Adjusted EBITDA, fundamental net income and earnings per share are non-GAAP measures and are described below under "Use of Non-
GAAP Measures—EBITDA and Adjusted EBITDA, and —Fundamental net income and fundamental earnings per share." See Attachment B for
a reconciliation of GAAP operating income to EBITDA and Adjusted EBITDA, and GAAP net income to fundamental net income and earnings
per share.

Fiscal 2019 guidance

For fiscal year 2019, we are establishing an initial guidance for FEPS of at least $1.05. This guidance is based on the following
expectations:

- EPE accounts remain stable at 2.5 million and at current Average Revenue Per User ("ARPU");
- DNI revenue and earnings growth of 10%;
- South Korea full year results consistent with 2018;
- No contribution for CPS for the full year; and
- A constant currency base of ZAR 12.70/$1, 56.8 million shares and a tax rate of 35%.

Factors impacting comparability of our Q4 2018 and Q4 2017 results

- Growth in non-CPS South African transaction processing businesses: Higher volumes, transaction and fee income due
  to the increased utilization by our customers of both the National Payment System and our own distribution networks
  (including ATMs) during Q4 2018, resulted in improved contribution to our processing revenue;
- Ongoing contributions from EasyPay Everywhere: EPE revenue and operating income growth was driven primarily by
  the expansion of our customer base over the last year and increased utilization of our ATM infrastructure;
- Higher equity-accounted earnings and re-measurement loss: Finbond and our investment in DNI positively impacted
  our reported results by approximately $6.9 million, before amortization of intangible assets, net of deferred taxes. The
  acquisition of DNI also resulted in a non-cash $4.6 million loss on re-measurement of the previously held equity interest
  following the consolidation of its business into our financial statements on June 30, 2018;
- Decline of CPS revenue and operating income due to the expiration of our SASSA contract: CPS revenue and
  operating income declined significantly due to 82% fewer grant recipients paid by CPS, being only those recipients paid
  at cash pay points as per the Constitutional Court order of March 23, 2018. We have not recognized the additional
  revenue per recipient recommended by South Africa's National Treasury as the amounts have not yet been confirmed by
  the Constitutional Court. As a result, CPS incurred a significant operating loss during Q4 2018;
- Favorable impact from the weakening of the U.S. dollar against the South African Rand: The U.S. dollar depreciated
  13% against the ZAR and 5% against the KRW during Q4 2018 compared with Q4 2017, which positively impacted our
  reported results;
- Regulatory changes in South Korea pertaining to fees on card transactions: The regulatory reduction in fees that may
  be charged on card transactions that came into effect in October 2017 continued to adversely impact our revenues and
  operating income in South Korea as all parties in the payment process adapt to the new laws and renegotiate their
  respective positions in the marketplace; and
- Lower net interest income resulting from strategic investments: Net interest income was $3.8 million lower due to cash
  utilized for strategic investments. Interest expense increased due to the South African lending facilities we obtained in
  August 2017 and March 2018 to partially fund our investments.

Preliminary results of Operations by Segment and Liquidity

Our operating metrics will be updated and posted on our website at http://ir.net1.com/phoenix.zhtml?c=73876&p=irol-IRHome.

South African transaction processing

Segment revenue was $64.0 million in Q4 2018, down 6% compared with Q4 2017 in USD, and 18% lower on a constant
currency basis. The decrease in segment revenue was primarily due to a significant decline in the number of social welfare grants
billed at the old contract rate as the Constitutional Court has not yet issued an order on National Treasury's price recommendation.
The resulting segment revenue decline was partially offset by higher EPE related transaction revenue and increased inter-segment
transaction processing activities. Operating income decreased, primarily as result of the fees earned from SASSA for paying grant
recipients remaining on the current pricing terms, which is not sufficient to cover CPS' fixed costs and resulted in an operating
loss in CPS for Q4 2018. Our operating income margin for Q4 2018 and 2017 was 6.7% and 21.9%, respectively.

