Net 1 UEPS Technologies Inc. Reports Second Quarter 2014 Results
- Revenue and Fundamental EPS of $137 million and $0.40, a
constant currency increase of 43% and 163%, respectively;
- Signed two separate BEE agreements in December 2013 to issue a
total of 4.4 million shares at ZAR 60.00 per share.
JOHANNESBURG, SOUTH AFRICA--(Marketwired - Feb 6, 2014) - Net 1
UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today released
results for the second quarter of fiscal 2014.
Summary Financial Metrics |
|
|
|
Three months ended December 31, |
|
|
|
|
|
|
%
change |
|
%
change |
|
|
2013 |
|
2012 |
|
in USD |
|
in ZAR |
(All figures in USD '000s except per share data) |
|
|
|
|
|
|
|
|
Revenue |
|
137,283 |
|
111,442 |
|
23% |
|
43% |
GAAP net income |
|
12,749 |
|
2,629 |
|
385% |
|
464% |
Fundamental net income (1) |
|
18,399 |
|
8,051 |
|
129% |
|
166% |
GAAP earnings per share ($) |
|
0.28 |
|
0.06 |
|
382% |
|
461% |
Fundamental earnings per share ($) (1) |
|
0.40 |
|
0.18 |
|
122% |
|
163% |
Fully-diluted shares outstanding ('000's) |
|
46,176 |
|
45,597 |
|
2% |
|
|
Average period USD/ ZAR exchange rate |
|
10.16 |
|
8.74 |
|
16% |
|
|
|
|
|
|
|
Six months ended December 31, |
|
|
|
|
|
|
%
change |
|
%
change |
|
|
2013 |
|
2012 |
|
in USD |
|
in ZAR |
(All figures in USD '000s except per share data) |
|
|
|
|
|
|
|
|
Revenue |
|
260,777 |
|
223,124 |
|
17% |
|
39% |
GAAP net income |
|
24,345 |
|
9,373 |
|
160% |
|
210% |
Fundamental net income (1) |
|
35,174 |
|
19,559 |
|
80% |
|
114% |
GAAP earnings per share ($) |
|
0.53 |
|
0.21 |
|
159% |
|
208% |
Fundamental earnings per share ($) (1) |
|
0.77 |
|
0.43 |
|
79% |
|
113% |
Fully-diluted shares outstanding ('000's) |
|
45,919 |
|
45,593 |
|
1% |
|
|
Average period USD/ ZAR exchange rate |
|
10.08 |
|
8.46 |
|
19% |
|
|
(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 Q2 2014 and Q2 2013 results
- Unfavorable impact from the strengthening of the US dollar
against the ZAR: The US dollar appreciated by 16% against the
ZAR during Q2 2014 which negatively impacted our reported
results;
- SASSA implementation complete: Our SASSA contract
implementation is complete. We incurred implementation-related
expenditure, including smart card costs, of approximately $21.0
million during Q2 2013;
- Higher revenue resulting from an increase in low-margin
prepaid airtime sales: Our revenue has increased as a result
of the growth of our Umoya Manje prepaid airtime offering during Q2
2014, which has lower margins compared with our other South African
businesses;
- National rollout of our financial services offering:
We continued the national roll out of our financial services
offering during Q2 2014, which resulted in higher revenue from
UEPS-based lending. Profitability in the financial services segment
however was lower due to rollout costs, including hiring and
training of additional staff and infrastructure deployment as well
as the creation of an allowance for doubtful finance loans
receivable;
- Increased contribution by KSNET: Our results were
positively impacted by growth in our Korean operations; and
- Ad hoc hardware sales in fiscal 2014: We sold more
terminals and cards during Q2 2014 as a result of ad hoc orders
received from our customers.
Comments and
Outlook
"I am delighted that
Net1 is once again demonstrating that it is a growth business, as
illustrated by our second quarter and first half results. The last
15 months have been challenging for the Company and its staff, not
because of our abilities, potential or execution, but rather
because of the negative press coverage we have received for no
justifiable reason. I wanted Net1 to emphatically respond, not with
press releases, but through its achievements and financial
performance," said Dr. Serge Belamant, Chairman and Chief Executive
Officer of Net1.
"I am particularly
delighted that we have now completed bulk registration as per our
SASSA contract, and that our technology is running as smoothly as
expected, thereby delivering the highest level of service to all
our clients anytime and anywhere in the country. We continue to
introduce financial or value-added services to our offerings, which
we primarily deliver via mobile phones thus reaching our customers
even if they reside in the most rural or underserviced areas of
South Africa. I am proud that we have facilitated financial
inclusion for so many people who have now access to affordable and
relevant products designed to improve their livelihood," he
concluded.
