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Net 1 Reports Third Quarter 2022 Results
Source: Nasdaq GlobeNewswire / 10 May 2022 15:05:01 America/Chicago
JOHANNESBURG, South Africa, May 10, 2022 (GLOBE NEWSWIRE) -- Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the third fiscal quarter ended March 31, 2022.
Highlights:
- Revenue increased to $35.2 million, up 27% in rand terms and 22% in dollar terms, underpinned by stronger merchant revenue;
- After normalizing for $5.9 million of once off restructuring fees, Segment Adjusted EBITDA (before corporate/eliminations) improved to $0.3 million income from a $10.7 million loss in the comparable quarter, driven by increased revenue in our merchant segment and continued execution on cost saving initiatives;
- Over $19.2 million (ZAR 300 million) in annualized Project Spring savings targeted in 2023 financial year;
- GAAP EPS improved 48% to $(0.06) and Fundamental EPS improved 79% to $(0.05);
- Connect Group acquisition closed post quarter end on April 14, 2022; and
- Shareholders vote in favor of Net1 changing its name to Lesaka Technologies, Inc.
Lesaka Group CEO Chris Meyer notes: “We are encouraged by the results we achieved this quarter, with a marked improvement in our performance, positively influenced by the recovery in our merchant division and delivery on the turnaround in our consumer financial services division. Notably, we launched our new brand identity, Lesaka, which authentically represents our commitment to the local communities we serve and our mission of improving lives by driving widespread financial inclusion. Having successfully completed the transformational Connect Group acquisition, our combined unique ecosystem, positively positions us to provide innovative essential financial services to previously underserved consumers and merchants across Southern Africa and to benefit from secular growth opportunities especially in the high growth informal merchant market.”
Summary Financial Metrics
Three months ended
Three months ended Mar 31,
2022Mar 31,
2021Dec 31,
2021Q3 ’22 vs
Q3 ’21Q3 ’22 vs
Q2 ’22Q3 ’22 vs
Q3 ’21Q3 ’22 vs
Q2 ’22(All figures in USD ‘000s except per share data) USD ‘000’s
(except per share data)% change in USD % change in ZAR Revenue 35,202 28,828 31,114 22 % 13 % 27 % 15 % GAAP operating loss (9,421 ) (14,292 ) (9,427 ) (34 %) (0 %) (31 %) 1 % Adjusted EBITDA loss(1) (2,870 ) (12,823 ) (7,059 ) (78 %) (59 %) (77 %) (59 %) GAAP loss per share ($) (0.06 ) (0.11 ) (0.22 ) (48 %) (73 %) (45 %) (73 %) Fundamental loss per share ($)(1) (0.05 ) (0.24 ) (0.13 ) (79 %) (62 %) (78 %) (61 %) Fully-diluted shares outstanding (‘000’s) 57,791 56,921 57,204 2 % 1 % n/a n/a Average period USD / ZAR exchange rate 15.61 14.96 15.38 4 % 2 % n/a n/a Nine months ended
Nine months ended Mar 31,
2022Mar 31,
2021F2022 vs
F2021F2022 vs
F2021(All figures in USD ‘000s except per share data) USD ‘000’s
(except per share data)% change
in USD% change
in ZARRevenue 100,820 96,269 5 % (3 %) GAAP operating loss (30,073 ) (40,272 ) (25 %) (31 %) Adjusted EBITDA loss(1) (20,016 ) (34,699 ) (42 %) (46 %) GAAP loss per share ($) (0.50 ) (0.70 ) (28 %) (33 %) Fundamental loss per share ($)(1) (0.40 ) (0.69 ) (42 %) (46 %) Fully-diluted shares outstanding (‘000’s) 57,322 56,895 1 % n/a Average period USD / ZAR exchange rate 14.99 16.12 (7 %) n/a (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 Q3 2022 and Q3 2021 results
- Higher revenue: Our revenues increased 27% in ZAR primarily due to an increase in hardware sales, an increase in merchant transaction processing fees, and moderate increases in lending and insurance revenues, which was partially offset by lower prepaid airtime sales;
- Lower operating losses: Operating losses decreased, delivering an improvement of 31% in ZAR compared with the prior period primarily due to an increase in revenue, the closure of the loss-making IPG operations and the implementation of various cost reduction initiatives in our Consumer business. During the quarter, we recorded a reorganization charge of $5.9 million related to the retrenchment process we commenced in January 2022; and
- Foreign exchange movements: The U.S. dollar was 4% stronger against the ZAR during the third quarter of fiscal 2022, which impacted our reported results.
