Net 1 UEPS Technologies, Inc. Reports Third Quarter 2017 Results
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JOHANNESBURG, SOUTH AFRICA -- (Marketwired) -- 05/04/17 --
Net 1 UEPS Technologies, Inc. (NASDAQ: UEPS) (JSE: NT1) today released results for Q3 2017.
- Q3 2017 Revenue of $147.9 million, an increase of 10%, down 8% in constant currency;
- Q3 2017 Fundamental net income of $23.5 million, an increase of 19%, down 1% in constant currency; and
- Q3 2017 FEPS of $0.43, an increase of 0%, which includes a 19% adverse impact related to higher share count.
Summary Financial Metrics
Three months ended March 31,
-----------------------------------
% change % change
2017 2016 in USD in ZAR
-------- -------- -------- --------
(All figures in USD '000s except per
share data)
Revenue 147,944 134,736 10% (8%)
GAAP net income 18,392 18,420 (0%) (17%)
Fundamental net income (1) 23,468 19,787 19% (1%)
GAAP earnings per share ($) 0.34 0.40 (15%) (29%)
Fundamental earnings per share ($) (1) 0.43 0.43 0% (16%)
Fully-diluted shares outstanding
('000's) 54,808 46,430 19%
Average period USD/ ZAR exchange rate 13.22 15.82 (16%)
Nine months ended March 31,
-----------------------------------
% change % change
2017 2016 in USD in ZAR
-------- -------- -------- --------
(All figures in USD '000s except per
share data)
Revenue 455,010 439,490 4% 1%
GAAP net income 61,665 58,098 6% 3%
Fundamental net income (1) 71,859 65,978 9% 6%
GAAP earnings per share ($) 1.15 1.24 (6%) (9%)
Fundamental earnings per share ($) (1) 1.34 1.41 (5%) (8%)
Fully-diluted shares outstanding
('000's) 53,088 47,074 13% 13%
Average period USD/ ZAR exchange rate 13.77 14.17 (3%)
(1) Fundamental net income and earnings per share are non-GAAP measures and are described below under "Use of Non-GAAP Measures -- Fundamental net income and fundamental earnings per share." See Attachment B for a reconciliation of GAAP net income to fundamental net income and earnings per share.
Factors impacting comparability of our Q3 2017 and Q3 2016 results
- Earnings and FEPS dilution impact from issue of additional shares of common stock: Our Q3 2017 fundamental earnings per share was impacted by the weighted average issuance of five million shares of our common stock in February 2017 and 10 million shares in Q4 2016, partially offset by buy backs of 5.5 million shares;
- Favorable impact from the weakening of the U.S. dollar against South African Rand: The U.S. dollar depreciated by 16% against the ZAR during Q3 2017, which positively impacted our reported results;
- Growth in lending and insurance businesses: We continued to experience volume growth and operating efficiencies in our lending and insurance businesses during Q3 2017, which has resulted in an improved contribution to our financial inclusion revenue and operating income;
- Ongoing contributions from EasyPay Everywhere: EPE revenue and operating income growth was driven primarily by ongoing EPE adoption as we further expanded our customer base utilizing our ATM infrastructure;
- Masterpayment expansion costs: Masterpayment incurred additional investment as it grows its staff complement to execute its expansion plan into new markets;
- Regulatory changes in South Korea pertaining to fees on card transactions: The regulations governing the fees that may be charged on card transactions have adversely impacted our revenues and operating income in South Korea;
- Lower prepaid sales resulting from improved security features to our Manje products: The introduction of our new biometric-linking feature adversely impacted the number of transacting users purchasing prepaid products through our mobile channel;
- Higher transaction-related costs in fiscal 2017: We incurred $1.4 million in transaction-related costs pertaining to various acquisition and investment initiatives pursued during Q3 2017;
- Gain on acquisition of T24 during fiscal 2016: We recognized a fair value adjustment gain of $1.9 million related to the acquisition of T24 during Q3 2016. We accounted for T24 as an equity method investment prior to obtaining control and recognized a gain arising from the consolidation and purchase accounting adjustments related to the T24 acquisition; and
- Tax impact of dividends from South African subsidiary in fiscal 2016: Our income tax expense for Q3 2016 includes approximately $2.1 million related to the tax impact, including withholding taxes, resulting from distributions from our South African subsidiary during fiscal 2016.