"Having completed
our significant implementation investments in fiscal 2013, we see
continued momentum as a result of the execution of our strategy, in
turn driving top and bottom line growth," said Herman Kotzé, Chief
Financial Officer of Net1. "Taking into account the anticipated
issuance of 4.4 million shares as part of our proposed BEE
transaction around March 15, 2014, for fiscal 2014 we expect
fundamental earnings per share of at least $1.60 assuming a
constant currency base of ZAR 8.71/$1. The share count assumption
in our guidance includes a little more than one quarter of the
shares related to our proposed BEE transaction," he concluded.
Results of
Operations by Segment and Liquidity
Our operating
metrics will be updated and posted on our website
(www.net1.com).
South African
transaction-based activities
Segment revenue was
$72.2 million in Q2 2014, up 19% compared with Q2 2013 in USD and
up 38% on a constant currency basis. In ZAR, the increases in
segment revenue were primarily due to higher volumes from the
growth of our Umoya Manje prepaid airtime product and from higher
transaction activity through the South African National Payment
System, both of which have lower margins than our traditional
businesses. Segment operating income margin was 19% and 3%,
respectively, and increased primarily due to the absence of SASSA
implementation costs in Q2 2014. Excluding amortization of
acquisition-related intangibles, Q2 2014 segment operating income
margin was 19% compared with 6% in Q2 2013.
International
transaction-based activities
KSNET contributes
the majority of our revenues and operating income in this segment.
Segment revenue was $37.2 million in Q2 2014, up 13% compared with
Q2 2013 in USD and 31% on a constant currency basis. The increase
in segment revenue was primarily due to growth at KSNET during Q2
2014, and was partially offset by the expiration and non-renewal of
NUETS' contract with its Iraqi customer in Q3 2013. Operating
income during Q2 2014 was positively impacted by growth at KSNET
but partially offset by the loss of the Iraqi contract, continued
losses related to our XeoHealth and Net1 Virtual Card launches in
the United States, as well as ongoing competition in the Korean
marketplace. Excluding the amortization of intangibles, Q2 2014
operating income margin was 13% compared to 11% during Q2 2013.
Smart card
accounts
Segment revenue was
$11.2 million in Q2 2014, up 37% compared with Q2 2013 in USD and
59% on a constant currency basis driven exclusively by the increase
in the number of smart card accounts. Segment operating income
margin from providing smart card accounts for Q2 2014 and 2013 was
29% and 28%, respectively.
Financial
services
UEPS-based lending
contributes the majority of the revenue and operating income in
this segment. Segment revenue was $6.2 million in Q2 2014, up 328%
compared with Q2 2013 in USD and 398% higher on a constant currency
basis, principally due to the increase in the number of loans
granted as we rolled out our product nationally. Q2 2014 segment
operating income margin was 28% compared with 72% during Q2 2013,
lower primarily due to an increase in start-up expenses,
establishment of the allowance for doubtful finance loans
receivable and the re-allocation of UEPS-based lending corporate
and administration overhead expenses to this segment. Smart Life
did not contribute to operating income in the first quarter of
fiscal 2014 as it is currently unable to issue new insurance
policies as a result of the suspension of its license by the
Financial Services Board in fiscal 2013.
Hardware,
software and related technology sales
Segment revenue was
$10.3 million in Q2 2014, up 31% compared with Q2 2013 in USD and
52% on a constant currency basis. The increase in revenue and
operating income resulted from higher ad hoc terminal and smart
card sales. Excluding amortization of all intangibles, segment
operating income margin was 16% compared to 11% during Q2 2013.
Corporate/eliminations
The increase in our
corporate expenses resulted primarily from legal fees we incurred
in connection with the DOJ and SEC investigations and other
corporate head office-related expenses.
Cash flow and
liquidity
At December 31,
2013, we had cash and cash equivalents of $22.4 million, down from
$53.7 million at June 30, 2013. The decrease in our cash balances
from June 30, 2013, was primarily due to the expansion of our
UEPS-based lending business, working capital changes, the repayment
of a portion of our Korean debt and acquisition of substantially
all of the remaining shares of KSNET that we did not already own.
During December 2013, we temporarily increased our short-term South
African credit facility to ZAR 650 million (comprising a ZAR 500
million overdraft facility to enable us to fund additional working
capital requirements and ZAR 150 million of indirect and overdraft
facilities). The overdraft portion of the facility will be reduced
to ZAR 400 million on March 31, 2014.
Excluding the impact
of interest received, interest paid under our Korean debt and
taxes, the decrease in cash from operating activities resulted from
the expansion of our UEPS-based lending book and the timing of
prefunding related to the January 2014 payment cycle, offset by
improved cash generated from operating activities and the
substantial elimination of implementation costs related to our
SASSA contract in fiscal 2014. Capital expenditures for Q2 2014 and
2013 were $6.8 million and $5.6 million, respectively, and have
increased primarily due to the acquisition of more payment
processing terminals in Korea.
Use of Non-GAAP
Measures
US securities laws
require that when we publish any non-GAAP measures, we disclose the
reason for using the non-GAAP measure and provide reconciliation to
the directly comparable GAAP measure. The presentation of
fundamental net income and fundamental earnings per share and
headline earnings per share are non-GAAP measures.