Results of Operations by Segment and Liquidity
Consumer
Segment revenue was $16.4 million in Q3 2022, up 6% compared with Q3 2021, and flat compared with Q2 2022 on a constant currency basis. Segment revenue increased primarily due to higher lending and insurance revenues and moderately higher account holder fees. We embarked on a retrenchment process during Q3 2022 and recorded an expense of $5.9 million which is included in the Segment EBITDA loss. Segment EBITDA loss has decreased primarily due to the implementation of various cost reduction initiatives. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for Q3 2022 and 2021 was (41.8%) and (46.9%), respectively.
The table below presents EBITDA for our Consumer operating segment and illustrates EBITDA for Q3 2022 including and excluding the reorganization costs:
In United States dollars In South African Rand Three months ended March 31, Three months ended March 31, Operating Segment 2022
USD ’0002021
USD ’000% change 2022
ZAR ’0002021
ZAR ’000
% changeEBITDA: Consumer (6,866 ) (7,610 ) (10 %) (107,191 ) (113,827 ) (6 %) Reorganization costs 5,852 - nm 91,361 - nm Consumer excluding reorganization costs (1,014 ) (7,610 ) (87 %) (15,830 ) (113,827 ) (86 %) EBITDA margin: Consumer (42 %) (47 %) (42 %) (47 %) Consumer excluding reorganization costs (6 %) (47 %) (6 %) (47 %) Merchant
Segment revenue was $18.5 million in Q3 2022, up 58% compared with Q3 2021 and up 33% compared to Q2 2022 on a constant currency basis. Segment revenue increased year on year due to an increase in hardware sales and processing fees, which was partially offset by fewer prepaid airtime sales. The increase in segment EBITDA is primarily due to the increase in hardware sales. Our EBITDA margin for Q3 2022 and 2021 was 6.9% and 2.2%, respectively.
Other
Other includes the activities of IPG in fiscal 2021 and our other business outside South Africa, principally Botswana.
Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the third quarter of fiscal 2022 following the closure of our loss-making activities performed through IPG.
Corporate/Eliminations
Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditures 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 increased compared with the prior period due to higher employee costs, an increase in director and officer’s insurance premiums, and higher stock-based compensation charges. Fiscal 2021 includes an unrealized foreign exchange gain of $0.6 million which also impacts comparability. Our corporate expenses for fiscal 2022 includes transaction related expenses of $0.1 million (ZAR 1.8 million) related to the Connect Group acquisition. We expect to incur additional expenses related to the Connect Group transaction in Q4 2022.
Cash flow and liquidity
At March 31, 2022, our cash and cash equivalents were $183.7 million and comprised of U.S. dollar-denominated balances of $11.3 million, ZAR-denominated balances of ZAR 2.5 billion ($169.9 million), and other currency deposits, primarily Botswana pula, of $2.4 million, all amounts translated at exchange rates applicable as of March 31, 2022. The decrease in our unrestricted cash balances from June 30, 2021 was primarily due to utilization of cash reserves to fund our operations and payment of reorganization costs, which was partially offset by the receipt of $7.5 million related to the sale of Bank Frick in fiscal 2021 and a $3.7 million gain on foreign currency options.
Adopting a new brand and identity
As we embarked on creating a world class financial technology platform and repositioning ourselves for growth, it became evident we required a new identity that would resonate with our customers and employees. It was important for our new identity to authentically express our commitment to the local communities we serve and our ambition to drive financial inclusion by giving ordinary people and small businesses access to essential financial services.
For thousands of years livestock have been seen as a symbol of security, community and wealth and protecting one’s livestock was central to preserving the dignity and pride of a community. To ensure the best possible protection, an enclosure commonly known as a “kraal” in South Africa, was built in the center of the community. A kraal is seen as the social and economic heart of a village and only the most reliable people are entrusted with its care and protection. The word Lesaka means Kraal in Setswana and Sesotho, two of South Africa’s official languages, and it was agreed by our shareholders that the existing company name Net1, should change to Lesaka, which aptly represents our new group and its vision.
