JOHANNESBURG, South Africa, May 09, 2019 (GLOBE NEWSWIRE) -- Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the third fiscal quarter ended March 31, 2019.

 Q3 2019 Highlights:

• Revenue of $86.5 million, GAAP EPS of $(0.96) and Fundamental EPS of $(0.62)
• Fundamental EPS of ($0.62) includes $25.2 million, or $0.44 per share of non-cash fair value loss adjustments for Cell C, net of tax, and the impairment of the Cedar Cell note;
• Operating loss of $21.7 million, Adjusted EBITDA improved sequentially to a loss of $(1.1) million;
• Early-settlement of long-term South African debt on May 3, 2019; net cash of $24 million at March 31, 2019;
• Monetization of DNI commenced with reduction of ownership from 55% to 30.4% since March 2019; DNI given a call option to acquire the remaining 30.4% at an exercise price of $59.3 million prior to December 31, 2019; and
• Active EPE accounts remained stable at 1.1 million as of March 31, 2019.

“We are pleased that our core South African operations demonstrated far more stability during the third-quarter, allowing us to focus on our extensive cost-containment exercise, a significant reduction of debt and other obligations, and the first steps towards the realization of value of some of our assets,” said Herman Kotzé, CEO. “The retrenchment of thousands of Net1 family members has been one of the most difficult processes we have ever faced and we completed the necessary actions to remain on track to achieve a monthly EBITDA-neutral position for our South African operations by the end of Q4 2019. The Board and management remain squarely focused on reviewing all options available for the Group, and will provide updates when there are tangible actions to report.”

“In Korea, our advisors are actively engaged with management to execute the near-term action items to drive higher growth and profitability, and in parallel, our Board, with financial advisors, is reviewing the strategic alternatives for this business. Cell C is focused on managing its near-term liquidity constraints, closing its transaction with a new minority investor and improving the performance of the business. Our other equity investments continued to perform in line with expectations during the quarter,” continued Kotzé. “With the deleveraging of the balance sheet that has been achieved since our last report, we remain comfortable with our liquidity position for the next 12 months.”

Subsequent Event
On February 28, 2019, we entered into a transaction which reduced our shareholding in DNI from 55% to 38%. The transaction closed on March 31, 2019. On May 3, 2019, we entered into an agreement which further reduced our shareholding in DNI from 38% to 30.4% through the sale of shares in DNI to FirstRand Bank Limited, acting through its Rand Merchant Bank division, for a transaction consideration of ZAR 215.0 million ($14.9 million, translated at exchange rates applicable as of May 3, 2019). The company utilized the sale proceeds and ZAR 15.0 million ($1.0 million, translated at exchange rates applicable as of May 3, 2019) of its cash reserves to early-settle its outstanding long-term borrowings. On May 3, 2019, we also entered into an agreement, in which we granted a call option to DNI to acquire our retained 30.4% interest in DNI. The option expires on December 31, 2019, and may be exercised at any time during this period. The option strike price for our remaining 30.4% interest is ZAR 859.3 million, or $59.3 million, translated at exchange rates applicable as of May 3, 2019, less any special distributions made by DNI.

Summary Financial Metrics

	Three months ended March 31,
	2019			2018 As restated(1)			% change in USD			% change in ZAR
(All figures in USD ‘000s except per share data)
Revenue	86,484			162,721			(47	%)		(37	%)
GAAP operating (loss) income	(21,683	)		7,564			nm			nm
Adjusted (negative) EBITDA(2)	(1,082	)		34,335			nm			nm
GAAP (loss) earnings per share ($)	(0.96	)		0.57			nm			nm
Continuing	(0.88	)		0.51			nm			nm
Discontinued	(0.08	)		0.06			nm			nm
Fundamental (loss) earnings per share ($)(2)	(0.62	)		0.95			nm			nm
Fully-diluted shares outstanding (‘000’s)	56,828			56,777			0	%
Average period USD/ ZAR exchange rate	14.17			11.95			19	%
Non-cash adjustments included (before tax impact):	39,726			(17,399	)		nm
Allowance for doubtful finance loans receivables	396			579			(32	%)
Change in fair value of equity securities	26,263			(37,843	)		nm
Loss on disposal of DNI	5,140			-			nm
Impairment loss	5,305			19,865			(73	%)
Impairment of Cedar Cell note	2,622			-			nm

