EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Net 1 UEPS Technologies, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Exhibit 99.1

Net 1 UEPS Technologies, Inc. Reports Preliminary Fourth Quarter and Full Year 2019 Results

JOHANNESBURG, September 26, 2019 - Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released preliminary unaudited results for the fourth quarter and full-year fiscal 2019.

Preliminary Q4 2019 Highlights:

  • Revenue of $71.2 million, GAAP EPS of $(2.63) and Fundamental EPS of $(2.45)
  • Fundamental EPS of $(2.45) includes $125.4 million, or $2.21 per share of non-cash fair value loss adjustments for Cell C, net of tax, and $13.7 million, or $0.24 per share for impairments of the Cedar Cellular note and goodwill;
  • Total revenue from continuing operations in constant currency grew 3.5% compared to Q3 2019, while adjusted EBITDA loss improved from ($9.4) million in Q3 2019 to a loss of $(0.7) million in Q4 2019;
  • South African operations achieved EBITDA breakeven in July 2019; active EPE accounts remained stable at 1.1 million; and
  • KSNET revenue grew 11% compared to Q3 2019 in constant currency, while EBITDA margin improved 200 basis points;

"We are pleased to report that we have stabilized our business in South Africa, and we are focused on returning to growth and profitability in fiscal 2020. Going forward, we are returning to our roots of providing innovative and affordable financial technology and services offerings to the unbanked and underbanked, as well as leveraging our deep expertise in cryptography and secure transactions to introduce new and relevant products," said Herman Kotzé, CEO. "We also continue to review our portfolio of investments for those that do not fit our strategic focus or give us a path to control, and will accordingly be evaluated for monetization. Building on our disposal of DNI which started in Q3 2019, the Company has now received multiple indicative offers for KSNET in Korea, and we have engaged FT Partners to assist the Board to determine the appropriate course of action. With the challenges of the last year and the required repositioning behind us, we are well positioned to unlock shareholder value and improve capital allocation going forward."

"As we look to fiscal 2020, our progress should be benchmarked to our Q4 2019 results rather than year-over-year comparisons given the contract termination and business disposals over the course of fiscal 2019. In fiscal 2020, we expect to generate adjusted EBITDA of at least $16 million using a constant currency base of ZAR 14.27/$1, driven by growth in South Korea and South Africa, and reduced losses in our IPG business," said Alex Smith, CFO. "We are working closely with Cell C and its stakeholders to improve its short-term liquidity challenges, conclude its recapitalization and as a result, create a long-term sustainable business. Our other equity investments continued to perform in line, or ahead of expectations during the quarter."

Preliminary Summary Financial Metrics

    Three months ended June 30,  
    2019     2018
As restated(1)		     % change in USD     % change in ZAR  
(All figures in USD '000s except per share data)                  
Revenue   71,181     149,194     (52%)     (40%)  
                         
GAAP operating (loss) income   (15,607 )   10,072     nm     nm  
                         
Adjusted (negative) EBITDA(2)   (749 )   24,301     nm     nm  
                         
GAAP (loss) earnings per share ($)   (2.63 )   0.05     nm     nm  
Continuing   (2.63 )   0.10     nm     nm  
Discontinued   -     (0.05 )   nm     nm  
                         
Fundamental (loss) earnings per share ($)(2)   (2.45 )   0.22     nm     nm  
                         
Fully-diluted shares outstanding ('000's)   56,804     56,816     (0%)        
                         
Average period USD/ ZAR exchange rate   14.29     11.45     25%        
                         
Non-cash adjustments included (before tax impact):   140,827     12,834     997%        
Allowance for doubtful finance loans receivables   1,148     1,798     (36%)        
Change in fair value of equity securities   125,360     5,370     2,234%        
Loss on disposal of DNI   631     -     nm        
Loss on acquisition of DNI   -     4,614     nm        
Impairment loss   6,249     1,052     494%        
Impairment of Cedar Cell note   7,439     -     nm        


    Fiscal year ended June 30,  
    2019      2018
As restated(1)		     % change in USD     % change in ZAR  
(All figures in USD '000s except per share data)                  
Revenue   380,699     612,889     (38%)     (30%)  
                         
GAAP operating (loss) income   (79,469 )   58,949     nm     nm  
                         
Adjusted (negative) EBITDA(2)   (12,621 )   127,155     nm     nm  
                         
GAAP (loss) earnings per share ($)   (4.82 )   1.13     nm     nm  
Continuing   (4.80 )   1.09     nm     nm  
Discontinued   (0.02 )   0.04     nm     nm  
                         
Fundamental (loss) earnings per share ($)(2)   (3.93 )   2.00     nm     nm  
                         
Fully-diluted shares outstanding ('000's)   56,778     56,858     (0%)        
                         