As Lesaka, we are on a mission to build and protect the financial wellbeing of our communities and our intention is to protect the vulnerable and underserved, by providing widespread access to essential financial services.
Changing our name will mean that our tickers will change to LSAK on the NasdaqGS and LSK on the JSE, effective May 18, 2022.
Webcast and Conference Call
Net1 will host a webcast and conference call to review results on May 11, 2022, at 8:00 a.m. Eastern Time.
Participants now have the option to either:
- Watch the live results presentation by webcast using the webcast link below; or
- Listen to an audio only broadcast of the results, using the conference call information below.
Webcast information:
The results webcast can be accessed by using the following webcast link:
https://78449.themediaframe.com/links/net1220510.html.
Participants who want to submit their questions real-time will be able to do so utilizing the question functionality included in this link.Conference call information:
The conference call can be accessed either through pre-registering for the call or dialing in real time. Participants will be given the opportunity to ask their questions through the conference call facility.Pre-register:
Participants can pre-register for the May 11, 2022, conference call by using the following link:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=5271444&linkSecurityString=adee45774. Participants utilizing this pre-registration service will receive their dial-in number and unique pin upon registration.Real time dial in:
For those participants who do not pre-register, you can dial +1 508 924 4326 (US and Canada), +44 333 300 1418 (U.K. only) or +27 11 535 3600 (South Africa only) ten minutes prior to the start of the call. Callers should request “Net1 call” upon dial-in.A replay of the results presentation webcast will be available on the Net1 investor relations website.
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 adjustments for a gain related to fair value adjustments in respect of currency options, reorganization costs incurred, a gain on disposal of equity securities and a loss on disposal of equity-accounted investments.
Fundamental net loss and loss per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, loss on disposal of equity-accounted investments, impairment losses related to an equity-accounted investment and the deferred tax liability reversal related to the impairment of the 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 South African financial technology company that utilizes its proprietary banking and payment technology to deliver financial services to consumers (B2C) and merchants (B2B) in Southern Africa. Net1’s mission is to drive true financial inclusion for both consumers and merchants through offering affordable financial services to the previously underserved sectors of the economy. Net1 offers banking, lending and insurance products to consumers and cash management solutions, bill payment technology, value added services, growth capital and card acquiring solutions to formal and informal Southern African retail merchants.
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.comMedia Relations Contact:
Janine Bester Gertzen
Email: Janine@thenielsennetwork.comNET 1 UEPS TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations Unaudited Unaudited Three months ended Nine months ended March 31, March 31, 2022 2021 2022 2021 (In thousands) (In thousands) REVENUE $ 35,202 $ 28,828 $ 100,820 $ 96,269 EXPENSE Cost of goods sold, IT processing, servicing and support 23,008 23,096 67,795 73,895 Selling, general and administration 15,184 18,892 53,372 59,517 Depreciation and amortization 463 1,132 2,084 3,129 Reorganization costs 5,852 - 5,852 - Transaction costs related to Connect Group acquisition 116 - 1,790 - OPERATING LOSS (9,421 ) (14,292 ) (30,073 ) (40,272 ) CHANGE IN FAIR VALUE OF EQUITY