UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4,
2016
NET 1 UEPS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Florida |
000-31203 |
98-0171860 |
| (State or other jurisdiction |
(Commission |
(IRS Employer |
| of incorporation) |
File Number) |
Identification No.) |
President Place, 4th Floor, Cnr. Jan
Smuts Avenue and Bolton Road
Rosebank, Johannesburg, South Africa
(Address of principal executive
offices)
(ZIP Code)
Registrant’s telephone number, including area code:
011-27-11-343-2000
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[ ] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Item 2.02. Results of Operations and Financial
Condition.
The following information is furnished pursuant to Item 2.02,
“Results of Operations and Financial Condition”.
On February 4, 2016, we issued a press release setting forth
our financial results for the second quarter ended December 31, 2015. A copy of
the press release is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| |
NET 1 UEPS TECHNOLOGIES, INC. |
| |
|
| |
|
| Date: February 4, 2016 |
By: /s/ Serge C.P.
Belamant
|
| |
Dr. Serge C.P.
Belamant |
| |
Chief Executive
Officer and Chairman of |
| |
the Board
|
Exhibit 99.1
Net 1 UEPS Technologies, Inc. Reports Second Quarter 2016
Results
JOHANNESBURG, February 4, 2016 – Net 1 UEPS Technologies, Inc.
(Nasdaq: UEPS; JSE: NT1) today released results for the second quarter of fiscal
2016.
| • |
Q2 2016 Revenue of $150.3 million, a
constant currency increase of 23%; |
| |
|
| • |
Q2 2016 FEPS of $0.42, which includes an
adverse impact of $0.09 per share attributable to taxes,
and incremental expenses to expand operations and
infrastructure; |
| |
|
| • |
Net loan book increased 40% from Q1 2016,
and more than 800,000 EPE accounts opened, 800 ATMs deployed and
110 branches opened by January 2016; |
| |
|
| • |
Repurchase of 749,213 shares of Net1 common
stock for approximately $11.2 million. |
Summary Financial Metrics
|
|
|
Three months ended December 31, |
|
|
|
|
|
|
|
|
|
|
% change |
|
|
% change |
|
|
|
|
2015 |
|
|
2014 |
|
|
in USD |
|
|
in ZAR |
|
|
(All figures in USD ‘000s except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
150,281 |
|
|
154,131 |
|
|
(2% |
) |
|
23% |
|
|
GAAP net income |
|
16,658 |
|
|
22,374 |
|
|
(26% |
) |
|
(6% |
) |
|
Fundamental net income (1) |
|
19,619 |
|
|
26,400 |
|
|
(26% |
) |
|
(6% |
) |
|
GAAP earnings per share ($) |
|
0.35 |
|
|
0.48 |
|
|
(26% |
) |
|
(7% |
) |
|
Fundamental earnings per share ($) (1) |
|
0.42 |
|
|
0.57 |
|
|
(26% |
) |
|
(8% |
) |
|
Fully-diluted shares outstanding (‘000’s) |
|
47,400 |
|
|
46,644 |
|
|
2% |
|
|
|
|
|
Average period USD/ ZAR exchange rate |
|
14.12 |
|
|
11.22 |
|
|
26% |
|
|
|
|
|
|
|
Six months ended December 31, |
|
|
|
|
|
|
|
|
|
|
% change |
|
|
% change |
|
|
|
|
2015 |
|
|
2014 |
|
|
in USD |
|
|
in ZAR |
|
|
(All figures in USD ‘000s except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
304,754 |
|
|
310,572 |
|
|
(2% |
) |
|
21% |
|
|
GAAP net income |
|
39,678 |
|
|
46,463 |
|
|
(15% |
) |
|
5% |
|
|
Fundamental net income (1) |
|
46,031 |
|
|
54,522 |
|
|
(16% |
) |
|
4% |
|
|
GAAP earnings per share ($) |
|
0.84 |
|
|
0.99 |
|
|
(15% |
) |
|
5% |
|
|
Fundamental earnings per share ($) (1) |
|
0.98 |
|
|
1.16 |
|
|
(16% |
) |
|
4% |
|
|
Fully-diluted shares outstanding (‘000’s) |
|
47,394 |
|
|
46,990 |
|
|
1% |
|
|
1% |
|
|
Average period USD/ ZAR exchange rate |
|
13.49 |
|
|
10.97 |
|
|
23% |
|
|
|
|
(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 2016 and Q2 2015
results
|
• |
Unfavorable impact from the strengthening of the
U.S. dollar against primary functional currencies: The U.S. dollar
appreciated by 26% against the ZAR and 10% against the KRW during Q2 2016,
which negatively impacted our reported results; |
|
• |
Continued growth in financial inclusion services:
We continued to grow our financial inclusion services offerings
during Q2 2016, which has resulted in higher revenues and operating
income, primarily from more sales of low- margin prepaid airtime and an
increase in transaction fees. The significant growth in our lending book
during December 2015 resulted in a substantial increase in the allowance
for doubtful finance loans receivable, in accordance with our policy of
providing for doubtful finance loans receivable at the time that a loan is
originated; |
|
• |
Ongoing contributions from EPE and Smart Life and
expansion of branch network: Our EPE and Smart Life offerings
contributed to an increase in revenue in ZAR, as well as an associated
increase in establishment costs for our branch network; |
| |
• |
Increased contribution by KSNET: Our
results were positively impacted by growth in our Korean operations; and
|
|
• |
Tax impact of dividends from South African