Average period USD/ ZAR exchange rate   14.27     12.70     12%        
                         
Non-cash adjustments included (before tax impact):   238,554     6,416     3,618%        
Allowance for doubtful finance loans receivables   32,786     13,358     145%        
Change in fair value of equity securities   167,459     (32,473 )   nm        
Loss on disposal of DNI   5,771     -     nm        
Loss on acquisition of DNI   -     4,614     nm        
Impairment loss   19,745     20,917     (6%)        
Impairment of Cedar Cell note   12,793     -     nm        

(1) 2018 restated to correct an error identified by its equity method investment - Finbond Group Limited. The financial information for the three months and year ended June 30, 2018, have been restated with the effect of decreasing GAAP net (loss) income by $0.1 million, respectively. GAAP (loss) earnings per share were unaffected.

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

Factors impacting comparability of our preliminary Q4 2019 and Q4 2018 results

  • Decline in revenue: Our revenues declined 41% in ZAR primarily due to the expiration of our SASSA contract, the significant decline in EPE account numbers driven by SASSA's auto-migration of accounts to SAPO, and a reduction in EPE-related financial and value-added services and transaction fees due to a smaller customer base;
  • Increase in operating losses: Lower revenue, coupled with a high-fixed cost infrastructure, ongoing IPG operating losses, and a goodwill impairment resulted in an operating loss. We also incurred $1.0 million in retrenchment costs during Q4 2019;
  • Non-cash losses, impairments and fair-value adjustments: We incurred a $0.6 million non-cash loss on disposal of an 8% interest in DNI, a goodwill impairment loss of $6.2 million, a fair value adjustment loss of $125.4 million for Cell C and a $7.4 million impairment of our Cedar Cell note; and
  • Adverse foreign exchange movements: The U.S. dollar appreciated 24% against the ZAR and 10% against the KRW during Q4 2019, which adversely impacted our reported results.

Preliminary Results of Operations by Segment and Liquidity

South African transaction processing

Segment revenue was $18.9 million in Q4 2019, down 63% on a constant currency basis compared with Q4 2018 but up from $17.4 million in Q3 2019. The year-over-year 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 as the contract ended at the end of Q1 2019. Our revenue and operating income were also adversely impacted by the significant reduction in the number of SASSA grant recipients with SASSA-branded Grindrod cards linked to Grindrod bank accounts as well as a lower number of EPE accounts in Q2 2019. These decreases in revenue and operating income were partially offset by higher transaction revenue as a result of increased usage of our ATMs. Operating income for this operating segment for Q4 2019 included retrenchment costs of $1.0 million (ZAR 14.3 million). Our operating (loss) income margin for Q4 2019 and 2018 was (13.1%) and 6.7%, respectively. Excluding restructuring costs, the operating loss margin for Q4 2019 and Q3 2019 was (7.5%) and (57.5%) respectively.

International transaction processing

Segment revenue was $36.4 million in Q4 2019, down 16% compared with Q4 2018 but up from $34.4 million in Q3 2019. Segment revenue was lower during Q4 2019, primarily due to a contraction in IPG transactions processed, specifically meaningfully lower crypto-exchange and China processing activity, and modestly lower KSNET revenue as a result of lower transaction values processed. Operating income during Q4 2019 was higher compared to fiscal 2018 due to an improved contribution from KSNET, primarily as a result of a lower depreciation expense, and partially offset by the decrease in IPG revenues. Operating income margin for Q4 2019 and 2018, and Q3 2019 was 6.1%, 4.8%, and 5.6% respectively.

Financial inclusion and applied technologies

Segment revenue was $17.4 million in Q4 2019, down 59% compared with Q4 2018 in constant currency and Q3 2019 revenue (excluding DNI) of $18.8 million. Segment revenue decreased primarily due to fewer prepaid airtime and value-added services sales, lower lending and insurance revenue, and a decrease in inter-segment revenues. Operating income was significantly lower than Q4 2018, primarily due to lower revenue generation and higher expenses incurred to maintain and expand our financial service infrastructure. Operating (loss) income for this operating segment for Q4 2019 includes a goodwill impairment of $6.2 million. Operating (loss) income margin for Q4 2019 and 2018 was (61.2%) and 25.5%, respectively. Excluding the goodwill impairment, segment operating loss and margin for Q4 2019 were ($4.5) million and (26.0%), respectively, and excluding DNI and retrenchment costs, segment operating loss and margin for Q3, 2019 were ($3.3) million and (17.8%), respectively.

Corporate/eliminations

Our corporate expenses decreased primarily due to a reversal of stock compensation charge of $1.8 million related to stock options and restricted stock forfeited, partially offset by higher non-employee director expenses, transaction-related expenditures and external service provider fees.