"The last few months have been challenging, aggravated by the tarnishing of our reputation and questioning of our business practices due to frivolous and unsubstantiated public attacks. Although we devoted a substantial amount of time to manage these issues, we believe that we have made sufficient progress towards the finalization of our South African and international expansion strategy," said Serge Belamant, CEO of Net1. "Consistent with our service delivery track record over the last five years, the distribution of grants in April and May has gone smoothly and without any delay or interruption and we continue to fulfill our obligations in accordance with the Constitutional Court's order. We remain willing to support a smooth transition to SASSA or whomever they determine to be the most suitable service provider when our current contract expires. In the interim, we continue to provide seamless and timely access to grants for beneficiaries and our technology continues to save the South African government an estimated ZAR 2 billion per annum through the identification and removal of fraudulent beneficiaries," he added.
"We intend to shortly commence with the implementation of our strategic plan to accelerate growth, diversification and geographic footprint," added Serge Belamant. "In South Africa we will partner, invest in or acquire the right institutions to expand our addressable market and fuel innovation, which in turn will lead to the creation of new products and business models. Internationally, our UEPS/EMV banking platform will be the cornerstone from which we can service the needs of the developed and developing world, while also providing the bridge between the two," he concluded.
"We expect to make substantial progress towards completion of a number of investment transactions during the last quarter of fiscal 2017, including Blue Label, DNI and Cell C," said Herman Kotze, Chief Financial Officer of Net1. "These transactions will have a limited impact on our full year results and we reaffirm our fundamental earnings per share guidance for fiscal 2017 to be at least $1.69 using a constant currency base of ZAR 14.38/$1, a share count of 54.5 million shares, and a tax rate between 33%-35%," he concluded.
Recent Developments
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 $64.0 million in Q3 2017, up 26% in USD compared with Q3 2016, and up 6% on a constant currency basis. In ZAR, the increase in segment revenue was primarily due to higher EPE transaction revenue as a result of increased usage of our ATMs, increased inter-segment transaction processing activities and a modest increase in the number of social welfare grants distributed. Operating income decreased primarily due to the impact of annual salary increases granted to our South African employees, partially offset by higher EPE transaction revenue as a result of increased usage of our ATMs and a modest increase in the number of social welfare grants distributed.
Our operating income margin for Q3 2017 and 2016 was 24% and 26%, respectively. Our fiscal 2017 margin includes higher EPE revenue, and an increase in the number of beneficiaries paid in Q3 2017, which was partially offset by annual salary increases granted.
- International transaction processing
Segment revenue was $41.5 million in Q3 2017, up 2% in USD compared with Q3 2016, and down 15% on a constant currency basis. In calendar 2016, South Korean regulators introduced specific regulations governing the fees that may be charged on card transactions, as is the case in most other developed economies. These regulations have a direct impact on card issuers in South Korea and consistent with global practices, card issuers have renegotiated their fees with South Korean VAN companies, including KSNET, which has had an adverse impact on KSNET's financial performance.
Segment revenue increased during Q3 2017, primarily due to the inclusion of Masterpayment; however, this growth was partially offset by a lower contribution from KSNET due to the regulatory changes described above. Operating income during Q3 2017 was lower due to lower revenue at KSNET, losses incurred by Masterpayment as it grows its staff complement to execute its expansion plan into new markets, and ongoing ZAZOO start-up costs in the UK and India, which was partially offset by a positive contribution by T24. Operating income margin for Q3 2017 and 2016 was 5% and 12%, respectively.
