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NET 1 UEPS TECHNOLOGIES INC - Net 1 UEPS Technologies, Inc. Reports First Quarter 2019 Results

Release Date: 09/11/2018 07:10
Code(s): NT1     PDF:  
Wrap Text
Net 1 UEPS Technologies, Inc. Reports First Quarter 2019 Results

Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
("Net1" or "the Company")

Net 1 UEPS Technologies, Inc. Reports First Quarter 2019 Results
JOHANNESBURG, November 9, 2018 - Net1 (Nasdaq: UEPS; JSE: NT1) today released results for the first fiscal quarter
ended September 30, 2018.

Q1 2019 Highlights:

- Revenue of $126 million and Fundamental EPS of $0.01 (including a loss of $0.28 per share related to CPS);
- Adjusted EBITDA of $13 million and free cash flow of $13 million, despite CPS losses;
- Korea EBITDA margin improved sequentially to 22%, from 20% in Q4 2018;
- Net cash increased to $50 million, from $40 million in Q4 2018;
- Active EPE accounts declined to 1.7 million in October, primarily due to forced migration in August and September;
- DNI contributed revenue and operating income of $17.9 million and $7.6 million, ahead of budget; and
- Equity investments performed in-line with our expectations.

"Our first quarter signaled the end of an era and the advent of an exciting new chapter for Net1 as our SASSA contract finally
came to an end after 78 months," said Herman Kotzé, CEO of Net1. "The last six and a half years allowed us to prove the
applicability and robustness of our technology and we are proud of our uninterrupted service record, albeit at the expense of
the many complex legal and reputational issues that arose during the contract period. Despite the many challenges we faced
during the last three months, the transformation of our business is well underway as we are now free to focus on the
reconfiguration of our unparalleled last-mile distribution network to provide the most affordable transactional and financial
services to our target market. We are only five weeks into the execution of our new strategy to provide acquiring services to
any bank card holder through our unique biometrically-enabled ATM and POS networks (in addition to our card issuing and
financial services offerings), and we have already processed more than 2.6 million transactions during this period. Our
acquiring strategy is complementary to our EPE issuing strategy in terms of serving our market in South Africa and between
EPE customers (account holders) and non-EPE customers (acquiring customers), we expect to have five million monthly
transacting customers within one year."

"Regarding our first quarter financial results, we experienced very difficult trading conditions as we had to deploy our full
infrastructure to ensure seamless service delivery to an undetermined and declining customer base, as SASSA commenced
with their phase-out activities. As a result, we incurred significant operating losses in anticipation of the proposed fee
adjustment being sanctioned by the Constitutional Court, which has not yet been executed. In addition, SASSA performed a
forced migration of approximately 900,000 EPE customers to SAPO during the last three months of the contract in order to
meet their targets for SAPO, which we consider to be illegal and unfortunately requires further legal action. We are
disappointed that the last three months of our contract had to end in this manner, but as we have said previously, we expect
FY2019 to be both a transitional and transformational year. We are committed to recover from the exogenous shock to our
account base during Q1 and to reposition the company to be a commercially focused service provider that will drive new
customer acquisition, new products and in turn higher growth and profitability over time. Internationally, the restructuring of
IPG was completed during Q1 2019, and as soon as we have received certification from Visa and Mastercard on our new
issuing and acquiring platforms, we will be set on a new growth trajectory," concluded Kotzé.

Fiscal 2019 guidance update:

"For fiscal year 2019, we have now factored in the lower than previously expected EPE base as of September, as well as the
resulting impact on our financial inclusion businesses, together with lower volumes and higher restructuring costs at IPG
during Q1 2019. We therefore expect FEPS of at least $0.65 for fiscal 2019, down from prior guidance of $1.05. Of this
reduction, $0.30 relates in equal parts to lower EPE fees due to fewer accounts and a related reduction in associated financial
services, while the balance of the change is due to funding costs for our ATMs and losses incurred by IPG," said Alex Smith,
CFO of Net1.

