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Net 1 Ueps Technologies Inc (UEPS) SEC Filing 10-K Annual report for the fiscal year ending Tuesday, June 30, 2015

Net 1 Ueps Technologies Inc

CIK: 1041514 Ticker: UEPS

Exhibit 99.1

Net 1 UEPS Technologies, Inc. Reports Fourth Quarter and Full Year 2015 Results

Q4 2015 Revenue and FEPS of $164 million and $0.58, a constant currency increase after adjusting for the SASSA recovery in 2014, of 22% and 30%, respectively;
Strategic investments in Hong Kong and Nigeria-based businesses and ZAZOO partnerships with Funifi and BitX; and
Cash and equivalents of $117.6 million as of June 30, 2015, and operating cash flow of $31.8 million in Q4 2015.

JOHANNESBURG, August 20, 2015 – Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the fourth quarter and full-year fiscal 2015.

Summary Financial Metrics

    Three months ended June 30,  
                % change     % change  
    2015     2014     in USD     in ZAR  
(All figures in USD ‘000s except per share data)                        
Revenue   164,286     182,753     (10% )   4%  
     Revenue excluding SASSA recovery(1)(2)   164,286     156,118     5%     22%  
GAAP net income   23,914     28,584     (16% )   (3% )
Fundamental net income(1)   27,233     44,362     (39% )   (29% )
     Fundamental net income excluding SASSA recovery(1)   27,233     25,185     8%     24%  
GAAP earnings per share ($)   0.51     0.59     (13% )   1%  
Fundamental earnings per share ($)(1)   0.58     0.91     (36% )   (26% )
     Fundamental earnings per share excluding SASSA recovery(1)   0.58     0.52     12%     30%  
Fully-diluted shares outstanding (‘000’s)   46,944     48,855     (4% )   (4% )
Average period USD/ ZAR exchange rate   12.04     10.42     16%        

          Year ended June 30,        
                % change     % change  
    2015     2014     in USD     in ZAR  
(All figures in USD ‘000s except per share data)                        
Revenue   625,979     581,656     8%     18%  
     Revenue excluding SASSA recovery(1)(2)   625,979     555,021     13%     24%  
GAAP net income   94,735     70,111     35%     49%  
Fundamental net income(1)   108,205     101,343     7%     17%  
     Fundamental net income excluding SASSA recovery(1)   108,205     82,166     32%     45%  
GAAP earnings per share ($)   2.03     1.51     34%     48%  
Fundamental earnings per share ($)(1)   2.32     2.18     6%     17%  
     Fundamental earnings per share excluding SASSA recovery(1)   2.32     1.77     31%     44%  
Fully-diluted shares outstanding (‘000’s)   46,913     46,603     1%     1%  
Average period USD/ ZAR exchange rate   11.43     10.40     10%        

(1) Revenue excluding SASSA recovery, Fundamental net income, Fundamental net income excluding SASSA recovery, Fundamental earnings per share and Fundamental earnings per share excluding SASSA recovery 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.

(2) Revenue excluding SASSA recovery is Revenue earned during 2014 less approximately $26.6 million received from SASSA related to the recovery of additional implementation costs incurred during the beneficiary re-registration process in fiscal 2012 and 2013

Factors impacting comparability of our Q4 2015 and Q4 2014 results

Unfavorable impact from the strengthening of the US dollar against the ZAR: The US dollar appreciated by 16% against the ZAR during Q4 2015, which negatively impacted our reported results;
Higher revenue resulting from an increase in low-margin prepaid airtime and electricity sales: Our revenue has increased as a result of the growth of our prepaid electricity and prepaid airtime offering during Q4 2015, with prepaid airtime having lower margins compared with our other South African businesses;
  Increased contribution by KSNET: Our results were positively impacted by growth in our South Korean operations;



Growth in financial services: The expansion of our financial services offering resulted in higher year-over-year revenue and operating income from UEPS-based lending during Q4 2015;
Ad hoc hardware sales in fiscal 2015: We sold more terminals and cards during Q4 2015 as a result of ad hoc orders received from our customers;
$26.6 million recovery of expenses and 2014 implementation costs: In Q4 2014, we received approximately $26.6 million, or approximately $19.1 million, net of tax, from SASSA related to the recovery of additional implementation costs incurred during the beneficiary re-registration process in fiscal 2012 and 2013; and
Fair value charge resulting from issue of equity instruments pursuant to BEE transactions: The fair value non- cash charge of $11.3 million related to our BEE transactions adversely impacted our reported results during Q4 2014.