- Financial inclusion and applied technologies
Segment revenue was $56.9 million in Q3 2017, up 5% in USD compared with Q3 2016 and down 12% on a constant currency basis. In ZAR, Financial inclusion and applied technologies revenue decreased primarily due to fewer prepaid airtime and other value added services sales, as well as fewer ad-hoc terminal sales, partially offset by increased volumes in our lending and insurance businesses, and an increase in inter-segment revenues. Operating income margin for the Financial inclusion and applied technologies segment was 25% and 21% during Q3 fiscal 2017 and 2016, respectively, and has increased primarily due to improved revenues from our lending and insurance businesses and an increase in inter-segment revenues and fewer low margin prepaid product sales, offset by fewer ad hoc terminal and annual salary increases granted to our South African employees.
- Corporate/eliminations
Our corporate expenses have increased primarily due to higher transaction-related expenditures, higher amortization costs and modest increases in U.S. dollar denominated goods and services purchased from third parties and directors' fees. Our corporate expenses for the third quarter of fiscal 2016, includes a gain related to the acquisition of T24.
- Cash flow and liquidity
At March 31, 2017, our cash and cash equivalents were $223.0 million, and excludes $44.7 million of restricted cash. The decrease in our cash balances from June 30, 2016, was primarily due to repurchase of shares of our common stock; unscheduled repayments of our Korean debt; payment of taxes; the investment in MobiKwik, C4U Malta and Pros Software; a loan to Finbond and capital expenditures, which was partially offset by the sale of 5 million shares of our common stock and expansion of most of our core businesses.
Excluding the impact of taxes, interest received and interest paid under our Korean debt, the increase in cash from operating activities resulted from improved trading activity during fiscal 2017, offset by the timing of receipt of amounts from customers. Capital expenditures for Q3 2017 and 2016 were $1.9 million and $8.1 million, respectively, and have decreased primarily due to the acquisition of fewer payment processing terminals in South Korea. We provided a $2.0 million loan to KZ One, the holding company of our Nigerian initiative One Credit. We sold 5 million shares of our common stock for $45.0 million and received approximately $0.6 million from the exercise of stock options. We also utilized approximately $0.3 million of our Korean borrowings to pay quarterly interest due.
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 Korean debt facility fees and US government investigations-related expenses as well as, in fiscal 2017, a refund (net of taxes) related to Korean industry-wide litigation that has now been finalized and costs related to transactions and acquisition consummated or ultimately not pursued. 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) 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 Q3 2017 results on May 5, 2017, at 8:00 Eastern Time. To participate in the call, dial 1-855-481-5362 (US and Canada), 0808-162-4061 (U.K. only) or 0-800-200-648 (South Africa only) ten minutes prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on the Net1 homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through May 28, 2017.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System ("UEPS") or utilize its proprietary mobile technologies. The Company operates market-leading payment processors in South Africa and the Republic of Korea. Through Transact24, Net1 offers debit, credit and prepaid processing and issuing services for Visa, MasterCard, ChinaUnionPay, Alipay and WeChat in China and other territories across Asia-Pacific, Europe and Africa, and the United States. Through Masterpayment, Net1 provides payment processing and enables working capital financing in Europe.
UEPS permits the Company to facilitate biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. Net1's UEPS/EMV solution is interoperable with global EMV standards that seamlessly enable access to all the UEPS functionality in a traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification.
Net1's mobile technologies include its proprietary mobile payments solution -- MVC, which offers secure mobile-based payments, as well as mobile banking and prepaid value-added services in developed and emerging countries.
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.