SECURITIES - 10,814 - 25,942 GAIN RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS 6,120 - 3,691 - LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT 346 - 346 13 GAIN ON DISPOSAL OF EQUITY SECURITIES 720 - 720 - LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT - BANK FRICK - 472 - 472 INTEREST INCOME 761 606 1,463 1,934 INTEREST EXPENSE 691 744 2,272 2,168 LOSS BEFORE INCOME TAX EXPENSE (2,857 ) (4,088 ) (26,817 ) (15,049 ) INCOME TAX EXPENSE 470 2,171 754 4,549 NET LOSS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS (3,327 ) (6,259 ) (27,571 ) (19,598 ) EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS - 55 (1,156 ) (20,098 ) NET LOSS ATTRIBUTABLE TO NET1 (3,327 ) (6,204 ) (28,727 ) (39,696 ) Net loss per share, in United States dollars: Basic loss attributable to Net1 shareholders $ (0.06 ) $ (0.11 ) $ (0.50 ) $ (0.70 ) Diluted loss attributable to Net1 shareholders $ (0.06 ) $ (0.11 ) $ (0.50 ) $ (0.70 ) NET 1 UEPS TECHNOLOGIES, INC. Unaudited Condensed Consolidated Balance Sheets Unaudited (A) March 31, June 30, 2022 2021 (In thousands, except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $ 183,712 $ 198,572 Restricted cash 56,336 25,193 Accounts receivable, net of allowance of - March: $454; June: $267 and other receivables 24,435 26,583 Finance loans receivable, net of allowance of - March: $2,466; June: $2,349 22,196 21,142 Inventory 22,104 22,361 Total current assets before settlement assets 308,783 293,851 Settlement assets 364 466 Total current assets 309,147 294,317 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of - March: $37,708; June: $38,535 5,851 7,492 OPERATING LEASE RIGHT-OF-USE 3,375 4,519 EQUITY-ACCOUNTED INVESTMENTS 7,275 10,004 GOODWILL 28,661 29,153 INTANGIBLE ASSETS, net of accumulated amortization of - March: $14,388; June: $16,403 298 357 DEFERRED INCOME TAXES 1,066 622 OTHER LONG-TERM ASSETS, including reinsurance assets 77,992 81,866 TOTAL ASSETS 433,665 428,330 LIABILITIES CURRENT LIABILITIES Short-term credit facilities for ATM funding 45,678 14,245 Accounts payable 5,102 7,113 Other payables 27,187 27,588 Operating lease liability - current 2,232 2,822 Income taxes payable 695 256 Total current liabilities before settlement obligations 80,894 52,024 Settlement obligations 364 466 Total current liabilities 81,258 52,490 DEFERRED INCOME TAXES 10,408 10,415 OPERATING LEASE LIABILITY - LONG TERM 1,345 1,890 OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 2,695 2,576 TOTAL LIABILITIES 95,706 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: March: 57,921,062; 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: March: -; June: - - - ADDITIONAL PAID-IN-CAPITAL 304,430 301,959 TREASURY SHARES, AT COST: March: 24,891,292; June: 24,891,292 (286,951 ) (286,951 ) ACCUMULATED OTHER COMPREHENSIVE LOSS (142,465 ) (145,721 ) RETAINED EARNINGS 377,886 406,613 TOTAL NET1 EQUITY 252,980 275,980 NON-CONTROLLING INTEREST - - TOTAL EQUITY 252,980 275,980 TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY $ 433,665 $ 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 Nine months ended March 31, March 31, 2022 2021 2022 2021 (In thousands) (In thousands) Cash flows from operating activities Net loss $ (3,327 ) $ (6,204 ) $ (28,727 ) $ (39,696 ) Depreciation and amortization 463 1,132 2,084 3,129 Impairment loss (27 ) - 198 - Movement in allowance for doubtful accounts receivable 91 299 1,217 913 Interest payable (97 ) (25 ) (199 ) (46 ) Unrealized (gain) loss related to fair value adjustment to currency options (2,391 ) - 38 - Fair value adjustment related to financial liabilities (152 ) (475 ) (476 ) 1,201 Gain on disposal of equity securities (720 ) - (720 ) - Loss on disposal of equity-accounted investment 346 - 346 13 Loss on disposal of equity-accounted investment - Bank Frick - 472 - 472 (Earnings) Loss from equity-accounted investments - (55 ) 1,156 20,098 Movement in allowance for