Comments and Outlook

“I am thrilled with our 2015 performance as we were able to execute on our strategy extremely well. The continued local and international interest we receive as a result of our proven ability to implement state of the art, functional and robust solutions that allow for the financial inclusion of all citizens, as well as our card and mobile centric solutions that can be provided individually or in unison, provides us with a bespoke end-to-end financial technology solution relevant to both developed and developing world economies,” said Dr. Belamant, Chairman and CEO. “Our ZAZOO initiative is gaining momentum as demonstrated by its financial performance, and its latest agreements with companies such as Uber, Microsoft, and BitX and our investment in T24. ZAZOO’s pipeline has numerous other deals and it is well positioned to grow exponentially over a short period of time. We also believe that our entry into Nigeria via our investment in One Credit provides us the opportunity to deploy our entire solution in this vast, under-penetrated and profitable economy,” he concluded.

“Our financial and operating performance, including the increased investment in our newer growth and international initiatives, continues to track the strategic developments in our business,” said Herman Kotzé, Chief Financial Officer of Net1. “We expect to sustain the momentum in our business and continue our product, client and geographic diversification, and for fiscal 2016 anticipate our fundamental earnings per share to be at least $2.57, assuming an updated constant currency base of ZAR11.43/ $1 and a share count of 46.7 million shares,” 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 processing

Segment revenue was $59.8 million in Q4 2015, down 32% compared with Q4 2014 in USD and down 22% on a constant currency basis. In ZAR, revenue increased 12% in fiscal 2015 compared to fiscal 2014 (after excluding the impact of the recovery in fiscal 2014 of implementation costs related to our SASSA contract). The increase in segment revenues, exclusive of such recovery, was primarily due to more low-margin transaction fees generated from beneficiaries using the South African National Payment System and more inter-segment transaction processing activities. In addition, revenue from the distribution of social welfare grants grew modestly during the year and was in-line with the increase in unique welfare cardholder recipients, net of removal of invalid and fraudulent beneficiaries, offset by the loss of MediKredit revenue as a result of the sale of that business.

Segment operating income margin was 19% and 44%, respectively, and decreased primarily due to the recovery of SASSA implementation costs in 2014. Segment operating income margin excluding the recovery of implementation costs was 20% for Q4 2014.

International transaction processing

Segment revenue was $42.6 million in Q4 2015, up 1% compared with Q4 2014 in USD and 17% on a constant currency basis. Revenue increased primarily due to increased transaction processing activities in South Korea during Q4 2015. Operating income during the year to date fiscal 2015 was higher due to increase in revenue contribution from KSNET, but partially offset by ZAZOO start-up costs in the UK and India. Segment operating income margin in Q4 2015 and Q4 2014 was 17% and 16%, respectively.

Financial inclusion and applied technologies

Segment revenue was $73.0 million in Q4 2015, up 14% compared with Q4 2014 in USD and 32% on a constant currency basis. Financial inclusion and applied technologies revenue and operating income increased primarily due to higher prepaid airtime sales driven by the rollout of our prepaid airtime product, an increase in the number of UEPS-based loans as we rolled out our product nationally, more ad hoc terminal and card sales and, in ZAR, an increase in intersegment revenues. Smart Life did not contribute to operating income in fiscal 2015 and 2014 due to the FSB suspension of its license. Smart Life resumed operating activities in early fiscal 2016, following the upliftment of suspension of its license by the FSB. Segment operating income margin was 27% and 28%, respectively, and decreased primarily as a result of more low-margin prepaid airtime and hardware sales.


Corporate/eliminations

The decrease in our corporate expenses in Q4 2015 resulted primarily from the non-cash charge related to the equity instruments issued pursuant to our BEE transactions in Q4 2014 and lower US government investigation and US lawsuit expenses, partially offset by increases in general corporate audit fees, executive emoluments and other corporate head office-related expenses.

Cash flow and liquidity

At June 30, 2015, we had cash and cash equivalents of $117.6 million, up from $58.7 million at June 30, 2014. The increase in our cash balances from June 30, 2014, was primarily due to the expansion of all of our core businesses, and to a lesser extent, to the cash conservation resulting from the sale of loss-incurring businesses, offset by provisional tax payments, investments, capital expenditures and the scheduled Korean debt repayment in October 2014.