subsidiary: Our income tax expense includes approximately $2.4
million related to the tax impact, including withholding taxes, resulting
from distributions from our South African subsidiary during October 2015,
which helped reduce the impact of a weakened ZAR on our reported cash
balances. The conversion of a significant portion of our ZAR cash reserves
to USD negatively impacted our interest income due the material difference
between ZAR and USD deposit rates. |
Comments and Outlook
“We continue to see tangible gains in the execution of our
strategic plan, which includes the scaling up of our newer growth initiatives and
the globalization of our business activities,” said Dr. Serge Belamant, Chairman
and CEO of Net1. “EasyPay Everywhere, financial services and ZAZOO all delivered
in-line or above our expectations, supported by consistent operating
contributions from our established and recurring mature businesses, despite
the ongoing currency and macroeconomic headwinds. Our pipeline of local and
international opportunities for both our card-centric and mobile-centric
projects augurs well for the sustained organic growth of our business,” he
concluded.
“Our underlying business fundamentals and momentum remain
strong,” said Herman Kotze, Chief Financial Officer of Net1. “We converted a
meaningful portion of our South African cash reserves to USD in order to limit
the impact of the sudden and volatile depreciation of the ZAR during Q2 2016.
This resulted in withholding and other tax-related adjustments, as well as lower tax-effected interest income due to the differential
between ZAR and USD deposit rates, of approximately
$2.4 million, for a decrease of approximately $0.06 to our basic and diluted
EPS. Additionally, the 40% sequential growth in our lending book during Q2 2016,
adversely impacted EPS by $0.02 per share as a result our provisioning policy to
provide an allowance on loan origination. We will only recognize the
revenue from these new loans from Q3 2016. Finally, EPS was $0.01 per share
lower due to the ongoing incremental costs incurred to expand our branch
network,” he added.
“Therefore for fiscal 2016, we now expect fundamental earnings
per share of at least $2.45, which includes a full year impact of $0.12 per
share related to taxes and forgone interest income as a
result of the distribution of our South African cash reserves to our U.S.
parent. Our fiscal 2016 guidance once again also assumes a constant currency
base of ZAR11.43/ $1 and a share count of 46.7 million shares,” he concluded.
Share buybacks and replenishment of repurchase authorization
back to $100 million
During Q2 2016, we acquired 749,213 shares of Net1 common stock
for approximately $11.2 million. On February 3, 2016, our Board of Directors
replenished the authorization to repurchase back to up to $100 million of common
stock. The authorization does not have an expiration date. The share repurchase
authorization will be used at management’s discretion, subject to limitations
imposed by SEC Rule 10b-18 and other legal requirements and subject to price and
other internal limitations established by our Board of Directors. Repurchases
will be funded from our available cash reserves. Share repurchases may be made
through open market purchases, privately negotiated transactions, or both. There
can be no assurance that we will purchase any shares or any particular number of
shares. The authorization may be suspended, terminated or modified at any time
for any reason, including market conditions, the cost of repurchasing shares,
liquidity and other factors that management deems appropriate.
Results of Operations by Segment and Liquidity
Our operating metrics will be updated and posted on our website
(www.net1.com).
South African transaction processing
Segment revenue was $52.8 million in Q2 2016, down 10% compared with Q2 2015 in
USD, but 14% higher on a constant currency basis. In ZAR, the increase in
segment revenue [and operating income] was due to higher EPE revenue as a result
of increased ATM transactions, more low-margin transaction fees generated from
card holders using the South African National Payment System and an increase in
the number of social welfare grants distributed, offset by fewer inter-segment
transaction processing activities. Our operating income margin for Q2 2016 and
2015 was 23% and 22%, respectively, and was higher primarily due to higher EPE
revenue as a result of increased ATM transactions, an increase in the number of
beneficiaries paid in fiscal 2016 and a modest increase in the margin of
transaction fees generated from cardholders using the South African National
Payment System, partially offset by annual salary increases granted to our South
African employees.
