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Net 1 Reports Third Quarter 2021 Results

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JOHANNESBURG, South Africa, May 06, 2021 (GLOBE NEWSWIRE) -- Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the third fiscal quarter ended March 31, 2021.

Recent Developments:

  • Net increase of approximately 27,000 EasyPay Everywhere (EPE) account holders;

  • Non-cash increase of $10.8 million, before tax effect, in the fair value of investment in MobiKwik;

  • Sale of entire interest in Bank Frick for $30 million;

  • Reduction of IPG operating loss from $3.2 million in Q2, 2021, to $1.2 million in Q3, 2021, excluding the impact of the $3.6 million once-off payment to terminate all arrangements with Bank Frick and settle all related liabilities, of which $1.4 million and 2.2 million was expensed during Q2, 2021 and Q3, 2021, respectively;

  • At March 31, 2021, unrestricted cash of $208 million and no debt;

  • Revenue of $28.8 million, a decrease of 17% from Q3 2020;

  • Operating loss of $(14.3) million;

  • GAAP EPS of $(0.11) and Fundamental EPS of $(0.24); and

  • Adjusted EBITDA loss of $(12.8) million, flat compared to Q2 2021.

“We have made a lot of operational progress over the past quarter in exiting our loss-making European operations and preparing the South African operations for significant account growth,” said Alex Smith, Net1’s interim CEO and CFO. “We are making progress in our mission of driving financial inclusion for the underserved market having recently hired a new dynamic, highly accomplished and experienced CEO of Net1 Southern Africa, Lincoln Mali, who is well respected and experienced in the South African financial services and banking industry. Our new strategy, mission and leadership has also enabled us to attract some amazing new talent among the senior management ranks,” he concluded.

Summary Financial Metrics

Q3 2021

Q3 2020

Q2 2021

(as
restated)(1)

Q3 ’21 vs
Q3 ’20

Q3 ’21 vs
Q2 ’21

Q3 ’21 vs
Q3 ’20

Q3 ’21 vs
Q2 ’21

(All figures in USD ‘000s except per share data)

USD ‘000’s
(except per share data)

% change in USD

% change in ZAR

Revenue

28,828

34,614

32,305

(17%)

(11%)

(19%)

(14%)

GAAP operating loss

(14,292

)

(14,212

)

(15,205

)

1%

(6%)

(2%)

(9%)

Adjusted EBITDA (loss)(2)

(12,823

)

(6,423

)

(12,792

)

100%

0%

94%

(3%)

GAAP (loss) earnings per share ($)

(0.11

)

(0.61

)

(0.08

)

(82%)

38%

(82%)

33%

Continuing

(0.11

)

(0.85

)

(0.08

)

(87%)

38%

(87%)

33%

Discontinued

-

0.24

-

nm

nm

nm

nm

Fundamental loss per share ($)(2)

(0.24

)

(0.11

)

(0.24

)

118%

-

112%

(3%)

Fully-diluted shares outstanding (‘000’s)

56,921

56,803

56,641

0%

0%

nm

nm

Average period USD/ ZAR exchange rate

14.96

15.37

15.47

(3%)

(3%)

nm

nm


F2021

F2020
(as
restated)(1)

F2021 vs
F2020

F2021 vs
F2020

(All figures in USD ‘000s except per share data)

USD ‘000’s
(except per share data)

% change
in USD

% change
in ZAR

Revenue

96,269

119,748

(20%)

(19%)

GAAP operating loss

(40,272

)

(31,068

)

30%

31%

Adjusted EBITDA (loss)(2)

(35,438

)

(17,399

)

104%

106%

GAAP (loss) earnings per share ($)

(0.70

)

(0.69

)

1%

2%

Continuing

(0.70

)

(1.03

)

(32%)

(31%)

Discontinued

-

0.34

nm

nm

Fundamental loss per share ($)(2)

(0.71

)

(0.22

)

223%

226%

Fully-diluted shares outstanding (‘000’s)

56,895

56,646

0%

nm

Average period USD/ ZAR exchange rate

16.12

15.96

1%

nm

(1) 2020 has been restated to correct an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support. The financial information for the three and nine months ended March 31, 2020, has been restated with the effect of decreasing revenue by $1.9 million and $5.3 million, respectively. Refer to Note 1 to our unaudited condensed consolidated financial statements.