Excluding the impact of interest received, interest paid under our Korean debt and taxes, the increase in cash from operating activities resulted from improved trading activity during fiscal 2015. During fiscal 2015, we paid interest of $3.6 million under our South Korean debt facility. Capital expenditures for Q4 2015 and 2014 were $11.6 million and $6.6 million, respectively, and have increased primarily due to the acquisition of more payment processing terminals in South Korea and ATMs in South Africa.

Use of Non-GAAP Measures

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

Fundamental net income and fundamental earnings per share

Fundamental net income and earnings per share is GAAP net income and earnings per share adjusted for (1) the amortization of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3) unusual non-recurring items, including the amortization of KSNET debt facility fees and US government investigations-related and US lawsuit expenses; as well as in fiscal 2015, a refund (net of taxes) related to Korean industry-wide litigation that has now been finalized and in fiscal 2014, the equity instruments charged related to our December 2014 BEE transactions, transaction-related costs and the net loss on deconsolidation of subsidiaries and business, net of tax.

Fundamental net income excluding SASSA recovery and fundamental earnings per share excluding SASSA recovery is Fundamental net income and earnings per share less the recovery received from SASSA in 2014 of $19.2 million, after taxes.

Management believes that the fundamental net income and earnings per share, as well as the fundamental net income and earnings per share excluding SASSA recovery, metrics enhances its own evaluation, as well as an investor’s understanding, of our financial performance.

Attachment B presents the reconciliation between GAAP net income and earnings per share, basic, to fundamental net income and earnings per share, basic and to fundamental net income and earnings per share, basic excluding recovery from SASSA.

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, and, in fiscal 2014, the net loss on deconsolidation of subsidiaries and asset group, 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 Q4 2015 results on August 21, 2015, 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 September 13, 2015.


Fiscal 2016 earnings call dates

We expect to host quarterly conference calls to review our fiscal 2016 quarterly results in accordance with the schedule provided in the table below:

Conference call to review quarter ended:   Tentative date
September 30, 2015 (Q1, 2016)   November 6, 2015
December 31, 2015 (Q2, 2016)   February 5, 2016
March 31, 2016 (Q3, 2016)   May 6, 2016
June 30, 2016 (Q4, 2016)   August 26, 2016

The dates provided above are tentative and we will confirm the final dates and dial-in details closer to the quarterly conference call date.

About Net1 (www.net1.com)

Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System (“UEPS”) or utilize its proprietary mobile technologies. The Company operates market-leading payment processors in South Africa and the Republic of Korea.

UEPS permits the Company to facilitate biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. Net1’s UEPS/EMV solution is interoperable with global EMV standards that seamlessly enable access to all the UEPS functionality in a traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification.

Net1’s mobile technologies include its proprietary mobile payments solution - MVC, which offers secure mobile-based payments, as well as mobile banking and prepaid value-added services in developed and emerging countries. The Company intends to deploy its varied mobile solutions through its ZAZOO business unit, which is an aggregation of innovative technology companies and is based in the United Kingdom.

Net1 has a primary listing on the NASDAQ and a secondary listing on the Johannesburg Stock Exchange.

Forward-Looking Statements

This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.

Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1 917-767-6722
Email: dchopra@net1.com


NET 1 UEPS TECHNOLOGIES, INC.
Consolidated Statements of Operations

    Unaudited     (A)  
    Three months ended     Year ended  
    June 30,           June 30,  
    2015     2014     2015     2014  
    (In thousands, except per share data)     (In thousands, except per share data)  
REVENUE $  164,286   $ 182,753   $  625,979   $ 581,656  
EXPENSE                        
         Cost of goods sold, IT processing, servicing and support   80,582     72,641     297,856     260,232  
         Selling, general and administration   40,797     46,156     158,919     168,072  
         Equity instruments issued pursuant to BEE transactions   -     11,268     -     11,268  
         Depreciation and amortization   10,294     10,041     40,685     40,286  
OPERATING INCOME   32,613     42,647     128,519     101,798  
INTEREST INCOME   4,467     4,824     16,355     14,817  
INTEREST EXPENSE   1,096     1,761     4,456     7,473  
INCOME BEFORE INCOME TAX EXPENSE   35,984     45,710     140,418     109,142  
INCOME TAX EXPENSE   11,980     17,260     44,136     39,379  
NET INCOME BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS
  24,004     28,450     96,282     69,763  
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS
  219     96     452     298  
NET INCOME   24,223     28,546     96,734     70,061  
LESS (ADD): NET INCOME (LOSS)
ATTRIBUTABLE TO NON-CONTROLLING
INTEREST
  309     (38 )   1,999     (50 )
NET INCOME ATTRIBUTABLE TO NET1 $  23,914   $ 28,584   $  94,735   $ 70,111  
Net income per share, in United States dollars                        
         Basic earnings attributable to Net1 shareholders $ 0.51   $ 0.59   $ 2.03   $ 1.51  
         Diluted earnings attributable to Net1 shareholders $ 0.51   $ 0.59   $ 2.02   $ 1.50  