Cash flow and liquidity

At June 30, 2019, our cash and cash equivalents were $46.5 million and comprised of KRW-denominated balances of KRW 30.1 billion ($26.1 million), ZAR-denominated balances of ZAR 189.9 million ($13.5 million), U.S. dollar-denominated balances of $2.4 million, and other currency deposits, primarily Botswana pula, of $4.5 million, all amounts translated at exchange rates applicable as of June 30, 2019. The decrease in our unrestricted cash balances from June 30, 2018, was primarily due to significantly weaker trading activities, scheduled debt repayments, dividend payments to non-controlling interests and capital expenditures, which was partially offset by cash dividends received from DNI and a decrease in our South African lending book.

Excluding the impact of interest received, interest paid under our South Africa debt and taxes, the decrease in cash provided is primarily due to significantly weaker trading activity during fiscal 2019 compared to 2018. Capital expenditures for Q4 2019 and 2018 were $2.1 million and $1.9 million, respectively, and primarily relate to the acquisition of additional ATMs in South Africa. We made an unscheduled South African debt facility payment of $1.0 million (ZAR 15 million) and settled our outstanding South African long-term borrowings in full.

Operating metrics and supplemental presentation for Q4 2019 Results

A supplemental presentation and operating metrics for preliminary Q4 2019 will be posted to the Investor Relations page of our website - ir.net1.com prior to our earnings call on Friday, September 27, 2019.

Conference Call

We will host a conference call to review these results on September 27, 2019, 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 080-020-0648 (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 October 20, 2019.

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 negative EBITDA, adjusted negative 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

(Loss) Earnings before interest, tax, depreciation and amortization ("EBITDA") is GAAP operating (loss) 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, retrenchment costs incurred, and in fiscal 2018, the non-cash re-measurement loss related to the acquisition of DNI, an allowance for doubtful Mastertrading working capital finance loans receivable, a refund of indirect taxes in Korea, and (loss) profits realized on the sale of a business.

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), 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 impairment losses, costs related to acquisitions and transactions consummated or ultimately not pursued.

Fundamental net (loss) income and (loss) earnings per share for fiscal 2019 also includes an adjustment for the loss incurred on the disposal of DNI, retrenchment costs incurred, accretion of interest related to the DNI contingent consideration, and for the non-controlling interest portion of the amortization of intangible assets (net of deferred taxes). Fundamental net income and earnings per share for fiscal 2018 also includes adjustments for an allowance for doubtful working capital finance receivables, the non-cash re-measurement loss related to the acquisition of DNI, refund of indirect taxes in Korea, the impact of changes in tax laws in the U.S and a gain realized on the sale of XeoHealth.

We provide earnings guidance only on a non-GAAP basis and do not provide a reconciliation of forward-looking fundamental (loss) 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 (loss) income and (loss) 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 (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 loss and (profit) loss on sale of property, plant and equipment and the re-measurement loss on the acquisition of DNI. 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 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 through DNI 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, including statements concerning our preliminary financial results for our fourth quarter and full year ended June 30, 2019. The preliminary financial results for our fourth quarter and full year 2019 included in this press release represent the most current information available to management. Our actual results, when disclosed in our Form 10-K, may differ from these preliminary results as a result of the completion of our financial closing procedures, final adjustments, completion of the review by our independent registered public accounting firm and other developments that may arise between now and the disclosure of the final results. A discussion of various factors that may cause our preliminary 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

Group Vice President, 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


NET 1 UEPS TECHNOLOGIES, INC.  
Preliminary Unaudited Consolidated Statements of Operations  
         
      Unaudited   Unaudited  
    Three months ended   Year ended  
      June 30,    June 30,  
      2019     2018
(As restated)(R)		     2019      2018
(As restated)(R)		  
  (In thousands, except per share data)   (In thousands, except per share data)  
                           
REVENUE $   71,181   $ 149,194   $ 380,699   $ 612,889  
                           
EXPENSE                          
                           
Cost of goods sold, IT processing, servicing and support     41,668     78,030     215,348     304,536  
                           
Selling, general and administration     32,050     51,586     187,726     193,003  
                           
Depreciation and amortization     6,821     8,454     37,349     35,484  
                           
Impairment loss     6,249     1,052     19,745     20,917  
                           
OPERATING (LOSS) INCOME     (15,607 )   10,072     (79,469 )   58,949  
                           
CHANGE IN FAIR VALUE OF EQUITY SECURITIES     (125,360 )   (5,370 )   (167,459 )   32,473  
                           
LOSS ON DISPOSAL OF DNI     631     -     5,771     -  
                           
INTEREST INCOME, net of impairment     (6,150 )   2,982     (5,564 )   17,885  
Interest income     1,289     2,982     7,229     17,885  
Impairment of Cedar Cellular note     (7,439 )   -     (12,793 )   -  
                           