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

Business update related to COVID-19 pandemic

The COVID-19 pandemic did not impact our South African operations as severely during the three and nine months ended March 31, 2021, compared to the last four months of the year ended June 30, 2020. South Africa has been at an adjusted Level 1 since March 1, 2021. On December 28, 2020, the country moved back to Level 3 restrictions which remained in place through to February 28, 2021. South Africa operates with a five-level COVID-19 alert system, with Level 1 being the least restrictive and Level 5 being the most restrictive. The country went into lockdown (Level 5) towards the end of March 2020 and gradually eased restrictions for the remainder of the 2020 calendar year (to Level 4 from May 1, to Level 3 from June 1, to Level 2 from August 18 and to Level 1 from September 21). The increase at the end of December 2020 back to Level 3 was in response to a second wave of infections, which was more severe than the first wave. The South Africa government commenced its vaccination program in early calendar 2021, with a stated goal of vaccinating 67% of the South African population by the end of calendar year. With the winter months approaching, there are concerns over the potential for a third wave, particularly as there have been several delays in the vaccination program to date.

Factors impacting comparability of our Q3 2021 and Q3 2020 results

  • Lower revenue: Our revenues decreased 19% in ZAR primarily due to fewer prepaid airtime and hardware sales and lower account fee revenue;

  • Ongoing operating losses: Operating costs are largely in line with the prior period in ZAR due to the largely fixed cost nature of the cost base. As a result, we continue to experience operating losses because of depressed revenues;

  • Once-off termination payment: During Q3 2021, we made a payment of $3.6 million to the Frick Family Foundation to terminate all existing arrangements with Bank Frick and settle all liabilities related to IPG’s activities with Bank Frick;

  • Non-cash increase in fair value of MobiKwik: We recorded a non-cash fair value gain during Q3 2021 of $10.8 million related to the change in fair value of MobiKwik; and

  • Foreign exchange movements: The U.S. dollar was 3% weaker against the ZAR during Q3 2021, which impacted our reported results.

Results of Operations by Segment and Liquidity

Processing

Segment revenue, excluding IPG, was $18.7 million in Q3 2021, down 13% compared with Q3 2020 and down 7% compared with Q2 2021 on a constant currency basis. Excluding IPG, segment revenue decreased primarily due to fewer prepaid airtime sales and a reduction in volume-driven transaction fees. Excluding IPG, Processing’s operating loss has been impacted by lower revenue and by an increase in transaction-based costs. Our revenue for Q3 2020 was adversely impacted by ZAR 8.2 million ($0.5 million) as a result of the COVID-19 pandemic as we were unable to charge certain cash withdrawal fees to customers as a result of the lockdown during the last few days of March 2020. Our operating loss for the Q3 2020 also includes the impact of the $6.4 million impairment losses. IPG’s operating loss for the quarter primarily related to the closure of its operations, which is at an advanced stage, and we expect reduced operating losses and cash burn going forward. Our operating loss margin (calculated as operating (loss) income divided by revenue) for Q3 2021 and 2020 was (57.7%) and (56.1%), respectively. Excluding IPG, our operating loss margin for the Processing segment was (39.9%) and (44.1%) during the Q3 2021 and 2020, respectively. Excluding the impairment losses, our operating loss and operating loss margin for the Processing segment was $6.1 million and (27.4%), respectively, during Q3 2020.

Financial services

Segment revenue was $10.2 million in Q3 2021, down 15% on a constant currency basis compared with Q3 2020 and up from $9.7 million compared to Q2 2021. Segment revenue decreased due to lower account fee revenue and a modest reduction in lending revenue, whilst insurance revenues increased compared to the prior period. The increase in operating loss is primarily due to the lower account fee revenue and the increase in insurance-related claims experienced this quarter attributed to the second wave of the pandemic. Our operating loss margin for the Q3 2021 and 2020 was (20.7%) and (14.6%), respectively.

Technology

Segment revenue was $2.0 million in Q3 2021, down 51%, compared with Q3 2020, and down 57% compared with Q2 2021 on a constant currency basis. Segment revenue decreased significantly due to fewer hardware sales from one product line compared to the prior period, though partially offset by increases in other hardware product lines. Operating income for Q3 2021 was directly impacted by the lower revenue compared with fiscal 2020. Our operating income margin for the Technology segment was 6.5% and 23.4% during Q3 2021 and 2020, respectively.