This guidance is also based on the following expectations:

- Average EPE accounts of 1.8 million (down from prior guidance of 2.5 million);
- average acquiring customers of 1.75 million for the remaining nine months - ARPUs on acquiring customers are
  approximately half of those of EPE customers;
- DNI revenue and earnings growth of 10%;
- South Korea full year results consistent with fiscal 2018;
- Break-even result for CPS for fiscal 2019, which assumes the successful resolution of the company's claim for
  additional revenue at the treasury recommended rate for the work performed during the last six-month of its SASSA
  contract; and
- A constant currency base of ZAR 12.70/$1, 56.8 million shares and a tax rate of 35%.

Summary Financial Metrics

                                                                                        Three months ended September 30,
                                                                                                      % change    % change
                                                                                    2018      2017      in USD      in ZAR
(All figures in USD '000s except per share data)
Revenue                                                                          125,884   152,558       (17%)        (7%)
GAAP operating income                                                                896    25,006       (96%)       (96%)
Adjusted EBITDA (1)                                                               13,240    35,301       (62%)       (58%)
GAAP net (loss) income                                                           (5,199)    19,483      (127%)      (130%)
Fundamental net income (1)                                                           774    24,446       (97%)       (96%)
GAAP (loss) earnings per share ($)                                                (0.09)      0.34      (127%)      (130%)
Fundamental earnings per share ($) (1)                                              0.01      0.43       (98%)       (96%)
Fully-diluted shares outstanding ('000's)                                         56,773    57,243        (1%)
Average period USD/ ZAR exchange rate                                              14.86     13.17         13%

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

Factors impacting comparability of our Q1 2019 and Q1 2018 results

- Consolidation of DNI results in higher revenue and operating income: DNI contributed ZAR 266.5 million and
  ZAR 112.8 million to Q1 2019 revenue and operating income respectively;
- Improved contribution from South Korea: Our South Korean operations experienced modest revenue pressures due
  to regulatory changes and macroeconomic factors, however, its operating income improved compared to Q1, 2018
  and sequentially from Q4, 2018;
- Successful launch of rural ATM acquiring initiative: Late in the first quarter of fiscal 2019, we commenced its
  rural ATM acquiring offering, which is currently servicing in excess of one million customers;
- Reduced contributions from EasyPay Everywhere and financial inclusion initiatives: We have seen a decline in
  EPE account numbers as a result of the SASSA's initiatives to convert grant recipients to the new SAPO accounts,
  often unilaterally and without the recipient's consent. This has reduced the operating income from our EPE accounts
  and has also had an adverse impact on the profitability of our various financial inclusion initiatives, including Manje
  Mobile, lending and insurance;
- Decline of CPS revenue and operating income due to the expiration of our SASSA contract: CPS revenue
  declined 87% and it incurred significant operating losses due to 91% fewer grant recipients paid by CPS and the
  contract price not yet being adjusted. In order to fulfill our constitutional obligation, it maintained its full payment
  infrastructure and associated cost base despite National Treasury's proposed price increase not being ratified by the
  Constitutional Court during the quarter, resulting in a $15.7 million operating loss.
- High income tax expense due to deferred tax valuation allowance on CPS losses: Our income tax expenses
  includes a valuation allowance recorded against the net operating loss deferred tax asset generated by CPS as a result
  of the losses it incurred during Q1 2019;
- Unfavorable impact from the strengthening of the U.S. dollar against the South African Rand: The U.S. dollar
  appreciated 13% against the ZAR during Q1 2019 compared with Q1 2018;
- Higher depreciation and amortization charges resulting from DNI acquisition: Our depreciation and amortization
  charge increased in Q1, 2019, as a result of the acquisition of DNI;
- Reduced income from equity-accounted investments: Earnings from equity accounted investments has reduced due
  to the consolidation of DNI from 30 June 2018; and
- Lower net interest income resulting from strategic investments: Net interest expense was $3.8 million lower due to
  cash utilized for strategic investments. In particular, Interest expense increased due to the South African lending
  facilities we obtained.

Results of Operations by Segment and Liquidity

South African transaction processing

Segment revenue was $37.7 million in Q1 2019, down 43% compared with Q1 2018 in USD, and 36% lower on a constant
currency basis. The decrease in segment revenue and operating income was primarily due to the substantial decrease in the
number of SASSA grant recipients paid under our SASSA contract at the old contracted rate. Our revenue and operating
income was also adversely impacted by the significant reduction in the number of SASSA grant recipients with SASSA-
branded Grindrod cards linked to Grindrod bank accounts. These decreases in revenue and operating income were partially
offset by higher EPE transaction revenue as a result of increased usage of our ATMs. Our operating (loss) income margin for
Q1 2019 and 2018 was (9.3%) and 18.6%, respectively.

