Dhruv Chopra IR
Herman Kotzé CEO
Alexander Smith CFO
Allen Klee Maxim Group
Scott Buck B. Riley FBR
Call transcript
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Good day, ladies and gentlemen and welcome to the Net 1 UEPS Quarter Four of 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this call is being recorded.

I would now like to turn the conference over to Mr. Dhruv Chopra. sir. ahead, go Please

Dhruv Chopra

Welcome on fourth our the our Kotze Juliet. call. CEO, XXXX With and Smith. Alex me call CFO, to you, quarter our earnings Herman Thank today is

ir.netX.com. presentation release press on Relations and investor Our are supplementary our available Investor website,

our audited statements We filed Form to with XXth. September Monday, XX-K be the expect financial on

risks As statements cautionary you the ask at the uncertainties and language release during in and to call, press will we forward-looking this reminder, with I a be forward-looking our contained statements. making associated look regarding

In certain directly addition, these we a be during this most call, of GAAP comparable we have non-GAAP will using non-GAAP reconciliation the And financial to measures. measures measures. provided

results discuss African of press in South our our assist a release rand, in will rand non-GAAP in business. results trends operations analyze underlying of understanding the to in is We our investors our which measure. We

South fluctuations by U.S. you dollar be significantly As affected the rand. results can the between the know, African currency company's and

We will following remarks. have prepared session a Q&A our

And over to turn Herman. the call with me that, let

Herman Kotzé

well on go Thank last day XXXX. key This review will focus I on highlights to we the fourth you, from quarter areas here highlighted good in morning, our and as the we everybody. call specifically and as Dhruv where progress the fiscal

the cost of importantly, Net X more the fiscal and changes our base, our restructuring business contract, EPE transformational XXXX during and following as went a comprehensive base. expiration through of our we implemented substantial customer of a SASSA auto-migration of portion

our set past ourselves I'm were objectives follows: the African focused the significant have completed of restructuring which as our able -- extremely six for nimble we progress make that operations. were main and towards pleased been the have and three we over months, and to complete We South largely

but flow to June cash we monthly basis achieve June, a very breakeven that I breakeven the close of can month XXXX. our to of in get month South we there operations came in African on the by were to able report in First, July.

settling by significant Second, to and debt. the liabilities sheet our deleverage balance

no we outstanding, QX. $XX and June of improved million XX, net we have position As our long-term to compared to cash debt have

And third, our shareholder of monetizing value by unlocking some make assets. progress towards

our option interest have sell holding. to our We XX% XX%, have and DNI issued in from to reduced an remaining

also have evaluating have us We we regarding strategic received and during FT Partners the the process. offers indicative engaged as to week with assist KSNET, past of our this part options

in retrench in by Africa have staff X,XXX reduced driven members, operating costs approximately XX%, approximately We our addition by decision difficult other South to operating monthly to largely the expenses.

brought million level now have customers. operations to we base believe, We a our active of current our X.X breakeven South African given sustainable

As our to business we expect profitability. refocus sequentially growing to we in return fiscal and grow again on XXXX,

history, on our times have recent the hopefully in rebuilding We past darkest group we now focused in the all respects. are and

remaining ownership March KSNET’s in XX, longer Our are rates. as expectations with weak result consolidated of the from reduction XXXX, from as the double-digit aware, line Group on continued in at transaction-related grow EBITDA. to Group. rebounded EBITDA and was to and a broadly EasyPay you Group's contribution QX, our DNI, of the our source a the contributes no businesses the currently and to operate primary continue to are

the plans our minutes few discuss I spend the and want addressing Before side. long-term, a corporate for to activity XXXX for on the fiscal I developments

provided have of individual several quarters, our we carrying some market to of past values and highlight Board’s the analysis. Over the investments

Net to discount our value I steep this the the market given realize how largely been in price, to provide to share of update relative am Although, on current happy by aim has now the an ignored X. some we

solutions and to secure, in deep activities an extensive strategic innovative, and security and our we unbanked that and roots, our as underbanked world’s intend and Group, to We return expertise the mainly to technology and leverage cryptography. providing well review are undergoing SMEs, the cost-effective individuals across as financial

sold some that of follow need we be six project, to methodical required. the highlight over not but a assets on up. do and will that and process illiquid I that wound accomplish to assets given been tie are not Businesses is or to complex, as the we or able following. past seamlessly this To that into this or do actions based an the extent, months, will non-core our considered have add overnight strategy

long-term DNI, on to from we DNI reduced XX% settle have XX% used ownership obligations. our First to in our and proceeds the

to December XX, DNI an for on have share approximately We management to $XX issued million XXXX. purchase XX% remaining our before option or

to a be business short-term the the complete, is in may as in at recapitalization DNI bearing to in over before impacted has coverage on public invest expected still achieved year, which have XXXX. their prospective is growth on C operationally investors’ DNI C C events recent the C’s and EBITDA double-digit last Cell not Cell the disclosures yesterday willingness Cell While negative Cell have highlighted