INTEREST EXPENSE     1,694     2,069     10,724     8,941  
                           
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE     (149,442 )   5,615     (268,987 )   100,366  
                           
INCOME TAX (BENEFIT) EXPENSE     2,023     8,840     3,725     48,597  
                           
NET (LOSS) INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS     (151,465 )   (3,225 )   (272,712 )   51,769  
                           
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS     1,820     4,208     1,482     11,597  
                           
NET (LOSS) INCOME     (149,645 )   983     (271,230 )   63,366  
Continuing     (149,645 )   3,794     (273,920 )   60,975  
Discontinued     -     (2,811 )   2,690     2,391  
                           
LESS (ADD) NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST     10     (1,783 )   2,349     (880 )
Continuing     10     (1,783 )   (1,352 )   (880 )
Discontinued     -     -     3,701     -  
                           
NET (LOSS) INCOME ATTRIBUTABLE TO NET1 $   (149,655 )   2,766     (273,579 )   64,246  
Continuing     (149,655 )   5,577     (272,568 )   61,855  
Discontinued     -   $ (2,811 ) $ (1,011 ) $ 2,391  
                           
Net (loss) income per share, in U.S. dollars                          
Basic (loss) earnings attributable to Net1 shareholders     (2.63 )   0.05     (4.82 )   1.13  
Continuing     (2.63 )   0.10     (4.80 )   1.09  
Discontinued     -     (0.05 )   (0.02 )   0.04  
Diluted (loss) earnings attributable to Net1 shareholders     (2.63 )   0.05     (4.82 )   1.13  
Continuing     (2.63 )   0.10     (4.80 )   1.09  
Discontinued     -     (0.05 )   (0.02 )   0.04  
                           
(R) Certain amounts have been restated to correct an insignificant misstatement.  


NET 1 UEPS TECHNOLOGIES, INC.  
Preliminary Unaudited Consolidated Balance Sheets  
  Unaudited   Unaudited (R)  
  June 30,   June 30,  
  2019   2018  
  (In thousands, except share data)  
ASSETS  
CURRENT ASSETS              
Cash and cash equivalents $   46,065   $ 87,075  
Restricted cash     75,446     -  
Pre-funded social welfare grants receivable     -     2,965  
Accounts receivable, net of allowance of - 2019: $1,241; 2018: $1,101 and other receivables     72,494     93,448  
Finance loans receivable, net of allowance of - 2019: $9,291; 2018: $16,403     30,631     61,463  
Inventory     7,535     10,361  
Current assets of discontinued operation     -     22,482  
Total current assets before settlement assets     232,171     277,794  
Settlement assets     63,479     149,047  
Total current assets     295,650     426,841  
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - 2019: $117,866; 2018: $126,026     18,554     25,737  
EQUITY-ACCOUNTED INVESTMENTS     151,116     86,016  
GOODWILL     149,387     169,079  
INTANGIBLE ASSETS, net of accumulated amortization of - 2019: $127,100; 2018: $121,466     11,889     27,129  
DEFERRED INCOME TAXES     2,151     4,776  
OTHER LONG-TERM ASSETS, including reinsurance assets     44,189     235,032  
LONG-TERM ASSETS OF DISCONTINUED OPERATION     -     242,704  
TOTAL ASSETS     672,936     1,217,314  
               

LIABILITIES

  
CURRENT LIABILITIES              
Short-term credit facilities for ATM funding     75,446     -  
Short-term credit facilities     9,544     -  
Accounts payable     17,005     21,106  
Other payables     32,410     41,645  
Current portion of long-term borrowings     -     44,079  
Income taxes payable     6,223     5,742  
Current liabilities of discontinued operation     -     20,914  
Total current liabilities before settlement obligations     140,628     133,486  
Settlement obligations     63,479     149,047  
Total current liabilities     204,107     282,533  
DEFERRED INCOME TAXES     4,682     16,067  
LONG-TERM BORROWINGS     -     5,469  
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities     3,007     30,289  
LONG-TERM LIABILITIES OF DISCONTINUED OPERATION     -     38,387  
TOTAL LIABILITIES     211,796     372,745  
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 - 2019: 56,568,425; 2018: 56,685,925     80     80  
PREFERRED STOCK              
Authorized shares: 50,000,000 with $0.001 par value;              
Issued and outstanding shares, net of treasury: June: -; June: -     -     -  
ADDITIONAL PAID-IN-CAPITAL     276,997     276,201  
TREASURY SHARES, AT COST: 2019: 24,891,292; 2018: 24,891,292     (286,951 )   (286,951 )
ACCUMULATED OTHER COMPREHENSIVE LOSS     (199,273 )   (184,538 )
RETAINED EARNINGS     562,615     836,194  
TOTAL NET1 EQUITY     353,468     640,986  
NON-CONTROLLING INTEREST     -     95,911  
TOTAL EQUITY     353,468     736,897  
               
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY $   672,936   $ 1,217,314  
               
(R) Certain amounts have been restated to correct an insignificant misstatement.  