International transaction processing

Segment revenue was $39.4 million in Q1 2019, down 14% compared with Q1 2018 in USD. Segment revenue was lower
during Q1 2019, primarily due to a contraction in IPG transactions processed, specifically meaningfully lower China
processing activity due to ongoing global trade negotiations, no Mastertrading working capital finance activities and
marginally lower KSNET revenue. Operating income during Q1 2019 was lower due to the decrease in IPG revenues and
ongoing losses at Masterpayment, but partially offset by an increased contribution from KSNET. Operating income margin for
Q1 2019 and 2018 was 7.0% and 11.6%, respectively.

Financial inclusion and applied technologies

Segment revenue was $53.2 million in Q1 2019, down 2% compared with Q1 2018 in USD and up 11% on a constant
currency basis. In ZAR, segment revenue increased primarily due to the inclusion of DNI and increased volumes in our
insurance businesses, partially offset by fewer prepaid airtime and value-added services sales, lending revenues, and a
decrease in inter-segment revenues. Operating income was moderately higher than Q1, 2018, primarily due to the inclusion of
DNI. DNI generated revenue of approximately ZAR 266.5 million and operating income of approximately ZAR 112.8
million during Q1 2019. Operating income margin for the Financial inclusion and applied technologies segment was 21.2%
and 25.6% during Q1 2019 and 2018, respectively.

Corporate/eliminations

Our corporate expenses have increased primarily due to higher acquired intangible asset amortization and higher transaction-
related expenditures.

Cash flow and liquidity

At September 30, 2018, our cash and cash equivalents were $98.6 million and comprised mainly ZAR-denominated balances
of ZAR 732.5 million ($51.8 million), KRW-denominated balances of KRW 41.3 billion ($37.2 million), U.S. dollar-
denominated balances of $4.1 million, and other currency deposits, primarily Botswana pula, of $5.5 million, all amounts
translated at exchange rates applicable as of September 30, 2018. The increase in our cash balances from June 30, 2018, was
primarily due the utilization of our debt facilities to fund our ATMs and to finance our lending to Cell C to fund the
construction of mobile telephony network infrastructure, the contribution from the inclusion of DNI, and a marginal decrease
in our South African lending book, which was partially offset by significantly weaker trading activities, scheduled debt
repayments, dividend payments to non-controlling interests and capital expenditures.

Excluding the impact of interest received, interest paid under our South Africa debt and taxes, the decrease in cash flow
relates primarily due to a decrease in our South African lending book, partially offset by an increase in lending to Cell to
finance the acquisition and/ or requisition of telecommunication towers and significantly weaker trading activity during fiscal
2019 compared to 2018. Capital expenditures for Q1 2019 and 2018 were $3.1 million and $1.5 million, respectively, and
have increased primarily due to the acquisition of ATMs in South Africa, computer equipment to maintain our processing
activities and the expansion of our branch network. We made a scheduled South African debt facility payment of $10 million
(ZAR 151 million) and paid dividends of $1.7 million to non-controlling interests.

Operating metrics and supplemental presentation for Q1 2019 Results

Our operating metrics will be updated and posted on our website (www.net1.com). A supplemental presentation for Q1 2019
will be posted to the Investor Relations page of our website - ir.net1.com one hour prior to our earnings call on Friday,
November 9, 2018.

Conference Call

We will host a conference call to review these results on November 9, 2018, at 8:00 a.m. Eastern Time. To participate in the
call, dial 1-508-924-4326 (US and Canada), 0333-300-1418 (U.K. only) or 010-201-6800 (South Africa only) ten minutes
prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on the Net1
homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be
available for replay on the Net1 website through November 30, 2018.

Use of Non-GAAP Measures

US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP
measures and provide reconciliations to the directly comparable GAAP measures. The presentation of EBITDA, adjusted
EBITDA, fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP
measures.