	Nine months ended March 31,
	2019			2018 As restated(1)		% change in USD			% change in ZAR
(All figures in USD ‘000s except per share data)
Revenue	309,518			463,695		(33	%)		(26	%)
GAAP operating (loss) income	(63,862	)		48,877		nm			nm
Adjusted (negative) EBITDA(2)	(11,872	)		102,774		nm			nm
GAAP (loss) earnings per share ($)	(2.18	)		1.08		nm			nm
Continuing	(2.16	)		1.02		nm			nm
Discontinued	(0.02	)		0.06		nm			nm
Fundamental (loss) earnings per share ($)(2)	(1.48	)		1.77		nm			(188	%)
Fully-diluted shares outstanding (‘000’s)	56,819			56,842		(0	%)
Average period USD/ ZAR exchange rate	14.27			12.89		11	%
Non-cash adjustments included (before tax impact):	97,727			(6,418	)	nm
Allowance for doubtful finance loans receivables	31,638			11,560		174	%
Change in fair value of equity securities	42,099			(37,843	)	nm
Loss on disposal of DNI	5,140			-		nm
Impairment loss	13,496			19,865		(32	%)
Impairment of Cedar Cell note	5,354			-		nm

(1) As previously reported and more fully described in Note 1 to the consolidated financial statements contained in the Form 10-K/A filed on December 6, 2018, the Company restated its 2018 consolidated financial statements, to correctly classify and record the change in fair value of its investment in Cell C. The financial information for the three and nine months ended March 31, 2018, has been restated with the effect of increasing GAAP net (loss) income by $29,366, and GAAP (loss) net income by $0.52.

(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 Q3 2019 and Q3 2018 results

• Decline in revenue: Our revenues declined 37% in ZAR primarily due to the expiration of our SASSA contract, 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, but partially offset by the inclusion of DNI;
• Increase in operating losses: Lower revenue, coupled with a high-fixed cost infrastructure and write-downs due to limited recoverability of dues from customers, resulted in an operating loss. During the Q3 2019, we commenced with a restructuring of our South African operations to bring our cost structure in-line with our current customer base, and expect to reach break-even on a cash basis by the end of the Q4 2019. We incurred $4.5 million in retrenchment costs during Q3 2019;
• Non-cash losses, impairments and fair-value adjustments: We incurred a $5.1 million non-cash loss on disposal of DNI, an impairment loss of $5.3 million related to DNI intangibles, a fair value adjustment loss of $26.3 million for Cell C and a $2.6 million impairment of our Cedar Cell note; and
• Adverse foreign exchange movements: The U.S. dollar appreciated 19% against the ZAR and 6% against the KRW during Q3 2019, which adversely impacted our reported results.

Results of Operations by Segment and Liquidity

South African transaction processing

Segment revenue was $17.4 million in Q3 2019, down 72% on a constant currency basis compared with Q3 2018. The 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 was 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. 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 Q3 2019 included retrenchment costs of $3.0 million (ZAR 41.7 million). Our operating (loss) income margin for Q3 2019 and 2018 was (74.6%) and 17.3%, respectively. Excluding restructuring costs, the operating loss margin for Q3 2019 was (57.5%).