International transaction processing

Segment revenue of $43.6 million in Q4 2018 was down 3% compared with Q4 2017 due to a lower contribution from KSNET.
Operating income during Q4 2018 was higher than Q4 2017 because last year's results include a $3.8 million allowance for
doubtful finance loans receivable. Excluding this allowance, Q4 2018 is lower than the comparative period and was adversely
impacted by lower operating income generated in South Korea as a result of the regulations governing the fees that may be
charged on card transactions and lower contributions from the other international businesses as we restructured various units to
consolidate them under the International Payments Group. Operating income margin for Q4 2018 and 2017 was 4.8% and 4.5%,
respectively.

Financial inclusion and applied technologies

Segment revenue was $53.9 million in Q4 2018, down 4% compared with Q4 2017 in USD and down 17% on a constant currency
basis. Financial inclusion and applied technologies revenue and operating income decreased primarily due to fewer prepaid
airtime and other value added services sales, lower volumes in our lending business as we tightened lending criteria and fewer
inter-segment revenues, partially offset by growth in insurance products and monthly account fees charged to our customers.

Operating income margin for the Financial inclusion and applied technologies segment was 25.5% in Q4 2018 compared with
25.7% in Q4 2017, respectively, and has reduced primarily due to a decrease in inter-segment revenues and inflationary cost
pressures, and partially offset by fewer low-margin prepaid product sales and higher monthly account fee income.

Corporate/eliminations

Our corporate expenses have decreased primarily due to fewer transaction costs and lower intangible asset amortization during Q4
2018. In addition, Q4 2018 included a $4.6 million non-cash loss on re-measurement of DNI as a result of its consolidation into
our financial statements and Q4 2017 included the costs associated with the separation of our former chief executive officer from
us, comprised of an $8.0 million separation payment and a $1.6 million stock-based compensation charge.

Cash flow and liquidity

At June 30, 2018, our cash and cash equivalents were $90.1 million and comprised mainly ZAR-denominated balances of ZAR
648.8 million ($47.3 million), KRW-denominated balances of KRW 32.8 billion ($29.5 million), U.S. dollar-denominated
balances of $6.3 million, and other currency deposits, primarily Botswana pula, of $7.0 million, all amounts translated at exchange
rates applicable as of June 30, 2018. The decrease in our cash balances from June 30, 2017, was primarily due to our investments
in DNI, Bank Frick, Cell C and a $9 million listed note totaling $291.5 million, scheduled repayments of our South African long-
term debt, unscheduled repayment of our South Korean debt in full, repayment of our short-term facilities, growth in our South
African lending book, and capital expenditures, which was partially offset by cash generated by our core businesses and new
South African long-term facilities.

Excluding the impact of interest received, interest paid under our South Korean and South African debt and taxes, the increase in
operating cash flow relates primarily to the receipt of certain working capital loans outstanding, offset partially by the expansion
of our South African lending book and weaker trading activity. Capital expenditures for Q4 2018 and 2017 were $1.9 million and
$2.7 million, respectively, and decreased primarily due to the acquisition of fewer payment processing terminals in South Korea,
partially offset by an increase in ATM and vehicle acquisitions in South Africa. We also paid approximately $9.2 million for an
additional 6% interest in DNI and received $9.2 million related to the loan repayment from DNI. Finally, we made a scheduled
South African debt facility payment of $16.1 million (ZAR 213.8 million) and repaid $3.4 million of our United States overdraft
facilities.

Supplemental Presentation for Q4 2018 Results

A supplemental presentation for preliminary Q4 2018 will be posted to the Investor Relations page of our website at –
http://ir.net1.com/phoenix.zhtml?c=73876&p=irol-presentations - one hour prior to our earnings call on Thursday, August 30, 2018.

Use of Non-GAAP Measures

US 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 income and fundamental earnings per share and headline earnings per share are non-GAAP measures.