International transaction processing
Segment revenue was $40.8 million in Q2 2016, up 1% compared
with Q2 2015 in USD, and up 27% on a constant currency basis. Operating income
during Q2 2016 was lower due to an increase in depreciation expenses at KSNET
and ongoing ZAZOO start-up costs in the UK and India, but was partially offset
by increase in revenue contribution from KSNET and a positive contribution by
XeoHealth. Operating income and margin for Q2 fiscal 2015, was negatively
impacted by ad hoc incentives provided to staff due to the strong operating
performance of KSNET during calendar 2014. Operating income margin for Q2 fiscal
2016 and 2015 was 10% and 14%, respectively.
Financial inclusion and applied technologies
Segment revenue was $65.7 million in Q2 2016, down 3% compared
with Q2 2015 in USD and up 22% on a constant currency basis. Financial inclusion
and applied technologies revenue and operating income increased primarily due to
higher prepaid airtime and other value-added services sales, more ad hoc
terminal and card sales and, in ZAR, an increase in inter-segment revenues,
offset by lower lending service fees. Operating income for the second quarter of
fiscal 2016, was adversely impacted by an increase in our allowance for doubtful
finance loans receivable resulting from a commensurate increase in our lending
book in the last lending cycle of calendar 2015 and establishment costs for
Smart Life and expansion of our branch network.
Driven by our expanded branch and ATM infrastructure, we
experienced an increase in our lending book towards the end of Q2 2016. We
expect this growth in our lending book to translate to higher revenue and
operating income during the third quarter of fiscal 2016.
Operating income margin for the Financial inclusion and applied
technologies segment was 21% and 26%, respectively, during Q2 2016 and 2015, and
has decreased primarily due to the increase in our allowance for doubtful
finance loans receivable, the sale of more low-margin prepaid airtime and
establishment costs for Smart Life, expansion of our branch network and annual
salary increases for our South African employees.
Corporate/eliminations
In USD, our corporate expenses have decreased primarily due to
the impact of the stronger USD on goods and services procured in other
currencies, primarily the ZAR, and lower amortization costs, partially offset by
modest increases in USD denominated goods and services purchased from third
parties and directors’ fees.
Cash flow and liquidity
At December 31, 2015, we had cash and cash equivalents of
$101.4 million, down from $117.6 million at June 30, 2015. The decrease in our
cash balances from June 30, 2015, was primarily due to the strengthening of the
U.S. dollar against our primary functional currencies, repurchase of shares of
our common stock, growth in our lending book, provisional tax payments and
capital expenditures, offset by the expansion of all of our core businesses.
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 lending book, offset by cash inflows from
improved trading activity during fiscal 2016. Capital expenditures for Q2 2016
and 2015 were $9.9 million and $9.1 million, respectively, and have increased
primarily due to the acquisition of more payment processing terminals in South
Korea and ATMs in South Africa.
Use of Non-GAAP Measures
US securities laws require that when we publish any non-GAAP
measures, we disclose the reason for using the non-GAAP measure and provide
reconciliation to the directly comparable GAAP measure. The presentation of
fundamental net income and fundamental earnings per share and headline earnings
per share are non-GAAP measures.
Fundamental net income and fundamental earnings per share
Fundamental net income and earnings per share is GAAP net
income and earnings per share adjusted for (1) the amortization of
acquisition-related intangible assets (net of deferred taxes), (2) stock-based
compensation charges and (3) unusual non-recurring items, including the
amortization of KSNET debt facility fees and US government
investigations-related and US lawsuit expenses. 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. 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 2016 results on
February 5, 2016, at 8:00 Eastern Time. To participate in the call, dial
1-855-481-5362 (US and Canada), 0808-162-4061 (U.K. only) or 0-800-200-648
(South Africa only) ten minutes prior to the start of the call. Callers should
request “Net1 call” upon dial-in. The call will also be webcast on the Net1
homepage, www.net1.com. Please click on the webcast link at least ten minutes
prior to the call. A webcast of the call will be available for replay on the
Net1 website through February 28, 2016.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that
leverage its Universal Electronic Payment System (“UEPS”) or utilize its
proprietary mobile technologies. The Company operates market-leading payment
processors in South Africa and the Republic of Korea. Through Transact24, Net1
now offers debit, credit and prepaid processing and issuing services for Visa,
MasterCard and ChinaUnionPay in China and other territories across Asia-Pacific,
Europe and Africa, and the United States.
UEPS permits the Company to facilitate biometrically secure,
real-time electronic transaction processing to unbanked and under-banked
populations of developing economies around the world in an online or offline
environment. Net1’s UEPS/EMV solution is interoperable with global EMV standards
that seamlessly enable access to all the UEPS functionality in a traditional EMV
environment. In addition to payments, UEPS can be used for banking, healthcare
management, payroll, remittances, voting and identification.