International transaction processing

Segment revenue was $34.4 million in Q3 2019, down 12% compared with Q3 2018 in constant currency. Segment revenue was lower during Q3 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 Q3 2018 was adversely impacted by a $19.9 million impairment loss and positively impacted by an ad hoc refund of indirect taxes of $2.5 million in Korea. Excluding the impact of the impairment loss and the ad hoc tax refund, operating income during Q3 2019 was lower compared to fiscal 2018 due to the decrease in IPG revenues and resulting from these lower revenues, and partially offset by an improved contribution from KSNET, primarily as a result of a lower depreciation expense. Operating income (loss) margin for Q3 2019 and 2018 was 5.6% and (32.2%), respectively. Excluding the goodwill impairment and ad hoc tax refund, segment operating income and margin for fiscal 2018 were $2.4 million and 5.2%, respectively.

Financial inclusion and applied technologies

Segment revenue was $36.7 million in Q3 2019, down 27% compared with Q3 2018 in constant currency. 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, partially offset by the inclusion of DNI. Operating income was significantly lower than Q3 2018, primarily due to lower revenue generation and higher expenses incurred to maintain and expand our financial service infrastructure, partially offset by the contribution from DNI. Operating income for this operating segment for Q3 2019 included retrenchment costs of $1.6 million (ZAR 22.1 million). Excluding the retrenchment costs, segment operating income and margin for fiscal 2019 were $4.8 million and 13.2% respectively.

Corporate/eliminations

Our corporate expenses increased primarily due to a $5.3 million impairment loss as well as higher acquired intangible asset amortization, non-employee director expenses, transaction-related expenditures and external service provider fees.

Cash flow and liquidity

At March 31, 2019, our cash and cash equivalents were $48.8 million and comprised ZAR-denominated balances of ZAR 263.0 million ($18.2 million), KRW-denominated balances of KRW 17.2 billion ($15.1 million), U.S. dollar-denominated balances of $10.7 million, and other currency deposits, primarily Botswana pula, of $4.7 million, all amounts translated at exchange rates applicable as of March 31, 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 the contribution from the inclusion of 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 Q3 2019 and 2018 were $1.6 million and $4.2 million, respectively, and have decreased primarily due to the acquisition of fewer ATMs in South Africa and computer equipment to maintain our processing activities. We made a scheduled South African debt facility payment of $10.5 million (ZAR 151 million).

Operating metrics and supplemental presentation for Q3 2019 Results

Our updated operating metrics have been posted on our website (www.net1.com). A supplemental presentation for Q3 2019 will be posted to the Investor Relations page of our website – ir.net1.com one hour prior to our earnings call on Friday, May 10, 2019.

Conference Call

We will host a conference call to review these results on May 10, 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 May 30, 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, 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 the impairment loss, 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, 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. 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. A discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.