DNI week, remains option being announced a of supportive and business will acquire DNI two that will it shareholders the stakes committed was remain regardless XG minority exercised. in we be controlling and cash-generative and Label profitable businesses when Blue and Earlier Mobile. this

streams, actively acquisitions to process. that has two DNI a year, last diversify of these are revenue sought and the part Over its

approvals conditions, These of transactions quarter during and to including regulatory first are close only the may various XXXX. calendar subject

So, period DNI the investors. of we as prospective acquisitions may enhance appeal accordingly to option extend the further these

in one investment believe and for autonomously though with this to the to KSNET, therefore country engaged FinTech review operates key order Group’s it strategic the Second, a of limited the a the top FT and it with a Partners assist is transaction tier in Group, remains value of KSNET bank the activities. overlap with developed the more value and forward. of determine processor, of route we KSNET company best on sources the other We business

of a report evaluating indicative to offers steps. are offers received from next past pleased these any the players, before week, determining currently strategic number and has I'm both the that financial and we within company

is the achieve take this whether transaction, exercise Board time necessary and to decision so shareholders' as goal. ongoing, or no to This make potential additional to maximize is a are provide to at The we is any value. about we timing it’s details our unable steps urgency will under final value, currently goal this

And internationally. our finally, we South and are continuing and strategic to explore businesses for assets Africa other some alternatives of in

other We or will developments keep transactions. material these you updated on on any any

capital the strategy. to allocation, would in on in a Similar we our any goals we assets this focused related I fiscal of very second discussion the to Directly following I and outlined on of our of the followed our by XXXX, XXXX, my specific is actions like plans. half specifically out strategy address will strategic monetization of reiteration outlining lay four-pillar specific are to long-term

For four Net by aim least to Africa. we the in EPE a XXXX. BXC for X.X areas our model million level new customer the model accounts First, of fiscal are: to accelerate We to X BXB XX% XXXX, from a the South from through QX brand active at focus had grow our transition or in

also the access liquidity to loan We having book at fund book. subject least XX% by increase to to sufficient our intend to

expect new payments, to Europe, and its bank acquiring crypto in and to in products neo introduce our blockchain new with and Second, we together IPG launch issuing, brand fiscal scale the new offerings, XXXX.

growth crypto will help new to storage expect profitability our in product, and turn asset which drive IPG. also We at launch

in Carbon. solution rapidly to Africa aim Third, X, in and Zap grow we market payment through want We penetration to sales Africa. Net accelerate Group

We of expect that group Ghana at fiscal during and to other country into XXXX. revenue outside generating start least one

plan turnaround the implement to complete want Korea. South we fourth, review and And in strategic

plan turnaround accretive corporate expected into of parallel, merchant to have this if profitability. be Korea. We will as while Phase appropriate. options lower unprofitable is it moved revenue In X the we our initially exit in agent transaction or the of and may for finalize we KSNET to evaluate finance And implementation relationships,

pillars four Let me now strategy. long-term turn of our to the

focused first and in A roughly since remain few key We Africa. our remained $X.X these Africa include, branches. at XX,XXX has million XXXX. on XXXX, pillar new QX operational is customers in South EPE through accounts opened first into trends accounts November EPE at approximately The primarily active levels walking stable South

There we in on to those is the product we net additions new of EPE natural are replace accretion not Finbond. rather on our collaboration but clients with range developed the focus existing through base, in will EPE, year actively looking

we pilot our Second, of began August in part issuing as our issued Finbond UEPS/EMV cost XXXX. new

We expect to launch are these account primary close XXXX. of contributor and commercial accounts fiscal be growth the to in

operating both time our services company’s have financial performance, and largely to Third, liquidity. and QX limited key compared QX stable customer Affordable the available financial additions, the historical to but the relatively XXXX new been of at driver are in offerings services a XXXX. returned same by micro-loans insurance

end our of processing the mobile be Fourth, Finbond’s our as QX deploy merchant ATMs XXX bill new to XXXX, we rollout driven sales transactions acquiring business. ATMs payment EasyPay QX continue delivered and airtime be double-digits, by infrastructure. XXXX, branch and expect payments, and And by grow finally, more to we QX the in business in

in with at of financial branch Africa second based South bank infrastructure have The XXX South African Capitech we to largest inclusion our are behind any distribution A, elements strategy Finbond key on: branches. of combined the XXX a branches,