Fundamental net
income and fundamental earnings per share
Fundamental net
income and earnings per share is GAAP net income 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 DOJ and
SEC investigations-related expenses, as well as in fiscal 2013,
acquisition-related costs. Management believes that the fundamental
net income and earnings per share metric enhances its own
evaluation, as well as an investor's understanding, of our
financial performance. Attachment B presents the reconciliation
between GAAP and fundamental net income 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, net of related tax effects.
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 Q2 2014 results on February 7, 2014, at
8:00 Eastern Time. To participate in the call, dial 1-855-481-5362 (US
and Canada), 0808-162-4061 (U.K. only) or 0-800-200-648 (South
Africa only) ten minutes prior to the start of the call. Callers
should request "Net1 call" upon dial-in. The call will also be
webcast on the Net1 homepage, www.net1.com. Please click on the
webcast link at least ten minutes prior to the call. A webcast of
the call will be available for replay on the Net1 website through
March 2, 2014.
About Net1
(www.net1.com)
Net1 is a leading
provider of alternative payment systems that leverage its Universal
Electronic Payment System, or UEPS, to facilitate biometrically
secure, real-time electronic transaction processing to unbanked and
under-banked populations of developing economies around the world
in an online or offline environment. Net1's UEPS/EMV solution is
also completely interoperable with global EMV standards that
seamlessly permit access to all the UEPS functionality in a
traditional EMV environment. In addition to payments, UEPS can be
used for banking, healthcare management, payroll, remittances,
voting and identification.
Net1 operates
market-leading payment processors in South Africa, Republic of
Korea, and Ghana. In addition, Net1's proprietary Mobile Virtual
Card technology offers secure mobile payments and banking services
in developed and emerging countries while its MediKredit and
XeoHealth subsidiaries provide its proprietary 5010 and ICD-10
compliant real-time claims adjudication system.
Net1 has a primary
listing on the Nasdaq and a secondary listing on the JSE
Limited.
Forward-Looking
Statements
This announcement
contains forward-looking statements that involve known and unknown
risks and uncertainties. A discussion of various factors that cause
our actual results, levels of activity, performance or achievements
to differ materially from those expressed in such forward-looking
statements are included in our filings with the Securities and
Exchange Commission. In addition, statements relating to our
proposed BEE transaction are forward-looking statements. The letter
of intent described in this announcement is non-binding and is
subject to the completion of definitive documentation that will
provide for the satisfaction of conditions to be contained therein
before any shares are issued. There can be no assurance that we
will enter into definitive agreements on the terms set forth
herein, if at all. We undertake no obligation to revise any of
these statements to reflect future events.
NET 1 UEPS TECHNOLOGIES INC. |
|
Unaudited Condensed Consolidated Statements of
Operations |
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2013 |
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
(In thousands, except per share data) |
|
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
$ |
137,283 |
$ |
111,442 |
|
|
$ |
260,777 |
|
$ |
223,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT processing, servicing and support |
|
|
67,883 |
|
47,227 |
|
|
|
124,442 |
|
|
92,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration |
|
|
40,824 |
|
48,756 |
|
|
|
81,330 |
|
|
96,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
9,774 |
|
10,487 |
|
|
|
19,803 |
|
|