Corporate/eliminations

Our corporate expenses for fiscal 2020 includes a $0.7 million impairment loss and net unrealized foreign exchange gains of $1.9 million compared with net unrealized foreign exchange gains of $0.6 million recorded in fiscal 2021.

Cash flow and liquidity

At March 31, 2021, our cash and cash equivalents were $207.8 million and comprised of U.S. dollar-denominated balances of $171.2 million, ZAR-denominated balances of ZAR 0.5 billion ($34.1 million), and other currency deposits, primarily Botswana pula, of $2.4 million, all amounts translated at exchange rates applicable as of March 31, 2021. The decrease in our unrestricted cash balances from June 30, 2020, was primarily due to the payment of Federal income taxes, weak trading activities and an increase in our lending book, which was partially offset by the receipt of the outstanding proceeds related to the sale of our Korean business, receipt of proceeds related to the disposal of Bank Frick and the receipt of the outstanding loan related to the disposal of our remaining interest in DNI.

Excluding the impact of income taxes, cash used in operating activities during Q3 2021 was impacted by the cash losses incurred by the majority of our continuing operations. Net cash used in operating activities during Q3 2020 includes the contribution from our Korean operations for January and February 2020. Capital expenditures for Q3 2021 and 2020 were $0.6 million and $1.0 million, respectively.

Conference Call

We will host a conference call to review these results on May 7, 2021, 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.

Participants are now able to pre-register for the May 7, 2021, conference call by navigating to https://www.diamondpass.net/9167989. Participants utilizing this pre-registration service will receive their dial-in number upon registration.

Use of Non-GAAP Measures

U.S. 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 most directly comparable GAAP measures. The presentation of EBITDA, adjusted EBITDA, fundamental net (loss) income and fundamental (loss) earnings per share and headline (loss) earnings per share are non-GAAP measures.

EBITDA and adjusted EBITDA

Earnings before interest, tax, depreciation and amortization (“EBITDA”) is GAAP operating (loss) income adjusted for depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for costs related to acquisitions and transactions consummated or ultimately not pursued.

Fundamental net (loss) income and fundamental (loss) earnings per share

Fundamental net (loss) income and (loss) 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), stock-based compensation charges, and unusual non-recurring items, including costs related to acquisitions and transactions consummated or ultimately not pursued.

Fundamental net (loss) income and (loss) earnings per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, loss on disposal of equity-accounted investments, impairment losses related to our equity-accounted investment and the deferred tax liability reversal related to the impairment of the equity-accounted investment, and fiscal 2020 also includes an adjustment for the impairment losses related to our equity-accounted investments, the gain related to the disposal of Net1 Korea, the gain related to the disposal of FIHRST, interest related to SASSA implementation costs refund.

Management believes that the EBITDA, adjusted EBITDA, fundamental net (loss) income and (loss) earnings per share metrics enhance 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 (loss) income and (loss) earnings per share.

Headline (loss) earnings per share (“H(L)EPS”)

The inclusion of H(L)EPS in this press release is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) 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.

H(L)EPS basic and diluted is calculated as GAAP net (loss) income adjusted for the impairment losses related to our equity-accounted investments, loss on disposal of equity-accounted investments, the gain related to the disposal of Net1 Korea. gain on disposal of FIHRST, and (profit) loss on sale of property, plant and equipment. Attachment C presents the reconciliation between our net (loss) income used to calculate (loss) earnings per share basic and diluted and HE(L)PS basic and diluted and the calculation of the denominator for headline diluted (loss) earnings per share.

About Net1

Net1 is a South African-focused financial technology company with a presence in Africa and Asia. Net1 utilizes its proprietary banking and payment technology to distribute low-cost financial and value-added services to underserved consumers and small businesses. The Company also provides transaction processing services, including being a payment processor and bill payment platform in South Africa. Net1 leverages its strategic investments in banks, telecom and mobile payment technology companies to further expand its product offerings or to enter new markets.

