Net 1 UEPS Technologies, Inc.: Form 8-K - Filed by newsfilecorp.com

false 2022-02-09 0001041514 Net 1 UEPS Technologies, Inc. 0001041514 2022-02-09 2022-02-09

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 9, 2022

NET 1 UEPS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Florida 000-31203 98-0171860
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

President Place, 4th Floor, Cnr.
Jan Smuts Avenue and Bolton Road
Rosebank, Johannesburg, South Africa
(Address of principal executive offices) (ZIP Code)

Registrant’s telephone number, including area code: 011-27-11-343-2000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Trading Symbols   Name of each exchange on which registered
Common stock, par value $0.001 per share   UEPS   NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02. Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition".

On February 9, 2022, Net 1 UEPS Technologies, Inc., a Florida corporation (the "Company"), issued a press release setting forth its financial results for the second quarter ended December 31, 2021. A copy of the press release is attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
99.1 Press Release, dated February 9, 2022, issued by Net 1 UEPS Technologies, Inc.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  NET 1 UEPS TECHNOLOGIES, INC.
 
 
Date: February 9, 2022 By: /s/ Alex M.R. Smith
Name: Alex M.R. Smith
Title: Chief Financial Officer


Net 1 UEPS Technologies, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Exhibit 99.1

Net 1 Reports Second Quarter 2022 Results

JOHANNESBURG, February 9, 2022 - Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the second fiscal quarter ended December 31, 2021.

Highlights:

“I am pleased with the progress we made in Q2, towards our strategic goal of returning our consumer financial services business to breakeven and then profitability as soon as possible.  During the quarter we continued to grow active accounts, improved average revenue per customer and delivered on our cost savings initiatives. We have seen this positive momentum translate into a marked improvement in the operational performance of our consumer business compared to Q1.” said Chris Meyer, Group CEO of Net1. “We are looking forward to finalizing the Connect Group acquisition in Q3, which will transform our Merchant business, once all the regulatory approvals are in place. We also made key enhancements to our management team, positioning us with the right leadership to successfully execute our long-term growth strategy and advance our key initiatives. However, we know there is still a lot more work to be done as we continue our journey of building the leading South African FinTech platform for underserved consumers and merchants.”

Summary Financial Metrics

Three months ended

    Three months ended                          
    Dec 31,
2021
    Dec 31,
2020
    Sep 30,
2021
    Q2 '22 vs
Q2 '21
    Q2 '22 vs
Q1 '22
    Q2 '22 vs
Q2 '21
    Q2 '22 vs
Q1 '22
 
(All figures in USD '000s except per share data)   USD '000's
(except per share data)
    % change in USD     % change in ZAR  
Revenue   31,114     32,305     34,504     (4%)     (10%)     (4%)     (5%)  
                                           
GAAP operating loss   (9,427 )   (15,205 )   (11,225 )   (38%)     (16%)     (38%)     (12%)  
                                           
Adjusted EBITDA (loss)(1)   (7,059 )   (12,132 )   (10,087 )   (42%)     (30%)     (42%)     (26%)  
                                           
GAAP (loss) earnings per share ($)   (0.22 )   (0.08 )   (0.23 )   171%     (5%)     170%     (0%)  
                                           
Fundamental loss per share ($)(1)   (0.13 )   (0.23 )   (0.22 )   (43%)     (41%)     (44%)     (38%)  
                                           
Fully-diluted shares outstanding ('000's)   57,204     56,641     56,809     1%     1%     nm     nm  
                                           
Average period USD/ ZAR exchange rate   15.38     15.47     14.61     (1%)     5%     nm     nm  

Six months ended

    Six months ended
December 31,
    F2022 vs
F2021
    F2022 vs
F2021
 
    2021     2020  
(All figures in USD '000s except per share data)   USD '000's
(except per share data)
    % change
in USD
    % change
in ZAR
 
Revenue   65,618     67,441     (3%)     (9%)  
                         
GAAP operating loss   (20,652 )   (25,980 )   (21%)     (25%)  
                         
Adjusted EBITDA (loss)(1)   (17,146 )   (21,876 )   (22%)     (26%)  
                         
GAAP loss per share ($)   (0.45 )   (0.59 )   (24%)     (29%)  
                         
Fundamental loss per share ($)(1)   (0.35 )   (0.45 )   (22%)     (27%)  
                         
Fully-diluted shares outstanding ('000's)   57,093     56,880     0%     nm  
                         
Average period USD/ ZAR exchange rate   15.47     16.47     (6%)     nm  


(1) 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.