NET 1 UEPS TECHNOLOGIES, INC.  
   
Preliminary Unaudited Condensed Consolidated Statements of Cash Flows  
                           
        Three months ended   Year ended  
        June 30,  

 June 30,

  
        2019
 		     2018(R)
(as restated)		     2019
 		   2018(R)
(as restated)		  
    (In thousands)   (In thousands)  
                             
Cash flows from operating activities                          
Net (loss) income $   (149,645 ) $ 983   $ (271,230 ) $ 63,366  
Depreciation and amortization     6,821     8,454     37,349     35,484  
Impairment loss     6,249     1,052     19,745     20,917  
Allowance for doubtful accounts receivable charged     1,148     1,798     32,786     13,358  
Earnings from equity-accounted investments     (1,820 )   (4,208 )   (1,482 )   (11,597 )
Interest on Cedar Cellular note     (447 )   (626 )   (2,397 )   (1,395 )
Impairment of Cedar Cellular note     7,439     -     12,793     -  
Change in fair value of equity securities     125,360     5,370     167,459     (32,473 )
Fair value adjustments and foreign currency re-measurements     (18 )   623     73     414  
Interest payable     (57 )   118     237     (146 )
Facility fee amortized     115     122     321     589  
Loss (Profit) on disposal of business     631     -     5,771     (463 )
Loss on fair value of DNI     -     4,614     -     4,614  
(Profit) Loss on disposal of property, plant and equipment     (73 )   (31 )   (486 )   40  
Stock compensation charge, net of forfeitures     (1,279 )   597     393     2,607  
Dividends received from equity accounted investments     864     -     1,318     4,111  
Decrease (Increase) in accounts and finance loans receivable, and pre-funded grants receivable     5,130     20,170     11,663     17,732  
Decrease (Increase) in inventory     430     255     4,042     (2,521 )
(Decrease) Increase in accounts payable and other payables     (3,199 )   4,820     (14,538 )   10,595  
Increase (Decrease) in taxes payable     1,286     (6,954 )   3,428     1,137  
(Decrease) Increase in deferred taxes     (482 )   (2,316 )   (11,705 )   5,936  
Net cash (used in) provided by operating activities     (1,547 )   34,841     (4,460 )   132,305  
                           
Cash flows from investing activities                          
Capital expenditures     (2,136 )   (1,848 )   (9,416 )   (9,649 )
Proceeds from disposal of property, plant and equipment     264     83     1,045     658  
Acquisition of intangible assets     -     -     (1,384 )   -  
Investment in equity of equity-accounted investments     -     (1,000 )   (2,989 )   (133,335 )
Disposal of DNI     -     -     (2,114 )   -  
Investment in MobiKwik     -     -     (1,056 )   -  
Repayment of loans by equity-accounted investments     1,029     9,180     1,029     9,180  
Proceeds on return of investment     -     -     284     -  
Investment in Cell C     -     -     -     (151,003 )
Loans to equity-accounted investments     -     -     -     (10,635 )
Acquisition of held to maturity investment     -     -     -     (9,000 )
Acquisitions, net of cash acquired           (6,202 )   -     (6,202 )
Other investing activities, net     -     (207 )   -     (61 )
Net change in settlement assets     2,198     210,405     79,077     490,795  
Net cash provided by investing activities     1,355     210,411     64,476     180,748  
                           
Cash flows from financing activities                          
Proceeds from bank overdraft     238,229     2,528     822,754     44,900  
Repayment of bank overdraft     (238,146 )   (5,932 )   (740,969 )   (62,925 )
Repayment of long-term borrowings     (1,047 )   (16,095 )   (37,357 )   (77,062 )
Long-term borrowings utilized     -     -     14,613     113,157  
Dividends paid to non-controlling interest     (19 )   -     (4,104 )   -  
Payment of guarantee fee     -     -     (394 )   (754 )
Acquisition of non-controlling interests     (180 )   -     (180 )   -  
Net change in settlement obligations     (2,198 )   (210,405 )   (79,077 )   (490,795 )
Net cash used in financing activities     (3,361 )   (229,904 )   (24,714 )   (473,479 )
                           