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 may 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:
Dara Dierks
Managing Director – ICR
Email: net1IR@icrinc.com

Media Relations Contact:
Bridget von Holdt
Business Director – BCW
Phone: +27-82-610-0650
Email: Bridget.vonholdt@bcw-global.com

NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations

Unaudited

Unaudited

Three months ended

Nine months ended

March 31,

March 31,

2021

2020

2021

2020

(as
restated)
(A)

(as
restated)
(A)

(In thousands)

(In thousands)

REVENUE

$

28,828

$

34,614

$

96,269

$

119,748

EXPENSE

Cost of goods sold, IT processing, servicing and support

23,096

23,883

73,895

81,335

Selling, general and administration

18,892

17,454

59,517

59,494

Depreciation and amortization

1,132

1,153

3,129

3,651

Impairment loss

-

6,336

-

6,336

OPERATING LOSS

(14,292

)

(14,212

)

(40,272

)

(31,068

)

CHANGE IN FAIR VALUE OF EQUITY SECURITIES

10,814

-

25,942

-

GAIN ON DISPOSAL OF FIHRST

-

-

-

9,743

LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT - BANK FRICK

472

-

472

-

LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT

-

-

13

-

INTEREST INCOME

606

570

1,934

2,015

INTEREST EXPENSE

744

1,886

2,168

6,362

LOSS BEFORE INCOME TAX EXPENSE

(4,088

)

(15,528

)

(15,049

)

(25,672

)

INCOME TAX EXPENSE

2,171

640

4,549

2,317

NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS

(6,259

)

(16,168

)

(19,598

)

(27,989

)

EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS

55

(32,193

)

(20,098

)

(30,624

)

NET LOSS FROM CONTINUING OPERATIONS

(6,204

)

(48,361

)

(39,696

)

(58,613

)

NET INCOME FROM DISCONTINUED OPERATIONS

-

747

-

6,402

GAIN FROM DISPOSAL OF DISCONTINUED OPERATION, net of tax

-

12,733

-

12,733

NET LOSS

(6,204

)

(34,881

)

(39,696

)

(39,478

)

NET (LOSS) INCOME ATTRIBUTABLE TO NET1

(6,204

)

(34,881

)

(39,696

)

(39,478

)

Continuing

(6,204

)

(48,361

)

(39,696

)

(58,613

)

Discontinued

$

-

$

13,480

$

-

$

19,135

Net (loss) earnings per share, in United States dollars:

Basic (loss) earnings attributable to Net1 shareholders

$

(0.11

)

$

(0.61

)

$

(0.70

)

$

(0.69

)

Continuing

$

(0.11

)

$

(0.85

)

$

(0.70

)

$

(1.03

)

Discontinued

$

-

$

0.24

$

-

$

0.34

Diluted (loss) earnings attributable to Net1 shareholders

$

(0.11

)

$

(0.61

)

$

(0.70

)

$

(0.69

)

Continuing

$

(0.11

)

$

(0.85

)

$

(0.70

)

$

(1.03

)

Discontinued

$

-

$

0.24

$

-

$

0.34

(A) 2020 has been restated to correct an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support. The financial information for the three and nine months ended March 31, 2020, has been restated with the effect of decreasing revenue by $1.9 million and $5.3 million, respectively.

NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Consolidated Balance Sheets

Unaudited

(A)

March 31,

June 30,

2021

2020

(In thousands, except share data)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

207,814

$

217,671

Restricted cash

19,016

14,814

Accounts receivable, net of allowance of - March: $428; June: $253 and other receivables

26,488

43,068

Finance loans receivable, net of allowance of - March: $2,289; June: $7,658

20,599

15,879

Inventory

20,267

19,860

Total current assets before settlement assets

294,184

311,292

Settlement assets

2,054

8,014

Total current assets

296,238

319,306

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - March: $36,296; June: $29,524

8,079

6,656

OPERATING LEASE RIGHT-OF-USE

4,870

5,395

EQUITY-ACCOUNTED INVESTMENTS

19,857

65,836

GOODWILL

28,141

24,169

INTANGIBLE ASSETS, net of accumulated amortization of - March: $29,835; June: $27,325