(A) – Derived from audited financial statements


NET 1 UEPS TECHNOLOGIES, INC.
Consolidated Balance Sheets

    (A)     (A)  
    June 30,     June 30,  
    2015     2014  
    (In thousands, except share data)  
ASSETS    
CURRENT ASSETS            
     Cash and cash equivalents $  117,583   $  58,672  
     Pre-funded social welfare grants receivable   2,306     4,809  
     Accounts receivable, net of allowances   148,768     148,067  
     Finance loans receivable, net of allowances   40,373     53,124  
     Inventory   12,979     10,785  
     Deferred income taxes   7,298     7,451  
             Total current assets before settlement assets   329,307     282,908  
                     Settlement assets   661,916     725,987  
                             Total current assets   991,223     1,008,895  
PROPERTY, PLANT AND EQUIPMENT, net   52,320     47,797  
EQUITY-ACCOUNTED INVESTMENTS   14,329     878  
GOODWILL   166,437     186,576  
INTANGIBLE ASSETS, net   47,124     68,514  
OTHER LONG-TERM ASSETS, including reinsurance assets   14,997     38,285  
     TOTAL ASSETS   1,286,430     1,350,945  
LIABILITIES    
CURRENT LIABILITIES            
     Accounts payable   21,453     17,101  
     Other payables   45,595     42,257  
     Current portion of long-term borrowings   8,863     14,789  
     Income taxes payable   6,287     7,676  
             Total current liabilities before settlement obligations   82,198     81,823  
                     Settlement obligations   661,916     725,987  
                             Total current liabilities   744,114     807,810  
DEFERRED INCOME TAXES   10,564     15,522  
LONG-TERM BORROWINGS   50,762     62,388  
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities   2,205     23,477  
     TOTAL LIABILITIES   807,645     909,197  
COMMITMENTS AND CONTINGENCIES            
EQUITY    
     COMMON STOCK            
                 Authorized: 200,000,000 with $0.001 par value; 
                 Issued and outstanding shares, net of treasury - 2015:46,679,565; 2014: 
                 47,819,299
  64     63  
     PREFERRED STOCK            
                 Authorized shares: 50,000,000 with $0.001 par value; 
                 Issued and outstanding shares, net of treasury: 2015: -; 2014: -
- -  
     ADDITIONAL PAID-IN-CAPITAL   213,896     202,401  
     TREASURY SHARES, AT COST: 2015: 18,057,228; 2014: 15,883,212   (214,520 )   (200,681 )
     ACCUMULATED OTHER COMPREHENSIVE LOSS   (139,181 )   (82,741 )
     RETAINED EARNINGS   617,868     522,729  
             TOTAL NET1 EQUITY   478,127     441,771  
             NON-CONTROLLING INTEREST   658     (23 )
                     TOTAL EQUITY   478,785     441,748  
                             TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $  1,286,430   $  1,350,945  

(A) – Derived from audited financial statements


NET 1 UEPS TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows

    Unaudited     A  
    Three months ended     Year ended  
    June 30,     June 30,  
    2015     2014     2015     2014  
    (In thousands)     (In thousands)  
Cash flows from operating activities                        
Net income $  24,223   $  28,546   $  96,734   $  70,061  
Adjustments to reconcile net income to net cash
provided by operating activities:
               
