Lesaka Technologies, Inc. · NASDAQ:LSAK
Lesaka Technologies — Net1 UEPS Technologies — Q4 2020 Earnings Presentation
33 slides from Lesaka Technologies's earnings presentation, September 2020
Slide 1: Q4 2020 Investor Presentation
Q4 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: Chairman's Introduction
CHAIRMAN’S INTRODUCTION
Slide 5: A Time of Change and Renewal at Net1
A Time of Change and Renewal at Net1 All changes with the aim of driving renewal at Net1 and unlocking value for shareholders in this deeply undervalued company. Material changes to the board during Q4: • 3 new directors appointed in May 2020 • 4 long-serving directors announced their resignations
Slide 6: Strategic Update
STRATEGIC UPDATE
Slide 7: Net1's Core Competencies Today
Net1’s Core Competencies Today Low cost financial services to Secure payment processing, incl. underserved consumers offline and rural environments • Net1 provides a suite of low-cost financial • Net1 provides secure payment processing services to underserved and underbanked services underlined by t
Slide 8: South Africa is Net1's primary market
South Africa is Net1’s primary market Following the sale of KSNET in South Korea, South Africa is Net1’s primary market. South Africa has, and continues to remain, the engine room and cash generator for the group. SA as % of Revenue SA as % of Employees 0 0 3% 4% 97% 96% South Africa International S
Slide 9: South Africa in the International Context
South Africa in the International Context Cash Payments as a % of Consumer Retail Payments by Country (2018) Egypt 99% Indonesia 92% India 90% Philippines 82% Malaysia 78% Thailand 77% Turkey 65% South Africa 60% Brazil 59% UK 42% Australia 37% United States 32% Sweden 20% South Korea 14% 1: Sources
Slide 10: Total Addressable Market in South Africa
Total Addressable Market in South Africa Consumer Finl Svcs: ~R57bn TAM Merchants: ~R104bn TAM Consumer / B2C Revenue Pool1 Merchant / B2B Revenue Pool2 Merchant Lending Insurance R30B Payments (Short-Term R22B R24B (Funeral & (28%) & Unsecured) (21%) (23%) Credit Life) R66B (64%) R8B (8%) R11B Merc
Slide 11: Characteristics of Addressable Markets in SA
Characteristics of Addressable Markets in SA Consumer Financial Services / B2C Merchant / B2B • Sizable market with underserved niches • Secular growth driven by movement from cash that align with Net1’s core competencies to card payments • 13% CAGR in card payments since 2012 • Attractive unit econ
Slide 12: Strategic Vision: A FinTech Platform for Payment Processing
Strategic Vision: A FinTech Platform for Payment Processing and Financial Services to Underserved Merchants and Consumers Illustration: Sample products and revenue streams from a single merchant Cash Deposits/ Withdrawals Insurance Acquiring MSME Merchant Lending Issuing Bill Payment & VAS Turnover:
Slide 13: Strategic Vision: A FinTech Platform for Payment Processing
Strategic Vision: A FinTech Platform for Payment Processing and Financial Services to Underserved Merchants and Consumers National Credit Provider Long-Term Insurance License Principal Member Approval (or ISO Mutual Banking License Enables Net 1 (through Enables Net 1 (through relationship with a Pr
Slide 14: FY 2021 Short-Term Strategy
FY 2021 | Short-Term Strategy 2021 Focus Areas 1) Accelerate rollout of services to underserved consumers in South Africa Metrics: • Expand banked customer base; • Increase penetration of financial services 2) Consolidate and buildout transaction and financial services for underserved merchants in S
Slide 15: Quarterly Summary
QUARTERLY SUMMARY Q4 2020
Slide 16: Quarterly Summary
Quarterly Summary Q4 2020 Company highlights include: Q4 2020 Investment portfolio update: • Adjusted EBITDA loss was $9.1 million excluding • Cell C’s recapitalization is ongoing while reporting impacts of COVID and one-off items EBITDA of ZAR 1.8 billion in H1 2020 • Suspended fees and origination
Slide 17: July and August 2020 Trends
July and August 2020 Trends Trends through August: 1 900 Bill Payment Volume (‘000s) 1 800 • Record transaction volumes for ATM network and EasyPay bill payments 1 700 1 600 • Over 120,000 loans issued in June compared to 30,000 in May and 500 in April 1 500 1 400 • 100% uptime of network 1 300 • De
Slide 18: NAV Breakdown