20,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
|
18,802 |
|
4,972 |
|
|
|
35,202 |
|
|
14,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME |
|
|
3,236 |
|
2,589 |
|
|
|
6,555 |
|
|
5,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
2,226 |
|
2,023 |
|
|
|
3,978 |
|
|
4,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
|
19,812 |
|
5,538 |
|
|
|
37,779 |
|
|
15,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
|
7,099 |
|
2,971 |
|
|
|
13,584 |
|
|
6,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS |
|
|
12,713 |
|
2,567 |
|
|
|
24,195 |
|
|
9,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS |
|
|
47 |
|
54 |
|
|
|
150 |
|
|
182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
12,760 |
|
2,621 |
|
|
|
24,345 |
|
|
9,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS (ADD) NET INCOME (LOSS) ATTRIBUTABLE TO
NON-CONTROLLING INTEREST |
|
|
11 |
|
(8 |
) |
|
|
- |
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO NET1 |
|
$ |
12,749 |
$ |
2,629 |
|
|
$ |
24,345 |
|
$ |
9,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share, in United States dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings attributable to Net1 shareholders |
|
$ |
0.28 |
$ |
0.06 |
|
|
$ |
0.53 |
|
$ |
0.21 |
|
|
Diluted earnings attributable to Net1 shareholders |
|
$ |
0.28 |
$ |
0.06 |
|
|
$ |
0.53 |
|
$ |
0.21 |
|
|
|
NET 1 UEPS TECHNOLOGIES INC. |
Unaudited Condensed Consolidated
Balance Sheets |
|
|
|
Unaudited |
|
|
(A) |
|
|
|
December 31, |
|
|
June 30, |
|
|
|
|
2013 |
|
|
2013 |
|
|
(In thousands, except share data) |
|
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
22,362 |
|
|
$ |
53,665 |
|
|
Pre-funded social welfare grants receivable |
|
|
7,971 |
|
|
|
2,934 |
|
|
Accounts receivable, net of allowances of - December:
$1,326; June: $4,701 |
|
|
125,062 |
|
|
|
102,614 |
|
|
Finance loans receivable, net of allowances of -
December: $1,813; June: $- |
|
|
42,847 |
|
|
|
8,350 |
|
|
Inventory |
|
|
13,537 |
|
|
|
12,222 |
|
|
Deferred income taxes |
|
|
5,001 |
|
|
|
4,938 |
|
|
|
Total current assets before settlement assets |
|
|
216,780 |
|
|
|
184,723 |
|
|
|
|
Settlement assets |
|
|
466,599 |
|
|
|
752,476 |
|
|
|
|
|
Total current assets |
|
|
683,379 |
|
|
|
937,199 |
|
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED |
|
|
|
|
|
|
|
|
DEPRECIATION OF - December: $87,536; June: $84,808 |
|
|
47,619 |
|
|
|
48,301 |
|
EQUITY-ACCOUNTED INVESTMENTS |
|
|
1,290 |
|
|
|
1,183 |
|
GOODWILL |
|
|
181,111 |
|
|
|
175,806 |
|
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF -
December: $72,696; June: $63,767 |
|
|
73,874 |
|
|
|
77,257 |
|
OTHER LONG-TERM ASSETS, including reinsurance
assets |
|
|
34,271 |
|
|
|
36,576 |
|
|
|
TOTAL ASSETS |
|
|
1,021,544 |
|
|
|
1,276,322 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Bank Overdraft |
|
|
24,256 |
|
|
|
- |
|
|
Accounts payable |
|
|
13,689 |
|
|
|
26,567 |
|
|
Other payables |
|
|
34,386 |
|
|
|
33,808 |
|
|
Current portion of long-term borrowings |
|
|
14,108 |
|
|
|
14,209 |
|
|
Income taxes payable |
|
|
3,479 |
|
|
|
2,275 |
|
|
|
Total current liabilities before settlement
obligations |
|
|
89,918 |
|
|
|
76,859 |
|
|
|
|
Settlement obligations |
|
|
466,599 |
|
|
|
752,476 |
|
|
|
|
|
Total current liabilities |
|
|
556,517 |
|
|
|
829,335 |
|
DEFERRED INCOME TAXES |
|
|
18,261 |
|
|
|
18,727 |
|
LONG-TERM BORROWINGS |
|
|
57,452 |
|
|
|
66,632 |
|
OTHER LONG-TERM LIABILITIES, including insurance policy
liabilities |
|
|
20,131 |
|
|
|
21,659 |
|
|
|
TOTAL LIABILITIES |
|
|
652,361 |
|
|
|
936,353 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
Authorized: 200,000,000 with $0.001 par value; |
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares, net of treasury -
December: 45,773,342; June: 45,592,550 |
|
|
59 |
|
|
|
59 |
|
|
PREFERRED STOCK |
|
|
|
|
|
|
|
|
|
|
Authorized shares: 50,000,000 with $0.001 par
value; |
|
|
|
|
|
|
|
|
|
|
Issued and outstanding shares, net of treasury:
December: -; June: - |
|
|
- |
|
|
|
- |
|
|
ADDITIONAL PAID-IN-CAPITAL |
|
|
164,060 |
|
|
|
160,670 |
|
|
TREASURY SHARES, AT COST: December: 13,455,090; June:
13,455,090 |
|
|
(175,823 |
) |
|
|
(175,823 |
) |
|
ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
|
(96,103 |
) |
|
|
(100,858 |
) |
|
RETAINED EARNINGS |
|
|
476,963 |
|
|
|
452,618 |
|
|
|
TOTAL NET1 EQUITY |
|
|
369,156 |
|
|
|
336,666 |
|
|
|
NON-CONTROLLING INTEREST |
|
|
27 |
|
|
|
3,303 |
|
|
|
|
TOTAL EQUITY |
|
|
369,183 |
|
|
|
339,969 |
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
|
$ |
1,021,544 |
|
|
$ |
1,276,322 |
|
(A) - Derived from audited financial statements |
|
|
NET 1 UEPS TECHNOLOGIES INC. |
Unaudited Condensed Consolidated
Statements of Cash Flows |
|
|
Three months ended |
|
|
Six months ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
(In thousands) |
|
|
(In thousands) |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
12,760 |
|
$ |
2,621 |
|
$ |
24,345 |
|
$ |
9,365 |
|
Depreciation and amortization |
|
9,774 |
|
|
10,487 |
|
|
19,803 |
|
|
20,491 |
|
Earnings from equity-accounted investments |
|
(47 |
) |
|
(54 |
) |
|
(150 |
) |
|
(182 |
) |
Fair value adjustments |
|
72 |
|
|
1,000 |
|
|
(61 |
) |
|
707 |
|
Interest payable |
|
694 |
|
|
1,117 |
|
|
1,666 |
|
|
2,309 |
|
Profit on disposal of property, plant and
equipment |
|
(15 |
) |
|
(86 |
) |
|
(16 |
) |
|
(86 |
) |
Stock-based compensation charge |
|
968 |
|
|
1,117 |
|
|
1,898 |
|
|
2,233 |
|
Facility fee amortized |
|
509 |
|
|
76 |
|
|
578 |
|
|
164 |
|
(Increase) Decrease in accounts receivable, pre-funded
social welfare grants receivable and finance loans receivable |
|
(37,977 |
) |
|
(5,061 |
) |
|
(61,078 |
) |
|
831 |
|
Increase in inventory |
|
(2,853 |
) |
|
(6,250 |
) |
|
(1,842 |
) |
|
(7,209 |
) |
Decrease in accounts payable and other payables |
|
(4,883 |
) |
|
(4,939 |
) |
|
(13,551 |
) |
|
(6,288 |
) |
(Decrease) increase in taxes payable |
|
(5,559 |
) |
|
(6,032 |
) |
|
1,362 |
|
|
(594 |
) |
Decrease in deferred taxes |
|
(691 |
) |
|
(916 |
) |
|
(1,878 |
) |
|
(2,932 |
) |
|
Net cash (used in) provided by operating activities |
|
(27,248 |
) |
|
(6,920 |
) |
|
(28,924 |
) |
|
18,809 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
(6,845 |
) |
|
(5,597 |
) |
|
(12,461 |
) |
|
(12,050 |
) |
Proceeds from disposal of property, plant and
equipment |
|
1,953 |
|
|
251 |
|
|
2,001 |
|
|
356 |
|
Acquisitions, net of cash acquired |
|
- |
|
|
(230 |
) |
|
- |
|
|
(2,143 |
) |
Repayment of loan by equity-accounted investment |
|
- |
|
|
- |
|
|
- |
|
|
3 |
|
Proceeds from maturity of investments related to
insurance business |
|
- |
|
|
- |
|
|
- |
|
|
545 |
|
Other investing activities |
|
- |
|
|
- |
|
|
(1 |
) |
|
- |
|
Net change in settlement assets |
|
204,730 |
|
|
(72,835 |
) |
|
256,503 |
|
|
(12,056 |
) |
|
Net cash provided by (used in) investing activities |
|
199,838 |
|
|
(78,411 |
) |
|
246,042 |
|
|
(25,345 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings obtained |
|
71,605 |
|
|
- |
|
|
71,605 |
|
|
- |
|
Repayment of long-term borrowings |
|
(87,008 |
) |
|
(7,307 |
) |
|
(87,008 |
) |
|
(7,307 |
) |
Payment of facility fee |
|
(872 |
) |
|
- |
|
|
(872 |
) |
|
- |
|
Proceeds from bank overdraft |
|
24,580 |
|
|
- |
|
|
24,580 |
|
|
- |
|
Acquisition of interests in KSNET |
|
(1,968 |
) |
|
- |
|
|
(1,968 |
) |
|
- |
|
Proceeds from issue of common stock |
|
- |
|
|
- |
|
|
- |
|
|
240 |
|
Net change in settlement obligations |
|
(204,730 |
) |
|
72,835 |
|
|
(256,503 |
) |
|
12,056 |
|
|
Net cash (used in) provided by financing activities |
|
(198,393 |
) |
|
65,528 |
|
|
(250,166 |
) |
|
4,989 |
|
Effect of exchange rate changes on cash |
|
495 |
|
|
375 |
|
|
1,745 |
|
|
540 |
|
Net decrease in cash and cash equivalents |
|
(25,308 |
) |
|
(19,428 |
) |
|
(31,303 |
) |
|
(1,007 |
) |
Cash and cash equivalents - beginning of period |
|