doubtful loans - - - 739 Change in fair value of equity securities - (10,814 ) - (25,942 ) (Profit) Loss on disposal of property, plant and equipment (1,077 ) (142 ) (2,598 ) 600 Stock-based compensation charge 614 245 1,711 876 Dividends received from equity accounted investments - - 137 125 (Increase) Decrease in accounts receivable and finance loans receivable (687 ) 5,786 (2,966 ) 4,230 (Increase) Decrease in inventory (181 ) 428 (27 ) 2,642 (Decrease) Increase in accounts payable and other payables (1,913 ) (894 ) (1,668 ) (4,393 ) Increase (Decrease) in taxes payable 395 (160 ) 444 (15,498 ) (Decrease) Increase in deferred taxes (112 ) 2,153 (458 ) 424 Net cash used in operating activities (8,775 ) (8,254 ) (30,508 ) (50,113 ) Cash flows from investing activities Capital expenditures (834 ) (649 ) (1,721 ) (3,947 ) Proceeds from disposal of property, plant and equipment 1,538 254 3,529 345 Proceeds from disposal of equity securities 720 - 720 - Proceeds from disposal of equity-accounted investment 819 - 819 - Proceeds from disposal of equity-accounted investment - Bank Frick - 18,568 7,500 18,568 Proceeds from disposal of Net1 Korea, net of cash disposed - - - 20,114 Proceeds from disposal of DNI as equity-accounted investment - - - 6,010 Loan to equity-accounted investment - - - (1,238 ) Repayment of loans by equity-accounted investments - - - 134 Net change in settlement assets 5 745 102 6,190 Net cash provided by investing activities 2,248 18,918 10,949 46,176 Cash flows from financing activities Proceeds from bank overdraft 95,048 55,280 406,398 261,759 Repayment of bank overdraft (100,832 ) (103,195 ) (372,508 ) (268,303 ) Proceeds from issue of shares 20 35 759 53 Proceeds from disgorgement of shareholders' short-swing profits - - - 124 Net change in settlement obligations (5 ) (745 ) (102 ) (6,190 ) Net cash (used in) provided by financing activities (5,769 ) (48,625 ) 34,547 (12,557 ) Effect of exchange rate changes on cash 12,200 (2,263 ) 1,295 10,839 Net (decrease) increase in cash, cash equivalents and restricted cash (96 ) (40,224 ) 16,283 (5,655 ) Cash, cash equivalents and restricted cash – beginning of period 240,144 267,054 223,765 232,485 Cash, cash equivalents and restricted cash – end of period $ 240,048 $ 226,830 $ 240,048 $ 226,830
Net 1 UEPS Technologies, Inc.Attachment A
Operating segment revenue, operating (loss) income and operating (loss) margin:
Three months ended March 31, 2022 and 2021 and June 30, 2021
Three months ended Change - actual Change –
constant
exchange rate(2)Key segmental data, in ’000, except margins Mar 31,
2022Mar 31,
2021Dec 31,
2021Q3 '22
vs
Q3 '21Q3 '22
vs
Q2 '22Q3 '22
vs
Q3 '21Q3 '22
vs
Q2 '22Revenue: Consumer $ 16,429 $ 16,236 $ 16,639 1 % (1 %) 6 % 0 % Merchant 18,478 12,171 14,102 52 % 31 % 58 % 33 % Other 397 421 396 (6 %) 0 % (2 %) 2 % Subtotal: Operating segments 35,304 28,828 31,137 22 % 13 % 28 % 15 % Intersegment eliminations (102 ) - (23 ) nm 343 % nm 350 % Consolidated revenue $ 35,202 $ 28,828 $ 31,114 22 % 13 % 27 % 15 % Segment Adjusted EBITDA Consumer(1) $ (6,866 ) $ (7,610 ) $ (4,551 ) (10 %) 51 % (6 %) 53 % Merchant 1,271 273 795 366 % 60 % 386 % 62 % Other 87 (3,315 ) 123 nm (29 %) nm (28 %) Total Segment Adjusted EBITDA (5,508 ) (10,652 ) (3,633 ) (48 %) 52 % (46 %) 54 % Corporate/Eliminations (2,560 ) (1,404 ) (4,235 ) 82 % (40 %) 90 % (39 %) Subtotal (8,068 ) (12,056 ) (7,868 ) (33 %) 3 % nm nm Less: Lease adjustments 890 1,104 833 (19 %) 7 % nm nm Less: Depreciation and amortization 463 1,132 726 (59 %) (36 %) nm nm Consolidated operating loss $ (9,421 ) $ (14,292 ) $ (9,427 ) (34 %) (0 %) (31 %) 1 % Segment Adjusted EBITDA (loss) margin (%) Consumer (41.8 %) (46.9 %) (27.4 %) Merchant 6.9 % 2.2 % 5.6 % Other 21.9 % (787.4 %) 31.1 % Consolidated EBITDA (loss) margin (26.8 %) (49.6 %) (30.3 %) (1) – Consumer Segment Adjusted EBITDA for Q3 2022, includes reorganization costs of $5.9 million.