EBITDA and Adjusted EBITDA

Earnings before interest, tax, depreciation and amortization ("EBITDA") is GAAP operating income adjusted for depreciation and
amortization and impairment losses. Adjusted EBITDA is EBITDA adjusted for costs related to acquisitions and transactions
consummated or ultimately not pursued. Fiscal 2018 also includes adjustments for an allowance for doubtful working capital
finance receivables, the non-cash re-measurement loss related to the acquisition of DNI, a refund of indirect taxes in South Korea
and a gain realized on the sale of XeoHealth. Fiscal 2017 also includes adjustments for costs paid and stock-based compensation
charges incurred related to the separation of our former chief executive officer from our company, and stock-based compensation
reversals.

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 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 and reversals, the amortization of South African and South
Korean debt facility fees, an impairment loss and unusual non-recurring items, including costs related to acquisitions and
transactions consummated or ultimately not pursued.

Fundamental net income and earnings per share for fiscal 2018 includes the Cell C fair value adjustment (net unrealized income
on asset available for sale, net of tax), as well as adjustments for the non-cash re-measurement loss related to the acquisition of
DNI, an impairment loss, an allowance for doubtful working capital finance receivables, a refund of indirect taxes in South Korea,
the impact of changes in tax laws in the U.S and a gain realized on the sale of XeoHealth. Fundamental net income and earnings
per share for fiscal 2017 also includes separation costs (net of taxes) paid to our former chief executive officer, adjustments for a
refund (net of taxes) related to South Korean industry-wide litigation and US government investigations-related expenses.

We provide earnings guidance only on a non-GAAP basis and do not provide a reconciliation of forward-looking fundamental
earnings per share 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 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 operating income and EBITDA and adjusted EBITDA; and 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 impairment loss, loss on the acquisition of DNI and
(profit) loss on sale of property, plant and equipment. 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 these results on August 30, 2018, 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 010-201-6800 (South Africa only) ten minutes prior to the
start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on the Net1 homepage,
www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for
replay on the Net1 website through September 22, 2018.

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 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, including
statements concerning our preliminary financial results for our fourth quarter and full year ended June 30, 2018. The preliminary
financial results for our fourth quarter and full year 2018 included in this press release represent the most current information
available to management. Our actual results, when disclosed in our Form 10-K, may differ from these preliminary results as a
result of the completion of our financial closing procedures, final adjustments, completion of the review by our independent
registered public accounting firm and other developments that may arise between now and the disclosure of the final results. A
discussion of various factors that may cause our preliminary 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

Media Relations Contact:

Bridget von Holdt
Business Director – Burson-Marsteller South Africa
Phone: +27-82-610-0650
Email: bridget.vonholdt@bm-africa.com

Preliminary Unaudited Consolidated Statements of Operations
                                                                                  Unaudited
                                                                             Three months ended                           Year ended
                                                                                   June 30,                                June 30,
                                                                          2018                2017             2018 (A)             2017 (B)
                                                               (In thousands, except per share data)   (In thousands, except per share data)

REVENUE                                                            $   149,194         $   155,056          $   612,889         $   610,066

EXPENSE

    Cost of goods sold, IT processing, servicing and support            78,030              73,173              304,536             292,383

    Selling, general and administration                                 51,586              56,896              193,003             179,262

    Depreciation and amortization                                        8,454              10,261               35,484              41,378

    Impairment loss                                                      1,052                   -               20,917                   -

OPERATING INCOME                                                        10,072              14,726               58,949              97,043

INTEREST INCOME                                                          2,982               6,408               17,885              20,897

INTEREST EXPENSE                                                         2,069               1,711                8,941               3,484

INCOME BEFORE INCOME TAX EXPENSE                                        10,985              19,423               67,893             114,456

INCOME TAX EXPENSE                                                      10,073              10,152               41,353              42,472

NET INCOME BEFORE EARNINGS FROM EQUITY-
ACCOUNTED INVESTMENTS                                                      912               9,271               26,540              71,984

EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS                                                              4,341               1,886               11,730               2,664

NET INCOME                                                               5,253              11,157               38,270              74,648