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Nine months ended
------------------- -------------------
March 31, March 31,
------------------- -------------------
2017 2016 2017 2016
--------- --------- --------- ---------
(In thousands, (In thousands,
except per share except per share
data) data)
REVENUE $ 147,944 $ 134,736 $ 455,010 $ 439,490
EXPENSE
Cost of goods sold, IT processing,
servicing and support 70,912 63,266 219,210 219,316
Selling, general and
administration 42,195 35,998 122,366 108,007
Depreciation and amortization 10,290 9,281 31,117 29,982
--------- --------- --------- ---------
OPERATING INCOME 24,547 26,191 82,317 82,185
INTEREST INCOME 5,124 3,345 14,489 11,284
INTEREST EXPENSE 467 852 1,773 2,880
--------- --------- --------- ---------
INCOME BEFORE INCOME TAX EXPENSE 29,204 28,684 95,033 90,589
INCOME TAX EXPENSE 10,233 9,816 32,320 31,306
--------- --------- --------- ---------
NET INCOME BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS 18,971 18,868 62,713 59,283
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS 45 2 778 578
--------- --------- --------- ---------
NET INCOME 19,016 18,870 63,491 59,861
LESS NET INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTEREST 624 450 1,826 1,763
--------- --------- --------- ---------
NET INCOME ATTRIBUTABLE TO NET1 $ 18,392 $ 18,420 $ 61,665 $ 58,098
========= ========= ========= =========
Net income per share, in U.S.
dollars
Basic earnings attributable to
Net1 shareholders $ 0.34 $ 0.40 $ 1.16 $ 1.24
Diluted earnings attributable to
Net1 shareholders $ 0.34 $ 0.40 $ 1.16 $ 1.23
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
Unaudited (A)
March 31, June 30,
2017 2016
---------- ----------
(In thousands, except
share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 222,972 $ 223,644
Restricted cash 44,735 -
Pre-funded social welfare grants receivable 1,615 1,580
Accounts receivable, net of allowances of - March:
$3,362; June: $1,669 122,540 107,805
Finance loans receivable, net of allowances of -
March: $3,536; June: $4,494 43,539 37,009
Inventory 10,560 10,004
Deferred income taxes 6,841 6,956
---------- ----------
Total current assets before settlement assets 452,802 386,998
Settlement assets 513,713 536,725
---------- ----------
Total current assets 966,515 923,723
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of - March: $124,527; June: $99,969 43,901 54,977
EQUITY-ACCOUNTED INVESTMENTS 38,920 25,645
GOODWILL 190,174 179,478
INTANGIBLE ASSETS, net of accumulated amortization
of - March: $105,620; June: $91,208 42,904 48,556
OTHER LONG-TERM ASSETS, including reinsurance assets 39,281 31,121
---------- ----------
TOTAL ASSETS 1,321,695 1,263,500
========== ==========
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities - -
Accounts payable 13,555 14,097
Other payables 38,319 37,479
Current portion of long-term borrowings 8,941 8,675
Income taxes payable 11,223 5,235
---------- ----------
Total current liabilities before settlement
obligations 72,038 65,486
Settlement obligations 513,713 536,725
---------- ----------
Total current liabilities 585,751 602,211
DEFERRED INCOME TAXES 11,143 12,559
LONG-TERM BORROWINGS 16,335 43,134
OTHER LONG-TERM LIABILITIES, including insurance
policy liabilities 2,725 2,376
---------- ----------
TOTAL LIABILITIES 615,954 660,280
---------- ----------
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury -
March: 57,590,085; June: 55,271,954 79 74
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001 par
value;
Issued and outstanding shares, net of treasury:
March: -; June: - - -
ADDITIONAL PAID-IN-CAPITAL 269,533 223,978
TREASURY SHARES, AT COST: March: 23,621,541; June:
20,483,932 (273,238) (241,627)
ACCUMULATED OTHER COMPREHENSIVE LOSS (164,510) (189,700)
RETAINED EARNINGS 761,987 700,322
---------- ----------