(2) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q3 2022 also prevailed during Q3 2021 and Q2 2022.
Nine months ended March 31, 2022 and 2021Change - actual Change –
constant
exchange
rate(2)Nine months ended
March 31,F2021
vsF2021
vsKey segmental data, in ’000, except margins 2021 2020 F2020 F2020 Revenue: Consumer $ 50,232 $ 47,867 5 % (2 %) Merchant 49,652 45,623 9 % 1 % Other 1,220 2,855 (57 %) (60 %) Subtotal: Operating segments 101,104 96,345 5 % (2 %) Intersegment eliminations (284 ) (76 ) 274 % 247 % Consolidated revenue $ 100,820 $ 96,269 5 % (3 %) Segment Adjusted EBITDA Consumer(1) $ (20,871 ) $ (19,395 ) 8 % 0 % Merchant 3,951 4,471 (12 %) (18 %) Other 353 (10,285 ) nm nm Total Segment Adjusted EBITDA (16,567 ) (25,209 ) (34 %) (39 %) Corporate/Eliminations (8,775 ) (8,943 ) (2 %) (9 %) Subtotal (25,342 ) (34,152 ) (26 %) nm Less: Lease adjustments 2,647 2,991 (12 %) nm Less: Depreciation and amortization 2,084 3,129 (33 %) nm Consolidated operating loss $ (30,073 ) $ (40,272 ) (25 %) (31 %) Segment Adjusted EBITDA (loss) margin (%) Consumer (41.5 %) (40.5 %) Merchant 8.0 % 9.8 % Other 28.9 % (360.2 %) Consolidated EBITDA (loss) margin (29.8 %) (41.8 %) (1) – Consumer Segment Adjusted EBITDA for fiscal 2022, includes reorganization costs of $5.9 million.
(2) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the year to date fiscal 2022 also prevailed during the year to date fiscal 2021.Earnings (Loss) from equity-accounted investments:
The table below presents the relative earnings (loss) from our equity-accounted investments:
Three months ended
March 31,Nine months ended
March 31,2022 2021 %
change2022 2021 %
changeBank Frick $ - $ 177 nm $ - $ 1,156 nm Share of net income - 177 nm - 1,156 nm Finbond - - nm (1,156 ) (20,267 ) (94 %) Share of net loss - - nm (1,156 ) (2,617 ) (56 %) Impairment - - nm - (17,650 ) nm Other - (122 ) nm - (987 ) nm Share of net loss - (122 ) nm - (439 ) nm Impairment - - nm - (548 ) nm Earnings (Loss) from equity-accounted investments $ - $ 55 nm $ (1,156 ) $ (20,098 ) (94 %)
Net 1 UEPS Technologies, Inc.Attachment B
Reconciliation of GAAP operating loss to EBITDA loss and adjusted EBITDA loss:
Three and nine months ended March 31, 2022 and 2021
Three months ended
March 31,Nine months ended
March 31,2022 2021 2022 2021 Operating loss - GAAP $ (9,421 ) $ (14,292 ) $ (30,073 ) $ (40,272 ) Depreciation and amortization 463 1,132 2,084 3,129 Operating loss before depreciation and amortization (8,958 ) (13,160 ) (27,989 ) (37,143 ) Reorganization costs 5,852 - 5,852 - Allowance for doubtful EMI loans receivable - - - 739 Transaction costs 236 337 2,121 1,705 Adjusted EBITDA loss $ (2,870 ) $ (12,823 ) $ (20,016 ) $ (34,699 ) Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:
Three months ended March 31, 2022 and 2021
Net (loss) income
(USD '000)(L)PS, basic
(USD)Net (loss) income
(ZAR '000)(L)PS, basic
(ZAR)2022 2021 2022 2021 2022 2021 2022 2021 GAAP (3,327 ) (6,204 ) (0.06 ) (0.11 ) (51,940 ) (92,796 ) (0.90 ) (1.63 ) Gain related to fair value adjustment to currency options (6,120 ) - (95,545 ) - Reorganization costs, net of tax 5,852 - 91,361 - Transaction costs 236 337 3,684 5,041 Stock-based compensation charge 614 245 9,586 3,665 Gain on disposal of equity securities (720 ) - (11,241 ) - Loss on sale of equity-accounted investment 346 - 5,402 - Intangible asset amortization, net 11 66 184 990 Change in fair value of equity securities, net - (8,543 ) - (127,783 ) Loss on disposal of equity-accounted investment - Bank Frick - 472 - 7,060 Fundamental (3,108 ) (13,627 ) (0.05 ) (0.24 ) (48,509 ) (203,823 ) (0.84 ) (3.60 ) Nine months ended March 31, 2022 and 2021