Net1’s mobile technologies include its proprietary mobile
payments solution - MVC, which offers secure mobile-based payments, as well as
mobile banking and prepaid value-added services in developed and emerging
countries. The Company intends to deploy its varied mobile solutions through its
ZAZOO business unit, which is an aggregation of innovative technology companies
and is based in the United Kingdom.
Net1 has a primary listing on the NASDAQ and a secondary
listing on the Johannesburg Stock Exchange.
Forward-Looking Statements
This announcement contains forward-looking statements that
involve known and unknown risks and uncertainties. A discussion of various
factors that cause our actual results, levels of activity, performance or
achievements to differ materially from those expressed in such forward-looking
statements are included in our filings with the Securities and Exchange
Commission. We undertake no obligation to revise any of these statements to
reflect future events.
Investor Relations Contact:
Dhruv Chopra
Head of
Investor Relations
Phone: +1 917-767-6722
Email: dchopra@net1.com
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed
Consolidated Statements of Operations
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
|
December 31, |
|
|
December
31, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
(In thousands,
except per share data) |
|
|
(In thousands,
except per share data) |
|
|
|
|
|
|
|
|
|
|
REVENUE |
$ |
150,281
|
|
$ |
154,131 |
|
$ |
304,754
|
|
$ |
310,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold, IT processing, servicing and support |
|
78,668 |
|
|
71,774 |
|
|
156,050 |
|
|
146,180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administration |
|
36,248 |
|
|
41,385 |
|
|
72,009 |
|
|
80,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
10,586 |
|
|
10,157 |
|
|
20,701 |
|
|
20,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
24,779 |
|
|
30,815 |
|
|
55,994 |
|
|
63,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME |
|
3,664 |
|
|
3,587 |
|
|
7,939 |
|
|
7,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
1,054 |
|
|
1,107 |
|
|
2,028 |
|
|
2,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX
EXPENSE |
|
27,389 |
|
|
33,295 |
|
|
61,905 |
|
|
69,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
10,593 |
|
|
10,203 |
|
|
21,490 |
|
|
21,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE EARNINGS
FROM EQUITY-ACCOUNTED INVESTMENTS |
|
16,796 |
|
|
23,092 |
|
|
40,415 |
|
|
47,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS |
|
388 |
|
|
76 |
|
|
576 |
|
|
168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
17,184 |
|
|
23,168 |
|
|
40,991 |
|
|
47,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS NET INCOME ATTRIBUTABLE
TO NON-CONTROLLING INTEREST |
|
526 |
|
|
794 |
|
|
1,313 |
|
|
1,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
NET1 |
$ |
16,658 $ |
|
|
22,374 |
|
$ |
39,678 $ |
|
|
46,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share, in
United States dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
attributable to
Net1 shareholders |
$ |
0.35 |
|
$ |
0.48 |
|
$ |
0.84 |
|
$ |
0.99 |
|
|
Diluted
earnings attributable to Net1 shareholders
|
$ |
0.35 |
|
$ |
0.48 |
|
$ |
0.84 |
|
$ |
0.99 |
|
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
Unaudited |
|
|
(A) |
|
|
|
|
December 31, |
|
|
June
30, |
|
|
|
|
2015 |
|
|
2015 |
|
|
|
|
(In thousands, except share data) |
|
|
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
101,417
|
|
$ |
117,583
|
|
|
Pre-funded social welfare grants receivable |
|
2,503 |
|
|
2,306 |
|
|
Accounts
receivable, net of allowances of – December: $3,407; June: $1,956 |
|
149,005 |
|
|
148,768 |
|
|
Finance
loans receivable, net of allowances of – December: $4,555; June: $4,227
|
|
43,036 |
|
|
40,373 |
|
|
Inventory
|
|
10,636 |
|
|
12,979 |
|
|
Deferred
income taxes |
|
4,937 |
|
|
7,298 |
|
|
Total current assets before settlement assets |
|
311,534 |
|
|
329,307 |
|
|
Settlement assets |