Factors impacting comparability of our Q2 2022 and Q2 2021 results

 Lower revenue: Our revenues decreased 4% in ZAR primarily due to lower hardware sales as a result of the global chip shortage and fewer prepaid airtime sales. The benefit of the increase in active accounts was offset by lower ATM transactions as the number of active ATMs decreased as we go through a relocation process;

 Lower operating losses: Operating losses decreased, delivering an improvement of 38% in ZAR compared with the prior period primarily due to the closure of IPG and the implementation of various cost reduction initiatives in our Consumer business;

 Significant transaction costs: We expensed $1.5 million of transaction costs related to the Connect Group acquisition; and

 Foreign exchange movements: The U.S. dollar was 1% stronger against the ZAR during Q2 2022, which impacted our reported results.

Results of Operations by Segment and Liquidity

During November 2021, our chief operating decision maker ("CODM") changed our operating and internal reporting structures following the establishment of a new management team and our decision to focus primarily on the South African market. Our CODM has decided to analyze our operating performance primarily based on operational lines which group financial services provided to customers (consumers) into the Consumer operating segment and goods and services provided to corporate and other juristic entities into the Merchant operating segment.

Consumer

Segment revenue was $16.6 million in Q2 2022, up  2% compared with Q2 2021, and up  2% compared with Q1 2022 on a constant currency basis. Segment revenue increased primarily due to higher insurance revenue and moderately higher account holder fees, which was partially offset by moderately lower lending revenue and lower ATM transaction volumes. Segment EBITDA loss has decreased primarily due to the implementation of various cost reduction initiatives, which was partially offset by an increase in insurance-related claims experience and an increase in our allowance for doubtful finance loans receivable recorded during the second quarter of fiscal 2022 following strong loan originations in December 2021. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for Q2 2022 and 2021 was  (27.4%) and  (32.1%), respectively.

Merchant

Segment revenue was $14.1 million in Q2 2022, down  8% compared with Q2 2021 and down  13% compared to Q1 2022 on a constant currency basis. Segment revenue decreased due to fewer hardware sales as a result of the global chip shortage and fewer prepaid airtime sales, which was partially offset by higher processing fees. The decrease in segment EBITDA is primarily due to the lower revenue. The decrease in segment EBITDA is primarily due to fewer sales. Our EBITDA margin for Q2 2022 and 2021 was  5.6% and  8.1%, respectively.

Other

Other includes the activities of IPG in fiscal 2021 and our other business outside South Africa.

Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during Q2 2022 following the closure of our loss-making activities performed through IPG. Our EBITDA (loss) margin for the Other segment was  31.1% and  (494.2%) during Q2 2022 and 2021, respectively.

Corporate/Eliminations

Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditure related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; certain employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and officer’s insurance premiums; elimination entries and from fiscal 2022 our group CEO’s compensation.

Our corporate expenses for fiscal 2022 decreased compared with fiscal 2021 due to the inclusion of an allowance on doubtful loans receivable from equity-accounted investments of $0.7 million created during the second quarter of fiscal 2021. Our corporate expenses for fiscal 2022 includes transaction related expenses of $1.5 million (ZAR 22.9 million) related to the Connect Group acquisition. We expect to incur additional expenses related to the Connect Group transaction in the third quarter of fiscal 2022.