Net (loss) income
(USD '000)(L) EPS, basic
(USD)Net (loss) income
(ZAR '000)(L)EPS, basic
(ZAR)2022 2021 2022 2021 2022 2021 2022 2021 GAAP (28,727 ) (39,696 ) (0.50 ) (0.70 ) (430,545 ) (639,798 ) (7.51 ) (11.27 ) Reorganization costs, net of tax 5,852 - 87,706 - Gain related to fair value adjustment to currency options (3,691 ) - (55,319 ) - Transaction costs 2,120 1,705 31,774 27,480 Stock-based compensation charge 1,711 876 25,644 14,119 Gain on disposal of equity securities (720 ) - (10,791 ) - Loss on sale of equity-accounted investment 346 13 5,186 210 Intangible asset amortization, net 38 184 551 2,971 Change in fair value of equity securities, net - (20,494 ) - (330,313 ) Impairment of equity method investments - 18,198 - 281,729 Reversal of deferred taxes related to impairment of equity method investment - (1,353 ) - (22,633 ) Allowance for doubtful EMI loans receivable - 739 - 11,911 Loss on disposal of equity-accounted investment - Bank Frick - 472 - 7,607 Fundamental (23,071 ) (39,356 ) (0.40 ) (0.69 ) (345,794 ) (646,717 ) (6.03 ) (11.39 )
Net 1 UEPS Technologies, Inc.Attachment C
Reconciliation of net loss used to calculate loss per share basic and diluted and headline loss per share basic and diluted:
Three months ended March 31, 2022 and 2021
2022 2021 Net loss (USD’000) (3,327 ) (6,204 ) Adjustments: Gain on disposal of equity securities (720 ) - Loss on sale of equity-accounted investment 346 - Loss on disposal of equity-accounted investment - Bank Frick - 430 Impairment loss (27 ) - Profit on sale of property, plant and equipment (1,077 ) (142 ) Tax effects on above 302 40 Net loss used to calculate headline loss (USD’000) (4,503 ) (5,876 ) Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000) 57,791 56,646 Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000) 57,791 56,921 Headline loss per share: Basic, in USD (0.08 ) (0.10 ) Diluted, in USD (0.08 ) (0.10 ) Nine months ended March 31, 2022 and 2021
2022 2021 Net loss (USD’000) (28,727 ) (39,696 ) Adjustments: Gain on disposal of equity securities (720 ) - Loss on sale of equity-accounted investment 346 - Impairment loss 198 - Impairment of equity method investments - 18,198 Loss on disposal of equity-accounted investment - Bank Frick - 430 Impairment loss 198 - (Profit) Loss on sale of property, plant and equipment (2,598 ) 600 Tax effects on above 727 (1,521 ) Net loss used to calculate headline loss (USD’000) (30,774 ) (21,989 ) Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss (‘000) 57,322 56,803 Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss (‘000) 57,322 56,895 Headline loss per share: Basic, in USD (0.54 ) (0.39 ) Diluted, in USD (0.54 ) (0.39 ) Calculation of the denominator for headline diluted loss per share
2022 2021 2022 2021 Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP 57,791 56,646 57,322 56,803 Effect of dilutive securities under GAAP - 275 - 92 Denominator for headline diluted loss per share 57,791 56,921 57,322 56,895 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.