Investor Relations Contact:
Dhruv Chopra
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.
Unaudited Condensed Consolidated Statements of Operations
	Three months ended									Nine months ended
	March 31,									March 31,
	2019						2018 (As restated)			2019					2018 (As restated)
	(In thousands, except per share data)									(In thousands, except per share data)
REVENUE	$		86,484			$		162,721		$		309,518		$		463,695
EXPENSE
Cost of goods sold, IT processing, servicing and support			50,179					77,860				173,680				226,506
Selling, general and administration			42,802					48,091				155,676				141,417
Depreciation and amortization			9,881					9,341				30,528				27,030
Impairment loss			5,305					19,865				13,496				19,865
OPERATING (LOSS) INCOME			(21,683	)				7,564				(63,862	)			48,877
CHANGE IN FAIR VALUE OF EQUITY SECURITIES			(26,263	)				37,843				(42,099	)			37,843
LOSS ON DISPOSAL OF DNI			5,140					-				5,140				-
INTEREST INCOME, net of impairment			(959	)				5,154				586				14,903
INTEREST EXPENSE			3,493					2,426				9,030				6,872
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE			(57,538	)				48,135				(119,545	)			94,751
INCOME TAX (BENEFIT) EXPENSE			(2,490	)				19,418				1,702				39,757
NET (LOSS) INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS			(55,048	)				28,717				(121,247	)			54,994
(LOSS) EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS			(464	)				3,960				(338	)			7,389
NET (LOSS) INCOME			(55,512	)				32,677				(121,585	)			62,383
Continuing			(50,784	)				29,386				(124,275	)			57,181
Discontinued			(4,728	)				3,291				2,690				5,202
(ADD) LESS NET (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST			(728	)				302				2,339				903
Continuing			(485	)				302				(1,362	)			903
Discontinued			(243	)				-				3,701				-
NET (LOSS) INCOME ATTRIBUTABLE TO NET1	$		(54,784	)		$		32,375		$		(123,924	)	$		61,480
Continuing			(50,299	)				29,084				(122,913	)			56,278
Discontinued			(4,485	)				3,291				(1,011	)			5,202
Net (loss) income per share, in U.S. dollars
Basic (loss) earnings attributable to Net1 shareholders		$	(0.96	)			$	0.57			$	(2.18	)		$	1.08
Continuing		$	(0.88	)			$	0.51			$	(2.16	)		$	1.02
Discontinued		$	(0.08	)			$	0.06			$	(0.02	)		$	0.06
Diluted (loss) earnings attributable to Net1 shareholders		$	(0.96	)			$	0.57			$	(2.18	)		$	1.08
Continuing		$	(0.88	)			$	0.51			$	(2.16	)		$	1.02
Discontinued		$	(0.08	)			$	0.06			$	(0.02	)		$	0.06

NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets
	March 31,				June 30,
	2019				2018(A)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	48,757			$	87,075
Restricted cash		74,181				-
Pre-funded social welfare grants receivable		-				2,965
Accounts receivable, net and other receivables		80,150				93,448
Finance loans receivable, net		25,217				61,463
Inventory		7,861				10,361
Current assets of discontinued operation		-				22,482
Total current assets before settlement assets		236,166				277,794
Settlement assets		66,222				149,047
Total current assets		302,388				426,841
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of – March: $131,212; June: $126,026		19,889				25,737
EQUITY-ACCOUNTED INVESTMENTS		167,497				87,992
GOODWILL		156,499				169,079
INTANGIBLE ASSETS, net of accumulated amortization of – March: $128,724; June: $121,466		15,719				27,129
DEFERRED INCOME TAXES		2,862				5,751
OTHER LONG-TERM ASSETS, including reinsurance assets		174,903				235,032
LONG-TERM ASSETS OF DISCONTINUED OPERATION		-				241,729
TOTAL ASSETS		839,757				1,219,290
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities for ATM funding		74,181				-
Short-term credit facilities		8,865				-
Accounts payable		14,743				21,106
Other payables		37,936				41,645
Current portion of long-term borrowings		15,823				44,079
Income taxes payable		4,958				5,742
Current liabilities of discontinued operation		-				20,914
Total current liabilities before settlement obligations		156,506				133,486
Settlement obligations		66,222				149,047
Total current liabilities		222,728				282,533
DEFERRED INCOME TAXES		6,299				17,485
LONG-TERM BORROWINGS		-				5,469
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities		2,273				30,289
LONG-TERM LIABILITIES OF DISCONTINUED OPERATION		-				37,412
TOTAL LIABILITIES		231,300				373,188
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 - March: 56,815,925; June: 56,685,925		80				80
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury: March: -; June: -		-				-
ADDITIONAL PAID-IN-CAPITAL		277,950				276,201
TREASURY SHARES, AT COST: March: 24,891,292; June: 24,891,292		(286,951	)			(286,951	)
ACCUMULATED OTHER COMPREHENSIVE LOSS		(204,338	)			(184,436	)
RETAINED EARNINGS		713,701				837,625
TOTAL NET1 EQUITY		500,442				642,519
NON-CONTROLLING INTEREST		343				95,911
TOTAL EQUITY		500,785				738,430
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY	$	839,757			$	1,219,290
(A) – Derived from audited financial statements filed on Form 10-K/A on December 6, 2018

NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
			Three months ended								Nine months ended
			March 31,								March 31,
			2019				2018 (as restated)				2019						2018 (as restated()
		(In thousands)								(In thousands)
Cash flows from operating activities
Net (loss) income		$	(55,512	)		$	32,677			$	(121,585			)	$			62,383
Depreciation and amortization			9,881				9,341				30,528							27,030
Impairment loss			5,305				19,865				13,496							19,865
Allowance for doubtful accounts receivable charged			396				579				31,638							11,560
Loss (Earnings) from equity-accounted investments			464				(3,960	)			338							(7,389	)
Interest on Cedar Cell note, net of impairment			2,044				(587	)			3,404							(769	)
Change in fair value of equity securities			26,263				(37,843	)			42,099							(37,843	)
Fair value adjustments and foreign currency re-measurements			90				(110	)			91							(209	)
Interest payable			53				(17	)			294							(264	)
Facility fee amortized			51				120				206							467
(Profit) Loss on disposal of property, plant and equipment			(147	)			(50	)			(413			)				71
Loss (Profit) on disposal of business			5,140				-				5,140							(463	)
Stock-based compensation charge, net			487				575				1,672							2,010
Dividends received from equity accounted investments			-				1,946				454							4,111
Decrease (Increase) in accounts receivable, pre-funded social welfare grants receivable and finance loans receivable			(14,938	)			41,679				6,533							(2,438	)
Decrease (Increase) in inventory			1,451				1,072				3,612							(2,776	)
Increase (Decrease) in accounts payable and other payables			8,196				2,827				(11,339			)				5,775
Increase in taxes payable			795				9,007				2,142							8,091
(Decrease) Increase in deferred taxes			(4,153	)			7,824				(11,223			)				8,252
Net cash (used in) provided by operating activities			(14,134	)			84,945				(2,913			)				97,464
Cash flows from investing activities
Capital expenditures			(1,615	)			(4,225	)			(7,280			)				(7,801	)
Proceeds from disposal of property, plant and equipment			295				160				781							575
Disposal of DNI			(2,114	)			-				(2,114			)				-
Investment in equity of equity-accounted investments			(489	)			(18,597	)			(2,989			)				(132,335	)
Acquisition of intangible assets			-				-				(1,384			)				-
Investment in MobiKwik			-				-				(1,056			)				-
Proceeds on return of investment			-				-				284							-
Investment in Cell C			-				-				-							(151,003	)
Loans to equity-accounted investments			-				(10,635	)			-							(10,635	)
Acquisition of held to maturity investment			-				-				-							(9,000	)
Other investing activities			-				300				-							146
Net change in settlement assets			(1,083	)			43,222				76,879							280,390
Net cash (used in) provided by investing activities			(5,006	)			10,225				63,121							(29,663	)
Cash flows from financing activities
Proceeds from bank overdraft			278,288				9,802				584,525							42,372
Repayment of bank overdraft			(257,097	)			(42,650	)			(502,823			)				(56,993	)
Repayment of long-term borrowings			(12,499	)			(15,826	)			(36,310			)				(60,967	)
Long-term borrowings utilized			3,609				17,726				14,613							113,157
Dividends paid to non-controlling interest			(1,148	)			-				(4,085			)				-
Payment of guarantee fee			-				(202	)			(394			)				(754	)
Net change in settlement obligations			1,083				(43,222	)			(76,879			)				(280,390	)
Net cash provided by (used in) financing activities			12,236				(74,372	)			(21,353			)				(243,575	)
Effect of exchange rate changes on cash			(3,199	)			1,478				(5,971			)				4,489
Net (decrease) increase in cash, cash equivalents and restricted cash			(10,103	)			22,276				32,884							(171,285	)
Cash, cash equivalents and restricted cash – beginning			133,041				64,896				90,054							258,457
Cash, cash equivalents and restricted cash – end of period (1)		$	122,938			$	87,172			$	122,938				$			87,172
(1) Cash, cash equivalents and restricted cash as of March 31, 2019, includes restricted cash of approximately $74.2 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