XXX shrinks All number banks branches, every of the and other day. between XXX have major that almost and

thousands We point fixed EasyPay’s to and terminals, ATMs, also distribution access cash a XX,XXX points. plus X,XXX sale have of rural of

to the touch-points be digital live. physical customers, to type not is market close want able addressable have convenient to bank in to who but proximity those where they access Our

that now and variants to permit a basic does accounts cost EPE and free internet accounts. gives any two banking and deductions. B, banking cost, we transactions low biometric security, functionality One; different erstwhile have our not

offering, an financial banking second added free that all services, fee. internet EPE a value monthly The flat transactions, mobile access security, and provides biometric to is akin for banking and to inclusion

generate and average per variants. both of between expect ZAR an account to XX ARPU ZAR XX across We

well us of chain marginal able to integrated we issuance. had or vertically spans utilize a been bill and in as acquiring, e-commerce to the build higher all we C, POS processing, generate for transaction that parties as compared value returns, ATM components. and card processing, some Africa third have Controlling payments, and allowed to to South the banking model if

And cash being with sheet establish result funded from excess a low partner future, services card, and Historically, types competitive cost also of their of distribution, the balance credit Providing our in to account to but will in clients. so consumers. to loan is continue financial products. relationships able leverage the D, Finbond most and banking we as our micro-financial differentiator services, with certain the a do to able to intent key are we for the to we reserves offer book we loan

is certification our or driven primarily Frick, of IPG’s strategy, remaining of complete. which Payments is IPG with last has Asia. pillar The is to issues. offerings. the Visa’s commence reorganization, and to long-term to centralization and IPG we Bank deployment pillar Moving product bank which Group. engaged now on and through This Bank brand payment International would audit any as currently conclusion second new close now of and its the them Europe is the The limitation on remaining allow a product board Frick and are onsite the Visa of happened audit facilitator with therefore the outstanding restructuring,

QX this We in expect exercise conclude to XXXX.

and in with KYC automated launch platform the anti EU volumes. currencies clients. full able turn virtual and issuing to support across and IPG’s to Together one money account increase and Frick and our bespoke will services support acquiring and services, be support, multiple With would card of plastic our breadth full processing our international increase goal API reach offered, laundering the drive for be a Bank system of the issuing

offer member Similarly, EU will localization target verticals industry products and languages our merchants, full for states automated will instant and payment acquiring support. of offer XX onboarding in near mobile XX specific

security, financial developed assets the a exchanges, with who such Bank vastly secure store new has as as be patent to be standard product, crypto using Net the as cold and crypto is a investors in current IPG, cryptography and the to speed assets this themselves. expertise of X well their clear, To spending Net and offered redundancy prefer custodians transactions Lastly Frick developed storage. storage and X product virtual will improving and

Net year, its well of X bank chain market, of position its liquidity currency reviewing merits has reference Group, Frick matters the and priorities capital crypto to and close ownership our availability in of an to with as the of block exercising other in the option our to Europe increase the regulatory are making of deployment exercise the we our this a actively of IPG's options. Bank alignment activities decision option in with October leadership in majority given on as the to position

be on without I and therefore soon bank first that member say directly able issue the is gone to a a would virtual of MobiKwik, approved, this am an has approved the Because to MobiKwik's customer Lastly non-bank will as MobiKwik Central issuing partner. cards member, has base. pleased Once to millions Visa application approval. Indian Visa time become for has issue a to be Bank cards we the able MobiKwik to

consumer Annualized its continues one $XX compared MobiKwik able hit Indian the revenue to million continued companies milestone itself towards has in been March financial only was of in do XXXX They've launch XX% digital million, not tech sustain, that XXX%. August breakeven revenue making $XX of their of of continued them the and momentum. XXXX revenue. June traction so. from the to now to a accounts growth or few gain over rollout month services but have also XXXX, to of very June and for in accelerate in the large progress have that annualized The EBITDA XXXX,

financial Moving mobile And Namibia based our for to operational of of we based the strong access strategy, population XX% solutions, third Africa. of together namely and only remains partners to that's have Today, services. adult substantial with the country, Africa, are deployment in on a the on to us. opportunity local XX% card Botswana. the long-term cloud pillar and depending In

in in countries MTN. partnership our footholds nine have We VTU other with offering through

initiatives months Zap as Group rapidly in We QR-based Carbon payment payment have system XX a our in consumer through a UEPS finance through old Africa. operation Ghana, and growing Nigeria national

have also existence. our time of maximize market. stepped investments the quarter We potential different and to and significant strides has Group to the up between its cooperation businesses third accelerated actively Zap made in