LESS NET INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTEREST                                                   (1,783)               (132)                (880)               1,694

NET INCOME ATTRIBUTABLE TO NET1                                      $   7,036          $   11,289           $   39,150          $   72,954

Net income per share, in U.S. dollars
     Basic earnings attributable to Net1 shareholders                    $0.12               $0.20                $0.69               $1.34
     Diluted earnings attributable to Net1 shareholders                  $0.12               $0.20                $0.69               $1.33

    (A) – Unaudited
    (B) – Derived from audited financial statements

Preliminary Unaudited Consolidated Balance Sheets
                                                                                                             Unaudited              (A) (R)
                                                                                                              June 30,             June 30,
                                                                                                                  2018                 2017
                                                                                                          (In thousands, except share data)
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                                                                $   90,054          $   258,457
   Pre-funded social welfare grants receivable                                                                   2,965                2,322
   Accounts receivable, net of allowances of – June: $1,101; June: $1,255                                      109,683              111,429
   Finance loans receivable, net of allowances of – June: $16,403; June: $7,469                                 62,205               80,177
   Inventory                                                                                                    12,887                8,020
   Deferred income taxes                                                                                             -                5,330
      Total current assets before settlement assets                                                            277,794              465,735
          Settlement assets                                                                                    149,047              640,455
              Total current assets                                                                             426,841            1,106,190
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of – June:
$129,185; June: $120,212                                                                                        27,054               39,411
EQUITY-ACCOUNTED INVESTMENTS                                                                                    88,331               27,862
GOODWILL                                                                                                       283,240              188,833
INTANGIBLE ASSETS, net of accumulated amortization of – June: $121,466 ; June:
$108,907                                                                                                       131,132               38,764
DEFERRED INCOME TAXES                                                                                            6,312                    -
OTHER LONG-TERM ASSETS, including reinsurance assets                                                           256,380               49,696
   TOTAL ASSETS                                                                                              1,219,290            1,450,756
                                                            
LIABILITIES

CURRENT LIABILITIES
   Short-term credit facilities                                                                                      -               16,579
   Accounts payable                                                                                             35,055               15,136
   Other payables                                                                                               47,994               34,799
   Current portion of long-term borrowings                                                                      44,695                8,738
   Income taxes payable                                                                                          5,742                5,607
      Total current liabilities before settlement obligations                                                  133,486               80,859
          Settlement obligations                                                                               149,047              640,455
              Total current liabilities                                                                        282,533              721,314
DEFERRED INCOME TAXES                                                                                           46,606               11,139
LONG-TERM BORROWINGS                                                                                             5,469                7,501
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities                                             38,580                2,795
   TOTAL LIABILITIES                                                                                           373,188              742,749
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 - June: 56,685,925; June: 56,369,737                         80                   80
   PREFERRED STOCK
        Authorized shares: 50,000,000 with $0.001 par value;
        Issued and outstanding shares, net of treasury: June: -; June: -                                             -                    -
   ADDITIONAL PAID-IN-CAPITAL                                                                                  276,201              273,733
   TREASURY SHARES, AT COST: June: 24,891,292; June: 24,891,292                                              (286,951)            (286,951)
   ACCUMULATED OTHER COMPREHENSIVE LOSS                                                                      (159,237)            (162,569)
   RETAINED EARNINGS                                                                                           812,426              773,276
      TOTAL NET1 EQUITY                                                                                        642,519              597,569
      NON-CONTROLLING INTEREST                                                                                  95,911                2,766
          TOTAL EQUITY                                                                                         738,430              600,335
              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                 $   1,219,290        $   1,450,756

(A) – Derived from audited financial statements
(R) During Q2, 2018, we reclassified redeemable common stock out of total equity because redeemable common stock is required to be presented outside of
permanent equity. We have restated these amounts in our audited consolidated balance sheet as at June 30, 2017. Total equity has decreased by approximately 
$107.7 million and we have presented the approximately $107.7 million redeemable common stock outside of permanent equity. This reclassification has no impact 
on the Company's previously reported consolidated income, comprehensive income or cash flows.