     Depreciation and amortization   10,294     10,041     40,685     40,286  
     Earnings from equity-accounted investments   (219 )   (96 )   (452 )   (298 )
     Fair value adjustment   518     (104 )   248     (55 )
     Interest payable   7     404     1,283     2,100  
     Facility fee amortized   38     81     208     738  
     Profit on disposal of property, plant and equipment   (1 )   (392 )   (296 )   (434 )
     Profit on deconsolidation of subsidiaries and business   -     55     -     55  
     Stock compensation charge, net of forfeitures   513     898     3,195     3,718  
     Fair value of BEE equity instruments granted   -     11,268     -     11,268  
     (Increase) Decrease in accounts and finance
     loans receivable, and pre-funded grants
     receivable
  (4,135 )   (33,926 )   1,399     (101,447 )
     (Increase) Decrease in inventory   (1,075 )   (199 )   (3,846 )   780  
     Increase (Decrease) in accounts payable and other payables   6,804     23,566     (850 )   12,671  
     (Decrease) Increase in taxes payable   (3,507 )   (3,908 )   606     5,523  
     Decrease in deferred taxes   (1,631 )   (4,802 )   (3,656 )   (7,821 )
           Net cash provided by operating activities   31,829     31,432     135,258     37,145  
                         
Cash flows from investing activities                        
Capital expenditures   (11,614 )   (6,597 )   (36,436 )   (23,906 )
Proceeds from disposal of property, plant and equipment   80     866     857     2,990  
Net cash outflow from sale of MediKredit   -     (669 )   -     (669 )
Proceeds from sale of business   -     186     1,895     186  
(Acquisition of equity of)/ capital reduction/ repayment of loan by equity-accounted investment   (13,200 )   564     (13,200 )   539  
Other investing activities, net   -     -     (29 )   570  
Net change in settlement assets   (22,853 )   20,059     (12,570 )   (1,350 )
           Net cash (used in) provided by investing activities   (47,587 )   14,409     (59,483 )   (21,640 )
                         
Cash flows from financing activities                        
Repayment of long-term borrowings   -     -     (14,128 )   (87,008 )
Long-term borrowings obtained   789     1,044     3,765     73,677  
Acquisition of treasury stock   -     -     (9,151 )   -  
Sale of equity to non-controlling interest   -     -     1,407     -  
Dividends paid to non-controlling interest   -     -     (1,024 )   -  
Proceeds from issue of common stock   265     110     2,045     198  
Payment of facility fee   -     -     -     (872 )
Proceeds from bank overdraft   -     -     -     24,580  
Repayment of bank overdraft   -     -     -     (23,335 )
Acquisition of interests in KSNET   -     -     -     (1,968 )
Net change in settlement obligations   22,853     (20,059 )   12,570     1,350  
           Net cash provided by (used in) financing activities   23,907     (18,905 )   (4,516 )   (13,378 )
                         
Effect of exchange rate changes on cash   (1,568 )   861     (12,348 )   2,880  
Net increase in cash and cash equivalents   6,581     27,797     58,911     5,007  
Cash and cash equivalents – beginning of year   111,002     30,875     58,672     53,665  
Cash and cash equivalents at end of year $  117,583   $  58,672   $  117,583   $  58,672  

(A) – Derived from audited financial statements


Net 1 UEPS Technologies, Inc.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended June 30, 2015 and 2014 and March 31, 2015

                        Change – constant  
                Change - actual     exchange rate(1)
                Q4 ‘15     Q4 ‘15     Q4 ‘15     Q4 ‘15  
                vs     vs     vs      vs  
Key segmental data, in $ ’000,   Q4 ‘15     Q4 ‘14     Q3 ‘15     Q4‘14     Q3 ‘15     Q4‘14     Q3 ‘15  
Revenue:                                          
South African transaction processing $ 59,774   $ 88,265   $ 57,999     (32% )   3%     (22% )   6%  
International transaction processing   42,573     42,201     38,311     1%     11%     17%     14%  
Financial inclusion and applied technologies   73,042     64,093     66,830     14%     9%     32%     12%  
         Subtotal: Operating segments   175,389     194,559     163,140     (10% )   8%     4%     10%  
         Intersegment eliminations   (11,103 )   (11,806 )   (12,019 )   (6% )   (8% )   9%     (5% )
                 Consolidated revenue $ 164,286   $ 182,753   $ 151,121     (10% )   9%     4%     12%  
                                           