Group currently. including their three During payments, expanded operators QX largest the of also cetera. functionality for and They merchant delivered mobile by its recharges, its airtime the development money Beta is has Ghana product acquirers transfers, bank Zap completing XXXX, for two largest bill et multiple have offering in

customer We commercial also expect in entry. QX closely sign us Zap has in and and commenced launch to facilitate Nigeria contracts Zap Carbon for their Group Group a to working XXXX. is with activities

its product, a funds launched lending which loans. to financial in Lastly, as expanded quarter product, its the given of that addition success bill digital last transfers payments, an enhances services Carbon fully-fledged savings offers digital platform offering and

XXX,XXX leader of market million, in $XX continues XXX% and [ph] digital and of to million Carbon loans first the platform, approximately QX the during lending transactions a X.X over excess test space be in disbursed Carbon across nearly on increase an sequentially.

or QX basis revenue KSNET Similarly, pillar margin sequentially local XXX XX% of XX.X% impacts its fourth Korea plan rebounded the KSNET additional and grew some restructuring QX volumes X Our volume in Phase EBITDA South and weak specifically. compared improve In and preliminary is from points helps from to QX, to our currency. seasonally XXXX.

depreciation result restructuring compared X Operating to XXXX to XXXX of ago in In X.X%, and now a entered significantly year plan lower to as lower CapEx amortized. fully improved its XXXX certain QX X.X% being a amortization, X.X% and our intangibles has Phase of and QX implementation. margin QX in due

growth a While impact also X, we requires meaningful to it more execute. more have expect time and and than profitability this effort to on Phase

our one QX We is XXXX. a may EBITDA XXXX believe of or can rate back $XX quarters. review KSNET. fiscal from have But pursuing to million in get still strategic possible In a a parallel, we quarter million pushed quarter KSNET's $X it a run target been we by improve two

with period made with in We are time such and short profitable business. and interest cash in progress the a pleased of generative a

the reviewed we offers which business, received FT are have of assistance Within the being for with the by multiple currently Partners. the week board indicative last

with We will update developments. you tangible any

now events to would the legacy briefly I like and current C status outstanding our address matters and of SASSA. Cell with

short-term C C, macroeconomic there pertaining coverage its C Cell that downgrades. challenges by cost plenty accurate It on has First to challenging Cell Cell environment faced South is faced of inflated and been in and a has issues, rating Africa. liquidity the

shoulders management to its and creditors like long-term at to including its with highlight key solution to and a its capital would arrive Cell I However, stakeholders, structure. working is cost that C closely sustainable

agreements we be agreement C during has the their with signed have CapEx Cell are going meaningfully will their should and sustainable recurrent a few manage expand coupled that able term MTN a sheet sharing recapitalized, a the recapitalisation Through where close engagement OpEx months. to and business. to they MTN to with funding Once their through a with recently they to on meaningful create stakeholders the they costs transaction situation Cell until the C’s a act impact network forward. are in able also expect of position long-term next reduce

registration On XXXX, the issues that end fees SASSA, to against for yet our related to these the but with are us on SASSA through with operationally though put we working other there of and in to be September months These and as are as XXXX. six SASSA two for businesses. we for payable yet have and areas last resolved. can actively not issues our since energies of outstanding been The unresolved, claim amounts contract, the paid soon few are us bulk behind contract to courts a issues the us involved refocus primary are our to us we

historically to of capital that a it acknowledge allocation, we track record investments. when we and acquisitions allocation, some capital including on our Lastly have mixed comes

or the or by exit expertise technology underbanked leverage our and businesses We do FinTech providing control, which to Board, or not year to focus to to a new that experience. As transactions. secure can enter strategies, XX we with ascribe leverage plan on or markets unbanked in businesses skills, utilizing our that those and we want control to core services fit our

our profits reduce of revenue, obvious Group. significant interest a free KSNET is and the cash contribution businesses therefore imperative will profitability contributor African will as to And return the require disposal working And that this accordingly. and of any scale flow is to KSNET it we current IPG in It quickly capital $XX is South return of million. approximately to possible, as that and which

to compete interest with technologies. a or as successful in We company also and disruptive -- global to active to need unlock emerging shareholder value FinTech compete

EPE obtaining determine profitability, we and sales, reinvesting As proceeds we and growth execute to to optimal on and IPG asset dividends. objectives, accelerate our liquidity businesses shareholder to the and of investments to need including strategic to our shareholdings we critical use or Finbond, execution raise any the through of strategy, the improving to that be those consider controlling in returns buybacks in