Cash flow and liquidity

At December 31, 2021, our cash and cash equivalents were $182.4 million and comprised of U.S. dollar-denominated balances of $159.4 million, ZAR-denominated balances of ZAR 0.3 billion ($21.0 million), and other currency deposits, primarily Botswana pula, of $2.0 million, all amounts translated at exchange rates applicable as of December 31, 2021. The decrease in our unrestricted cash balances from June 30, 2021, was primarily due to growth in our financial loans receivable book in December 2021, and utilization of cash reserves to fund our operations, partially offset by the receipt of $7.5 million related to the sale of Bank Frick in fiscal 2021.

Excluding the impact of income taxes, our cash used in operating activities during the first quarter of fiscal 2022 was impacted by the utilization of cash to grow our financial loans receivable book in December 2021, but partially offset by lower cash losses incurred by the majority of our continuing operations. Capital expenditures for Q2 2022 and 2021 were $0.2 million and $3.0 million, respectively.

Conference Call

Net1 will host a conference call to review these results on February 10, 2022, 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 can pre-register for the February 10, 2022, conference call by navigating to https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=4585301&linkSecurityString=825dd9610 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.

Operating income before depreciation and amortization and adjusted EBITDA

Operating income before depreciation and amortization is GAAP operating (loss) income adjusted for depreciation and amortization. Adjusted EBITDA is earnings before interest, tax, depreciation and amortization ("EBITDA"), adjusted for unusual non-recurring items, costs related to acquisitions and transactions consummated or ultimately not pursued.

Fundamental net loss and fundamental loss per share

Fundamental net loss and loss per share is GAAP net loss and loss 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 and loss per share for fiscal 2022 also includes an adjustment for to an unrealized loss related to fair value adjustments in respect of currency options.

Fundamental net loss and loss per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, impairment losses related to an equity-accounted investment and the deferred tax liability reversal related to the impairment of the equity-accounted investment, an allowance for doubtful loans to equity-accounted investments and a loss on disposal of an equity-accounted investment.

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 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 H(L)EPS basic and diluted and the calculation of the denominator for headline diluted (loss) earnings per share.


About Net1

Net1 is a leading financial technology company that utilizes its proprietary banking and payment technology to deliver on its mission of financial inclusion through the distribution of low-cost financial and value-added services to underserved consumers and small businesses in Southern Africa, which represents a significant segment of these economies. The Company also provides transaction processing services, including being a payment processor and bill payment platform in South Africa. Net1 leverages its strategic investments 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:
Partner - ICR

Email: net1IR@icrinc.com

Media Relations Contact:

Bridget von Holdt

Co-Market Leader | MD - 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   Six months ended  
  December 31,   December 31,  
  2021   2020   2021   2020  
  (In thousands)   (In thousands)  
                         
REVENUE $ 31,114   $ 32,305   $ 65,618   $ 67,441  
                         
EXPENSE                        
                         
Cost of goods sold, IT processing, servicing and support   20,580     24,339     44,787     50,799  
Selling, general and administration   17,746     22,097     38,188     40,625  
Depreciation and amortization   726     1,074     1,621     1,997  
Transaction costs related to Connect Group acquisition   1,489     -     1,674     -  
                         
OPERATING LOSS   (9,427 )   (15,205 )   (20,652 )   (25,980 )
                         
CHANGE IN FAIR VALUE OF EQUITY SECURITIES   -     15,128     -     15,128  
                         
UNREALIZED LOSS RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS   2,429     -     2,429     -  
                         
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT   -     13     -     13  
                         
INTEREST INCOME   313     717     702     1,328  
                         
INTEREST EXPENSE   765     677     1,581     1,424  
                         
LOSS BEFORE INCOME TAX EXPENSE   (12,308 )   (50 )   (23,960 )   (10,961 )
                         
INCOME TAX EXPENSE   98     3,468     284     2,378  
                         
NET LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS   (12,406 )   (3,518 )   (24,244 )   (13,339 )
                         
LOSS FROM EQUITY-ACCOUNTED INVESTMENTS   -     (1,016 )   (1,156 )   (20,153 )
                         
NET LOSS ATTRIBUTABLE TO NET1   (12,406 )   (4,534 )   (25,400 )   (33,492 )
                         
