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JOHANNESBURG, SOUTH AFRICA--(Marketwired - Feb. 6, 2014) - Net 1 UEPS Technologies Inc. UEPSNT 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 Kotze, 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 (In thousands, except
per share data) 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
Key segmental data, in $ '000, Q2 '14 Q2 '13
------------- ----------
Revenue:
SA transaction-based activities $ 72,237 $ 60,764
International transaction-based
activities 37,288 33,113
Smart card accounts 11,237 8,219
Financial services 6,199 1,448
Hardware, software and related
technology sales 10,322 7,898
------------- -------------
Total consolidated revenue $ 137,283 $ 111,442
------------- -------------
------------- -------------
Consolidated operating income
(loss):
SA transaction-based activities $ 13,398 $ 1,933
-------------- -------------
Operating income (loss)
excluding amortization 13,916 3,398
Amortization of intangible
assets (518) (1,465)
-------------- -------------
International transaction-based
activities 1,365 202
-------------- -------------
Operating income excluding
amortization 4,883 3,515
Amortization of intangible
assets (3,518) (3,313)
-------------- -------------
Smart card accounts 3,203 2,342
Financial services 1,727 1,048
Hardware, software and related
technology sales 1,592 795
-------------- -------------
Operating income (loss)
excluding amortization 1,663 878
Amortization of intangible
assets (71) (83)
-------------- -------------
Corporate/ Eliminations (2,483) (1,348)
-------------- -----------
Total operating income (loss) $ 18,802 $ 4,972
-------------- -------------
-------------- -------------
Operating income margin (%)
SA transaction-based activities 19% 3%
International transaction-based
activities 4% 1%
International transaction-based
activities excluding
amortization 13% 11%
Smart card accounts 29% 28%
Financial services 28% 72%
Hardware, software and related
technology sales 15% 10%
Overall operating margin 14% 4%
Change -
constant
exchange
Change - actual rate(1)
---------------- ---------------
Q2 '14 Q2 '14 Q2 '14 Q2 '14
vs vs vs vs
Key segmental data, in $ '000, Q1 '14 Q2'13 Q1 '14 Q2'13 Q1 '14
-------- ------- -------- ------- -------
Revenue:
SA transaction-based activities $ 63,032 19% 15% 38% 16%
International transaction-based
activities 36,817 13% 1% 31% 3%
Smart card accounts 11,329 37% (1%) 59% 1%
Financial services 2,427 328% 155% 398% 159%
Hardware, software and related
technology sales 9,889 31% 4% 52% 6%
--------
Total consolidated revenue $123,494 23% 11% 43% 13%
---------
---------
Consolidated operating income
(loss):
SA transaction-based activities $ 13,282 593% 1% 706% 2%
-----------------------------------------
Operating income (loss)
excluding amortization 13,808 310% 1% 376% 2%
Amortization of intangible
assets (526) (65%) (2%) (59%) 0%
-----------------------------------------
International transaction-based
activities 2,051 576% (33%) 685% (32%)
-----------------------------------------
Operating income excluding
amortization 5,200 39% (6%) 61% (5%)
Amortization of intangible
assets (3,149) 6% 12% 23% 13%
-----------------------------------------
Smart card accounts 3,228 37% (1%) 59% 1%
Financial services 56 65% nm 92% nm
Hardware, software and related
technology sales 2,948 100% (46%) 133% (45%)
------------------------- ---------------
Operating income (loss)
excluding amortization 3,021 89% (45%) 120% (44%)
Amortization of intangible
assets (73) (14%) (3%) (1%) (1%)
-----------------------------------------
Corporate/ Eliminations (5,165) 84% (52%) 114% (51%)
---------
Total operating income (loss) $ 16,400 278% 15% 340% 16%
---------
---------
Operating income margin (%)
SA transaction-based activities 21%
International transaction-based
activities 6%
International transaction-based
activities excluding
amortization 14%
Smart card accounts 28%
Financial services 2%
Hardware, software and related
technology sales 30%
Overall operating margin 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 F2014 F2013 F2013 F2013
margins
-------- -------- ------- --------
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
EPS, EPS,
Net income basic Net income 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations Contact:
Net 1 UEPS Technologies, Inc.
Dhruv Chopra
Managing Director
+1 917-767-6722
dchopra@net1.com
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