TOTAL NET1 EQUITY 593,851 493,047
REDEEMABLE COMMON STOCK 107,672 107,672
NON-CONTROLLING INTEREST 4,218 2,501
---------- ----------
TOTAL EQUITY 705,741 603,220
---------- ----------
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,321,695 $1,263,500
========== ==========
(A) - Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended Nine months ended
-------------------- --------------------
March 31, March 31,
-------------------- --------------------
2017 2016 2017 2016
--------- --------- --------- ---------
(In thousands) (In thousands)
Cash flows from operating
activities
Net income $ 19,016 $ 18,870 $ 63,491 $ 59,861
Depreciation and amortization 10,290 9,281 31,117 29,982
Earnings from equity-accounted
investments (45) (2) (778) (578)
Fair value adjustments (50) (2,387) (61) 613
Interest payable 75 343 84 1,697
Profit on disposal of property,
plant and equipment (98) (29) (571) (113)
Gain on fair value of T24 - (1,909) - (1,909)
Stock-based compensation charge
(reversal), net 621 954 (68) 2,645
Facility fee amortized 27 34 94 103
Dividends received from equity
accounted investments - - 370 -
(Increase) Decrease in accounts
receivable, pre-funded social
welfare grants receivable and
finance loans receivable (16,612) 15,914 (2,261) (15,211)
Decrease (Increase) in inventory 3,893 (340) 308 (495)
(Decrease) Increase in accounts
payable and other
payables (1,486) 4,009 (4,386) 1,563
Increase in taxes payable 6,678 4,479 5,819 3,444
Decrease in deferred taxes (506) (19) (1,752) (256)
--------- --------- --------- ---------
Net cash provided by operating
activities 21,803 49,198 91,406 81,346
--------- --------- --------- ---------
Cash flows from investing
activities
Capital expenditures (1,949) (8,053) (8,498) (28,698)
Proceeds from disposal of
property, plant and equipment 330 136 1,344 753
Investment in MobiKwik - - (15,347) -
Loans to equity accounted
investments (2,000) - (12,044) -
Acquisitions, net of cash
acquired - (1,666) (4,651) (1,666)
Acquisition of available for
sale securities - (8,900) - (8,900)
Other investing activities - (5) - (5)
Net change in settlement assets (165,945) (111,118) 54,827 171,516
--------- --------- --------- ---------
Net cash (used in) provided by
investing activities (169,564) (129,606) 15,631 133,000
--------- --------- --------- ---------
Cash flows from financing
activities
Proceeds from issue of common
stock 45,629 - 45,629 3,762
Acquisition of treasury stock - (12,726) (32,081) (23,912)
Repayment of long-term
borrowings - - (28,493) -
Guarantee fee paid - - (1,145) -
Dividends paid to non-
controlling interest - - (613) -
Long-term borrowings utilized 274 676 521 2,107
Net change in settlement
obligations 165,955 111,118 (54,817) (171,516)
--------- --------- --------- ---------
Net provided by (cash used) in
financing activities 211,858 99,068 (70,999) (189,559)
--------- --------- --------- ---------
Effect of exchange rate changes
on cash 4,719 3,192 8,025 (19,101)
--------- --------- --------- ---------
Net increase in cash, cash
equivalents and restricted cash 68,816 21,852 44,063 5,686
Cash, cash equivalents and
restricted cash - beginning of
period 198,891 101,417 223,644 117,583
--------- --------- --------- ---------
Cash, cash equivalents and
restricted cash - end of period $ 267,707 $ 123,269 $ 267,707 $ 123,269
========= ========= ========= =========
(A) - Net change in settlement assets and net change in settlement obligations included in the unaudited condensed consolidated statement of cash flows for the three and nine months ended March 31, 2016, have been increased by $19.7 million and $59.5 million, respectively, as a result of the restatement described in Note 2 -- (Significant accounting policies -- Settlement assets and settlement obligations) to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2016.