Operating segment revenue, operating income and operating margin:

Three months ended March 31, 2019 and 2018 and December 31, 2018

													Change - actual						Change – constant exchange rate(1)
Key segmental data, in ’000, except margins	Q3 ‘19				Q3 ‘18				Q2 ‘19				Q3 ‘19 vs Q3‘18			Q3 ‘19 vs Q2 ‘19			Q3 ‘19 vs Q3‘18			Q3 ‘19 vs Q2 ‘19
Revenue:
South African transaction processing	$	17,374			$	73,508			$	21,970			(76	%)		(21	%)		(72	%)		(22	%)
International transaction processing		34,358				46,240				38,124			(26	%)		(10	%)		(12	%)		(11	%)
Financial inclusion and applied technologies		36,650				59,574				38,755			(38	%)		(5	%)		(27	%)		(6	%)
Continuing		18,808				59,574				19,047			(68	%)		(1	%)		(63	%)		(2	%)
Discontinued		17,842				-				19,708			nm			(9	%)		nm			(10	%)
Subtotal: Operating segments		88,382				179,322				98,849			(51	%)		(11	%)		(42	%)		(12	%)
Intersegment eliminations		(1,898	)			(16,601	)			(1,699	)		(89	%)		12	%		(86	%)		11	%
Consolidated revenue		86,484				162,721				97,150			(47	%)		(11	%)		(37	%)		(12	%)
Continuing		68,642				162,721				77,442			(58	%)		(11	%)		(50	%)		(12	%)
Discontinued	$	17,842			$	-			$	19,708			nm			(9	%)		nm			(10	%)
Operating (loss) income:
South African transaction processing	($	12,954	)		$	12,719			($	11,830	)		nm			10	%		nm			8	%
International transaction processing		1,909				(14,892	)			(4,043	)		nm			nm			nm			nm
Financial inclusion and applied technologies		3,227				14,968				(18,538	)		(78	%)		nm			(74	%)		nm
Continuing		(4,911	)			14,968				(26,968	)		(133	%)		nm			(139	%)		nm
Discontinued		8,138				-				8,430			nm			(3	%)		nm			(4	%)
Subtotal: Operating segments		(7,818	)			12,795				(34,411	)		nm			(77	%)		nm			(78	%)
Corporate/Eliminations		(13,865	)			(5,231	)			(8,664	)		165	%		60	%		214	%		58	%
Continuing		(6,399	)			(5,231	)			(6,061	)		22	%		6	%		45	%		4	%
Discontinued		(7,466	)			-				(2,603	)		nm			187	%		nm			184	%
Consolidated operating (loss) income		(21,683	)			7,564				(43,075	)		nm			(50	%)		nm			(50	%)
Continuing		(22,355	)			7,564				(48,902	)		nm			(54	%)		nm			(55	%)
Discontinued	$	672			$	-			$	5,827			nm			(88	%)		nm			(89	%)
Operating (loss) income margin (%)
South African transaction processing		(74.6	%)			17.3	%			(53.8	%)
International transaction processing		5.6	%			(32.2	%)			(10.6	%)
Financial inclusion and applied technologies		8.8	%			25.1	%			(47.8	%)
Continuing		(26.1	%)			25.1	%			(141.6	%)
Discontinued		45.6	%		nm					42.8	%
Consolidated operating margin		(25.1	%)			4.6	%			(44.3	%)
Continuing		(32.6	%)			4.6	%			(63.1	%)
Discontinued		3.8	%		nm					29.6	%
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q3 2019 also prevailed during Q3 2018 and Q2 2019.