Net loss per share, in United States dollars:                        
Basic loss attributable to Net1 shareholders $ (0.22 ) $ (0.08 ) $ (0.45 ) $ (0.59 )
Diluted loss attributable to Net1 shareholders $ (0.22 ) $ (0.08 ) $ (0.45 ) $ (0.59 )



NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Consolidated Balance Sheets


  Unaudited   (A)  
  December 31,   June 30,  
  2021   2021  
  (In thousands, except share data)  
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents $ 182,356   $ 198,572  
Restricted cash   57,788     25,193  
Accounts receivable, net of allowance of - December: $424; June: $267 and other receivables   20,701     26,583  
Finance loans receivable, net of allowance of - December: $2,397; June: $2,349   21,571     21,142  
Inventory   20,005     22,361  
Total current assets before settlement assets   302,421     293,851  
Settlement assets   369     466  
Total current assets   302,790     294,317  
             
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - December: $34,643; June: $38,535   5,389     7,492  
OPERATING LEASE RIGHT-OF-USE   3,611     4,519  
EQUITY-ACCOUNTED INVESTMENTS   7,217     10,004  
GOODWILL   26,239     29,153  
INTANGIBLE ASSETS, net of accumulated amortization of - December: $14,757; June: $16,403   288     357  
DEFERRED INCOME TAXES   868     622  
OTHER LONG-TERM ASSETS, including reinsurance assets   77,821     81,866  
TOTAL ASSETS   424,223     428,330  
             
LIABILITIES            
CURRENT LIABILITIES            
Short-term credit facilities for ATM funding   47,960     14,245  
Accounts payable   3,539     7,113  
Other payables   30,248     27,588  
Operating lease liability - current   2,516     2,822  
Income taxes payable   271     256  
Total current liabilities before settlement obligations   84,534     52,024  
Settlement obligations   369     466  
Total current liabilities   84,903     52,490  
DEFERRED INCOME TAXES   10,402     10,415  
OPERATING LEASE LIABILITY - LONG TERM   1,281     1,890  
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities   2,391     2,576  
TOTAL LIABILITIES   98,977     67,371  
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: December: $57,657,172; June: $56,716,620   80     80  
PREFERRED STOCK            
Authorized shares: 50,000,000 with $0.001 par value;            
Issued and outstanding shares, net of treasury:  December: -; June: -   -     -  
ADDITIONAL PAID-IN-CAPITAL   303,804     301,959  
TREASURY SHARES, AT COST: December: $24,891,292; June: $24,891,292   (286,951 )   (286,951 )
ACCUMULATED OTHER COMPREHENSIVE LOSS   (157,879 )   (145,721 )
RETAINED EARNINGS   381,213     406,613  
TOTAL NET1 EQUITY   240,267     275,980  
NON-CONTROLLING INTEREST   -     -  
TOTAL EQUITY   240,267     275,980  
             
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY $ 424,223   $ 428,330  

(A) Derived from audited consolidated financial statements.


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

     
    Unaudited   Unaudited  
      Three months ended   Six months ended  
      December 31,   December 31,  
      2021   2020   2021   2020  
      (In thousands)   (In thousands)  
                             
Cash flows from operating activities                        
  Net loss $ (12,406 ) $ (4,534 ) $ (25,400 ) $ (33,492 )
  Depreciation and amortization   726     1,074     1,621     1,997  
  Impairment loss   85     -     225     -  
  Movement in allowance for doubtful accounts receivable   740     100     1,126     614  
  Loss from equity-accounted investments   -     1,016     1,156     20,153  
  Movement in allowance for doubtful loans   -     661     -     739  
  Change in fair value of equity securities   -     (15,128 )   -     (15,128 )
  Fair value adjustment related to financial liabilities   (234 )   790     (324 )   1,676  
  Unrealized loss related to fair value adjustment to currency options   2,429     -     2,429     -  
  Interest payable   (113 )   42     (102 )   (21 )
  Loss on disposal of equity-accounted investment   -     13     -     13  
  Profit on disposal of property, plant and equipment   (1,356 )   752     (1,521 )   742  
  Stock-based compensation charge   788     232     1,097     631  
  Dividends received from equity-accounted investments   -     68     137     125  
  (Increase) Decrease in accounts receivable and finance loans receivable   (3,467 )   6,559     (2,279 )   (1,556 )
  (Increase) Decrease in inventory   (1,429 )   (145 )   154     2,214  
  Increase (Decrease) in accounts payable and other payables   676     (3,084 )   245     (3,499 )
  (Decrease) Increase in taxes payable   (245 )   (421 )   49     (15,338 )
  Increase (Decrease) in deferred taxes   21     26     (346 )   (1,729 )
    Net cash used in operating activities   (13,785 )   (11,979 )   (21,733 )   (41,859 )
                             