NAV Breakdown At the share price of $3.27, Net1 is trading at a significant discount to its NAV per share of $6.57, and a discount to its net cash balance of $3.81/share $7.00 Other Net Assets Per $6.00 $1.06 Share Other Long-term Assets $0.55 $5.00 Per Share $1.15 Equity Accounted Investments Per S
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS Q4 2020
Slide 20: Q4 2020 Financial Report
Q4 2020 Financial Report Q4 2020 Financial Highlights Q4 2020 Q4 2019 Q3 2020 ($ Millions) Revenue 26 17 37 % change USD 52% (29%) % change Const. FX 86% (20%) Adjusted EBITDA (12) (7) (6) % change USD 68% 90% EBITDA Margin (%) (47%) (43%) (18%) Fundamental Net Income* (12) (173) (6) % change USD (9
Slide 21: Fiscal 2020 Financial Report
Fiscal 2020 Financial Report FY 2020 Financial Highlights FY 2020 FY 2019 ($ Millions) Revenue 151 166 % change USD (9%) % change Const. FX 12% Adjusted EBITDA (30) (65) % change USD (53%) EBITDA Margin (%) (20%) (39%) Fundamental Net Income* (59) (257) % change USD (77%) % change Const. FX (72%) Fu
Slide 22: Q4 2020 Financial Report: Business Segment Results
Q4 2020 Financial Report Business Segment Results – Q4 2020 Q4 constant currency SATP Revenue • SATP constant currency revenue down 9% vs. Q4 2019 R 732 • Impact from lost revenue on certain transaction 800 due to COVID-19 and FIHRST disposal 700 600 • ITP USD revenue down 28% vs Q4 2019 ZAR Million
Slide 23: Q4 2020 Financial Report: Business Segment Results
Q4 2020 Financial Report Business Segment Results – Q4 2020 USD (Millions) Revenue Operating Income Operating Margin 4Q 2020 4Q 2019 4Q 2020 4Q 2019 4Q 2020 4Q 2019 SATP $14 $19 $(5) $(2) (32%) (13%) % Change* (9%) 125% ITP 1 2 (4) (3) (290%) (138%) % Change* (12%) 85% FIAT 13 18 (2) (11) (19%) (61%
Slide 24: Balance Sheet Overview
Q4 2020 Financial Report Balance Sheet Overview USD (Millions) June 30, 2020 Jun 30, 2019 Net Unrestricted Cash $ 218 $ 20 Investments and Equity Accounted Investments $ 93 $ 175 Total Assets $ 454 $ 670 Total Equity $ 375 $ 425 Total Debt $0 $0 Book Value / Share $ 6.57 $ 7.51 Net Cash / Share $ 3.
Slide 25: Strategic Investments
Q4 2020 Financial Report Strategic Investments % held Balance Sheet Value (Jun2020) Equity Accounted: Bank Frick 35% $30 million $30 million (1) Finbond (JSE listed) 31% $31 million $36 million (2) Carbon 25% $7 million $16 million (3) Investments: Cell C 15% $0 million $0 million MobiKwik 13% $27 m
Slide 26: Segment Highlights
SEGMENT HIGHLIGHTS Q4 2020
Slide 27: Q4 2020 SATP Segment Highlights
Q4 2020 | SATP Segment Highlights Financial Highlights • Revenue - $14 million • 9% constant currency decrease from $19 million in Q4 2019 • 20% constant currency decrease compared to Q3 2020 • Fee income lower by ZAR 27.0 million due to COVID-19 • Operating Loss – $5 million • Higher loss due to CO
Slide 28: Q4 2020 ITP Segment Highlights
Q4 2020 | ITP Segment Highlights Financial Highlights (continuing operations) • Revenue - $1.4 million • 28% decrease compared to Q4 2019 • Contraction in international processing activities • Operating loss – $(4) million • Ongoing losses from international unit 28
Slide 29: Q4 2020 FIAT Segment Highlights
Q4 2020 | FIAT Segment Highlights Financial Highlights (continuing operations) • Revenue - $13 million • 13% constant currency decrease from $18 million in Q4 2019 • 20% constant currency decrease compared to Q3 2020 • Operating loss - $2 million • Operating loss of $37 million in Q4 2019 • Operatin
Slide 30: Q4 2020 FIAT Segment Highlights (Cont'd)
Q4 2020 | FIAT Segment Highlights (Cont’d) Key Trends Average Active EPE accounts Value of Loans Outstanding 1 400 Millions 2.0 1 200 Millions 1 000 1.5 800 1.0 600 0.5 400 200 0.0 0 As of quarter ended Outstanding Capital Deferred Service Fees Number of Paying SmartLife Policies 225 000 220 000 215
Slide 31: Appendix A
Appendix A
Slide 32: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q4 2020 – Fundamental Net Loss and GAAP Net Loss Three months ended Jun-20 Jun-19 $ '000 EPS, basic $ '000 EPS, basic Fundamental net loss (Non-GAAP) (12,291) (0.22) (173,290) (3.05) Termination fee to cancel Bank Frick option (17,517) - Loss on deconsolidation of
Slide 33: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures Q4 2020 – GAAP Net Loss and EBITDA loss Three months ended Jun-20 Jun-20 $ '000 EPS, basic $ '000 EPS, basic Net loss attributable to Net1 (GAAP) (38,880) (0.68) (183,048) (3.22) Loss on disposal of discontinued operation 279 - Net income from discontinued operati
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