437

612

DEFERRED INCOME TAXES

383

358

OTHER LONG-TERM ASSETS, including reinsurance assets

58,447

31,346

TOTAL ASSETS

416,452

453,678

LIABILITIES

CURRENT LIABILITIES

Short-term credit facilities for ATM funding

11,395

14,814

Accounts payable

6,785

6,287

Other payables

23,224

23,779

Operating lease liability - current

2,945

2,251

Income taxes payable

797

16,157

Total current liabilities before settlement obligations

45,146

63,288

Settlement obligations

2,054

8,015

Total current liabilities

47,200

71,303

DEFERRED INCOME TAXES

5,517

1,859

OPERATING LEASE LIABILITY - LONG TERM

2,111

3,312

OTHER LONG-TERM LIABILITIES, including insurance policy liabilities

2,240

2,012

TOTAL LIABILITIES

57,068

78,486

COMMITMENTS AND CONTINGENCIES

-

-

REDEEMABLE COMMON STOCK

84,979

84,979

EQUITY

NET1 EQUITY:

COMMON STOCK

Authorized: 200,000,000 with $0.001 par value;

Issued and outstanding shares, net of treasury: March: $56,626,060; June: $57,118,925

80

80

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

302,476

301,489

TREASURY SHARES, AT COST: March: $24,891,292; June: $24,891,292

(286,951

)

(286,951

)

ACCUMULATED OTHER COMPREHENSIVE LOSS

(146,174

)

(169,075

)

RETAINED EARNINGS

404,974

444,670

TOTAL NET1 EQUITY

274,405

290,213

NON-CONTROLLING INTEREST

-

-

TOTAL EQUITY

274,405

290,213

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY

$

416,452

$

453,678

(A) Derived from audited consolidated financial statements.

NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

Unaudited

Unaudited

Three months ended

Nine months ended

March 31,

March 31,

2021

2020

2021

2020

(In thousands)

(In thousands)

Cash flows from operating activities

Net loss

$

(6,204

)

$

(34,881

)

$

(39,696

)

$

(39,478

)

Depreciation and amortization

1,132

3,157

3,129

12,303

Impairment loss

-

6,336

-

6,336

Movement in allowance for doubtful accounts receivable

299

277

913

360

(Earnings) Loss from equity-accounted investments

(55

)

32,193

20,098

30,624

Movement in allowance for doubtful loans

-

99

739

719

Change in fair value of equity securities

(10,814

)

-

(25,942

)

-

Fair value adjustment related to financial liabilities

(475

)

(987

)

1,201

(753

)

Interest payable

(25

)

597

(46

)

1,755

Gain on disposal of Net1 Korea

-

(12,733

)

-

(12,733

)

Gain on disposal of FIHRST

-

-

-

(9,743

)

Loss on disposal of equity-accounted investment - Bank Frick

472

-

472

-

Loss on disposal of equity-accounted investment

-

-

13

-

(Profit) Loss on disposal of property, plant and equipment

(142

)

108

600

(95

)

Stock-based compensation charge

245

347

876

1,170

Dividends received from equity accounted investments

-

677

125

2,125

Decrease in accounts receivable and finance loans receivable

5,786

10,596

4,230

13,697

Decrease (Increase) in inventory

428

(5,041

)

2,642

(18,036

)

Decrease in accounts payable and other payables

(894

)

(4,396

)

(4,393

)

(4,660

)

Decrease in taxes payable

(160

)

(131

)

(15,498

)

(1,087

)

Increase (Decrease) in deferred taxes

2,153

(413

)

424

(618

)

Net cash used in operating activities

(8,254

)

(4,195

)

(50,113

)

(18,114

)

Cash flows from investing activities

Capital expenditures

(649

)

(1,042

)

(3,947

)

(4,493

)

Proceeds from disposal of property, plant and equipment

254

59

345

362

Proceeds from disposal of equity-accounted investment - Bank Frick

18,568

-

18,568

-

Proceeds from disposal of Net1 Korea, net of cash disposed

-

192,619

20,114

192,619

Transaction costs paid related to disposal of Net1 Korea

-

(7,458

)

-

(7,458

)

Proceeds from disposal of DNI as equity-accounted investment

-

-

6,010

-

Proceeds from disposal of FIHRST, net of cash disposed

-

-

-

10,895

Investment in equity-accounted investments

-

(1,250

)

-

(2,500

)

Loan to equity-accounted investment

-

(99

)

(1,238

)

(711

)

Repayment of loans by equity-accounted investments

-

-

134

4,268

Net change in settlement assets

745

864

6,190

(9,274

)