Cash flows from investing activities                        
Capital expenditures   (189 )   (3,023 )   (887 )   (3,298 )
Proceeds from disposal of property, plant and equipment   1,760     75     1,991     91  
Proceeds from disposal of equity-accounted investment - Bank Frick    7,500     -     7,500     -  
Proceeds from disposal of Net1 Korea, net of cash disposed   -     -     -     20,114  
Proceeds from disposal of DNI as equity-accounted investment   -     5,681     -     6,010  
Loan to equity-accounted investment   -     (1,160 )   -     (1,238 )
Net change in settlement assets   97     1,377     97     5,445  
  Net cash (used in) provided by investing activities   9,168     3,084     8,701     27,258  
                             
Cash flows from financing activities                        
Proceeds from bank overdraft   172,445     137,333     311,350     206,479  
Repayment of bank overdraft   (172,768 )   (88,258 )   (271,676 )   (165,108 )
Proceeds from issue of shares   739     18     739     18  
Proceeds from disgorgement of shareholders' short-swing profits   -     26     -     124  
Net change in settlement obligations   (97 )   (1,377 )   (97 )   (5,445 )
  Net cash provided by (used in) financing activities   319     47,742     40,316     36,068  
                             
Effect of exchange rate changes on cash   (5,979 )   12,296     (10,905 )   13,102  
Net increase (decrease) in cash, cash equivalents and restricted cash   (10,277 )   51,143     16,379     34,569  
Cash, cash equivalents and restricted cash - beginning of period   250,421     215,911     223,765     232,485  
Cash, cash equivalents and restricted cash - end of period $ 240,144   $ 267,054   $ 240,144   $ 267,054  


Net 1 UEPS Technologies, Inc.

Attachment A

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

Three months ended December 31, 2021 and 2020 and June 30, 2021

            Three months ended     Change - actual     Change -
constant
exchange rate
(1)
 
Key segmental data, in '000, except margins Dec 31, 2021   Dec 31, 2020   Sep 30, 2021    
Q2 '22

vs
Q2 '21
    Q2 '22
vs
Q1 '22
    Q2 '22
vs
Q2 '21
    Q2 '22
vs
Q1 '22
 
Revenue:                                          
  Consumer $ 16,639   $ 16,259   $ 17,164     2%     (3%)     2%     2%  
  Merchant   14,102     15,206     17,072     (7%)     (17%)     (8%)     (13%)  
  Other   396     878     427     (55%)     (7%)     (55%)     (2%)  
      Subtotal: Operating segments   31,137     32,343     34,663     (4%)     (10%)     (4%)     (5%)  
      Intersegment eliminations   (23 )   (38 )   (159 )   (39%)     (86%)     (40%)     (85%)  
        Consolidated revenue $ 31,114   $ 32,305   $ 34,504     (4%)     (10%)     (4%)     (5%)  
                                                     