To conclude, assets of value deleveraged roots we non-core underbanked, our commenced unbanked hope and turn returns to have have and and providing for unlock shareholder forward. going our the business, been financial monetization inclusion in nimble to of stabilized and with

Let hand to to go it me over the Alex over financials. now

Alexander Smith

key the endured and to Herman, comparisons year. you, well ago operating trends within the given third quarter the discuss to everybody. Thank of more XXXX, the quarter the XXXX, are today fourth good over of and as by past our results to as changes day compared relevant segments the I’ll year sequential for as a Group

XXXX, For was by our adversely rate ago, average impacted exchange rand-dollar the to approximately compared XX.XX ZAR based the a dollar XX.XX quarter results XX%. $X U.S. to year fourth of our ZAR which

the value note. fundamental for impact Cedar and Cell of $X.XX Our Cell the goodwill $X.XX, a for negative fair share non-cash includes declined per C adjustment impairments and loss earnings of which the $X.XX to of

position breakeven done a level at fundamental earnings rightsizing South the we’ve the reflects the Operationally, business. work African in

from disposed quarter was the that a quarter, not operating the any the end of Our XXXX of XXXX. controlling in and accounted the equity loss of sale further at as business interest. being during fourth revenue deconsolidated with X% May fourth contributions off was XXXX, did our DNI third following quarter DNI include

the segment, African XXXX fourth XX% period, including was reported of number processing the SASSA extent The reduction decrease quarter in a contract, EPE of By due $XX.X XX% up a third from on SASSA in of million with year-over-year with those termination South and compared the to but transaction primarily XXXX, constant quarter revenue of the the cards to basis. accounts. down currency the Grindrod the prior lesser

revenue ATMs in and double-digit result a of by were growth our decreases of income These usage partially operating offset and increased as transaction a with higher EasyPay. revenue,

XX.X% for was Our respectively, but quarter from the in operating XXXX XXXX. fourth third X.X% XXXX the negative an of of and positive XX.X% quarter margins and improvement negative

margin the negative fourth cost, was restructuring of for XX.X% Excluding operating quarter X.X% XXXX. a negative the third XXXX the compared in of loss to quarter

generated decline. to quarter quarter XXXX compared the compared processing million ago, the the in compared revenue was year-over-year year A third contributor up transaction in decrease Segment XXXX, XXXX, to the fourth in of of the in of largest of X.X% margin improved a International of to which year-over-year operating and X.X% third quarter with XX% fourth down IPG XXXX, and revenue X% $XX.X quarter the quarter XXXX. of to U.S. was dollars. fourth the X.X% in

but For year-over-year the fourth year to sequentially quarter Korean revenue KSNET processed third following a of primarily won million, lower $XX.X from down seasonally ago, rebound compared was XX% in X% due a weak quarter. a XXXX, to volumes up to

As strong, regulatory we are to implementing conversion midst in staying of cash environment investment through Herman restructuring capital Korea, fees. in with low. the our KSNET interchange in remains the addition on managing mentioned,

XXXX. products and out we decline, return in These continued product. and asset XXXX also business during to to its start have of development IPG’s expect losses. IPG development storage current crypto legacy reduce once but losses respect launch the costs during new million of fiscal approximately costs once to incurred $XXX,XXX to $X.X for QX, will product growth, pay fiscal roll the we include we businesses the

down revenues. given insurance services the its primarily in due XX% XX% Financial down inclusion lower quarter and and revenue XXXX, which and of to value deconsolidation, with fourth airtime of added lending of in million compared fourth XXXX to in and compared no intersegment applied the prepaid decrease fourth contribution generated QX technologies fewer the from DNI and sales, was XXXX, $XX.X revenue, quarter quarter a

positive XXXX, impairments positive in and XXXX. excluding third to quarter the quarter margin of fourth negative the X.X% of in was compared Operating XX.X% XX%,

quarter The third DNI. from a included contribution

the Excluding The XXXX effects accounts. was the to negative QX performance this, fees due is the margin operating from XX.X%. to Grindrod last reduction accounts the in SASSA in decline monthly a of to QX relating

have through to-date, the have remained more businesses around we normalized numbers mark XXXX insurance now Active stable partnership quarter. to lending in have steady million stable QX rollout EPE base accounts with new remained offerings and EPE the returned these to through also are With X.X fourth starting Finbond. a our and And product operating performance levels.

