Good day, ladies and gentlemen, and welcome to the Net 1 UEPS Technologies Second Quarter 2017 results conference. All participants are currently in listen-only mode. And there will be an opportunity for you to ask questions later during the conference. [Operator Instructions] Please also note that this call is being recorded. I would now like to turn the conference over to Dhruv Chopra, Head of Investor Relations. Please go ahead.

Thank you, Chris. Welcome to our second quarter fiscal 2017 earnings call. With me today are Serge Belamant, Chairman and CEO; and Herman Kotze, CFO. Our press release and Form 10-Q are available on our website, www.net1.com. As a reminder, during this call, we will be making certain forward-looking statements and I ask you to look at the cautionary language contained in our press release and Form 10-Q regarding the risks and uncertainties associated with forward-looking statements. In addition, during this call we will be using certain non-GAAP financial measures. And we have provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. We will discuss our results in South African rand, which is a non-GAAP measure. We analyze our results of operations in our 10-Q and in our press release in rand to assist investors in understanding the underlying trends of our business. As you know, the company’s results can be significantly affected by currency fluctuations between the U.S. dollar and the South African rand. So without further ado, let me turn it over to Serge.

Thank you very much, Dhruv. Good morning to all of our shareholders. Today, I plan to spend most of my discussion focused on our strategy and how we intend to create a new impetus for both our rand and hard currency based earnings. At the same time, I will highlight how we plan to reduce our risk profile by relying far less on government contracts and the South African rand. Our results, barring specific temporary product or business related events, were good year-over-year. And for once, exchange rates did not cause wild swings in our reported numbers. Our international businesses are showing great potential. And as result of our investments and the strengthening of our management teams, our pipeline is growing meaningfully. To summarize our Q2 2017 performance, revenue of $151 million was flat in constant currency. And growth in EPE transaction growth, lending and insurance, and our Masterpayment and T24 acquisitions internationally were offset by the self-induced decline in our prepaid airtime sales, lower ad-hoc terminal sales and to a lower extent lower revenue in Korea due to recent regulatory changes. Our fundamental EPS in quarter two was $0.43, up 3% in constant currency, despite a 12% headwind due to the issuance of 10 million shares to the IFC in Q4 of 2016. Today, I would like to focus on three major topics, namely our strategic developments, SASSA, and our strategic investment in Bank Frick. But perhaps before I kick off, it is important to note that last night our President, President Zuma addressed the nation. His speech was pretty much focused on economic transformation for South Africa, South African businesses and South African citizens. I think it is important that this message is understood clearly by all businesses that operate in South Africa. And we believe we are…

Thank you, Serge. I will discuss the key results and trends within our operating segments for the second quarter of 2017 compared to a year-ago. For Q2 of 2017, our average rand dollar exchange rate was ZAR 13.94 compared ZAR 14.12 a year-ago, which resulted for the first time in a long time in a negligible impact of currency fluctuations on our reported results. We continue to absorb our growth investments and manage through certain regulatory constraints in Korea, which in turn will help us drive improved growth in fiscal 2018. Revenue for Q2 2017 was flat in constant currency, while fundamental net income grew 15% and fundamental earnings per share by 2%, impacted by the dilution caused by the IFC share issuance. On a consolidated basis for Q2 2017, we reported revenue of $151 million, and fundamental earnings per share of US$0.43. Our fully diluted weighted share count for Q2 2017 was 52.6 million shares largely as a result of the issuance of 10 million shares to the IFC in May 2016, partially offset by share repurchases. By segment, South African transaction processing generated revenue of $60 million in Q2 2017, up 12% on a constant currency basis. Increasing segment revenue and operating income was primarily due to higher EPE transaction revenue as a result of increased usage of our ATMs, increased inter-segment transaction processing activities and modest growth in the number of social welfare grants distributed. Our operating income margin for Q2 2017 and 2016 was 26% and 23% respectively. Our fiscal 2017 margin includes higher EPE revenue as a result of increased ATM transactions, an increase in inter-segment transaction processing activities, an increase in the number of beneficiaries paid in Q2 2017, which was partially offset by annual salary increases granted to our South African employees. While…

Thank you very much, sir. [Operator Instructions] Our first question is from Porter Collins of Seawolf Capital. Please go ahead.

How are you doing? I got a couple questions here. In terms of your MobiKwik, where are you - with your investment? There is a - made $15 million investment, but you also have a couple of other tranches. And there was an article recently in Indian newspaper about them raising capital at a $1 billion valuation. And can you remind us of where you stand there? That’s the first question. And then the second question is can you give an update on Blue Label? And the third question is can you given an update on the upfront cost load in terms of hiring people and where you are in that process of hiring and then subsequent revenues? So thank you.

Yes, thank you. So let me - I’ll do the first two and then I’ll hand over the financial one to Herman. On MobiKwik, it’s actually quite simple. I think we misunderstand that MobiKwik at the moment we do not control MobiKwik. In other words that it is up to the company to decide if they wish to go out to the market and sensitize the market and to see if in fact there is an opportunity for them to raise money. I think this is something which is typical in a lot of FinTech companies. We, to be totally honest, our business plan is not based on any of that whatsoever. Our business plan is based on the fact that MobiKwik, due to the changes in India, specifically the demonetization, which has really pushed many millions of customers to actually rather utilize a banking account or, slash, a so called wallet in order to transact, because cash became very difficult to obtain. We actually believe that the opportunity for MobiKwik to grow is therefore present and valid. However, we have also agreed that there are a number of things that MobiKwik has got to do in order for their business plan to remain sustainable. One of them we firmly believe is to come almost to follow the plan that are actually highlighted, namely for MobiKwik to become the frontend to a banking system. In other words, we firmly believe that all of the customers of MobiKwik should have a bank account either through a bank that MobiKwik would earn or simply through a bank that they would be working in association with, utilizing of course the UEPS technology as a banking platform. That would allow us to go not only in the deepest rural areas, but of course our…

Thanks, Serge. Porter, maybe just to add on to the MobiKwik, just on the investment side, so you’re correct, the first investment tranche or $15 million was completed last year. The second and third tranches, which totals $25 million in expense over the next two years, are dependent on specific metrics and profitability being achieved. Those have been pre-agreed obviously. And I think finally also the valuation of those shares, of those share issuances, if the targets are achieved they’re already been agreed with the current shareholders and with the management team, so just…

Is that number public or no? What your valuation investment is?

That number isn’t public, but obviously it’s a lot less than a $1 billion.

Yes.

So that’s to answer the - just to complete the MobiKwik picture. On the question about the investments that we’ve currently made to-date, obviously, that mainly pertains to Masterpayment. In terms of hiring of new staff members and sales executives, we have employed a number of these across Europe through the Masterpayment management team. Over the last six months, primarily in Germany, we’ve obviously bolstered the team and we’ve also expanded our presence to Italy, France, Spain and the UK, and then also the U.S. We haven’t publicly disclosed the investment that we’ve made in the sales team. But obviously this is all part of an agreed expansion plan with the Masterpayment team in terms of which they presented us with a business case with the investment in sales staff will translate in - specifically in 2018, in fiscal 2018 into significant sales revenues, which we believe will become exponential going forward into 2019 and beyond. So although the - obviously, the upfront investment and the cost associated with that is quite painful. I think it’s also important to note that the original plan that we agreed and the original costs that we projected at the moment, the management team has done pretty well to remain below those initial costs that we agreed on. So we’re very happy with the way things are progressing. And we believe that the visibility of these new hires being translated into sales will transpire early in 2018.

Thank you.

Thank you. Porter, do you have any further questions you like to ask?

That’s it.