Operating income (loss):                                          
South African transaction processing $ 11,268   $ 38,675   $ 13,218     (71% )   (15% )   (66% )   (13% )
International transaction processing   7,134     6,647     6,579     7%     8%     24%     11%  
Financial inclusion and applied technologies   19,385     18,126     17,906     7%     8%     24%     11%  
         Subtotal: Operating segments   37,787     63,448     37,703     (40% )   0%     (31% )   3%  
         Corporate/Eliminations   (5,174 )   (20,801 )   (5,737 )   (75% )   (10% )   (71% )   (7% )
                 Consolidated operating income $ 32,613   $ 42,647   $ 31,966     (24% )   2%     (12% )   5%  
                                           
Operating income margin (%)                                          
South African transaction processing   19%     44%     23%                          
International transaction processing   17%     16%     17%                          
Financial inclusion and applied technologies   27%     28%     27%                  
         Consolidated operating margin   20%     23%     21%                          

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the fourth quarter of fiscal 2015 also prevailed during the fourth quarter of fiscal 2014 and the third quarter of fiscal 2015.


Year ended June 30, 2015 and 2014

                      Change –  
                      constant  
                Change -     exchange  
                actual     rate(1)
                F2015     F2015  
                vs     vs  
Key segmental data, in ’000, except margins   F2015     F2014     F2015     F2015  
Revenue:                        
South African transaction processing   236,452     261,577     (10% )   (1% )
International transaction processing   164,554     152,725     8%     18%  
Financial inclusion and applied technologies   272,600     207,595     31%     44%  
         Subtotal: Operating segments   673,606     621,897     8%     19%  
         Intersegment eliminations   (47,627 )   (40,241 )   18%     30%  
                 Consolidated revenue   625,979     581,656     8%     18%  
                         
Operating income (loss):                        
South African transaction processing   51,008     61,401     (17% )   (9% )
International transaction processing   26,805     21,952     22%     34%  
Financial inclusion and applied technologies   72,725     60,685     20%     32%  
         Subtotal: Operating segments   150,538     144,038     5%     15%  
         Corporate/Eliminations   (22,019 )   (42,240 )   (48% )   (43% )
                 Consolidated operating income   128,519     101,798     26%     39%  
                         
Operating income margin (%)                        
South African transaction processing   22%     23%              
International transaction processing   16%     14%              
Financial inclusion and applied technologies   27%     29%              
         Overall operating margin   21%     18%              

(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2015 also prevailed during fiscal 2014.


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 and to fundamental net income and earnings per share, basic excluding recovery from SASSA:

Three months ended June 30, 2015 and 2014

          EPS,                 EPS,  
    Net income     basic     Net income     basic  
    (USD’000)   (USD)     (ZAR’000)   (ZAR)  
    2015     2014     2015     2014      2015     2014     2015     2014  
                                                 
GAAP   23,914     28,584     0.51     0.59       288,035     297,897     6.18     6.12  
                                                 
     Intangible asset amortization, net .   2,751     2,960                 33,131     30,842              
     Stock-based compensation charge   513     898                 6,179     9,359              
     Facility fees for KSNET debt   38     79                 458     823              
     US government investigations-
      related and US lawsuit expenses
  17     53             205     552          
     BEE equity instruments charge   -     11,268                 -     118,740              
     Net loss on deconsolidation of
     subsidiaries and business, net of
     tax
  -     443             -     4,617          
     Transaction-related costs   -     77                 -     802              
                 Fundamental   27,233     44,362     0.58     0.91     328,008     463,632     7.04     9.52  
     Recovery from SASSA, net of tax .   -     19,177                 -     199,861              
                 Fundamental excluding
                 recovery from SASSA,
                 net
of tax
  27,233     25,185     0.58     0.52     328,008     263,771     7.04     5.42  

Year ended June 30, 2015 and 2014

                                        EPS,  
    Net income     EPS, basic     Net income     basic  
    (USD’000)   (USD)     (ZAR’000)     (ZAR)  
    2015     2014     2015     2014     2015     2014     2015     2014  
                                                 