|
321,812 |
|
|
661,916 |
|
|
Total current assets |
|
633,346 |
|
|
991,223 |
|
|
PROPERTY, PLANT AND
EQUIPMENT, net of accumulated depreciation of – December: $95,537;
June: $94,014 |
|
53,216 |
|
|
52,320 |
|
|
EQUITY-ACCOUNTED INVESTMENTS
|
|
14,626 |
|
|
14,329 |
|
|
GOODWILL |
|
152,312 |
|
|
166,437 |
|
|
INTANGIBLE ASSETS, net of
accumulated amortization of - December: $83,694; June: $84,668 |
|
38,686 |
|
|
47,124 |
|
|
OTHER LONG-TERM ASSETS,
including reinsurance assets |
|
11,286 |
|
|
14,997 |
|
|
TOTAL
ASSETS |
|
903,472 |
|
|
1,286,430 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Accounts
payable |
|
13,541 |
|
|
21,453 |
|
|
Other
payables |
|
43,125 |
|
|
45,595 |
|
|
Current
portion of long-term borrowings |
|
8,503 |
|
|
8,863 |
|
|
Income
taxes payable |
|
3,092 |
|
|
6,287 |
|
|
Total current liabilities before settlement
obligations |
|
68,261 |
|
|
82,198 |
|
|
Settlement obligations |
|
321,812 |
|
|
661,916 |
|
|
Total current liabilities |
|
390,073 |
|
|
744,114 |
|
|
DEFERRED INCOME TAXES |
|
8,483 |
|
|
10,564 |
|
|
LONG-TERM BORROWINGS |
|
50,091 |
|
|
50,762 |
|
|
OTHER LONG-TERM LIABILITIES,
including insurance policy liabilities |
|
1,321 |
|
|
2,205 |
|
|
TOTAL
LIABILITIES |
|
449,968 |
|
|
807,645 |
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
COMMON
STOCK |
|
|
|
|
|
|
|
Authorized: 200,000,000 with $0.001 par value; Issued and outstanding shares, net of treasury - December: 46,573,489; June: 46,679,565 |
|
64 |
|
|
64 |
|
|
PREFERRED
STOCK |
|
|
|
|
|
|
|
Authorized shares: 50,000,000 with $0.001 par value; Issued and outstanding shares, net of treasury: December: -; June: - |
|
- |
|
|
- |
|
|
ADDITIONAL PAID-IN-CAPITAL |
|
219,416 |
|
|
213,896 |
|
|
TREASURY
SHARES, AT COST: December: 18,806,441; June: 18,057,228 |
|
(225,706 |
) |
|
(214,520 |
) |
|
ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
(199,324 |
) |
|
(139,181 |
) |
|
RETAINED
EARNINGS |
|
657,546 |
|
|
617,868 |
|
|
TOTAL NET1 EQUITY |
|
451,996 |
|
|
478,127 |
|
|
NON-CONTROLLING INTEREST |
|
1,508 |
|
|
658 |
|
|
TOTAL EQUITY |
|
453,504 |
|
|
478,785 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
903,472 |
|
$ |
1,286,430 |
|
(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, |
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
(In thousands) |
|
|
(In thousands) |
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
17,184 |
|
$ |
23,168 |
|
$ |
40,991 |
|
$ |
47,515 |
|
|
Depreciation and amortization |
|
10,586 |
|
|
10,157 |
|
|
20,701 |
|
|
20,331 |
|
|
Earnings from
equity-accounted investments |
|
(388 |
)
|
|
(76 |
)
|
|
(576 |
)
|
|
(168 |
)
|
|
Fair value adjustments |
|
1,567 |
|
|
(234 |
) |
|
3,000 |
|
|
179 |
|
|
Interest payable |
|
645 |
|
|
140 |
|
|
1,354 |
|
|
1,299 |
|
|
Loss (Profit) on disposal of property, plant
and equipment |
|
11 |
|
|
(109 |
) |
|
(84 |
) |
|
(231 |
) |
|
Stock-based compensation
charge |
|
965 |
|
|
1,035 |
|
|
1,691 |
|
|
1,951 |
|
|
Facility fee amortized |
|
35 |
|
|
52 |
|
|
69 |
|
|
134 |
|
|
(Increase) Decrease in
accounts receivable, pre-funded social welfare grants receivable and
finance |
|
|
|
|
|
|
|
|
|
|
|
|
|
loans receivable |
|
(13,847 |
) |
|
(7,315 |
) |
|
(31,125 |
) |
|
2,155 |
|
|
Decrease (Increase) in
inventory |
|
776 |
|
|
(622 |
)
|
|
(155 |
)
|
|
(2,745 |
)
|
|
Decrease in accounts payable and other
payables |
|
(5,418 |
) |
|
(1,456 |
) |
|
(2,046 |
) |
|
(12,389 |
) |
|
(Decrease) Increase in taxes
payable |
|
(8,859 |
)
|
|
(9,963 |
)
|
|
(1,035 |
)
|
|
(3,352 |
)
|
|
Increase (Decrease) in deferred taxes |
|
789 |
|
|
(168 |
) |
|
(637 |
) |
|
(558 |
) |
|
Net cash
provided by operating activities |
|
4,046 |
|
|
14,609 |
|
|
32,148 |
|
|
54,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
(9,947 |
) |
|
(9,137 |
) |
|
(20,645 |
) |
|
(18,515 |
) |
|
Proceeds from disposal of
property, plant and equipment |
|
269 |
|
|
373 |
|
|
617 |
|
|
614 |
|
|
Proceeds from sale of business |
|
- |
|
|
- |
|
|
- |
|
|
1,895 |
|
|