EBITDA and Adjusted EBITDA

Earnings before interest, tax, depreciation and amortization ("EBITDA") is GAAP operating income adjusted for
depreciation and amortization and, if applicable, impairment losses. Adjusted EBITDA is EBITDA adjusted for costs related
to acquisitions and transactions consummated or ultimately not pursued.

Fundamental net income and fundamental earnings per share

Fundamental net income and earnings per share is GAAP net (loss) income and (loss) earnings per share adjusted for the
amortization of acquisition-related intangible assets (net of deferred taxes), the amortization of intangible assets (net of
deferred taxes) related to equity-accounted investments, stock-based compensation charges and reversals, the amortization of
South African and South Korean debt facility fees and unusual non-recurring items, including costs related to acquisitions
and transactions consummated or ultimately not pursued.

Fundamental net income and earnings per share for fiscal 2019 also includes an adjustment for the non-controlling interest
portion of the amortization of intangible assets (net of deferred taxes).

We provide earnings guidance only on a non-GAAP basis and do not provide a reconciliation of forward-looking
fundamental earnings per share guidance to the most directly comparable GAAP financial measures because of the inherent
difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, the amounts of which,
based on past experience, could be material.

Management believes that the EBITDA, adjusted EBITDA, fundamental net income and earnings per share metric enhances
its own evaluation, as well as an investor's understanding, of our financial performance. Attachment B presents the
reconciliation between GAAP operating income and EBITDA and adjusted EBITDA; and GAAP net (loss) income and (loss)
earnings per share 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 (loss) 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 (loss) 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 HE(L)PS basic and diluted and the calculation of the denominator for headline diluted earnings per share.

About Net1

Net1 is a leading provider of transaction processing services, financial inclusion products and services and secure payment
technology. Net1 operates market-leading payment processors in South Africa and the Republic of Korea. Net1 offers debit,
credit and prepaid processing and issuing services for all major payment networks. In South Africa, Net1 provides innovative
low-cost financial inclusion products, including banking, lending and insurance, and is a leading distributor of mobile
subscriber starter packs for Cell C, a South African mobile network operator. Net1 leverages its strategic equity investments
in Finbond and Bank Frick (both regulated banks), and Cell C to introduce products to new customers and geographies. Net1
has a primary listing on NASDAQ (NasdaqGS: UEPS) and a secondary listing on the Johannesburg Stock Exchange (JSE:
NT1). Visit www.net1.com for additional information about Net1.

Forward-Looking Statements

This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. 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

Media Relations Contact:
Bridget von Holdt
Business Director - BCW
Phone: +27-82-610-0650
Email: bridget.vonholdt@bm-africa.com

Unaudited Condensed Consolidated Statements of Operations   


                                                                                                   Three months ended
                                                                                                     September 30,
                                                                                                   2018               2017
                                                                                          (In thousands, except per share data)
REVENUE                                                                                $        125,884     $      152,558
EXPENSE
    Cost of goods sold, IT processing, servicing and support                                     72,316             74,652
    Selling, general and administration                                                          41,878             43,934
    Depreciation and amortization                                                                10,794              8,966
OPERATING INCOME                                                                                    896             25,006
INTEREST INCOME                                                                                   1,876              5,044
INTEREST EXPENSE                                                                                  2,759              2,121
INCOME BEFORE INCOME TAX EXPENSE                                                                     13             27,929
INCOME TAX EXPENSE                                                                                6,490             10,277
NET (LOSS) INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS                                                                                     (6,477)             17,652
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS                                                        1,373              2,075
NET (LOSS) INCOME                                                                               (5,104)             19,727
LESS NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST                                             95                244
NET (LOSS) INCOME ATTRIBUTABLE TO NET1                                                 $        (5,199)     $       19,483
Net (loss) income per share, in U.S. dollars
    Basic (loss) earnings attributable to Net1 shareholders                                     ($0.09)              $0.34
    Diluted (loss) earnings attributable to Net1 shareholders                                   ($0.09)              $0.34