Net cash provided by investing activities

18,918

183,693

46,176

183,708

Cash flows from financing activities

Proceeds from bank overdraft

55,280

193,723

261,759

585,273

Repayment of bank overdraft

(103,195

)

(226,699

)

(268,303

)

(605,253

)

Proceeds from issue of shares

35

-

53

-

Proceeds from disgorgement of shareholders' short-swing profits

-

-

124

-

Long-term borrowings utilized

-

-

-

14,798

Repayment of long-term borrowings

-

-

-

(11,313

)

Guarantee fee

-

-

-

(148

)

Finance lease capital repayments

-

(17

)

(69

)

Net change in settlement obligations

(745

)

(864

)

(6,190

)

9,274

Net cash used in financing activities

(48,625

)

(33,857

)

(12,557

)

(7,438

)

Effect of exchange rate changes on cash

(2,263

)

(20,060

)

10,839

(19,007

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(40,224

)

125,581

(5,655

)

139,149

Cash, cash equivalents and restricted cash – beginning of period

267,054

135,079

232,485

121,511

Cash, cash equivalents and restricted cash – end of period

$

226,830

$

260,660

$

226,830

$

260,660

Net 1 UEPS Technologies, Inc.

Attachment A

Operating segment revenue, operating (loss) income and operating (loss) margin:

Three months ended March 31, 2021 and 2020 and December 31, 2020

Change - actual

Change –
constant
exchange rate
(1)

Key segmental data, in ’000, except margins

Q3 '21

Q3 '20
(as
restated)(A)

Q2 '21

Q3 '21
vs
Q3 '20

Q3 '21
vs
Q2 '21

Q3 '21
vs
Q3 '20

Q3 '21
vs
Q2 '21

Revenue:

Processing

$

18,747

$

22,078

$

19,990

(15

%)

(6

%)

(17

%)

(9

%)

IPG

6

1,164

478

(99

%)

(99

%)

(99

%)

(99

%)

All Other

18,741

20,914

19,512

(10

%)

(4

%)

(13

%)

(7

%)

Financial services

10,192

11,683

9,709

(13

%)

5

%

(15

%)

2

%

Technology

2,026

4,040

4,609

(50

%)

(56

%)

(51

%)

(57

%)

Subtotal: Operating segments

30,965

37,801

34,308

(18

%)

(10

%)

(20

%)

(13

%)

Intersegment eliminations

(2,137

)

(3,187

)

(2,003

)

(33

%)

7

%

(35

%)

3

%

Consolidated revenue

$

28,828

$

34,614

$

32,305

(17

%)

(11

%)

(19

%)

(14

%)

Operating (loss) income:

Processing

$

(10,816

)

$

(12,394

)

$

(10,381

)

(13

%)

4

%

(15

%)

1

%

IPG

(3,332

)

(3,175

)

(4,647

)

5

%

(28

%)

2

%

(31

%)

All Other

(7,484

)

(9,219

)

(5,734

)

(19

%)

31

%

(21

%)

26

%

Financial services

(2,111

)

(1,701

)

(1,071

)

24

%

97

%

21

%

91

%

Technology

131

945

1,078

(86

%)

(88

%)

(87

%)

(88

%)

Subtotal: Operating segments

(12,796

)

(13,150

)

(10,374

)

(3

%)

23

%

(5

%)

19

%

Corporate/Eliminations

(1,496

)

(1,062

)

(4,831

)

41

%

(69

%)

37

%

(70

%)

Consolidated operating (loss) income

$

(14,292

)

$

(14,212

)

$

(15,205

)

1

%

(6

%)

(2

%)

(9

%)

Operating (loss) income margin (%)

Processing

(57.7

%)

(56.1

%)

(51.9

%)

IPG

nm

(272.8

%)

(972.2

%)

All Other

(39.9

%)

(44.1

%)

(29.4

%)

Financial services

(20.7

%)

(14.6

%)

(11.0

%)

Technology

6.5

%

23.4

%

23.4

%

Consolidated operating margin

(49.6

%)

(41.1

%)

(47.1

%)

(A) – 2020 has been restated to correct an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support.

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q3 2021 also prevailed during Q3 2020 and Q2 2021.