Effect of exchange rate changes on cash     2,126     (12,466 )   (3,845 )   (7,977 )
Net (decrease) increase in cash, cash equivalents and restricted cash     (1,427 )   2,882     31,457     (168,403 )
Cash, cash equivalents and restricted cash - beginning     122,938     87,172     90,054     258,457  
Cash, cash equivalents and restricted cash - end of period (1) $   121,511   $ 90,054   $ 121,511   $ 90,054  
                           
Cash, cash equivalents and restricted cash - end of year for the year ended June 30, 2018, includes $2,979 related to DNI.  
(R) Certain amounts have been restated to correct an insignificant misstatement.  
(1) Cash, cash equivalents and restricted cash as of June 30, 2019, includes restricted cash of approximately $75.4 million related to cash withdrawn from the    Company's 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.  

Net 1 UEPS Technologies, Inc.

Attachment A

Preliminary operating segment revenue, operating income and operating margin:

Three months ended June 30, 2019 and 2018 and March 31, 2019

                      Change - actual     Change - constant exchange rate(1)  
Key segmental data, in '000, except margins   Q4 '19     Q4 '18     Q3 '19     Q4 '19
vs
Q4'18		     Q4 '19
vs
Q3 '19		     Q4 '19
vs
Q4'18		     Q4 '19
vs
Q3 '19		  
Revenue:                                          
South African transaction processing    $18,945     $63,954     $17,374     (70%)     9%     (63%)     10%  
International transaction processing.   36,399     43,580     34,358     (16%)     6%     4%     7%  
Financial inclusion and applied technologies    17,573     53,888     36,650     (67%)     (52%)     (59%)     (52%)  
Continuing   17,573     53,888     18,808     (67%)     (7%)     (59%)     (6%)  
Discontinued   -     -     17,842     nm     nm     nm     nm  
Subtotal: Operating segments.   72,917     161,422     88,382     (55%)     (17%)     (44%)     (17%)  
Intersegment eliminations   (1,736 )   (12,228 )   (1,898 )   (86%)     (9%)     (82%)     (8%)  
Consolidated revenue   71,181     149,194     86,484     (52%)     (18%)     (40%)     (17%)  
Continuing   71,181     149,194     68,642     (52%)     4%     (40%)     5%  
Discontinued   $-     $0     $17,842     nm     nm     nm     nm  
                                           
Operating (loss) income:                                          
South African transaction processing    ($2,474 ) $ 4,275     ($12,954 )   nm     (81%)     nm     (81%)  
International transaction processing.   2,209     2,089     1,909     6%     16%     32%     17%  
Financial inclusion and applied technologies    (10,749 )   13,747     3,227     nm     nm     nm     nm  
Continuing   (10,749)     13,747     (4,911 )   nm     119%     nm     121%  
Discontinued   -     -     8,138     nm     nm     nm     nm  
Subtotal: Operating segments.   (11,014 )   20,111     (7,818 )   nm     41%     nm     42%  
Corporate/Eliminations   (4,593 )   (10,039 )   (13,865 )   (54%)     (67%)     (43%)     (67%)  
Continuing   (4,593)     (5,425)     (6,399 )   (15%)     (28%)     6%     (28%)  
Discontinued   -     (4,614)     (7,466 )   nm     nm     nm     nm  
Consolidated operating (loss) income    (15,607 )   10,072     (21,683 )   nm     (28%)     nm     (27%)  
Continuing   (15,607)     14,686     (22,355 )   nm     (30%)     nm     (30%)  
Discontinued   $-     ($4,614)     $672     nm     nm     nm     nm  
                                           
Operating (loss) income margin (%)                                          
South African transaction processing    (13.1%)     6.7%     (74.6%)                          
International transaction processing.   6.1%     4.8%     5.6%                          
Financial inclusion and applied technologies    (61.2%)     25.5%     8.8%                          
Continuing   (61.2%)     25.5%     (26.1%)                          
Discontinued   nm     nm     45.6%                          
Consolidated operating margin    (21.9%)     6.8%     (25.1%)                          
Continuing   (21.9%)     9.8%     (32.6%)                          
Discontinued   nm     nm     3.8%                          
                                           
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q4 2019 also prevailed during Q4 2018 and Q3 2019.  