EBITDA:                                          
  Consumer $ (4,551 ) $ (5,214 ) $ (9,454 )   (13%)     (52%)     (13%)     (49%)  
  Merchant   795     1,227     1,885     (35%)     (58%)     (36%)     (56%)  
  Other   123     (4,339 )   143     nm     (14%)     nm     (9%)  
    Subtotal: Operating segments   (3,633 )   (8,326 )   (7,426 )   (56%)     (51%)     (57%)     (49%)  
    Corporate/Eliminations   (4,235 )   (4,743 )   (1,980 )   (11%)     114%     (11%)     125%  
      Segment Adjusted EBITDA   (7,868 )   (13,069 )   (9,406 )   (40%)     (16%)     nm     nm  
        Less: Lease adjustments   833     1,062     924     (22%)     (10%)     nm     nm  
        Less: Depreciation and amortization   726     1,074     895     (32%)     (19%)     nm     nm  
          Consolidated operating loss $ (9,427 ) $ (15,205 ) $ (11,225 )   (38%)     (16%)     (38%)     (12%)  
                                                     
EBITDA (loss) margin (%)                                          
  Consumer   (27.4%)     (32.1%)     (55.1%)                          
  Merchant   5.6%     8.1%     11.0%                          
  Other   31.1%     (494.2%)     33.5%                          
    Consolidated EBITDA (loss) margin   (30.3%)     (47.1%)     (32.5%)                          

(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q2 2022 also prevailed during Q2 2021 and Q1 2022.


Six months ended December 31, 2021 and 2020

                            Change -
actual
    Change -
constant
exchange
rate
(1)
 
                             
              Six months ended
December 31,
    F2021
vs
F2020
    F2021
vs
F2020
 
Key segmental data, in '000, except margins   2021   2020  
Revenue:                          
  Consumer   $ 33,803   $ 31,631     7%     0%  
  Merchant     31,174     33,452     (7%)     (12%)  
  Other     823     2,434     (66%)     (68%)  
      Subtotal: Operating segments     65,800     67,517     (3%)     (8%)  
      Intersegment eliminations     (182 )   (76 )   139%     125%  
        Consolidated revenue   $ 65,618   $ 67,441     (3%)     (9%)  
                                     
Operating (loss) income:                          
  Consumer   $ (14,005 ) $ (11,785 )   19%     12%  
  Merchant     2,680     4,198     (36%)     (40%)  
  Other     266     (6,970 )   nm     nm  
    Subtotal: Operating segments     (11,059 )   (14,557 )   (24%)     (29%)  
    Corporate/Eliminations     (6,215 )   (7,539 )   (18%)     (23%)  
      Segment Adjusted EBITDA     (17,274 )   (22,096 )   (22%)     nm  
        Less: Lease adjustments     1,757     1,887     (7%)     nm  
        Less: Depreciation and amortization     1,621     1,997     (19%)     nm  
          Consolidated operating loss   $ (20,652 ) $ (25,980 )   (21%)     (25%)  
                                     
EBITDA (loss) margin (%)                          
  Consumer     (41.4%)     (37.3%)              
  Merchant     8.6%     12.5%              
  Other     32.3%     (286.4%)              
    Consolidated EBITDA (loss) margin     (31.5%)     (38.5%)              

(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the first half of fiscal 2022 also prevailed during the first half of fiscal 2021.


(Loss) Earnings from equity-accounted investments:

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

    Three months ended
December 31,
          Six months ended
December 31,
       
      2021     2020     %
change
    2021     2020     %
change
 
Bank Frick   -     498     nm     -     979     nm  
  Share of net income   -     498     nm     -     979     nm  
Finbond   -     (806 )   nm     (1,156 )   (20,267 )   (94%)  
  Share of net loss   -     -     nm     (1,156 )   (2,617 )   (56%)  
  Impairment   -     (806 )   nm     -     (17,650 )   nm  
Other   -     (708 )   nm     -     (865 )   nm  
  Share of net loss   -     (160 )   nm     -     (317 )   nm  
  Impairment   -     (548 )   nm     -     (548 )   nm  
  Loss from equity-accounted investments $ -   $ (1,016 )   nm   $ (1,156 ) $ (20,153 )   (94%)  


Net 1 UEPS Technologies, Inc.

