Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Q2 2020 Earnings Presentation
34 slides from Lesaka Technologies's earnings presentation, 2020
Slide 1: Q2 2020 Investor Presentation
Q2 2020 Investor Presentation www.net1.com
Slide 2: Safe Harbor Statement
Safe Harbor Statement The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could caus
Slide 3: Defined Terms
Defined Terms Unless specifically noted otherwise within this presentation, the following terms are hereby defined as follows: Constant Currency: We analyze our results of operations both in U.S. dollars, as presented in the consolidated financial statements, and supplementally in ZAR, because ZAR i
Slide 4: Performance Summary
Performance Summary Q2 2020 Company highlights include: Q2 2020 Investment portfolio update: • Revenue of $74 million down 2% compared to Q2 • Cell C’s recapitalization ongoing. Operating 2019 in constant currency performance improvements in Nov and Dec 2019 • Adj. EBITDA of $(0.7) million, impacted
Slide 5: Strategic Summary
STRATEGIC SUMMARY Q2 2020 ——— NET1 74
Slide 6: Return to our roots: Financial Inclusion
Return to our roots: Financial Inclusion Providing Innovative and Cost-Effective Solutions FINANCIAL TECHNOLOGY Affordability Accessibility Offline/security Micro-loans Distribution Micro-insurance Unbanked and Under-banked Omni-channel Working Capital VAS Easy-to-use 6
Slide 7: Global Market Opportunity
Q2 2020 | Global Market Opportunity Net1 is a global fintech player focused on the unbanked GLOBAL REACH TECHNOLOGY 19 office or service locations globally • Core UEPS/EMV platform • Tokenization – virtual card • Mobile banking/payments (QR) • Crypto-asset storage • Card processing gateways • ACH pr
Slide 8: FY 2020 Targets
Q2 2020 | FY 2020 Targets 1) Accelerate transition from B2B to B2C model in South Africa Metrics: • Grow active account base by at least 10% from year-end fiscal 2019 levels; • Expand financial and value-added services businesses at least 10% from FY2019 levels 2) Introduce and scale up payments and
Slide 9: FY 2020 Adj. EBITDA Bridge
FY 2020 Adj. EBITDA Bridge For FY20, we expect to generate approx. $(3) million adjusted EBITDA compared to our initial guidance of $16 million due to divestitures and lower growth Adj. EBITDA $ millions $(32) 9
Slide 10: FY 2020 Capital Allocation
FY 2020 Capital Allocation We expect to raise a meaningful amount of cash from asset divestitures and intend to use proceeds to reinvest in our business as well as return capital to shareholders Proceeds: Uses of Capital KSNET sale $197m Reinvestment in SA $40-50m ($237 + Dividend $10 – cash $30 (mo
Slide 11: Long-term Growth Strategy
Q2 2020 | Long-term Growth Strategy Focus on three key pillars to drive long term growth and profitability SOUTH AFRICA AFRICA EU/ASIA (IPG) KOREA Financial Inclusion Mobile Payments, Digital Issuing, Acquiring, Improve growth and (Individuals) Financial services, UEPS Processing (SMEs) profitabilit
Slide 12: Strategic Investments
STRATEGIC INVESTMENTS Q2 2020
Slide 13: BANK Investments
BANK Investments FINBOND (South Africa) Ownership: 29% Carrying Value: $38 Mn South African mutual bank and lender with 400+ branches. Traded on JSE (Ticker: FGL) PROJECT 2020: Launch new UEPS/EMV products Leverage combined branch, ATM and POS infrastructure DEVELOPMENTS: Launched new banking offeri
Slide 14: MOBILE PAYMENT Investments
MOBILE PAYMENT Investments MOBIKWIK (India) Ownership: 13% Carrying Value: $27 Mn Leading digital fintech and payments company in India with 80+ million customers PROJECT 2020: Expand financial services offerings – loans, insurance, wealth Scale virtual card and introduce new Net1 offerings DEVELOPM
Slide 15: MOBILE PAYMENT Investments (Cont'd)
MOBILE PAYMENT Investments (Cont’d) V2 Limited Ownership: 50% Carrying Value: $3 Mn Startup Africa-focused mobile payments company leveraging QR-code technology PROJECT 2020: Commercially scale operations in Ghana Enter at least one additional African market DEVELOPMENTS: Started operations in Octob
Slide 16: TELECOM Investments
TELECOM Investments Cell C (South Africa) Ownership: 15% Carrying Value: $0 Mn Third-largest mobile operator in South Africa PROJECT 2020: Conclude recapitalization Integrate new MTN sharing agreement and build sustainability DEVELOPMENTS: MTN agreement has been signed in Q2 2020 Recapitalization ef
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS Q2 2020
Slide 18: Q2 2020 Financial Highlights
Q2 2020 Financial Report Q2 2020 Financial Highlights Q2 2020 Q2 201 9 Q1 2020 ($ Millions) Revenue 74 77 81 % change USD (4%) (8%) % change Const. FX (22%) (9%) Adjusted EBITDA (1 ) (33) 3 % change USD (98%) (1 25%) EBITDA Margin (%) (1 %) (43%) 4% Fundamental Net Income* (6) (51 ) (1 ) % change US