Fiscal year ended June 30, 2019 and 2018

                Change - actual     Change - constant exchange rate(1)  
Key segmental data, in '000, except margins   F2019     F2018     F2019
vs
F2018		     F2019
vs
F2018		  
Revenue:                        
South African transaction processing   $96,038     $268,047     (64%)     (60%)  
International transaction processing   148,268     180,027     (18%)     (7%)  
Financial inclusion and applied technologies   146,184     221,906     (34%)     (26%)  
Continuing   89,847     221,906     (60%)     (54%)  
Discontinued   56,337     -     nm     nm  
Subtotal: Operating segments   390,490     669,980     (42%)     (34%)  
Intersegment eliminations   (9,791 )   (57,091 )   (83%)     (81%)  
Consolidated revenue   380,699     612,889     (38%)     (30%)  
Continuing   324,362     612,889     (47%)     (41%)  
Discontinued   $56,337     $-     nm     nm  
                         
Operating (loss) income:                        
South African transaction processing   ($30,771 )   $42,796     nm     nm  
International transaction processing   2,837     (12,478 )   nm     nm  
Financial inclusion and applied technologies   (14,758 )   55,372     nm     nm  
Continuing   (39,158 )   55,372     nm     nm  
Discontinued   24,400     -     nm     nm  
Subtotal: Operating segments   (42,692 )   85,690     nm     nm  
Corporate/Eliminations   (36,777 )   (26,741 )   38%     55%  
Continuing   (24,058 )   (22,127 )   9%     22%  
Discontinued   (12,719 )   (4,614 )   176%     210%  
Consolidated operating (loss) income   (79,469 )   58,949     nm     nm  
Continuing   (91,150 )   63,563     nm     nm  
Discontinued   $11,681     ($4,614 )   nm     nm  
                         
Operating (loss) income margin (%)                        
South African transaction processing   (32.0%)     16.0%              
International transaction processing   1.9%     (6.9%)              
Financial inclusion and applied technologies   (10.1%)     25.0%              
Continuing   (43.6%)     25.0%              
Discontinued   43.3%     nm              
Consolidated operating margin    (20.9%)     9.6%              
Continuing   (28.1%)     9.6%              
Discontinued   20.7%     nm              
                         
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2019 also prevailed during fiscal 2018.  

(Loss) Earnings from equity-accounted investments:

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

    Q4 2019     Q4 2018(R)     % change     F2019     F2018(R)     % change  
Bank Frick   $353     ($1,581 )   nm     ($1,542 )   ($606 )   154%  
Share of net income   493     (1,033 )   nm     1,109     201     452%  
Amortization of intangible assets, net of deferred tax    (140 )   (144 )   (3%)     (567 )   (403 )   41%  
Other   -     (404 )   nm     (2,084 )   (404 )   416%  
DNI(1)   865     1,803     (52%)     865     7,005     (88%)  
Share of net income   1,380     2,642     (48%)     1,380     9,510     (85%)  
Amortization of intangible assets, net of deferred tax    (515 )   (839 )   (39%)     (515 )   (2,505 )   (79%)  
Finbond(2)   953     4,093     (77%)     2,828     5,194     (46%)  
Other   (351 )   (107 )   nm     (669 )   4     nm  
                                       
Earnings from equity-accounted investments   $ 1,820     $ 4,208      (57%)     $   1,482    $ 11,597     (87%)   


(R) Finbond results have been restated to correct a misstatement.
(1) DNI was included as an equity-accounted investment from August 1, 2017 until June 30, 2018, the date upon which we obtained control and commenced consolidation of DNI, and then again from March 31, 2019. DNI is included in our Financial inclusion and applied technologies operating segment from the acquisition date.
(2) Finbond is listed on the Johannesburg Stock Exchange and reports its six-month results during our first quarter and its annual results during our fourth quarter and we record those results in our results during those quarters.

Net 1 UEPS Technologies, Inc.

Attachment B

Reconciliation of preliminary GAAP operating (loss) income to negative EBITDA and adjusted negative EBITDA:

Three months and year ended June 30, 2019 and 2018

    Three months ended
June 30, 		    Year ended
June 30,		  
    2019     2018     2019     2018  
                         
Operating (loss) income - GAAP   (15,607 )   10,072     (79,469 )   58,949  
                         
Depreciation and amortization   6,821     8,454     37,349     35,484  
Impairment loss   6,249     1,052     19,745     20,917  
(Negative) EBITDA   (2,537 )   19,578     (22,375 )   115,350  
Retrenchment costs   1,026     -     6,269     -  
Transaction costs   762     109     3,485     2,396  
Refund of Korean indirect taxes   -     -     -     (2,545 )
Loss resulting from acquisition of DNI   -     4,614     -     4,614  
Non-recurring Mastertrading allowance for doubtful accounts   -     -     -     7,803  
(Loss) Profit on disposal of subsidiary   -     -     -     (463 )
Adjusted (negative) EBITDA   (749 )   24,301     (12,621 )   127,155  