Nine months ended March 31, 2021 and 2020

Change -
actual

Change –
constant
exchange
rate
(1)

F2021

F2020

F2021
vs
F2020

F2021
vs
F2020

Key segmental data, in ’000, except margins

(as restated)(A)

Revenue:

Processing

$

61,243

$

75,395

(19%)

(18%)

IPG

1,693

2,389

(29%)

(28%)

All other

59,550

73,006

(18%)

(18%)

Financial services

28,166

38,119

(26%)

(25%)

Technology

12,846

16,139

(20%)

(20%)

Subtotal: Operating segments

102,255

129,653

(21%)

(20%)

Intersegment eliminations

(5,986

)

(9,905

)

(40%)

(39%)

Consolidated revenue

96,269

119,748

(20%)

(19%)

Operating (loss) income:

Processing

$

(28,498

)

$

(23,747

)

20%

21%

IPG

(10,751

)

(8,068

)

33%

nm

All other

(17,747

)

(15,679

)

13%

nm

Financial services

(5,554

)

(2,605

)

113%

115%

Technology

2,984

2,679

11%

12%

Subtotal: Operating segments

(31,068

)

(23,673

)

31%

33%

Corporate/Eliminations

(9,204

)

(7,395

)

24%

26%

Consolidated operating (loss) income

(40,272

)

(31,068

)

30%

31%

Operating (loss) income margin (%)

Processing

(46.5

%)

(31.5

%)

IPG

(635.0

%)

(337.7

%)

All other

(29.8

%)

(21.5

%)

Financial services

(19.7

%)

(6.8

%)

Technology

23.2

%

16.6

%

Consolidated operating margin

(41.8

%)

(25.9

%)

(A) – 2020 has been restated to correct an error with respect to the recognition of certain revenue and related cost of goods sold, IT processing, servicing and support.

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2021 also prevailed during fiscal 2020.

Earnings (Loss) from equity-accounted investments:

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

Q3 2021

Q3 2020

%
change

F2021

F2020

%
change

Bank Frick

177

(18,393

)

nm

1,156

(17,924

)

nm

Share of net income

177

15

1,080%

1,156

770

50%

Amortization of intangible assets, net of deferred tax

-

(147

)

nm

-

(433

)

nm

Impairment

-

(18,261

)

nm

-

(18,261

)

nm

DNI

$

-

$

(10,852

)

nm

$

-

$

(9,744

)

nm

Share of net income

-

1,563

nm

-

4,676

nm

Amortization of intangible assets, net of deferred tax

-

(419

)

nm

-

(1,350

)

nm

Impairment

-

(11,996

)

nm

-

(13,070

)

nm

Finbond

-

-

nm

(20,267

)

491

nm

Share of net (loss) income

-

-

nm

(2,617

)

491

nm

Impairment

-

-

nm

(17,650

)

-

nm

Other

(122

)

(2,948

)

(96%)

(987

)

(3,447

)

(71%)

Share of net loss

(122

)

(448

)

(73%)

(439

)

(947

)

(54%)

Impairment

-

(2,500

)

nm

(548

)

(2,500

)

(78%)

Earnings (Loss) from equity-accounted investments

$

55

$

(32,193

)

nm

$

(20,098

)

$

(30,624

)

(34%)


Net 1 UEPS Technologies, Inc.

Attachment B

Reconciliation of GAAP operating loss to EBITDA loss and adjusted EBITDA loss:

Three and nine months ended March 31, 2021 and 2020

Three months ended
March 31,

Nine months ended
March 31,

2021

2020

2021

2020

Operating loss - GAAP

(14,292

)

(14,212

)

(40,272

)

(31,068

)

Depreciation and amortization

1,132

1,153

3,129

3,651

Impairment loss

-

6,336

-

6,336

Negative EBITDA

(13,160

)

(6,723

)

(37,143

)

(21,081

)

Transaction costs

337

300

1,705

3,682

Adjusted EBITDA loss

(12,823

)

(6,423

)

(35,438

)

(17,399

)

Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:

Three months ended March 31, 2021 and 2020

Net (loss) income
(USD '000)

(L)PS, basic
(USD)

Net (loss) income
(ZAR '000)

(L)PS, basic
(ZAR)

2021

2020

2021

2020

2021

2020

2021

2020

GAAP

(6,204

)

(34,881

)

(0.11

)

(0.61

)

(92,796

)

(536,006

)

(1.64

)