Slide 19: Business Segment Results – Q2 2020
Q2 2020 Financial Report Business Segment Results – Q2 2020 Q2 constant currency SATP Revenue • SATP constant currency revenue grew 4% vs. Q1 2020 • Stable growth in SATP with modestly higher R 877 volumes partially offset by sale of FIHRST in Dec 1,000 800 • ITP USD revenue up 1% vs Q1 2020 ZAR Mil
Slide 20: Business Segment Results – Q2 2020
Q2 2020 Financial Report Business Segment Results – Q2 2020 USD (Millions) Revenue Operating Income Operating Margin 2Q 2020 2Q 2019 2Q 2020 2Q 2019 2Q 2020 2Q 2019 SATP (15%) (54%) $20 $22 $(3) $(12) % Change* (6%) (74%) ITP 8% (11%) 34 38 3 (4) % Change* (8%) nm FIAT (15%) (54%) 22 19 (1) (27) % C
Slide 21: Business Segment Results – YTD 2020
Q2 2020 Financial Report Business Segment Results – YTD 2020 USD (Millions) Revenue Operating Income Operating Margin YTD 2020 YTD 2019 YTD 2020 YTD 2019 YTD 2020 YTD 2019 SATP $40 $60 $(6) $(15) (16%) 26%) % Change* (33%) (58%) ITP 68 78 7 (1) 10% (2%) % Change* (11%) nm FIAT 52 53 1 (23) 1% 44%) %
Slide 22: Balance Sheet Overview
Q2 2020 Financial Report Balance Sheet Overview USD (Millions) Dec 31, 2019 Jun 30, 2019 Net Unrestricted Cash $ 51 $ 46 Investments and Equity Accounted Investments(1) $ 156 $ 178 Total Assets $ 690 $ 673 Total Equity $ 428 $ 319 Total Debt(2) $ 18 $ 10 Book Value / Share $ 7.57 $ 5.65 Net Cash / S
Slide 23: Key Investments
Q2 2020 Financial Report Key Investments % held Balance Sheet Value (Dec 2019) Equity Accounted: Bank Frick 35% $48 million >$48 million (1) Finbond (JSE listed) 29% $38 million $67 million (2) Carbon 25% $8 million $25 million (3) DNI 30% $62 million $62 million (4) Investments: Cell C 15% $0 milli
Slide 24: Business Overview: South African Transaction Processing
BUSINESS OVERVIEW SOUTH AFRICAN TRANSACTION PROCESSING Q2 2020
Slide 25: SATP Segment Highlights
Q2 2020 | SATP Segment Highlights Financial Highlights • Revenue - $21 million • 7% decrease from $22 million in Q2 2019 • 4% constant currency increase compared to Q1 2020 • Lower transaction revenue from fewer EPE accounts and SASSA Grindrod accounts and sale of FIHRST in December 2019 • Partially
Slide 26: Business Overview: International Transaction Processing
BUSINESS OVERVIEW INTERNATIONAL TRANSACTION PROCESSING Q2 2020
Slide 27: ITP Segment Highlights
Q2 2020 | ITP Segment Highlights Financial Highlights • Revenue - $34 million • 10% decrease compared to Q2 2019 • 1% increase compared to Q1 2020 • Depreciation of KRW versus USD • Contraction in IPG processing activities particularly China processing and crypto-currency transactions • Operating in
Slide 28: ITP Segment Highlights (Cont'd)
Q2 2020 | ITP Segment Highlights (Cont’d) Key Trends • South Korea and Rest of the World (ROW) Growth • South Korea revenue down 1% in KRW compared to Q2 2019 • ROW revenue impacted by contraction in IPG processing activities Revenue KRW Billions Revenue ROW (excl Korea) - USD Millions 50 9 8 40 7 6
Slide 29: Business Overview: Financial Inclusion & Applied Technologies
BUSINESS OVERVIEW FINANCIAL INCLUSION & APPLIED TECHNOLOGIES Q2 2020
Slide 30: FIAT Segment Highlights
Q2 2020 | FIAT Segment Highlights Financial Highlights • Revenue - $22 million • 15% increase from $19 million in Q2 2019 (continuing operations) • 28% constant currency decrease compared to Q1 2020 (ad-hoc sales) • Operating loss - $(0.9) million • Operating loss of $(27) million in Q2 2019 (contin
Slide 31: FIAT Segment Highlights (Cont'd)
Q2 2020 | FIAT Segment Highlights (Cont’d) Key Trends Average Active EPE accounts Value of Loans Outstanding 1,400 Millions 1,200 2.0 1,000 Millions 1.5 800 1.0 600 0.5 400 0.0 200 0 As of quarter ended Outstanding Capital Deferred Service Fees Number of Paying SmartLife Policies 2,20,000 2,15,000 2
Slide 32: Appendix A
Appendix A ——— NET1 Sar 5
Slide 33: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q2 2020 – Fundamental Net (Loss) Income and EBITDA Three months ended Dec-19 Dec-18 $ '000 EPS, basic $ '000 EPS, basic Fundamental net (loss) income (Non-GAAP) (5,698) (0.10) (51,042) (0.90) Amortisation of intangible assets, net of tax 9,743 - Gain on disposal o
Slide 34: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q2 2020 – Fundamental Net (Loss) Income and EBITDA Six months ended Dec-19 Dec-18 $ '000 EPS, basic $ '000 EPS, basic Fundamental net (loss) income (Non-GAAP) (6,886) (0.12) (50,229) 0.83 Amortisation of intangible assets, net of tax 9,743 - Gain on disposal of FI
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