Other investing activities
|
|
- |
|
|
(29 |
)
|
|
- |
|
|
(29 |
)
|
|
Net change in settlement assets |
|
264,404 |
|
|
241,652 |
|
|
242,829 |
|
|
198,598 |
|
|
Net cash provided by investing
activities |
|
254,726 |
|
|
232,859 |
|
|
222,801 |
|
|
182,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of treasury stock |
|
(11,186 |
) |
|
- |
|
|
(11,186 |
) |
|
(9,151 |
) |
|
Proceeds from issue of common
stock |
|
- |
|
|
- |
|
|
3,762 |
|
|
989 |
|
|
Long-term borrowings utilized |
|
711 |
|
|
1,081 |
|
|
1,431 |
|
|
2,178 |
|
|
Repayment of long-term
borrowings |
|
- |
|
|
(14,128 |
)
|
|
- |
|
|
(14,128 |
)
|
|
Sale of equity to non-controlling interest
|
|
- |
|
|
- |
|
|
- |
|
|
1,407 |
|
|
Net change in settlement
obligations |
|
(264,404 |
)
|
|
(241,652 |
)
|
|
(242,829 |
)
|
|
(198,598 |
) |
|
Net cash used in financing
activities |
|
(274,879 |
) |
|
(254,699 |
) |
|
(248,822 |
) |
|
(217,303 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
(8,086 |
) |
|
(2,973 |
) |
|
(22,293 |
) |
|
(7,072 |
) |
|
Net (decrease) increase in
cash and cash equivalents |
|
(24,193 |
)
|
|
(10,204 |
)
|
|
(16,166 |
)
|
|
12,309 |
|
|
Cash and cash equivalents – beginning of
period |
|
125,610 |
|
|
81,185 |
|
|
117,583 |
|
|
58,672 |
|
|
Cash and cash equivalents
– end of period |
$ |
101,417 |
|
$ |
70,981 |
|
$ |
101,417 |
|
$ |
70,981 |
|
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating
margin:
Three months ended December 31, 2015 and 2014 and September
30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change –
constant |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change - actual |
|
|
exchange
rate(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 ‘16 |
|
|
Q2 ‘16 |
|
|
Q2 ‘16 |
|
|
Q2 ‘16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
vs |
|
|
vs |
|
|
vs |
|
|
vs |
|
|
Key segmental data, in $ ’000,
|
|
Q2 ‘16 |
|
|
Q2 ‘15 |
|
|
Q1 ‘16 |
|
|
Q2‘15 |
|
|
Q1 ‘16 |
|
|
Q2‘15 |
|
|
Q1 ‘16 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
$ |
52,764 |
|
$ |
58,427 |
|
$ |
55,639 |
|
|
(10% |
) |
|
(5% |
) |
|
14% |
|
|
3% |
|
|
International transaction processing |
|
40,836 |
|
|
40,466 |
|
|
41,229 |
|
|
1% |
|
|
(1% |
) |
|
27% |
|
|
8% |
|
|
Financial inclusion and
applied technologies |
|
65,686 |
|
|
67,531 |
|
|
67,360 |
|
|
(3% |
) |
|
(2% |
) |
|
22% |
|
|
6% |
|
|
Subtotal:
Operating segments |
|
159,286 |
|
|
166,424 |
|
|
164,228 |
|
|
(4% |
) |
|
(3% |
) |
|
20% |
|
|
6% |
|
|
Intersegment eliminations |
|
(9,005 |
) |
|
(12,293 |
) |
|
(9,755 |
) |
|
(27% |
) |
|
(8% |
) |
|
(8% |
) |
|
1% |
|
|
Consolidated revenue
|
$ |
150,281 |
|
$ |
154,131 |
|
$ |
154,473 |
|
|
(2% |
) |
|
(3% |
) |
|
23% |
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
$ |
12,080 |
|
$ |
12,883 |
|
$ |
13,511 |
|
|
(6% |
) |
|
(11% |
) |
|
18% |
|
|
(3% |
) |
|
International transaction processing |
|
4,240 |
|
|
5,743 |
|
|
6,543 |
|
|
(26% |
) |
|
(35% |
) |
|
(7% |
) |
|
(29% |
) |
|
Financial inclusion and
applied technologies |
|
13,519 |
|
|
17,827 |
|
|
16,554 |
|
|
(24% |
) |
|
(18% |
) |
|
(5% |
) |
|
(11% |
) |
|
Subtotal:
Operating segments |
|
29,839 |
|
|
36,453 |
|
|
36,608 |
|
|
(18% |
) |
|
(18% |
) |
|
3% |
|
|
(11% |
) |
|
Corporate/Eliminations |
|
(5,060 |
) |
|
(5,638 |
) |
|
(5,393 |
) |
|
(10% |
) |
|
(6% |
) |
|
13% |
|
|
2% |
|
|
Consolidated operating income |
$ |
24,779 |
|
$ |
30,815 |
|
$ |
31,215 |
|
|
(20% |
) |
|
(21% |
) |
|
1% |
|
|
(14% |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
|
23% |
|
|
22% |
|
|
24% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International transaction processing |
|
10% |
|
|
14% |
|
|
16% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial inclusion and
applied technologies |
|
21% |
|
|
26% |
|
|
25% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating margin |
|
16% |
|
|
20% |
|
|
20% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2016 also prevailed during the second quarter of fiscal
2015 and the first quarter of fiscal 2016.