47,670 |
|
|
57,544 |
|
|
53,665 |
|
|
39,123 |
|
Cash and cash equivalents - end of period |
$ |
22,362 |
|
$ |
38,116 |
|
$ |
22,362 |
|
$ |
38,116 |
|
|
Net 1 UEPS Technologies Inc. |
|
Attachment A |
|
Operating segment revenue, operating income and
operating margin: |
|
Three months ended December 31, 2013 and 2012 and
September 30, 2013 |
|
Change - actual |
|
Change - constant exchange rate(1) |
|
|
|
|
|
|
|
|
|
|
Q2 '14 |
|
Q2 '14 |
|
Q2 '14 |
|
Q2 '14 |
|
|
|
|
|
|
|
|
|
|
vs |
|
vs |
|
vs |
|
vs |
Key segmental data, in $ '000, |
Q2 '14 |
|
|
|
Q2 '13 |
|
|
Q1 '14 |
|
Q2'13 |
|
Q1 '14 |
|
Q2'13 |
|
Q1 '14 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$ |
72,237 |
|
$ |
|
60,764 |
|
|
$ |
63,032 |
|
19 |
% |
|
15 |
% |
|
38 |
% |
|
16 |
% |
|
|
International transaction-based activities |
|
37,288 |
|
|
|
33,113 |
|
|
|
36,817 |
|
13 |
% |
|
1 |
% |
|
31 |
% |
|
3 |
% |
|
|
Smart card accounts |
|
11,237 |
|
|
|
8,219 |
|
|
|
11,329 |
|
37 |
% |
|
(1 |
%) |
|
59 |
% |
|
1 |
% |
|
|
Financial services |
|
6,199 |
|
|
|
1,448 |
|
|
|
2,427 |
|
328 |
% |
|
155 |
% |
|
398 |
% |
|
159 |
% |
|
|
Hardware, software and related technology sales |
|
10,322 |
|
|
|
7,898 |
|
|
|
9,889 |
|
31 |
% |
|
4 |
% |
|
52 |
% |
|
6 |
% |
|
|
|
|
Total consolidated revenue |
$ |
137,283 |
|
|
$ |
111,442 |
|
|
$ |
123,494 |
|
23 |
% |
|
11 |
% |
|
43 |
% |
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
$ |
13,398 |
|
|
$ |
1,933 |
|
|
$ |
13,282 |
|
593 |
% |
|
1 |
% |
|
706 |
% |
|
2 |
% |
|
|
|
Operating income (loss) excluding amortization |
|
13,916 |
|
|
|
3,398 |
|
|
|
13,808 |
|
310 |
% |
|
1 |
% |
|
376 |
% |
|
2 |
% |
|
|
|
Amortization of intangible assets |
|
(518 |
) |
|
|
(1,465 |
) |
|
|
(526 |
) |
(65 |
%) |
|
(2 |
%) |
|
(59 |
%) |
|
0 |
% |
|
|
International transaction-based activities |
|
1,365 |
|
|
|
202 |
|
|
|
2,051 |
|
576 |
% |
|
(33 |
%) |
|
685 |
% |
|
(32 |
%) |
|
|
|
Operating income excluding amortization |
|
4,883 |
|
|
|
3,515 |
|
|
|
5,200 |
|
39 |
% |
|
(6 |
%) |
|
61 |
% |
|
(5 |
%) |
|
|
|
Amortization of intangible assets |
|
(3,518 |
) |
|
|
(3,313 |
) |
|
|
(3,149 |
) |
6 |
% |
|
12 |
% |
|
23 |
% |
|
13 |
% |
|
|
Smart card accounts |
|
3,203 |
|
|
|
2,342 |
|
|
|
3,228 |
|
37 |
% |
|
(1 |
%) |
|
59 |
% |
|
1% |
|
|
|
Financial services |
|
1,727 |
|
|
|
1,048 |
|
|
|
56 |
|
65 |
% |
|
nm |
|
|
92 |
% |
|
nm |
|
|
|
Hardware, software and related technology sales |
|
1,592 |
|
|
|
795 |
|
|
|
2,948 |
|
100 |
% |
|
(46 |
%) |
|
133 |
% |
|
(45 |
%) |
|
|
|
Operating income (loss) excluding amortization |
|
1,663 |
|
|
|
878 |
|
|
|
3,021 |
|
89 |
% |
|
(45 |
%) |
|
120 |
% |
|
(44 |
%) |
|
|
|
Amortization of intangible assets |
|
(71 |
) |
|
|
(83 |
) |
|
|
(73 |
) |
(14 |
%) |
|
(3 |
%) |
|
(1 |
%) |
|
(1 |
%) |
|
|
Corporate/ Eliminations |
|
(2,483 |
) |
|
|
(1,348 |
) |
|
|
(5,165 |
) |
84 |
% |
|
(52 |
%) |
|
114 |
% |
|
(51 |
%) |
|
|
|
Total operating income (loss) |
$ |
18,802 |
|
|
$ |
4,972 |
|
|
$ |
16,400 |
|
278 |
% |
|
15 |
% |
|
340 |
% |
|
16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
|
19 |
% |
|
|
3 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
International transaction-based activities |
|
4 |
% |
|
|
1 |
% |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
International transaction-based activities excluding
amortization |
|
13 |
% |
|
|
11 |
% |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Smart card accounts |
|
29 |
% |
|
|
28 |
% |
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial services |
|
28 |
% |
|
|
72 |
% |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware, software and related technology sales |
|
15 |
% |
|
|
10 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall operating margin |
|
14 |
% |
|
|
4 |
% |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
(1) - This information shows what the change in these items
would have been if the USD/ ZAR exchange rate that prevailed during