GAAP   94,735     70,111     2.03     1.51     1,082,584     728,916     23.17     15.68    
                                                 
     Intangible asset amortization, net .   11,263     12,490                 128,708     129,846              
     Stock-based compensation charge   3,195     3,718                 36,511     38,655              
     Refund for KSNET litigation   (1,354 )   -                 (15,473 )   -              
     Facility fees for KSNET debt   208     657                 2,377     6,831              
     US government investigations-
     related and US lawsuit expenses
  158     2,579               1,806     26,813            
     BEE equity instruments charge   -     11,268                 -     118,740              
     Net loss on deconsolidation of
     subsidiaries and business, net of
     tax
  -     443               -     4,606            
     Transaction-related costs   -     77                 -     806              
                 Fundamental   108,205     101,343     2.32     2.18     1,236,513     1,055,213     26.46     22.70    
     Recovery from SASSA, net of tax .   -     19,177                 -     199,861              
                 Fundamental excluding
                 recovery from SASSA, net
of
                 tax
  108,205     82,166     2.32     1.77     1,236,513     855,352     26.46     18.40  


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 June 30, 2015 and 2014

    2015     2014  
             
Net income (USD’000)   23,914     28,584  
Adjustments:            
     Profit on sale of property, plant and equipment   (1 )   (392 )
     Loss on deconsolidation of subsidiaries and business   -     55  
     Tax effects on above   -     (287 )
Net income used to calculate headline earnings (USD’000)   23,913     27,960  
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000)
  46,620     48,695  
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000)
  46,944     48,855  
Headline earnings per share:            
     Basic, in USD   0.51     0.57  
     Diluted, in USD   0.51     0.57  

Year ended June 30, 2015 and 2014

    2015     2014  
             
Net income (USD’000)   94,735     70,111  
Adjustments:            
     Profit on sale of property, plant and equipment   (296 )   (434 )
     Loss on deconsolidation of subsidiaries and business   -     55  
     Tax effects on above   83     (276 )
Net income used to calculate headline earnings (USD’000)   94,522     69,456  
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000)
46,733 46,484
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000)
46,913 46,603
Headline earnings per share:            
     Basic, in USD   2.02     1.49  
     Diluted, in USD   2.01     1.49  

Calculation of the denominator for headline diluted earnings per share

    Q4 ‘15     Q4 ‘14     F2015     F2014  
                         
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP   46,620     48,695     46,733     46,484  
     Effect of dilutive securities under GAAP   324     160     180     119  
         Denominator for headline diluted earnings per share   46,944     48,855     46,913     46,603  

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.