Six months ended December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
Change – |
|
|
|
|
|
|
|
|
|
|
|
|
|
constant |
|
|
|
|
|
|
|
|
|
|
Change - |
|
|
exchange |
|
|
|
|
|
|
|
|
|
|
actual |
|
|
rate(1) |
|
|
|
|
|
|
|
|
|
|
F2016 |
|
|
F2016 |
|
|
|
|
|
|
|
|
|
|
vs |
|
|
vs |
|
|
Key segmental data, in ’000, except
margins |
|
F2016 |
|
|
F2015 |
|
|
F2015 |
|
|
F2015 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
$ |
108,403 |
|
|
118,679 |
|
|
(9% |
) |
|
12% |
|
|
International transaction processing |
|
82,065 |
|
|
83,670 |
|
|
(2% |
) |
|
21% |
|
|
Financial inclusion and
applied technologies |
|
133,046 |
|
|
132,728 |
|
|
0% |
|
|
23% |
|
|
Subtotal:
Operating segments |
|
323,514 |
|
|
335,077 |
|
|
(3% |
) |
|
19% |
|
|
Intersegment eliminations |
|
(18,760 |
) |
|
(24,505 |
) |
|
(23% |
) |
|
(6% |
) |
|
Consolidated revenue |
$ |
304,754 |
|
|
310,572 |
|
|
(2% |
) |
|
21% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
$ |
25,591 |
|
|
26,522 |
|
|
(4% |
) |
|
19% |
|
|
International transaction processing |
|
10,783 |
|
|
13,092 |
|
|
(18% |
) |
|
1% |
|
|
Financial inclusion and
applied technologies |
|
30,073 |
|
|
35,434 |
|
|
(15% |
) |
|
4% |
|
|
Subtotal:
Operating segments |
|
66,447 |
|
|
75,048 |
|
|
(11% |
) |
|
9% |
|
|
Corporate/Eliminations |
|
(10,453 |
) |
|
(11,108 |
) |
|
(6% |
) |
|
16% |
|
|
Consolidated operating income |
$ |
55,994 |
|
|
63,940 |
|
|
(12% |
) |
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
South African transaction
processing |
|
24% |
|
|
22% |
|
|
|
|
|
|
|
|
International transaction processing |
|
13% |
|
|
16% |
|
|
|
|
|
|
|
|
Financial inclusion and
applied technologies |
|
23% |
|
|
27% |
|
|
|
|
|
|
|
|
Overall
operating margin |
|
18% |
|
|
21% |
|
|
|
|
|
|
|
(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 2016 also prevailed during the first half of fiscal 2015.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income and earnings per share,
basic, to fundamental net income and earnings per share, basic:
Three months ended December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
EPS,
|
|
|
|
|
|
|
|
|
EPS,
|
|
|
|
|
Net income
|
|
|
basic
|
|
|
Net income
|
|
|
basic
|
|
|
|
|
(USD’000) |
|
|
(USD) |
|
|
(ZAR’000) |
|
|
(ZAR) |
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
16,658 |
|
|
22,374 |
|
|
0.35 |
|
|
0.48 |
|
|
235,204
|
|
|
250,737
|
|
|
5.00 |
|
|
5.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net . |
|
1,952 |
|
|
2,930 |
|
|
|
|
|
|
|
|
27,572 |
|
|
32,827 |
|
|
|
|
|
|
|
|
Stock-based compensation
charge |
|
965 |
|
|
1,035 |
|
|
|
|
|
|
|
|
13,625 |
|
|
11,616 |
|
|
|
|
|
|
|
|
Facility
fees for KSNET debt |
|
35 |
|
|
52 |
|
|
|
|
|
|
|
|
494 |
|
|
584 |
|
|
|
|
|
|
|
|
US government
investigations-related and US lawsuit
expenses |
|
9 |
|
|
9 |
|
|
|
|
|
|
|
|
127 |
|
|
101 |
|
|
|
|
|
|
|
|
Fundamental |
|
19,619 |
|
|
26,400 |
|
|
0.42 |
|
|
0.57 |
|
|
277,022 |
|
|
295,865 |
|
|
5.88 |
|
|
6.36 |
|
Six months ended December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
EPS,
|
|
|
|
|
|
|
|
|
EPS,
|
|
|
|
|
Net income
|
|
|
basic
|
|
|
Net income
|
|
|
basic
|
|
|
|
|
(USD’000) |
|
|
(USD) |
|
|
(ZAR’000v) |
|
|
(ZAR) |
|