the second quarter of fiscal 2014 also prevailed during the second
quarter of fiscal 2013 and the first quarter of fiscal 2014. |
Six months ended December 31, 2013 and 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change - |
|
|
|
|
|
|
|
|
|
|
|
constant |
|
|
|
|
|
|
|
|
|
Change - |
|
exchange |
|
|
|
|
|
|
|
|
|
actual |
|
rate(1) |
|
|
|
|
|
|
|
|
|
F2014 |
|
F2014 |
|
|
|
|
|
|
|
|
|
vs |
|
vs |
|
Key segmental data, in '000, except margins |
|
F2014 |
|
|
F2013 |
|
|
F2013 |
|
F2013 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
|
$ |
135,269 |
|
|
$ |
122,128 |
|
|
11 |
% |
32 |
% |
|
|
International transaction-based activities |
|
|
74,105 |
|
|
|
64,762 |
|
|
14 |
% |
36 |
% |
|
|
Smart card accounts |
|
|
22,566 |
|
|
|
16,583 |
|
|
36 |
% |
62 |
% |
|
|
Financial services |
|
|
8,626 |
|
|
|
2,832 |
|
|
205 |
% |
263 |
% |
|
|
Hardware, software and related technology sales |
|
|
20,211 |
|
|
|
16,819 |
|
|
20 |
% |
43 |
% |
|
|
|
Total consolidated revenue |
|
$ |
260,777 |
|
|
$ |
223,124 |
|
|
17 |
% |
39 |
% |
|
Consolidated operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
|
$ |
26,680 |
|
|
$ |
8,333 |
|
|
220 |
% |
282 |
% |
|
|
|
Operating income excluding amortization |
|
|
27,724 |
|
|
|
11,264 |
|
|
146 |
% |
193 |
% |
|
|
|
Amortization of intangible assets |
|
|
(1,044 |
) |
|
|
(2,931 |
) |
|
(64 |
%) |
(58 |
%) |
|
|
International transaction-based activities |
|
|
3,416 |
|
|
|
31 |
|
|
nm |
|
nm |
|
|
|
|
Operating income excluding amortization |
|
|
10,024 |
|
|
|
6,499 |
|
|
54 |
% |
84 |
% |
|
|
|
Amortization of intangible assets |
|
|
(6,608 |
) |
|
|
(6,468 |
) |
|
2 |
% |
22 |
% |
|
|
Smart card accounts |
|
|
6,431 |
|
|
|
4,727 |
|
|
36 |
% |
62 |
% |
|
|
Financial services |
|
|
1,783 |
|
|
|
2,145 |
|
|
(17 |
%) |
(1 |
%) |
|
|
Hardware, software and related technology sales |
|
|
4,540 |
|
|
|
2,779 |
|
|
63 |
% |
95 |
% |
|
|
|
Operating income excluding amortization |
|
|
4,683 |
|
|
|
2,948 |
|
|
59 |
% |
89 |
% |
|
|
|
Amortization of intangible assets |
|
|
(143 |
) |
|
|
(169 |
) |
|
(15 |
%) |
1 |
% |
|
|
Corporate/ Eliminations |
|
|
(7,648 |
) |
|
|
(3,718 |
) |
|
106 |
% |
145 |
% |
|
|
|
Total operating income |
|
$ |
35,202 |
|
|
$ |
14,297 |
|
|
146 |
% |
193 |
% |
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based activities |
|
|
20 |
% |
|
|
7 |
% |
|
|
|
|
|
|
|
International transaction-based activities |
|
|
5 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
International transaction-based activities excluding
amortization |
|
|
14 |
% |
|
|
10 |
% |
|
|
|
|
|
|
|
Smart card accounts |
|
|
28 |
% |
|
|
29 |
% |
|
|
|
|
|
|
|
Financial services |
|
|
21 |
% |
|
|
76 |
% |
|
|
|
|
|
|
|
Hardware, software and related technology sales |
|
|
22 |
% |
|
|
17 |
% |
|
|
|
|
|
|
|
Overall operating margin |
|
|
13 |
% |
|
|
6 |
% |
|
|
|
|
|
|
(1) - This information shows what the change in these items
would have been if the USD/ ZAR exchange rate that prevailed during
the first half of fiscal 2014 also prevailed during the first half
of fiscal 2013. |
|
|
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 December 31, 2013 and 2012 |
|
|
|
|
|
|
EPS, |
|
|
|
|
|
|
EPS, |
|
Net income |
|
basic |
|
|
Net income |
|
basic |
|
(USD'000) |
|
(USD) |
|
|
(ZAR'000) |
|
(ZAR) |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
GAAP |
12,749 |
|
2,629 |
|
0.28 |
|
0.06 |
|
|
129,519 |
|
22,979 |
|
2.83 |
|
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net. |
3,104 |
|
3,640 |
|
|
|
|
|
|
31,530 |
|
31,817 |
|
|
|
|
|
Stock-based compensation charge |
968 |
|
1,117 |
|
|
|
|
|
|
9,834 |
|
9,763 |
|
|
|
|
|
Facility fees for KSNET debt |
509 |
|
76 |
|
|
|
|
|
|
5,171 |
|
664 |
|
|
|
|
|
DOJ and SEC investigations- related expenses |
1,068 |
|
561 |
|
|
|
|
|
|
10,850 |
|
4,903 |
|
|
|
|
|
Acquisition-related costs |
- |
|
28 |
|
|
|
|
|
|
- |
|
245 |
|
|
|
|
|
|