Preliminary Unaudited Consolidated Statements of Cash Flows
                                                                                               Unaudited
                                                                                           Three months ended             Year ended
                                                                                                June 30,                    June 30,
                                                                                        2018           2017        2018 (A)        2017 (B)
                                                                                           (In thousands)                (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                         $   5,253     $   11,157      $   38,270      $   74,648
Adjustments to reconcile net income to net cash provided by
operating activities:
    Depreciation and amortization                                                      8,454         10,261          35,484          41,378
    Earnings from equity-accounted investments                                       (4,341)        (1,886)        (11,730)         (2,664)
    Interest on Cedar Cellular note                                                    (587)              -           (769)               -
    Fair value adjustment                                                                584          (239)           (212)           (300)
    Interest payable                                                                     118           (64)           (146)              20
    Facility fee amortized                                                               122          1,232             589           1,326
    Loss on fair value of DNI                                                          4,614              -           4,614               -
    (Profit) Loss on disposal of property, plant and
    equipment                                                                           (31)           (68)              40           (639)
    Profit on disposal of business                                                         -              -           (463)               -
    Stock compensation charge, net of forfeitures                                        597          2,050           2,607           1,982
    Dividends received from equity accounted investments                                   -            817           4,111           1,187
    Impairment loss                                                                    1,052              -          20,917               -
    Decrease (Increase) in accounts and finance loans
    receivable, and pre-funded grants receivable                                      21,968       (13,506)          31,390        (15,767)
    Decrease (Increase) in inventory                                                     255          2,717         (2,521)           3,025
    Increase (Decrease) in accounts payable and other
    payables                                                                           4,820        (2,075)          10,595         (6,461)
    (Decrease) Increase in taxes payable                                             (6,954)        (6,173)           1,137           (354)
    (Decrease) Increase in deferred taxes                                            (1,083)          1,532         (1,308)           (220)
  Net cash provided by operating activities                                           34,841          5,755         132,605          97,161
Cash flows from investing activities
  Capital expenditures                                                               (1,848)        (2,697)         (9,649)        (11,195)
  Proceeds from disposal of property, plant and equipment                                 83            238             658           1,592
  Investment in Cell C                                                                     -              -       (151,003)               -
  Investment in equity of equity-accounted investments                                     -              -       (133,335)               -
  Loans to equity-accounted investments                                              (1,000)              -        (10,635)        (12,044)
  Repayment of loans by equity-accounted investments                                   9,180              -           9,180               -
  Acquisition of held to maturity investment                                               -              -         (9,000)               -
  Acquisitions, net of cash acquired                                                 (6,202)              -         (6,202)         (4,651)
  Investment in MobiKwik                                                                   -       (10,488)               -        (25,835)
  Other investing activities, net                                                      (207)              -           (361)               -
  Net change in settlement assets                                                    210,405      (116,755)         490,795        (61,938)
  Net cash provided by (used in) investing activities                                210,411      (129,702)         180,448       (114,071)
Cash flows from financing activities
  Long-term borrowings utilized                                                            -            279         113,157             800
  Repayment of long-term borrowings                                                 (16,095)        (8,825)        (77,062)        (37,318)
  Repayment of bank overdraft                                                        (5,932)              -        (62,925)               -
  Proceeds from bank overdraft                                                         2,528         16,176          44,900          16,176
  Payment of guarantee fee                                                                 -              -           (754)         (1,145)
  Proceeds from issue of common stock                                                      -          2,250               -          47,879
  Acquisition of treasury stock                                                            -       (13,713)               -        (45,794)
  Dividends paid to non-controlling interest                                               -        (1,454)               -         (2,067)
  Net change in settlement obligations                                             (210,405)        116,755       (490,795)          61,938
  Net cash (used in) provided by financing activities                              (229,904)        111,468       (473,479)          40,469
Effect of exchange rate changes on cash                                             (12,466)          3,229         (7,977)          11,254
Net (decrease) increase in cash and cash equivalents                                   2,882        (9,250)       (168,403)          34,813
Cash, cash equivalents and restricted cash – beginning of
period                                                                                87,172        267,707         258,457         223,644
Cash and cash equivalents – end of period                                         $   90,054    $   258,457      $   90,054     $   258,457