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
39,678 |
|
|
46,463 |
|
|
0.84 |
|
|
0.99 |
|
|
535,281
|
|
|
509,644
|
|
|
11.39 |
|
|
10.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization, net . |
|
4,460 |
|
|
5,838 |
|
|
|
|
|
|
|
|
60,164 |
|
|
64,036 |
|
|
|
|
|
|
|
|
Stock-based compensation
charge |
|
1,691 |
|
|
1,951 |
|
|
|
|
|
|
|
|
22,813 |
|
|
21,400 |
|
|
|
|
|
|
|
|
Facility
fees for KSNET debt |
|
69 |
|
|
134 |
|
|
|
|
|
|
|
|
931 |
|
|
1,470 |
|
|
|
|
|
|
|
|
US government
investigations- related and US lawsuit
expenses |
|
133 |
|
|
136 |
|
|
|
|
|
|
|
|
1,794 |
|
|
1,492 |
|
|
|
|
|
|
|
|
Fundamental |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,031 |
|
|
54,522 |
|
|
0.98 |
|
|
1.16 |
|
|
620,983 |
|
|
598,042 |
|
|
13.21 |
|
|
12.76 |
|
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, 2015 and 2014
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Net income (USD’000) |
|
16,658 |
|
|
22,374 |
|
|
Adjustments: |
|
|
|
|
|
|
|
Loss
(Profit) on sale of property, plant and equipment |
|
11 |
|
|
(109 |
)
|
|
Tax effects on above |
|
(3 |
) |
|
31 |
|
|
|
|
|
|
|
|
|
|
Net income used to calculate headline
earnings (USD’000) |
|
16,666 |
|
|
22,296 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to
calculate net income per share basic earnings and headline earnings
per share basic earnings (‘000) |
|
47,086 |
|
|
46,519 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to
calculate net income per share diluted earnings and headline earnings
per share diluted earnings (‘000) |
|
47,400 |
|
|
46,644 |
|
|
|
|
|
|
|
|
|
|
Headline earnings per share: |
|
|
|
|
|
|
|
Basic, in
USD |
|
0.35 |
|
|
0.48 |
|
|
Diluted, in USD |
|
0.35 |
|
|
0.48 |
|
Six months ended December 31, 2015 and 2014
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Net income (USD’000) |
|
39,678 |
|
|
46,463 |
|
|
Adjustments: |
|
|
|
|
|
|
|
Profit on
sale of property, plant and equipment |
|
(84 |
)
|
|
(231 |
)
|
|
Tax effects on above |
|
24 |
|
|
65 |
|
|
|
|
|
|
|
|
|
|
Net income used to calculate headline
earnings (USD’000) |
|
39,618 |
|
|
46,297 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to
calculate net income per share basic earnings and headline earnings
per share basic earnings (‘000) |
|
47,007 |
|
|
46,873 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used to
calculate net income per share diluted earnings and headline earnings
per share diluted earnings (‘000) |
|
47,394 |
|
|
46,990 |
|
|
|
|
|
|
|
|
|
|
Headline earnings per share: |
|
|
|
|
|
|
|
Basic, in
USD |
|
0.84 |
|
|
0.99 |
|
|
Diluted, in USD |
|
0.84 |
|
|
0.99 |
|
Calculation of the denominator for headline diluted earnings
per share
|
|
|
Q2 ‘16 |
|
|
Q2 ‘15 |
|
|
F2016 |
|
|
F2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares
outstanding and unvested restricted shares expected to vest under GAAP
|
|
47,086 |
|
|
46,519 |
|
|
47,007 |
|
|
46,873 |
|
|
Effect of dilutive securities
under GAAP |
|
314
|
|
|
125
|
|
|
387
|
|
|
117
|
|
|
Denominator for headline diluted earnings per share |
|
47,400 |
|
|
46,644 |
|
|
47,394 |
|
|
46,990 |
|
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.
Net 1 Ueps Technologies (NASDAQ:UEPS)
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