Unaudited Consolidated Balance Sheets

                                                                                            Unaudited                  (R)
                                                                                        September 30,             June 30,
                                                                                                 2018                 2018
                                                                                         (In thousands, except share data)
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                                            $      98,555       $       90,054
   Restricted cash                                                                             84,778                    -
   Pre-funded social welfare grants receivable                                                      -                2,965
   Accounts receivable, net of allowances of - September: $1,260; June: $1,101                113,924              109,683
   Finance loans receivable, net of allowances of - September: $18,721; June: $16,403          50,811               62,205
   Inventory                                                                                   10,369               12,887
      Total current assets before settlement assets                                           358,437              277,794
          Settlement assets                                                                    68,566              149,047
              Total current assets                                                            427,003              426,841
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - September:
$130,655; June: $129,185                                                                       25,222               27,054
EQUITY-ACCOUNTED INVESTMENTS                                                                   94,241               88,331
GOODWILL                                                                                      279,158              283,240
INTANGIBLE ASSETS, net of accumulated amortization of - September: $126,694 ; June:
$121,466                                                                                      121,824              131,132
DEFERRED INCOME TAXES                                                                           8,007                6,312
OTHER LONG-TERM ASSETS, including reinsurance assets                                          245,150              256,380
   TOTAL ASSETS                                                                             1,200,605            1,219,290
LIABILITIES
CURRENT LIABILITIES
   Short-term credit facilities for ATM funding                                                84,778                    -
   Short-term credit facilities                                                                 3,313                    -
   Accounts payable                                                                            23,134               35,055
   Other payables                                                                              82,292               47,994
   Current portion of long-term borrowings                                                     33,937               44,695
   Income taxes payable                                                                        13,898                5,742
      Total current liabilities before settlement obligations                                 241,352              133,486
          Settlement obligations                                                               68,566              149,047
              Total current liabilities                                                       309,918              282,533
DEFERRED INCOME TAXES                                                                          43,567               46,606
LONG-TERM BORROWINGS                                                                           11,660                5,469
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities                             3,419               38,580
   TOTAL LIABILITIES                                                                          368,564              373,188
COMMITMENTS AND CONTINGENCIES
REDEEMABLE COMMON STOCK                                                                       107,672              107,672
EQUITY
   COMMON STOCK
        Authorized: 200,000,000 with $0.001 par value;
        Issued and outstanding shares, net of treasury - September: 56,833,925; June:
        56,685,925                                                                                 80                   80
   PREFERRED STOCK
        Authorized shares: 50,000,000 with $0.001 par value;
        Issued and outstanding shares, net of treasury: September: -; June: -                       -                    -
   ADDITIONAL PAID-IN-CAPITAL                                                                 276,865              276,201
   TREASURY SHARES, AT COST: September: 24,891,292; June: 24,891,292                        (286,951)            (286,951)
   ACCUMULATED OTHER COMPREHENSIVE LOSS                                                     (189,528)            (184,436)
   RETAINED EARNINGS                                                                          832,426              837,625
      TOTAL NET1 EQUITY                                                                       632,892              642,519
      NON-CONTROLLING INTEREST                                                                 91,477               95,911
          TOTAL EQUITY                                                                        724,369              738,430
            TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                  $   1,200,605       $    1,219,290

(R) - Amounts have been restated as disclosed in the Form 8-K filed with the SEC on November 8, 2018. The restatement resulted in an increase in retained income
of $25.2 million, and a decrease in other comprehensive income of $25.2 million.