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended March 31, 2017 and 2016 and March 31, 2017
Change -
constant
Change - exchange
actual rate(1)
----------- -----------
Q3 Q3 Q3 Q3
'17 '17 '17 '17
vs vs vs vs
Key segmental data, in $ Q2 Q2
'000, Q3 '17 Q3 '16 Q2 '17 Q3'16 '17 Q3'16 '17
-------- -------- -------- ----- ----- ----- -----
Revenue:
South African transaction
processing $63,967 $50,594 $59,862 26% 7% 6% 1%
International transaction
processing 41,514 40,588 44,000 2% (6%) (15%) (11%)
Financial inclusion and
applied technologies 56,881 54,286 59,258 5% (4%) (12%) (9%)
-------- -------- --------
Subtotal: Operating
segments 162,362 145,468 163,120 12% (0%) (7%) (6%)
Intersegment
eliminations (14,418) (10,732) (11,687) 34% 23% 12% 17%
-------- -------- --------
Consolidated revenue $147,944 $134,736 $151,433 10% (2%) (8%) (7%)
======== ======== ========
Operating income (loss):
South African transaction
processing $15,531 $13,133 $15,372 18% 1% (1%) (4%)
International transaction
processing 1,968 4,813 3,904 (59%) (50%) (66%) (52%)
Financial inclusion and
applied technologies 14,064 11,469 14,107 23% (0%) 3% (5%)
-------- -------- --------
Subtotal: Operating
segments 31,563 29,415 33,383 7% (5%) (10%) (10%)
Corporate/Eliminations (7,016) (3,224) (7,794) 118% (10%) 82% (15%)
-------- -------- --------
Consolidated
operating income $24,547 $26,191 $25,589 (6%) (4%) (22%) (9%)
======== ======== ========
Operating income margin
(%)
South African transaction
processing 24% 26% 26%
International transaction
processing 5% 12% 9%
Financial inclusion and
applied technologies 25% 21% 24%
Consolidated operating
margin 17% 19% 17%
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the third quarter of fiscal 2017 also prevailed during the third quarter of fiscal 2016 and the second quarter of fiscal 2017.
Nine months ended March 31, 2017 and 2016
Change -
constant
Change - exchange
actual rate(1)
-------- --------
F2017 F2017
vs vs
Key segmental data, in '000, except
margins F2017 F2016 F2016 F2016
-------- -------- -------- --------
Revenue:
South African transaction processing $181,397 158,997 14% 11%
International transaction processing 131,704 122,653 7% 4%
Financial inclusion and applied
technologies 179,681 187,332 (4%) (7%)
-------- --------
Subtotal: Operating segments 492,782 468,982 5% 2%
Intersegment eliminations (37,772) (29,492) 28% 24%
-------- --------
Consolidated revenue $455,010 439,490 4% 1%
======== ========
Operating income:
South African transaction processing $44,451 38,724 15% 12%
International transaction processing 11,689 15,596 (25%) (27%)
Financial inclusion and applied
technologies 43,354 41,542 4% 1%
-------- --------
Subtotal: Operating segments 99,494 95,862 4% 1%
Corporate/Eliminations (17,177) (13,677) 26% 22%
-------- --------
Consolidated operating income $82,317 82,185 0% (3%)
======== ========
Operating income margin (%)
South African transaction processing 25% 24%
International transaction processing 9% 13%
Financial inclusion and applied
technologies 24% 22%
Overall operating margin 18% 19%
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the year to date of fiscal 2017 also prevailed during the year to date of fiscal 2016.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income and earnings per share, basic, to
fundamental net income and earnings per share, basic:
Three months ended March 31, 2017 and 2016
EPS, EPS,
Net income basic Net income basic
(USD'000) (USD) (ZAR'000) (ZAR)
----------------- --------- ----------------- -----------
2017 2016 2017 2016 2017 2016 2017 2016
-------- -------- ---- ---- -------- -------- ----- -----
GAAP 18,392 18,420 0.34 0.40 243,190 291,377 4.45 6.29
Intangible asset
amortization,
net 2,772 1,743 36,653 27,586