(A) – Unaudited
(B) – Derived from audited financial statements

Attachment A

Preliminary Operating segment revenue, operating income and operating margin:

Three months ended June 30, 2018 and 2017 and March 31, 2018
                                                                                                                                Change –
                                                                                                                               constant
                                                                                                          Change - actual  exchange rate(1)
                                                                                                           Q4'18    Q4'18    Q4'18    Q4'18
Key segmental data, in '000, except                                                                          vs        vs       vs       vs
margins                                                                  Q4'18       Q4'17       Q3'18     Q4'17    Q3'18    Q4'17    Q3'18
Revenue:
South African transaction processing                                   $63,954     $67,747     $73,508      (6%)    (13%)    (18%)    (17%)
International transaction processing                                    43,580      45,025      46,240      (3%)     (6%)    (16%)    (10%)
Financial inclusion and applied
technologies                                                            53,888      56,220      59,574      (4%)    (10%)    (17%)    (13%)
     Subtotal: Operating segments                                      161,422     168,992     179,322      (4%)    (10%)    (17%)    (14%)
     Intersegment eliminations                                        (12,228)    (13,936)    (16,601)     (12%)    (26%)    (24%)    (29%)
         Consolidated revenue                                         $149,194    $155,056    $162,721      (4%)     (8%)    (16%)    (12%)
Operating income (loss):
South African transaction processing                                    $4,275     $14,858     $12,719     (71%)    (66%)    (75%)    (68%)
International transaction processing                                     2,089       2,016    (14,892)        4%   (114%)    (10%)   (113%)
Financial inclusion and applied
technologies                                                            13,747      14,431      14,968      (5%)     (8%)    (17%)    (12%)
     Subtotal: Operating segments                                       20,111      31,305      12,795     (36%)      57%    (44%)      51%
     Corporate/Eliminations                                           (10,039)    (16,579)     (5,231)     (39%)      92%    (47%)      84%
         Consolidated operating
         income                                                        $10,072     $14,726      $7,564     (32%)      33%    (41%)      28%
Operating income margin (%)
South African transaction processing                                      6.7%       21.9%       17.3%
International transaction processing                                      4.8%        4.5%     (32.2%)
Financial inclusion and applied
technologies                                                             25.5%       25.7%       25.1%
     Consolidated operating margin.                                       6.8%        9.5%        4.6%

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed
during the Q4 2018 also prevailed during Q4 2017 and Q3 2018.

Fiscal year ended June 30, 2018 and 2017
                                                                                                                                   Change –
                                                                                                                                   constant
                                                                                                                      Change -     exchange
                                                                                                                        actual      rate(1)
                                                                                                                         F2018        F2018
                                                                                                                            vs           vs
Key segmental data, in '000, except margins                                                     F2018       F2017        F2017        F2017
Revenue:
South African transaction processing                                                         $268,047    $249,144           8%           0%
International transaction processing                                                          180,027     176,729           2%         (5%)
Financial inclusion and applied technologies                                                  221,906     235,901         (6%)        (12%)
     Subtotal: Operating segments                                                             669,980     661,774           1%         (6%)
     Intersegment eliminations                                                               (57,091)    (51,708)          10%           3%
         Consolidated revenue                                                                $612,889    $610,066           0%         (6%)
Operating income:
South African transaction processing                                                          $42,796     $59,309        (28%)        (33%)
International transaction processing                                                         (12,478)      13,705       (191%)       (185%)
Financial inclusion and applied technologies                                                   55,372      57,785         (4%)        (11%)
     Subtotal: Operating segments                                                              85,690     130,799        (34%)        (39%)
     Corporate/Eliminations                                                                  (26,741)    (33,756)        (21%)        (26%)
         Consolidated operating income                                                        $58,949     $97,043        (39%)        (43%)
Operating income margin (%)
South African transaction processing                                                            16.0%       23.8%
International transaction processing                                                           (6.9%)        7.8%
Financial inclusion and applied technologies                                                    25.0%       24.5%
     Overall operating margin                                                                    9.6%       15.9%

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that
prevailed during fiscal 2018 also prevailed during fiscal 2017.