Attachment B

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

Three and six months ended December 31, 2021 and 2020

            Three months ended
December 31,
    Six months ended
December 31,
 
            2021     2020     2021     2020  
Operating loss - GAAP   (9,427 )   (15,205 )   (20,652 )   (25,980 )
                                 
  Depreciation and amortization   726     1,074     1,621     1,997  
    Operating loss before depreciation and amortization   (8,701 )   (14,131 )   (19,031 )   (23,983 )
      Transaction costs   1,642     1,339     1,885     1,368  
        Adjusted EBITDA loss   (7,059 )   (12,131 )   (17,146 )   (21,876 )

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

Three months ended December 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   (12,406 )   (4,534 )   (0.22 )   (0.08 )   (190,804 )   (70,120 )   (3.34 )   (1.23 )
                                                 
Unrealized loss related to fair value adjustment to currency options   2,429     -                 37,358     -              
Transaction costs   1,642     1,339                 25,254     20,708              
Stock-based compensation charge   788     232                 12,119     3,588              
Intangible asset amortization, net   12     64                 184     990              
Change in fair value of equity securities, net   -     (11,951 )               -     (184,828 )            
Impairment of equity method investment   -     1,354                 -     19,850              
Allowance for doubtful EMI loans receivable   -     661                 -     10,223              
Loss on disposal of equity-accounted investment   -     13                 -     201              
Fundamental   (7,535 )   (12,822 )   (0.13 )   (0.23 )   (115,889 )   (199,388 )   (2.03 )   (3.52 )


Six months ended December 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   (25,400 )   (33,492 )   (0.44 )   (0.59 )   (380,361 )   (551,529 )   (6.66 )   (9.70 )
                                                 
Unrealized loss related to fair value adjustment to currency options   2,429     -                 36,374     -              
Transaction costs   1,885     1,369                 28,228     22,544              
Stock-based compensation charge   1,097     631                 16,427     10,391              
Intangible asset amortization, net   25     121                 367     1,980              
Impairment of equity method investments   -     18,198                 -     301,579              
Change in fair value of equity securities, net   -     (11,951 )               -     (196,805 )            
Reversal of deferred taxes related to impairment of equity method investment   -     (1,353 )               -     (22,633 )            
Allowance for doubtful EMI loans receivable   -     739                 -     12,169              
Loss on disposal of equity-accounted investment   -     13                 -     214              
Fundamental   (19,964 )   (25,725 )   (0.35 )   (0.45 )   (298,965 )   (422,090 )   (5.24 )   (7.42 )


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 December 31, 2021 and 2020

      2021     2020  
Net loss (USD'000)   (12,406 )   (4,534 )
Adjustments:            
  Impairment of equity method investments   -     1,354  
  Impairment loss   85     -  
  (Profit) Loss on sale of property, plant and equipment   (1,356 )   752  
  Tax effects on above   380     (211 )
               
Net loss used to calculate headline loss (USD'000)   (13,297 )   (2,626 )
               
Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss ('000)   57,204     56,641  
               
Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss ('000)   57,204     56,641  
               
Headline loss per share:            
  Basic, in USD   (0.23 )   (0.05 )
  Diluted, in USD   (0.23 )   (0.05 )

Six months ended December 31, 2021 and 2020

      2021     2020  
Net loss (USD'000)   (25,400 )   (33,492 )
Adjustments:            
  Impairment of equity method investments   -     18,198  
  Impairment loss   225     -  
  (Profit) Loss on sale of property, plant and equipment   (1,356 )   742  
  Tax effects on above   380     (1,561 )
               
Net loss used to calculate headline loss (USD'000)   (26,151 )   (16,100 )
               
Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss ('000)   57,093     56,880  
               
Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss ('000)   57,093     56,880  
               
Headline loss per share:            
  Basic, in USD   (0.46 )   (0.28 )
  Diluted, in USD   (0.46 )   (0.28 )

Calculation of the denominator for headline diluted loss per share

                             
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP   57,204     56,641     57,093     56,880  
    Denominator for headline diluted loss per share   57,204     56,641     57,093     56,880  

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.