Transaction
costs 1,439 545 19,027 8,621
Stock-based
compensation
charge 621 954 8,211 15,091
US government
investigations-
related
expenses 217 - 2,869 -
Facility fees
for Korean debt 27 34 357 538
Gain on fair
value of T24 - (1,909) - (30,198)
----------------- -----------------
Fundamental 23,468 19,787 0.43 0.43 310,307 313,015 5.68 6.75
================= =================
Nine months ended March 31, 2017 and 2016
EPS, EPS,
Net income basic Net income basic
(USD'000) (USD) (ZAR'000) (ZAR)
----------------- --------- ----------------- -----------
2017 2016 2017 2016 2017 2016 2017 2016
-------- -------- ---- ---- -------- -------- ----- -----
GAAP 61,665 58,098 1.15 1.24 849,009 823,149 15.82 17.59
Intangible asset
amortization,
net 7,637 6,182 105,124 87,588
Transaction
costs 2,928 726 40,313 10,286
Stock-based
compensation
(reversal)
charge (68) 2,645 (936) 37,475
Refund related
to litigation
finalized in
Korea, net (643) - (8,853) -
Facility fees
for Korean debt 94 103 1,294 1,459
US government
investigations-
related
expenses 246 133 3,387 1,884
Gain on fair
value of T24 - (1,909) - (27,047)
----------------- -----------------
Fundamental 71,859 65,978 1.34 1.41 989,338 934,794 18.44 19.98
================= =================
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net income used to calculate earnings per share basic and
diluted and headline earnings per share basic and diluted:
Three months ended March 31, 2017 and 2016
2017 2016
-------- --------
Net income (USD'000) 18,392 18,420
Adjustments:
Gain on fair value of T24 - (1,909)
Profit on sale of property, plant and equipment (98) (29)
Tax effects on above 27 8
-------- --------
Net income used to calculate headline earnings (USD'000) 18,321 16,490
======== ========
Weighted average number of shares used to calculate net
income per share basic earnings and headline earnings
per share basic earnings ('000) 54,639 46,341
Weighted average number of shares used to calculate net
income per share diluted earnings and headline earnings
per share diluted earnings ('000) 54,808 46,430
Headline earnings per share:
Basic, in USD 0.34 0.36
Diluted, in USD 0.33 0.36
Nine months ended March 31, 2017 and 2016
2017 2016
-------- --------
Net income (USD'000) 61,665 58,098
Adjustments:
Gain on fair value of T24 - (1,909)
Profit on sale of property, plant and equipment (571) (113)
Tax effects on above 160 32
-------- --------
Net income used to calculate headline earnings (USD'000) 61,254 56,108
======== ========
Weighted average number of shares used to calculate net
income per share basic earnings and headline earnings
per share basic earnings ('000) 52,961 46,786
Weighted average number of shares used to calculate net
income per share diluted earnings and headline earnings
per share diluted earnings ('000) 53,088 47,074
Headline earnings per share:
Basic, in USD 1.16 1.20
Diluted, in USD 1.15 1.19
Calculation of the denominator for headline
diluted earnings per share
Q3 '17 Q3 '16 F2017 F2016
-------- -------- -------- --------
Basic weighted-average common shares
outstanding and unvested restricted
shares expected to vest under GAAP 54,639 46,341 52,961 46,786
Effect of dilutive securities under
GAAP 169 89 127 288
-------- -------- -------- --------
Denominator for headline diluted
earnings per share 54,808 46,430 53,088 47,074
======== ======== ======== ========
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:Dhruv Chopra Head of Investor Relations Phone: +1 917-767-6722 Email: [email protected] Media Relations Contact:Bridget von Holdt Business Director Burson-Marsteller South Africa Phone: +27-82-610-0650 Email: [email protected]
Source: Net 1 UEPS Technologies, Inc.
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