Unaudited Condensed Consolidated Statements of Cash Flows

                                                                                                     Three months ended
                                                                                                        September 30,
                                                                                                      2018            2017
                                                                                                    (In thousands)
Cash flows from operating activities
Net (loss) income                                                                            $     (5,104)    $     19,727
Depreciation and amortization                                                                       10,794           8,966
Earnings from equity-accounted investments                                                         (1,373)         (2,075)
Interest on Cedar Cell note                                                                          (156)               -
Fair value adjustments and re-measurements                                                            (82)              91
Interest payable                                                                                       110            (88)
Facility fee amortized                                                                                  87             133
(Profit) Loss on disposal of property, plant and equipment                                           (127)             105
Stock-based compensation charge, net                                                                   587             827
Dividends received from equity accounted investments                                                     -             912
Decrease (Increase) in accounts receivable, pre-funded social welfare grants receivable and
finance loans receivable                                                                            14,296        (39,141)
Decrease (Increase) in inventory                                                                     2,185         (1,526)
(Decrease) Increase in accounts payable and other payables                                         (9,480)           3,429
Increase in taxes payable                                                                            8,354           8,838
Decrease in deferred taxes                                                                         (3,634)           (991)
   Net cash provided by (used in) operating activities                                              16,457           (793)
Cash flows from investing activities
Capital expenditures                                                                               (3,118)         (1,473)
Proceeds from disposal of property, plant and equipment                                                274             316
Return on investment                                                                                   284               -
Investment in Cell C                                                                                     -       (151,003)
Investment in equity of equity-accounted investments                                                     -        (72,846)
Net change in settlement assets                                                                     75,931         212,649
  Net cash provided by (used in) investing activities                                               73,371        (12,357)
Cash flows from financing activities
Proceeds from bank overdraft                                                                        84,655          31,880
Repayment of long-term borrowings                                                                 (10,260)        (14,260)
Long-term borrowings utilized                                                                        7,801          95,431
Dividends paid to non-controlling interest                                                         (1,729)               -
Payment of guarantee fee                                                                             (136)           (552)
Repayment of bank overdraft                                                                              -         (2,952)
Net change in settlement obligations                                                              (75,931)       (212,649)
  Net cash provided by (used in) financing activities                                                4,400       (103,102)
Effect of exchange rate changes on cash                                                              (949)         (3,846)
Net increase (decrease) in cash, cash equivalents and restricted cash                               93,279       (120,098)
Cash, cash equivalents and restricted cash - beginning of period                                    90,054         258,457
Cash, cash equivalents and restricted cash - end of period (1)                               $     183,333    $    138,359

(1) Cash, cash equivalents and restricted cash as of September 30, 2018, includes restricted cash of approximately $84.8 million related to cash withdrawn
from our various debt facilities to fund ATMs. This cash may only be used to fund ATMs and is considered restricted as to use and therefore is classified as
restricted cash.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended September 30, 2018 and 2017 and June 30, 2018

                                                                                                               Change -
                                                                                                               constant
                                                                                       Change - actual    exchange rate(1)
                                                                                       Q1 '19   Q1 '19     Q1 '19   Q1 '19
Key segmental data, in '000, except                                                      vs       vs          vs       vs
margins                                              Q1 '19      Q1 '18      Q4 '18     Q1'18   Q4 '18      Q1'18   Q4 '18
Revenue:
South African transaction processing                $37,749     $66,437     $63,954     (43%)    (41%)      (36%)    (23%)
International transaction processing                 39,387      46,022      43,580     (14%)    (10%)       (3%)      17%
Financial inclusion and applied
technologies                                         53,206      54,313      53,888      (2%)     (1%)        11%      28%
      Subtotal: Operating segments                  130,342     166,772     161,422     (22%)    (19%)      (12%)       5%
      Intersegment eliminations                     (4,458)    (14,214)    (12,228)     (69%)    (64%)      (65%)    (53%)
          Consolidated revenue                     $125,884    $152,558    $149,194     (17%)    (16%)       (7%)      10%
Operating income (loss):
South African transaction processing               ($3,513)     $12,332      $4,275    (128%)   (182%)     (132%)   (207%)
International transaction processing                  2,762       5,316       2,089     (48%)      32%      (41%)      72%
Financial inclusion and applied
technologies                                         11,302      13,920      13,747     (19%)    (18%)       (8%)       7%
      Subtotal: Operating segments                   10,551      31,568      20,111     (67%)    (48%)      (62%)    (32%)
      Corporate/Eliminations                        (9,655)     (6,562)    (10,039)       47%     (4%)        66%      25%
          Consolidated operating
          income                                       $896     $25,006     $10,072     (96%)    (91%)      (96%)    (88%)
Operating income margin (%)
South African transaction processing                 (9.3%)       18.6%        6.7%
International transaction processing                   7.0%       11.6%        4.8%
Financial inclusion and applied
technologies                                          21.2%       25.6%       25.5%
      Consolidated operating margin                    0.7%       16.4%        6.8%

(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed
during the Q1 2019 also prevailed during Q1 2018 and Q4 2018.