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

Three months ended June 30, 2019 and 2018

    Net (loss) income
(USD'000)		     (L)EPS,
basic
(USD)		     Net (loss) income
(ZAR'000)		     (L)EPS,
basic
(ZAR)		  
    2019     2018     2019     2018     2019     2018     2019     2018  
                                                 
GAAP   (149,655 )   2,766     (2.63 )   0.05     (2,138,315 )   31,660     (37.64 )   0.55  
                                                 
Impairment loss   6,249     1,052                 89,288     14,442              
Loss on disposal of DNI   631     -                 9,016     -              
Intangible asset amortization, net    2,785     2,261                 39,807     25,883              
Retrenchment costs, net   739     -                 10,621     -              
Stock-based compensation charge    (1,370 )   597                 (19,575 )   6,833              
Transaction costs   762     189                 10,888     2,163              
Intangible asset amortization, net related to equity accounted investments    655     983                 9,359     11,251              
Facility fees for debt   115     122                 1,643     1,396              
Loss on resulting from acquisition of DNI    -     4,614                       63,332              
Fundamental   (139,089 )   12,584     (2.45 )   0.22     (1,987,268 )   156,960     (34.98 )   2.76  

Fiscal year ended June 30, 2019 and 2018

    Net (loss) income
(USD'000)		     (L)EPS,
basic
(USD)		     Net (loss) income
(ZAR'000)		     (L)EPS,
basic
(ZAR)		  
    2019     2018     2019     2018     2019     2018     2019     2018  
                                                 
GAAP   (273,579 )   64,246     (4.82 )   1.13     (3,903,834 )   815,610     (68.78 )   14.36  
                                                 
Intangible asset amortization, net    16,290     9,385                 232,452     119,126              
Impairment loss   19,745     20,917                 281,751     265,543              
Loss on disposal of DNI   5,771     -                 82,349     -              
Retrenchment costs, net   4,514     -                 63,708     -              
Intangible asset amortization, net related to non-controlling interest    (2,736 )   -                 (39,054 )   -              
Transaction costs   3,485     2,239                 49,727     28,424              
Accreted interest on DNI contingent consideration    1,848     -                 26,360                    
Stock-based compensation charge    393     2,607                 5,608     33,096              
Intangible asset amortization, net related to equity accounted investments    1,082     2,908                 15,439     36,917              
Facility fees for debt   321     589                 4,580     7,477              
Non-recurring Mastertrading allowance for doubtful accounts    -     7,803                 -     99,060              
Loss resulting from acquisition of DNI   -     4,614                 -     63,332              
Refund related to litigation finalized in Korea, net    -     (1,985 )               -     (25,200 )            
Change in US tax rate   -     860                 -     10,918              
Profit on disposal of
subsidiary		   -     (463 )               -     (5,878 )            
Fundamental   (222,866 )   113,720     (3.93 )   2.00     (3,180,914 )   1,448,425     (56.04 )   25.50  

Net 1 UEPS Technologies, Inc.

Attachment C

Reconciliation of preliminary 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 June 30, 2019 and 2018

    2019     2018  
             
Net (loss) income (USD'000)   (149,655 )   2,766  
Adjustments:            
Impairment loss   6,249     1,052  
Loss resulting from acquisition of DNI   631     -  
Loss on acquisition of DNI         4,614  
Profit on sale of property, plant and equipment   (73 )   (31 )
Tax effects on above   20     9  
             
Net (loss) income used to calculate headline earnings (USD'000)   (142,828 )   8,410  
             
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)                56,804     56,773  
             
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)                56,804     56,816  
             
Headline (loss) earnings per share:            
Basic, in USD   (2.51 )   0.15  
Diluted, in USD   (2.51 )   0.15  

Fiscal year ended June 30, 2019 and 2018

    2019     2018  
             
Net (loss) income (USD'000)   (273,579 )   64,246  
Adjustments:            
Impairment loss   19,745     20,917  
Loss (Profit) on sale of business   5,771     (463 )
Loss resulting from acquisition of DNI   -     4,614  
Profit on sale of property, plant and equipment   (486 )   40  
Tax effects on above   136     (11 )
             
Net (loss) income used to calculate headline earnings (USD'000)   (248,413 )   89,343  
             
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)                56,760     56,807  
             
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)                56,778     56,858  
             
Headline (loss) earnings per share:            
Basic, in USD   (4.38 )   1.57  
Diluted, in USD   (4.38 )   1.57  

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

    Q4 '19     Q4 '18     F2019     F2018  
                         
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP    56,804     56,773     56,760     56,807  
Effect of dilutive securities under GAAP   -     43     18     51  
Denominator for headline diluted (loss) earnings per share.   56,804     56,816     56,778     56,858  

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 (loss) earnings per share diluted.