loan in book approximately compared increased quarter net quarter first of Our by XXXX. the X% to the XXXX, fourth of

insurance policy Our also have in largely XXXX. QX at and flat micro remained holders around XXX,XXX QX

customers, are insurance products developing a to address quarter which and first we base unbanked of piloting during XXXX. broader the We loan are of new

expenses Our quarter the XXXX prior than with higher compensation corporate we’re the result for of previous the quarter of intangible compared quarter to a corporate amortization. slightly fourth asset the in XXXX fourth stock higher quarter, this, in and year of Normalizing line to the million prior as expenses a charges. acquired right reduced of and $X.X back due

business forward going of fiscal the easy and currently faced appropriate. June non-cash company the million We’ve XX, fair changes use discounted Cell a made zero multiple flow have XX% Cell quarter the This C’s a adjustment fair million as resulted no longer valuation for investment of the changed our $XXX.X we result cash approach EBITDA methodology $XXX.X a C, to the challenges by to of for in the XXXX. As assessed value historic of our at value as year. the in being

stakeholders been sustainable business. We've will closely working long-term believe which through Cell we and create C liquidity provide to to its with a platform a recapitalisation,

we carrying value Cell of full. the initiatives. steady due the its focuses of on impair first costs year, has team the also performance a lower Cedar on there first the low months C in as management fair to value for Our to of the delivered turnaround into in year increased six meant conclusion current revenue the Operationally Cell notes improvement half Cellular growth. had C But roaming and the been calendar EBITDA

third result a period Cedar equity Finbond, the million fourth of wrote of fourth decline a loan Cell to the recognize fell book the quarter from compared interest in as in year. income impairment their of the as Our migration SASSA $X.X XXXX, excluding who $X.X the to net a from main quarter Office. million, our XXXX $X.X debt. expense, the same reduced part of from to notes of compared due African like XXXX of to investments $X.X We contribution $X.X us was accounted settlement early million during million off The of last Post million the the cause customers quarter South

million results March. We million, at compared approximately the At annual expect an our reported timing of basis, contribution to the cash the on by XXXX, $XX.X be is equity by to $XX.X end positive various was from of investments accounted it our as XX, impacted investments. unrestricted June our

cash our the Setting respectively, million $X.X The million $XX.X off $X.X these reduced from million balances significantly capital in the to of we was absorbed expenditures which means less experienced third in facilities short-term activities, in million quarter. cash $XX.X $X.X $X.X was and by in million of quarter what of million cash the primarily operating credit quarter. than our amounts to and unrestricted again net due decrease

had We been million have $XX.X territories $X.X available us of in XX, which short-term at June utilized. of various to facilities banking XXXX, million

XX, cash of we of and $XX.X $XX.X short-term associated of million million. XXXX, As June had facilities utilized restricted

cash $XXX specifically to as sheet. our in billion presented place facilities facilities X.XX balance have processing under We of restricted South the Africa, ATMs on and fund drawn or cash ZAR system short-term in credit and have these million in the

release June from no settlement of a DNI cash debt. debt in stake following million included million, disposal balance amounted that Group's flow our remaining X% term Free on $X.X XX, the utilization term capital. was left in XXXX, an to which $X.X sheet there At of working

While $XX we sheet. outstanding have million have long-term balance cash and no net debt in on the

requirements We investments or buybacks to to commit to share fuel ability internal required that short-term have liquidity constraint the fund growth. our in resources

respective SA And growth to operational new the and intermonth businesses, in cash some have the of some In operations launches funding particular, funding SA on all there are flows working requirements international the opportunities need we of and requirements the and some operations. capital continue units. we in business product

However, the on disposal or remaining the other businesses, buybacks investment, or dividend. the as this DNI liquidity event, and will share such of a the occurrence sale create capacity of for of

expense tax quarter million, of of expense Our compared an million to in fourth $X.X quarter XXXX. the XXXX was $X fourth

the significantly losses rate quarter been tax effective has Our by and African impairments businesses. by South impacted for this incurred certain

tax benefit not effectively related deferred recorded net a to operating we’ve losses. asset As these

effective rate certain to is businesses. incurred distorted of tax Our by losses continue to likely be our by

weighted average million in remained fourth share count constant quarter the XXXX. of shares Our at has XX.X

we of looking South And being least rate generate internationally forward XX.XX EBITDA of exchange to and losses expect in operations improvements fiscal $XX corporate Africa million partially offset in to with XXXX by $X XXXX, ZAR using at Korea fiscal new IPG, startup adjusted overhead. our and to South

reporting actions, review effort course any to and and our our continue will the Over an simplify get of more the story. communication clarity in on corporate as we year, to we

Q&A. now can open We up the for call


Allen Klee [Operator Instructions] very comes The Thank first of sir. Maxim Group. you from much, question

Allen Klee

Yes, hello.

should can you revenue segments we main three for changes Thank and operating margins your thoughts on your XXXX, that about? percentage go -- For fiscal change through think you.