Earnings from equity-accounted investments:

The table below presents the relative earnings (loss) from our equity-accounted investments:
                                                                                                            %                             %
                                                                                  Q4 2018    Q4 2017   change     F2018      F2017   change
DNI                                                                                $1,803         $-       nm    $7,005         $-       nm
    Share of net income                                                             2,642          -       nm     9,510          -       nm
    Amortization of intangible assets, net
    of deferred tax                                                                 (839)          -       nm   (2,505)          -       nm
Bank Frick                                                                        (1,581)          -       nm     (606)          -       nm
    Share of net income                                                           (1,033)          -       nm       201          -       nm
    Amortization of intangible assets, net
    of deferred tax                                                                 (144)          -       nm     (403)          -       nm
    Other                                                                           (404)          -       nm     (404)          -       nm
Finbond                                                                             4,226      1,573       nm     5,327      2,503     113%
Other                                                                               (107)        313   (134%)         4        161    (98%)
    Earnings from equity-accounted
    investments                                                                    $4,341     $1,886     130%   $11,730     $2,664     340%

Attachment B

Reconciliation of preliminary GAAP operating income to EBITDA and Adjusted EBITDA:

Three months and year ended June 30, 2018 and 2017
                                                                                                     Three months ended     Year ended
                                                                                                           June 30,           June 30,
                                                                                                       2018      2017       2018       2017

Operating income - GAAP                                                                              10,072    14,726     58,949     97,043

    Depreciation and amortization                                                                     8,454    10,261     35,484     41,378
    Impairment loss                                                                                   1,052         -     20,917          -
       EBITDA                                                                                        19,578    24,987    115,350    138,421
          Non-recurring Mastertrading allowance for doubtful accounts                                     -         -      7,803          -
          Loss resulting from acquisition of DNI                                                      4,614         -      4,614          -
          Transaction costs                                                                             109       586      2,396      3,347
          Refund of South Korean indirect taxes                                                           -         -    (2,545)          -
          Profit on sale of Xeo                                                                           -         -      (463)          -
          Former CEO separation payment,                                                                  -     8,000          -      8,000
          Stock-based compensation charge related to former CEO and
          reversals                                                                                       -     1,570          -        250
              Adjusted EBITDA                                                                        24,301    35,143    127,155    150,018

Reconciliation of preliminary GAAP net income and earnings per share, basic, to fundamental net income and earnings
per share, basic:

Three months ended June 30, 2018 and 2017
                                                                                      EPS,                                          EPS,
                                                               Net income             basic                Net income              basic
                                                                (USD'000)             (USD)                 (ZAR'000)               (ZAR)
                                                            2018         2017      2018      2017       2018       2017        2018    2017
  
GAAP                                                       7,036       11,289      0.12      0.20     80,532    148,879        1.42    2.60

     Net unrealized income on asset available
     for sale, net of tax                                (4,167)            -                       (47,694)          -
     Loss resulting from acquisition of DNI                4,614            -                         63,332          -
     Intangible asset amortization, net                    2,261        2,776                         25,883     36,620
     Impairment loss                                       1,052            -                         14,442          -
     Stock-based compensation charge                         597        2,050                          6,833     27,036
     Intangible asset amortization, net related
     to equity-accounted investments                         983            -                         11,251          -
     Facility fees for debt                                  122        1,238                          1,396     16,329
     Transaction costs                                       189          586                          2,163      7,728
     Former CEO separation payment, net of 
     tax                                                       -        5,200                              -     68,578
     US government investigations-related and
     US lawsuit expenses                                       -           46                              -        607
            Fundamental                                   12,687       23,185      0.22      0.41    158,138    305,777        2.78    5.35