Fundamental |
18,398 |
|
8,051 |
|
0.40 |
|
0.18 |
|
|
186,904 |
|
70,371 |
|
4.08 |
|
1.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31, 2013 and 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
EPS, basic |
|
|
Net income |
|
EPS, basic |
|
(USD'000) |
|
(USD) |
|
|
(ZAR'000) |
|
(ZAR) |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
24,345 |
|
9,373 |
|
0.53 |
|
0.21 |
|
|
245,417 |
|
79,268 |
|
5.37 |
|
1.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net. |
5,889 |
|
7,155 |
|
|
|
|
|
|
59,367 |
|
60,518 |
|
|
|
|
|
Stock-based compensation charge |
1,898 |
|
2,233 |
|
|
|
|
|
|
19,134 |
|
18,885 |
|
|
|
|
|
Facility fees for KSNET debt |
578 |
|
164 |
|
|
|
|
|
|
5,827 |
|
1,387 |
|
|
|
|
|
DOJ and SEC investigations- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related expenses |
2,464 |
|
561 |
|
|
|
|
|
|
24,839 |
|
4,744 |
|
|
|
|
|
Acquisition-related costs |
- |
|
73 |
|
|
|
|
|
|
- |
|
617 |
|
|
|
|
|
|
Fundamental |
35,174 |
|
19,559 |
|
0.77 |
|
0.43 |
|
|
354,584 |
|
165,419 |
|
7.75 |
|
3.63 |
|
|
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 December 31, 2013 and 2012 |
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
Net income (USD'000) |
|
12,749 |
|
|
2,629 |
|
Adjustments: |
|
|
|
|
|
|
|
Profit on sale of property, plant and equipment |
|
(15 |
) |
|
(86 |
) |
|
Tax effects on above |
|
4 |
|
|
24 |
|
Net income used to calculate headline earnings
(USD'000) |
|
12,738 |
|
|
2,567 |
|
Weighted average number of shares used to calculate net
income per share basic earnings and headline earnings per share
basic earnings ('000) |
|
45,776 |
|
|
45,545 |
|
Weighted average number of shares used to calculate net
income per share diluted earnings and headline earnings per share
diluted earnings ('000) |
|
46,176 |
|
|
45,597 |
|
Headline earnings per share: |
|
|
|
|
|
|
|
Basic, in USD |
|
0.28 |
|
|
0.06 |
|
|
Diluted, in USD |
|
0.28 |
|
|
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended December 31, 2013 and 2012 |
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
2012 |
|
Net income (USD'000) |
|
24,345 |
|
|
9,373 |
|
Adjustments: |
|
|
|
|
|
|
|
Profit on sale of property, plant and equipment |
|
(16 |
) |
|
(86 |
) |
|
Tax effects on above |
|
4 |
|
|
24 |
|
Net income used to calculate headline earnings
(USD'000) |
|
24,333 |
|
|
9,311 |
|
Weighted average number of shares used to calculate net
income per share basic earnings and headline earnings per share
basic earnings ('000) |
|
45,725 |
|
|
45,530 |
|
Weighted average number of shares used to calculate net
income per share diluted earnings and headline earnings per share
diluted earnings ('000) |
|
45,919 |
|
|
45,593 |
|
Headline earnings per share: |
|
|
|
|
|
|
|
Basic, in USD |
|
0.53 |
|
|
0.20 |
|
|
Diluted, in USD |
|
0.52 |
|
|
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of the denominator for headline diluted
earnings per share |
|
|
|
Q2 '14 |
|
Q2 '13 |
|
F2014 |
|
F2013 |
|
|
Basic weighted-average common shares outstanding and
unvested restricted shares expected to vest under GAAP |
|
45,776 |
|
45,545 |
|
45,725 |
|
45,530 |
|
|
Effect of dilutive securities under GAAP |
|
400 |
|
52 |
|
194 |
|
63 |
|
|
|
Denominator for headline diluted earnings per share |
|
46,176 |
|
45,597 |
|
45,919 |
|
45,593 |
Weighted average
number of shares used to calculate headline earnings per share
diluted represent the denominator for basic weighted-average common
shares outstanding and unvested restricted shares expected to vest
plus the effect of dilutive securities under GAAP. We use this
number of fully-diluted shares outstanding to calculate headline
earnings per share diluted because we do not use the two-class
method to calculate headline earnings per share diluted.
Investor Relations Contact:Net 1 UEPS Technologies, Inc.Dhruv
ChopraManaging Director+1 917-767-6722dchopra@net1.com
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