Earnings from equity-accounted investments:

The table below presents the relative earnings (loss) from our equity-accounted investments:

                                                                                                                         %
                                                                                               Q1 2019    Q1 2018   change
Bank Frick                                                                                      ($588)         $-       nm
    Share of net income                                                                            162          -       nm
    Amortization of intangible assets, net of deferred tax                                       (144)          -       nm
    Other                                                                                        (606)          -       nm
DNI(1)                                                                                               -        865       nm
    Share of net income                                                                              -      1,408       nm
    Amortization of intangible assets, net of deferred tax                                           -      (543)       nm
Finbond                                                                                          1,875      1,101      70%
Other                                                                                               86        109    (21%)
    Earnings from equity-accounted investments                                                  $1,373     $2,075    (34%)

(1) DNI was accounted for using the equity method in fiscal 2018 and has been consolidated from June 30, 2018, following
the acquisition of a controlling interest in the company. DNI is included in our Financial inclusion and applied technologies
operating segment from the acquisition date.

Net 1 UEPS Technologies, Inc.

Attachment B

Reconciliation of GAAP operating income to EBITDA and Adjusted EBITDA:

Three months and year ended September 30, 2018 and 2017

                                                                                                         Three months ended
                                                                                                             September 30,
                                                                                                            2018      2017
Operating income - GAAP                                                                                      896    25,006
    Depreciation and amortization                                                                         10,794     8,966
      EBITDA                                                                                              11,690    33,972
          Transaction costs                                                                                1,550     1,329
              Adjusted EBITDA                                                                             13,240    35,301

Reconciliation of GAAP net (loss) income and (loss) earnings per share, basic, to fundamental net (loss) income and
(loss) earnings per share, basic:

Three months ended September 30, 2018 and 2017

                                                                         E(L)PS,                                E(L)PS,
                                                 Net (loss) income        basic        Net (loss) income         basic
                                                     (USD'000)            (USD)             (ZAR'000)            (ZAR)
                                                   2018       2017     2018   2017       2018        2017     2018    2017
GAAP                                            (5,199)     19,483   (0.09)   0.34   (77,251)     256,944   (1.36)    4.54
    Intangible asset amortization, net.           4,481      2,131                     66,578      28,107
    Intangible asset amortization, net
    related to non-controlling interest           (876)          -                   (13,016)           -
    Stock-based compensation charge                 587        827                      8,722      10,891
    Intangible asset amortization, net
    related to equity accounted
    investments                                     144        543                      2,140       7,134
    Facility fees for debt                           87        133                      1,293       1,751
    Transaction costs                             1,550      1,329                     23,031      17,502
          Fundamental                               774     24,446     0.01   0.43     11,497     322,329     0.20    5.70

Net 1 UEPS Technologies, Inc.

Attachment C

Reconciliation of net (loss) income used to calculate (loss) earnings per share basic and diluted and headline (loss)
earnings per share basic and diluted:

Three months ended September 30, 2018 and 2017

                                                                                                            2018      2017
Net (loss) income (USD'000)                                                                              (5,199)    19,483
Adjustments:   
   Profit on sale of property, plant and equipment                                                         (127)       105
   Tax effects on above                                                                                       36      (29)
Net (loss) income used to calculate headline earnings (USD'000)                                          (5,290)    19,559
Weighted average number of shares used to calculate net income per share basic (loss)
earnings and headline (loss) earnings per share basic (loss) earnings ('000)                              56,723    57,196
Weighted average number of shares used to calculate net income per share diluted (loss)
earnings and headline (loss) earnings per share diluted (loss) earnings ('000)                            56,773    57,243
Headline (loss) earnings per share:
   Basic, in USD                                                                                          (0.09)      0.34
   Diluted, in USD                                                                                        (0.09)      0.34

Calculation of the denominator for headline diluted (loss) earnings per share

                                                                                                           Q1 '19   Q1 '18

Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest under GAAP                                                              56,723   57,196
    Effect of dilutive securities under GAAP                                                                   50       47
      Denominator for headline diluted earnings per share                                                  56,773   57,243

Weighted average number of shares used to calculate headline (loss) 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 (loss) earnings per share
diluted because we do not use the two-class method to calculate headline earnings per share diluted.

Johannesburg
November 9, 2018

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