Fiscal year ended June 30, 2018 and 2017
                                                                                        EPS,                                       EPS,
                                                              Net income               basic              Net income              basic
                                                               (USD'000)               (USD)               (ZAR'000)              (ZAR)
                                                           2018         2017       2018    2017         2018        2017       2018    2017

GAAP                                                     39,150       72,954       0.69     1.34     497,014     993,504       8.75   18.22

     Net unrealized income on asset available
     for sale, net of tax                                25,199            -                         319,904           -
     Impairment loss                                     20,917            -                         265,543           -
     Non-recurring Mastertrading allowance
     for doubtful accounts                                7,803            -                          99,060           -
     Intangible asset amortization, net                   9,385       10,491                         119,126     142,857
     Loss resulting from acquisition of DNI               4,614            -                          63,332           -
     Transaction costs                                    2,239        3,347                          28,424      45,580
     Stock-based compensation charge                      2,607        1,982                          33,096      26,991
     Refund of South Korean indirect taxes              (1,985)            -                        (25,200)           -
     Intangible asset amortization, net related
     to equity-accounted investments                      2,908            -                          36,917           -
     Change in US tax rate                                  860            -                          10,918           -
     Profit on sale of Xeo                                (463)            -                         (5,878)           -
     Facility fees for debt                                 589        1,294                           7,477      17,621
     Former CEO separation payment, net of
     tax                                                      -        5,200                               -      70,814
     Refund related to litigation finalized in
     South Korea, net                                         -        (643)                               -     (8,756)
     US government investigations-related and
     US lawsuit expenses                                      -           96                               -       1,307
            Fundamental                                 113,823       94,721       2.00     1.74   1,449,733   1,289,918      25.52    23.65

Attachment C

Reconciliation of preliminary net income used to calculate earnings per share basic and diluted and headline earnings per
share basic and diluted:

Three months ended June 30, 2018 and 2017
                                                                                                                        2018            2017
Net income (USD'000)                                                                                                   7,036          11,289
Adjustments:   
   Re-measurement loss resulting from acquisition of DNI                                                               4,614               -
   Impairment loss                                                                                                     1,052               -
   Profit on sale of property, plant and equipment                                                                      (31)            (68)
   Tax effects on above                                                                                                    9              19
Net income used to calculate headline earnings (USD'000)                                                              12,680          11,240
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings ('000)                                                                 56,773          57,196
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings ('000)                                                      56,816          57,249
Headline earnings per share:  
   Basic, in USD                                                                                                        0.22            0.20
   Diluted, in USD                                                                                                      0.22            0.20

Fiscal year ended June 30, 2018 and 2017
                                                                                                                        2018            2017
Net income (USD'000)                                                                                                  39,150          72,954
Adjustments:              
   Impairment loss                                                                                                    20,917               -
   Re-measurement loss resulting from acquisition of DNI                                                               4,614               -
   Profit on sale of business                                                                                          (463)               -
   Loss (Profit) on sale of property, plant and equipment                                                                 40           (639)
   Tax effects on above                                                                                                 (11)             179
Net income used to calculate headline earnings (USD'000)                                                              64,247          72,494
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings ('000)                                                                 56,807          54,539
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings ('000)                                                      56,858          54,648
Headline earnings per share:     
   Basic, in USD                                                                                                        1.13            1.33
   Diluted, in USD                                                                                                      1.13            1.33

Calculation of the denominator for headline diluted earnings per share
                                                                                                    Q4 '18     Q4 '17      F2018       F2017
     Basic weighted-average common shares outstanding and unvested
     restricted shares expected to vest under GAAP                                                  56,773     57,196     56,807      54,539
         Effect of dilutive securities under GAAP                                                       43         53         51         109
           Denominator for headline diluted earnings per share                                      56,816     57,249     56,858      54,648

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 30, 2018

Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited

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