Nine months ended March 31, 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	$	77,093			$	204,093				(62	%)		(58	%)
International transaction processing		111,869				136,447				(18	%)		(9	%)
Financial inclusion and applied technologies		128,611				168,018				(23	%)		(15	%)
Continuing		72,274				168,018				(57	%)		(52	%)
Discontinued		56,337				-				nm			nm
Subtotal: Operating segments		317,573				508,558				(38	%)		(31	%)
Intersegment eliminations		(8,055	)			(44,863	)			(82	%)		(80	%)
Consolidated revenue		309,518				463,695				(33	%)		(26	%)
Continuing		253,181				463,695				(45	%)		(40	%)
Discontinued	$	56,337			$	-				nm			nm
Operating (loss) income:
South African transaction processing	$	(28,297	)		$	38,521				(173	%)		(181	%)
International transaction processing		628				(14,567	)			(104	%)		(105	%)
Financial inclusion and applied technologies		(4,009	)			41,625				(110	%)		(111	%)
Continuing		(28,409	)			41,625				(168	%)		(176	%)
Discontinued		24,400				-				nm			nm
Subtotal: Operating segments		(31,678	)			65,579				(148	%)		(153	%)
Corporate/Eliminations		(32,184	)			(16,702	)			93	%		113	%
Continuing		(19,465	)			(16,702	)			17	%		29	%
Discontinued		(12,719	)			-				nm			nm
Consolidated operating (loss) income		(63,862	)			48,877				(231	%)		(245	%)
Continuing		(75,543	)			48,877				(255	%)		(271	%)
Discontinued	$	11,681			$	-				nm			nm
Operating (loss) income margin (%)
South African transaction processing		(36.7	%)			18.9	%
International transaction processing		0.6	%			(10.7	%)
Financial inclusion and applied technologies		(3.1	%)			24.8	%
Continuing		(39.3	%)			24.8	%
Discontinued		43.3	%		nm
Consolidated operating margin		(20.6	%)			10.5	%
Continuing		(29.8	%)			10.5	%
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 the year to date fiscal 2019 also prevailed during the year to date fiscal 2018.

(Loss) Earnings from equity-accounted investments:

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

	Q3 2019				Q3 2018				% change			F2019				F2018				% change
Bank Frick		($90	)			$653			nm				($1,895	)			$975			nm
Share of net income		52				747			(93	%)			616				1,234			(50	%)
Amortization of intangible assets, net of deferred tax		(142	)			(94	)		51	%			(427	)			(259	)		65	%
Other		-				-			nm				(2,084	)			-			nm
DNI(1)		-				3,291			nm				-				5,202			nm
Share of net income		-				3,628			nm				-				6,868			nm
Amortization of intangible assets, net of deferred tax		-				(337	)		nm				-				(1,666	)		nm
Finbond(2)		-				-			nm				1,875				1,101			70	%
Other		(374	)			16			nm				(318	)			111			nm
(Loss) earnings from equity-accounted investments		($464	)			$3,960			nm				($338	)			$7,389			nm

(1) DNI was accounted for using the equity method in fiscal 2018 and has been consolidated from June 30, 2018, following the acquisition of a controlling interest in the company. 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 GAAP operating (loss) income to negative EBITDA and adjusted negative EBITDA:

Three and nine months and year ended March 31, 2019 and 2018

	Three months ended March 31,						Nine months ended March 31,
	2019			2018			2019			2018
Operating (loss) income - GAAP	(21,683	)		7,564			(63,862	)		48,877
Depreciation and amortization	9,881			9,341			30,528			27,030
Impairment loss	5,305			19,865			13,496			19,865
(Negative) EBITDA	(6,497	)		36,770			(19,838	)		95,772
Retrenchment costs	4,542			-			5,243			-
Transaction costs	873			110			2,723			2,207
Refund of Korean indirect taxes	-			(2,545	)		-			(2,545	)
Non-recurring Mastertrading allowance for doubtful accounts	-			-			-			7,803
(Loss) Profit on disposal of subsidiary	-			-			-			(463	)
Adjusted (negative) EBITDA	(1,082	)		34,335			(11,872	)		102,774

