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Financial Highlights

The following selected historical consolidated financial data should be read together with Item 7-"Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8-"Financial Statements and Supplementary Data."

The following selected historical financial data as of June 30, 2016 and 2015, and for the three years ended June 30, 2016 have been derived from our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The selected historical consolidated financial data presented below as of June 30, 2014, 2013 and 2012 and for the years ended June 30, 2013 and 2012, have been derived from our consolidated financial statements, which are not included herein. The selected historical financial data as of each date and for each period presented have been prepared in accordance with U.S. GAAP. These historical results are not necessarily indicative of results to be expected in any future period.

Consolidated Statements of Operations Data

(in thousands, except per share data)

 

Year Ended June 30

 

2016

2015

20141

20131

20121

Revenue

$590,749 $625,979 $581,656 $452,147 $390,264

Cost of goods sold, IT processing, servicing and support

290,101 297,856 260,232 196,834 141,000

Selling, general and administrative

145,886 158,919 168,072 191,552 137,404

Equity instruments granted pursuant to BEE
transactions2

- - 11,268 - 14,211

Depreciation and amortization

40,394 40,685 40,286 40,599 36,499

Impairment losses

- - - - -

Operating income

114,368 128,519 101,798 23,162 61,150

Interest income

15,292 16,355 14,817 12,083 8,576

Interest expense

3,423 4,456 7,473 7,966 9,345

Income before income taxes

126,237 140,418 109,142 27,279 60,381
Income tax expense 42,080 44,136 39,379 14,656 15,936

Net income attributable to Net1

82,454 94,735 70,111 12,977 44,651

Income from continuing
operations per share:

         

Basic

$1.72 $2.03 $1.51 $0.28 $0.99

Diluted

$1.71 $2.02 $1.50 $0.28 $0.99

 

1 Includes revenue and implementation costs related to our SASSA contract from April 2012. In addition, 2014 includes recovery of $26.6 million of implementation costs from SASSA.
2 Includes a non-cash charge of approximately $11.3 million in 2014 related to common stock issued in a BEE transaction. In addition, 2012 includes a non-cash charge of approximately $14.2 million in connection with the issuance of a now-expired option to purchase shares of our common stock in a previous BEE transaction.

Additional Operating Data:

(in thousands, except percentages)

 

Year ended June 30,

 

20161

20151

20141

20131

20122

Cash flows provided by operating activities

$116,552 $135,258 $37,145 $55,917 $20,406

Cash flows used in investing activities

$5,756 $59,483 $21,640 $447,816 $292,539

Cash flows (used in) provided by financing activities

$13,645 $(4,516) $(13,378) $409,716 $231,907

Operating income margin

19% 21% 18% 5% 16%

 

1 Cash flows used in investing activities include movements in settlement assets and cash flows provided by (used in) financing activities include movement in settlement liabilities.
2 Cash flows (used in) provided by investing activities and cash flows (used in) provided by financing activities for fiscal 2015, 2014, 2013 and 2012 have been restated as discussed in footnote 2 to the table below. We have:

  • increased cash flows from investing activities and increased cash flows from financing activities by $21.3 million during the year ended June 30, 2015;
  • decreased cash flows from investing activities and increased cash flows from financing activities by $12.4 million during the year ended June 30, 2014;
  • increased cash flows from investing activities and decreased cash flows from financing activities by $10.1 million during the year ended June 30, 2013; and
  • decreased cash flows from investing activities and increased cash flows from financing activities by $45.1 million during the year ended June 30, 2012.

Consolidated Balance Sheet Data:

(in thousands)

 

As of June 30,

 

2016

2015

2014

2013

2012

Cash and cash equivalents

$223,644 $117,583 $58,672 $53,665 $39,123

Total current assets before settlement assets1 2

386,998 329,307 282,908 184,723 175,236

Goodwill

179,478 166,437 186,576 175,806 182,737

Intangible assets

48,556 47,124 68,514 77,257 93,930

Total assets1 2

1,263,500 1,286,430 1,350,945 1,276,322 955,893

Total current liabilities before settlement obligations

65,486 82,198 81,823 76,859 73,377

Total long-term debt

43,134 50,762 62,388 66,632 79,760

Total equity

$603,220 $478,785 $441,748 $339,969 $346,811

 

1 During the year ended June 30, 2016, we identified a balance sheet misclassification between current assets and long-term assets reported as of June 30, 2015. We have restated these amounts in our consolidated balance sheet as of June 30, 2015, and have decreased our accounts receivable, net of allowances, which impacts total current assets before settlement assets, and increased our other long-term assets by approximately $27.4 million, which has no impact on total assets. The amounts presented in the table have been adjusted for prior periods. The restated adjustments decreased our total current assets before settlement assets, and increased our other long-term assets for fiscal 2014, 2013 and 2012, by $23.3 million, $15.7 million and $11.9 million, respectively. This restatement had no impact on our previously reported consolidated income, comprehensive income or cash flows.
2 During fiscal 2016, and in prior financial years, certain bank accounts, cash in transit and funds in preparation for immediate access by grant beneficiaries, as well as the corresponding obligation to grant beneficiaries, were not included in settlement assets and obligations, primarily due to the reservation of ownership clause in our agreement with SASSA and the assumption of total risk over the cash by the cash transfer service providers. In the course of the annual consideration of our accounting practices and in the context of the increased and more diversified payment delivery channels arising from our ATM and point of sale roll out, we have decided that our presentation would be enhanced by including these gross amounts in settlement assets and obligations. We have accordingly restated our balance sheet as of June 30, 2015, 2014, 2013 and 2012 to record an increase in settlement assets and obligations of $30.5 million, $12.4 million, $26.3 million and $42.0 million, espectively (balances translated at rates applicable as of June 30, 2015, 2014, 2013 and 2012, respectively.) The inclusion of these accounts did not impact on cash and cash equivalents reported nor did it impact on the Company's current assets before settlement assets and current liabilities before settlement obligations.

 

More about Financial Highlights

  • Management's Discussion

    The following discussion and analysis should be read in conjunction with Item 6—"Selected Financial Data" and Item 8—"Financial Statements and Supplementary Data." of the form 10K.
  • Risk Factors

    Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock.
  • Research & Development

    During fiscal 2016, 2015 and 2014, we incurred research and development expenditures of $2.3 million, $2.4 million and $2.2 million, respectively.
  • Employees

    As of June 30, 2016, we had 5,701 employees. On a segmental basis, 241 employees were part of our management, 2,571 were employed in South African transaction processing, 310 were employed in International transaction processing, and 2,576 were employed in Financial inclusion and applied technologies and corporate/eliminations activities.
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