(9.43

)

Change in fair value of equity securities, net

(8,543

)

-

(127,783

)

-

Loss on disposal of equity-accounted investment - Bank Frick

472

-

7,060

-

Stock-based compensation charge

245

347

3,665

5,332

Intangible asset amortization, net

66

983

990

15,112

Impairment of equity method investment

-

32,277

-

495,990

Gain on discontinued operation

-

(12,733

)

-

(195,664

)

Impairment loss

-

6,336

-

97,363

Intangible asset amortization, net related to equity accounted investments

-

566

-

8,698

Interest related to SASSA implementation costs refund

-

509

-

7,822

Transaction costs

337

300

5,041

4,610

Fundamental

(13,627

)

(6,296

)

(0.24

)

(0.11

)

(203,823

)

(96,743

)

(3.60

)

(1.70

)

Nine months ended March 31, 2021 and 2020

Net (loss) income
(USD '000)

(L) EPS, basic
(USD)

Net (loss) income
(ZAR '000)

(L)EPS, basic
(ZAR)

2021

2020

2021

2020

2021

2020

2021

2020

GAAP

(39,696

)

(39,478

)

(0.70

)

(0.69

)

(639,798

)

(630,053

)

(11.27

)

(11.12

)

Impairment of equity method investments

18,198

32,084

281,729

512,048

Reversal of deferred taxes related to impairment of equity method investment

(1,353

)

-

(22,633

)

-

Change in fair value of equity securities, net

(20,494

)

-

(330,313

)

-

Transaction costs

1,705

2,876

27,480

45,900

Stock-based compensation charge

876

1,170

14,119

18,673

Loss on disposal of equity-accounted investment - Bank Frick

472

-

7,607

-

Intangible asset amortization, net

184

3,768

2,971

60,123

Gain on discontinued operation

-

(12,733

)

-

(203,214

)

Gain on disposal of FIHRST

-

(9,743

)

-

(155,494

)

Impairment loss

-

6,336

-

101,120

Intangible asset amortization, net related to equity accounted investments

-

1,783

-

28,456

Interest related to SASSA implementation costs refund

-

1,498

-

23,909

Fundamental

(40,095

)

(12,439

)

(0.71

)

(0.22

)

(658,628

)

(198,532

)

(11.60

)

(3.50

)


Net 1 UEPS Technologies, Inc.

Attachment C

Reconciliation of net loss used to calculate loss per share basic and diluted and headline loss per share basic and diluted:

Three months ended March 31, 2021 and 2020

2021

2020

Net loss (USD’000)

(6,204

)

(34,881

)

Adjustments:

Loss on disposal of equity-accounted investment - Bank Frick

430

-

Impairment of equity method investments

-

32,757

Gain on disposal of discontinued operation

-

(21,377

)

Impairment loss

-

6,336

(Profit) Loss on sale of property, plant and equipment

(142

)

108

Tax effects on above

40

(30

)

Net loss used to calculate headline loss (USD’000)

(5,876

)

(17,087

)

Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000)

56,646

56,803

Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000)

56,921

56,803

Headline loss per share:

Basic, in USD

(0.10

)

(0.30

)

Diluted, in USD

(0.10

)

(0.30

)

Nine months ended March 31, 2021 and 2020

2021

2020

Net loss (USD’000)

(39,696

)

(39,478

)

Adjustments:

Impairment of equity method investments

18,198

33,831

Loss on disposal of equity-accounted investment - Bank Frick

430

-

Gain on disposal of discontinued operation

-

(21,377

)

Gain on disposal of FIHRST

-

(9,607

)

Impairment loss

-

6,336

Loss (Profit) on sale of property, plant and equipment

600

(95

)

Tax effects on above

(1,521

)

27

Net loss used to calculate headline loss (USD’000)

(21,989

)

(30,363

)

Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000)

56,803

56,646

Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000)

56,895

56,646

Headline loss per share:

Basic, in USD

(0.39

)

(0.54

)

Diluted, in USD

(0.39

)

(0.54

)

Calculation of the denominator for headline diluted loss per share

Q3 2021

Q3 2020

F2021

F2020

Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP

56,646

56,803

56,803

56,646

Effect of dilutive securities under GAAP

275

-

92

-

Denominator for headline diluted loss per share

56,921

56,803

56,895

56,646

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