Alexander Smith

to expect the a profitability some revenue we disclosing, and the but So is It of business. small transaction would African three South all profitability, scale after are at point. we that processing see terms return this a probably growth business Allen, relatively to in segments

IPG and will processing, there, we’re looking call. that’s their high-single of success more largely on In terms of the growth bit there but in be of the little the in the probably order the international rollout, a dependent digits. new to revenue difficult product strategy In transaction at growth revenue

Korea, probably the enhanced certainly we’re in margins see operating would in Certainly we’re to international position, at see transaction revenue in but short looking and of looking the expect operating to some the decline margin agents an -- in at looking processing in because of the we the in level space. are the an elimination portfolio, underperforming profitability some our we term uplift

there return services on some loan in and would to financial component the businesses technologies, should good too. South which in as implied see see continuing expect and Africa, we of we inclusion our a in in growth our contain component profitability Financial to particular, expanding, that book, would plan that we

Dhruv Chopra

this Allen, Dhruv. is

point when the clarification in your about talking Alex where as use base but you we’re his so from that QX year-over-year not we’re remarks, we’re one for about add a to Alex, using -- QX to we’re looking talking start. baseline, as alluded improvement, not Just growth the

Allen Klee

amortization, And you. amortizations, housekeeping, are other for stock-based a rate? couple depreciation CapEx, expectations fiscal intangible your XXXX and for thank Okay, and of comp, items, then tax what

Alexander Smith

assets. of the should So, tax deferred some let tax be work not XX% some backwards; around the rate. recognized with tax loss a normal line we me to of We out benefit XX%. the starting should work get about think But rate, into I kind having move more somewhat deferred, of on

than But, expect be is in a CapEx what amort, in come coming it out to significant. that our significant because effectively. would similar wasn’t a a year, to should and little obviously was that CapEx DNI, have we in Then, change would position. you the bit CapEx on strip incurred CapEx down depreciation replacement have terms downward have the down, to see levels but this wouldn’t largely been of trend position,

that expect little So bit. drop I’d a to see

Allen? What was the other thing,

Allen Klee

stock-based comp. Just and amortization intangible

Alexander Smith

amort, this course expect been in fully see number decline year, a have we a year. to intangible amortized in assets this coming of the of would Intangible

then space. to where this So, some expect see reversals, lower it’s decline that been line been back into comp that historically. move has with see we’d stock-based And year a we’d expect to of because in

Allen Klee

your the on longer then about And should Frick Bank and return be do think capital potentially that how you in generating term? decision position, Bank terms increase Okay. to Frick your of

Herman Kotzé

needs Allen, we us six considerations done and able before that the obviously to couple so. when next for our are analyzing we availability in will we to in we the months to us. obviously the into be The process option, take payment liquidity of available arrive the account in which number follow of be is arrive are the a will key next or to then of decision. at weeks the -- There of exercise options

But few bank that the reasons scale returns are entity, of So, initiatives. effectively but blockchain still our generated the to in the been years on doubled the the as workforce the the with XX over was base Bank have by that to last the have roughly crypto standalone course a will knowledge bank from -- last considerations decision, influence specific Frick. shareholder up over within equity have and low. few key quite The we very and those generated we good years, on [ph] in XX% a the bank are XXX intent been return employees, that

intense believe next investment substantial two the made years. two during improvement learning years been curve deal have do I The last the we from but emanate actual last over and two will perspective quarters a see flow that we from have quite that the

equity number. And return to we respectable the expect we shareholders so return going Frick, whether are of Bank numbers not forward, XX% in a or a bank’s to to controlling on XX% would sort

Allen Klee

you. SASSA growing EPE and been us extent that’s for what customers to thank stable have million to comfortable process? Okay, ability what like do you get do help And extent with still interact And then -- where like they that’s those recently, issue? your any understand to feel to of you can you X.X business or grow hinder feel you not can your to an do that comfortable customers

Herman Kotzé

the they role needs is interaction customer change SASSA where to Annexure of new where grant be one play that and form a they is his social longer. grants submitted there to infamous bank welfare end a account, their So, to part process direct the then decides to matter account inform social regarding to The customer on this paid the no needs is our SASSA SASSA, receives system. need wants into and If to between SASSA SASSA also it. any that a and open accounts. person by This details would us C bank to be have only

and October, process after in forms have social and grant had large. delay between we but when to us other I last them, in recipients little September, as think we only them. November that I at the initial these But required the now is than year, there the offer not say troubles are have processing And very SASSA have those public they to we to other to interaction and then presented no accounts that streamlined

decides And like that pricing, welcome that the they so with is cards. apply anybody who they like it bundle these more for to than comes the