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

Three months ended March 31, 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	(54,784	)		32,375			(0.96	)		0.57		(815,439	)	386,814			(14.35	)		6.80
Impairment loss	5,305			19,865								75,184		237,345
Loss on disposal of DNI	5,140			-								72,845		-
Intangible asset amortization, net	4,380			2,268								62,080		27,096
Retrenchment costs, net	3,270			-								45,915		-
Accreted interest on DNI contingent consideration	1,012			-								14,335		-
Intangible asset amortization, net related to non-controlling interest	(918	)		-								(13,008	)	-
Stock-based compensation charge	578			575								8,190		6,870
Transaction costs	873			110								12,371		1,314
Intangible asset amortization, net related to equity accounted investments	142			431								2,012		10,701
Facility fees for debt	51			120								723		1,434
Refund related to litigation finalized in Korea, net	-			(1,985	)							-		(23,717	)
Fundamental	(34,951	)		53,759			(0.62	)		0.95		(534,792	)	647,857			(9.41	)		11.40

Nine months ended March 31, 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	(123,924	)		61,480			(2.18	)		1.08		(1,705,572	)		792,686			(30.03	)	13.96
Intangible asset amortization, net	13,502			6,644								192,633			85,666
Impairment loss	13,496			19,865								192,551			256,128
Loss on disposal of DNI	5,140			-								73,333			-
Retrenchment costs, net	3,775											53,087			-
Intangible asset amortization, net related to non-controlling interest	(2,737	)		-								(39,047	)		-
Transaction costs	2,723			2,050								38,848			26,432
Accreted interest on DNI contingent consideration	1,848			-								26,360			-
Stock-based compensation charge	1,763			2,010								25,152			25,916
Intangible asset amortization, net related to equity accounted investments	427			1,925								6,092			17,835
Facility fees for debt	206			467								2,939			6,021
Non-recurring Mastertrading allowance for doubtful accounts	-			7,803								-			100,607
Refund related to litigation finalized in Korea, net	-			(1,985	)							-			(25,593	)
Change in US tax rate	-			860								-			11,088
Profit on disposal of subsidiary	-			(463	)							-			(5,970	)
Fundamental	(83,781	)		100,656			(1.48	)		1.77		(1,133,624	)		1,290,816			(19.96	)	22.73

Net 1 UEPS Technologies, Inc.

Attachment C

Reconciliation of 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 March 31, 2019 and 2018

	2019			2018
Net (loss) income (USD’000)	(54,784	)		32,375
Adjustments:
Impairment loss	5,305			19,865
Loss on sale of business	5,140			-
Profit on sale of property, plant and equipment	(147	)		(50	)
Tax effects on above	41			14
Net (loss) income used to calculate headline earnings (USD’000)	(44,445	)		52,204
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)	56,828			56,716
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)	56,828			56,777
Headline (loss) earnings per share:
Basic, in USD	(0.78	)		0.92
Diluted, in USD	(0.78	)		0.92

Nine months ended March 31, 2019 and 2018

	2019			2018
Net (loss) income (USD’000)	(123,924	)		61,480
Adjustments:
Impairment loss	13,496			19,865
Loss (Profit) on sale of business	5,140			(463	)
Profit on sale of property, plant and equipment	(413	)		(50	)
Tax effects on above	116			14
Net (loss) income used to calculate headline earnings (USD’000)	(105,585	)		80,846
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)	56,795			56,788
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)	56,819			56,842
Headline (loss) earnings per share:
Basic, in USD	(1.86	)		1.42
Diluted, in USD	(1.86	)		1.42

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

	Q3 ‘19		Q3 ‘18		F2019		F2018
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP	56,828		56,716		56,795		56,788
Effect of dilutive securities under GAAP	-		61		24		54
Denominator for headline diluted (loss) earnings per share	56,828		56,777		56,819		56,842

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.