The following information was filed by Net 1 Ueps Technologies Inc (UEPS) on Thursday, August 20, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statement Of Changes In Equity
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Income
Consolidated Statements Of Operations
Accounts Receivable, Net And Finance Loans Receivable, Net
Accounts Receivable, Net And Finance Loans Receivable, Net (narrative) (details)
Accounts Receivable, Net And Finance Loans Receivable, Net (schedule Of Accounts Receivable) (details)
Accounts Receivable, Net And Finance Loans Receivable, Net (schedule Of Finance Loans Receivable) (details)
Accounts Receivable, Net And Finance Loans Receivable, Net (tables)
Accumulated Other Comprehensive (loss) Income
Accumulated Other Comprehensive (loss) Income (changes In Accumulated Other Comprehensive (loss) Income ) (details)
Accumulated Other Comprehensive (loss) Income (tables)
Acquisitions
Acquisitions (narrative) (details)
Acquisitions (schedule Of Cash Paid Net Of Cash Received Related To Company Acquisitions) (details)
Acquisitions (schedule Of Preliminary Purchase Price Allocation Translated At Applicable Foreign Exchange Rate) (details)
Acquisitions (tables)
Commitments And Contingencies
Commitments And Contingencies (future Minimum Payments Under Operating Leases) (details)
Commitments And Contingencies (narrative) (details)
Commitments And Contingencies (tables)
Common Stock
Common Stock (narrative) (details)
Common Stock (number Of Shares, Net Of Treasury) (details)
Common Stock (tables)
Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business
Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business (narrative) (details)
Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business (profit (loss) On Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business) (details)
Deconsolidation Of Businesses Sold Or Liquidated And Disposal Of Business (tables)
Description Of Business And Basis Of Presentation
Earnings Per Share
Earnings Per Share (income From Continuing Operations And Share Data Used In Basic And Diluted Earnings Per Share Computations) (details)
Earnings Per Share (narrative) (details)
Earnings Per Share (tables)
Equity Instruments Issued Pursuant To Bee Transactions
Equity Instruments Issued Pursuant To Bee Transactions (details)
Fair Value Of Financial Instruments
Fair Value Of Financial Instruments (fair Value Of Assets And Liabilities Measured On Recurring Basis) (details)
Fair Value Of Financial Instruments (narrative) (details)
Fair Value Of Financial Instruments (outstanding Foreign Exchange Contracts) (details)
Fair Value Of Financial Instruments (tables)
Goodwill And Intangible Assets, Net
Goodwill And Intangible Assets, Net (carrying Value And Accumulated Amortization Of Intangible Assets) (details)
Goodwill And Intangible Assets, Net (carrying Value Of Goodwill) (details)
Goodwill And Intangible Assets, Net (future Estimated Annual Amortization Expense) (details)
Goodwill And Intangible Assets, Net (goodwill Allocated To Reportable Segments) (details)
Goodwill And Intangible Assets, Net (narrative) (details)
Goodwill And Intangible Assets, Net (tables)
Income Taxes
Income Taxes (components Of Income Before Income Taxes) (details)
Income Taxes (movement In Valuation Allowance) (details)
Income Taxes (narrative) (details)
Income Taxes (provisions For Income Taxes By Location Of Taxing Jurisdiction) (details)
Income Taxes (reconciliation Of Income Taxes) (details)
Income Taxes (schedule Of Deferred Tax Assets And Liabilities) (details)
Income Taxes (schedule Of Operating Loss Carryforwards) (details)
Income Taxes (schedule Of Reconciliation Of Total Amounts Of Unrecognized Tax Benefits) (details)
Income Taxes (tables)
Inventory
Inventory (details)
Inventory (tables)
Long-term Borrowings
Long-term Borrowings (details)
Operating Segments
Operating Segments (long-lived Assets Based On Geographical Location) (details)
Operating Segments (narrative) (details)
Operating Segments (reconciliation Of Reportable Segments Measure Of Profit Or Loss To Income) (details)
Operating Segments (reconciliation Of Reportable Segments Revenue) (details)
Operating Segments (revenue Based On Geographic Location) (details)
Operating Segments (summary Of Segment Information) (details)
Operating Segments (tables)
Other Payables
Other Payables (details)
Other Payables (tables)
Pre-funded Social Welfare Grants Receivable
Property, Plant And Equipment, Net
Property, Plant And Equipment, Net (details)
Property, Plant And Equipment, Net (tables)
Reinsurance Assets And Policy Holder Liabilities Under Insurance And Investment Contracts
Reinsurance Assets And Policy Holder Liabilities Under Insurance And Investment Contracts (narrative) (details)
Reinsurance Assets And Policy Holder Liabilities Under Insurance And Investment Contracts (summary Of Movement In Assets And Policy Holder Liabilities Under Investment Contracts) (details)
Reinsurance Assets And Policy Holder Liabilities Under Insurance And Investment Contracts (summary Of The Movement In Reinsurance Assets And Policy Holder Liabilities Under Insurance Contracts) (details)
Reinsurance Assets And Policy Holder Liabilities Under Insurance And Investment Contracts (tables)
Related Party Transactions
Related Party Transactions (details)
Revenue
Revenue (details)
Revenue (tables)
Short-term Facilities
Short-term Facilities (details)
Significant Accounting Policies
Significant Accounting Policies (details)
Significant Accounting Policies (policy)
Significant Accounting Policies (tables)
Stock-based Compensation
Stock-based Compensation (narrative) (details)
Stock-based Compensation (range Of Assumptions Used To Value Options Granted) (details)
Stock-based Compensation (recorded Net Stock Compensation Charge) (details)
Stock-based Compensation (restricted Stock Activity) (details)
Stock-based Compensation (summarized Stock Option Activity) (details)
Stock-based Compensation (tables)
Supplemental Cash Flow Information
Supplemental Cash Flow Information (cash Flow Movements If Cash Had Been Transferred) (details)
Supplemental Cash Flow Information (narrative) (details)
Supplemental Cash Flow Information (schedule Of Supplemental Cash Flow Disclosures) (details)
Supplemental Cash Flow Information (tables)
Unaudited Quartely Results
Unaudited Quartely Results (details)
Unaudited Quartely Results (tables)
Ticker: UEPS
CIK: 1041514
Form Type: 10-K Annual Report
Accession Number: 0001062993-15-004727
Submitted to the SEC: Thu Aug 20 2015 4:16:55 PM EST
Accepted by the SEC: Thu Aug 20 2015
Period: Tuesday, June 30, 2015
Industry: Functions Related To Depository Banking

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