Allen Klee

Okay, get you. to ask thank queue later. questions Thank you. more in I’ll the

Herman Kotzé



FBR. comes B. Buck Scott much, question very you sir. from of The Thank Riley next

Scott Buck

that guys. are And overview maybe a give able value step-by-step quick maybe what am hoping you to us morning, of be Cell can Good be the a what you the you realize give I kind us could and timing of when will that here sense to steps complete of of remaining recapitalization C? post complete re-cap? of think

Herman Kotzé

Scott. Hi, Sure.

and obviously So sharing network have carrying the business. we impact Cell model financial of MTN a will performance currently is business finalizing the material arrangement the the the on C with as said and that capacity debt and

the will commercial value recapitalization the is, around re-cap take the and the post deal. sharing of the ultimate is depend So and obviously network substance engaged will will in and Cell heavily currently in influenced that stakeholders the of the with the -- various be largely by outcome on C structure that discussions

So, the us taking on the discussions on early a for bit all stakeholders daily to that, of obviously various the place but speculate basis.

the that and So, next around we announcements to slow some in expect some movement quarter.

Scott Buck

thanks. great That’s

coming coming are office Are accounts, these is card are card, post for or of back time first where incremental a new you EPE account the kind holders these On to growth guys from? the that customers?

Herman Kotzé

them that terms they a in the back that its say us, post restrictive to who would to handle need services are financial enjoyed so Remember, ability account debit have to very of is fair people office amount simply to coming of former are access the orders. I clients, before.

And would back than clients new XX% so, more our accounts. coming customers, or say are I repeat these find return open of we that probably to

Scott Buck

to Prior you many helpful. year That’s how the a on during ago, were accounts all disruption average opening quarter? a

Alexander Smith

we mode that would to I a XXX,XXX down well Yes, years in when ago, roughly of initially, and an the and a after say scaled period full two average we accounts so half, were at about month, month. about yes XX,XXX peaked initial three opening launch

set some And conservative ourselves goals. pretty so going we’ve forward,

As the we’ve last would XX%. the to the base like we said next account by grow -- over year over

of of extent operations that’s liquidity But, the position scale account Group, we largely opened. in terms being to that and to services obviously are of also other back-up the able the around all to determined being able the provide the an by

those three accompanied for hope of to getting over around years is numbers term set loan with we’ve two X request ourselves application, a the to where there they medium increase and, typically to million customers. -- goal So, substantially a the we back next

Scott Buck

the And you Great, you us thanks issues, for the what mentioned one, that. around then, some XXXX the suite? what potential months? last the bulk Last are six for of registration could payable SASSA ongoing the figures fees on liability remind is the

Alexander Smith

ZAR XXX largely same, fees Sure, million. they the to same. against amounts XXXX The for us the in roughly coincidentally claim are paid the

So SASSA. owing six also the the in levied call interest could of us to to of the for payment roughly it amounts the $XX amount. obviously extent million, so contract amounts may potentially months on rates. also million increase and to the XXX that bearing liability million, be at exchange an ZAR last Conversely is That number today’s $XX interest for the

pretty size So, two are much same the and magnitude. the

Scott Buck

appreciate Thanks, guys. Okay, that.


Thank you. of Paul [Operator from comes Gordon Capital. question Instructions] The next Gordon

Unidentified Analyst

unmistakable, many In under-value that dealing about going to undervalued with that allocation the best well certainly with light to not way we funds places a in know restructuring are the oppose is we’re the decisions Bank they the clear of may on the as stock bought stock different out, ago. that over going other directions, management and or may our and use where feels of worked not funds year stock Frick area

Herman Kotzé

Yes, fully agree.

years, or have there substantial We two I are last the think purchases insiders. year -- over been by

have that it. a utilized to we've -- little we As going I $XXX of place forward, that put the the there's our buyback year authority we and in we that at adequate headroom on capacity ago, looking more said, than left bit I a -- we think sought million stock authority

acquire do book, lending to increasing Right to Frick all short-term stakes controlling in our the ability the impacted have are so. those business. of decisions all do we allocate or perspective, options the now, Bank or it's of of needs the or whether that the of exercising Finbond to it’s from whether our liquidity capital size to So by

simple as so be to of decision in we investment as to soon of returns. of opportunities enough the significant unlock consider position other a for And in be liquidity appropriate asset buybacks any or a ranking the them will terms in

Unidentified Analyst

Thank you.


was the fortunately gentlemen, and final Right, question. Net today's ladies of conference. X that concludes On that behalf