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NT1
NT1
NT1 - Net1 - Net 1 UEPS Technologies, Inc. Announces 2011 Third Quarter Results
Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
("Net1" or "the Company")
Net 1 UEPS Technologies, Inc. Announces 2011 Third Quarter Results
JOHANNESBURG, May 5, 2011 - Net 1 UEPS Technologies, Inc. ("Net1" or the
"Company") (Nasdaq: UEPS; JSE: NT1) today announced results for the three and
nine months ended March 31, 2011 ("3Q 2011"). Revenue for 3Q 2011 was $92.8
million, a year over year increase of 28% in US dollars ("USD") and 19% in
constant currency. During 3Q 2011, net loss under US generally accepted
accounting principles ("GAAP") was $21.6 million versus net income of $18.8
million for the three months ended March 31, 2010 ("3Q 2010"). GAAP loss per
share for 3Q 2011 was $0.47 versus GAAP earnings per share of $0.41 a year ago.
Fundamental earnings per share for 3Q 2011 was $0.38 compared to $0.51 for 3Q
2011, representing a decrease of 26% in USD and 31% in constant currency.
Revenue during year to date fiscal 2011 ("F2011") was $246.1 million, a year
over year increase of 16% in US dollars ("USD") and 8% in constant currency
compared to year to date fiscal 2010 ("F2010"). During F2011, net loss under
GAAP was $4.2 million versus net income of $56.0 million for F2010. Loss per
share under GAAP during F2011 was $0.09 versus earnings per share of $1.20 a
year ago, a decline of 108% in USD and 107% in constant currency. Fundamental
earnings per share for F2011 was $1.13 compared to $1.47 for F2010, representing
a decrease of 23% in USD and 29% in constant currency.
Summary Financial Metrics
Three months ended March 31,
2011 2010 % change % change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 28% 19%
92,758 72,291
GAAP net (loss) income (215)% (206)%
(21,562) 18,772
Fundamental net income (1) (26)% (31)%
17,144 23,189
GAAP (loss) earnings per (222)% (213)%
share ($) (0.47) 0.41
Fundamental earnings per (26)% (31)%
share ($) (1) 0.38 0.51
Fully-diluted shares 0%
outstanding (`000`s) 45,559 45,643
Average period USD/ ZAR (7)%
exchange rate 6.99 7.53
Nine months ended March 31,
2011 2010 % % change
change in ZAR
in USD
(All figures in USD `000s
except per share data)
Revenue 16% 8%
246,052 211,669
GAAP net (loss) income (107)% (107)%
(4,185) 55,997
Fundamental net income (1) (25)% (30)%
51,176 68,327
GAAP (loss) earnings per (108)% (107)%
share ($) (0.09) 1.20
Fundamental earnings per (23)% (29)%
share ($) (1) 1.13 1.47
Fully-diluted shares (3)%
outstanding (`000`s) 45,489 46,725
Average period USD/ ZAR (7)%
exchange rate 7.09 7.62
(1) Fundamental net income and earnings per share is GAAP net (loss) income and
(loss) earnings per share excluding the amortization of acquisition-related
intangible assets, net of deferred taxes, transaction-related costs and stock-
based compensation charges. In addition, the calculation of fundamental net
income and earnings per share for 3Q 2011 and F2011 also excludes an impairment
loss, net of deferred taxes, and amortization of facility fees related to the
KSNET acquisition.
The following factors impacted the comparability of our 3Q 2011 and 3Q 2010
results:
- Impairment loss related to Net1 UTA customer relationships: The
Company recorded an impairment loss of $41.8 million related to Net1 UTA`s
customer relationships, which resulted in an operating loss for the
quarter. The Company also reversed a deferred tax liability of $10.4
million associated with these customer relationships. As a result, the
Company`s reported net income was reduced by $31.3 million;
- SASSA price and volume reductions: The Company`s contract with SASSA
has reduced its revenue and operating income, before impairment loss,
as a result of the previously announced price and volume reductions;
- Favorable impact from the weakness of the US dollar: The US dollar
depreciated by 7% compared to the ZAR during the third quarter of fiscal
2011 compared to fiscal 2010 which positively impacted the Company`s
reported results;
- Increased revenue from KSNET at lower operating margins than the
Company`s legacy businesses, before acquired intangible asset amortization:
The KSNET acquisition increased the Company`s revenue during the entire
third quarter of fiscal 2011, however, because KSNET has an operating
margin that is lower than the Company`s legacy businesses, before acquired
intangible asset amortization, it reduced the Company`s overall operating
margin. The inclusion of KSNET in the Company`s results has also
contributed to the increase in selling, general and administration and
depreciation and amortization expenses;
- Increased transaction volumes at EasyPay: Reported results were
favorably impacted by increased transaction volumes at EasyPay resulting
from growth in value-added services;
- Lower revenue and operating loss generated by MediKredit: MediKredit`s
revenue for the third quarter of fiscal 2011 was lower than the comparable
period due to the inclusion in the third quarter of fiscal 2010 of claims
processing support fees received from a customer it lost in late calendar
2009 and which contractually continued to pay fees through the end of April
2010. MediKredit generated an operating loss during the third quarter of
fiscal 2011, in line with the Company`s expectations;
- Increased revenue from FIHRST at lower operating margins than other SA
transaction-based activity business: FIHRST increased the Company`s revenue
during the third quarter of fiscal 2011, however, because FIHRST has an
operating margin that is lower than the Company`s other SA transaction-
based activity businesses, it negatively impacted the Company`s overall
operating margin. The inclusion of FIHRST in the Company`s results has also
contributed to the increase in selling, general and administration expense;
- Increased user adoption in Iraq: The Company recorded increased
transaction revenues at NUETS from the adoption of the Company`s UEPS
technology in Iraq;
- Lower revenues and margins from hardware, software and related
technology sales segment: The hardware, software and related technology
sales segment was adversely impacted by lower revenues at NUETS, partially
offset by increased sales by Net1 UTA;
- Intangible asset amortization related to acquisitions: Reported
results were adversely impacted by additional intangible asset amortization
of approximately $3.1 million related to the acquisition of KSNET in the
second quarter of fiscal 2011, as well as FIHRST during the third quarter
of fiscal 2010;
- Lower interest income and increased interest expense resulting from
KSNET acquisition: Reported results were adversely impacted by lower
interest income due to the payment of a portion of the KSNET purchase price
in cash and increased interest expense due to the payment of a portion of
the KSNET purchase price utilizing long-term debt; and
- Non-recurring items included in selling, general and administration
expense: During the third quarter of fiscal 2011, the Company incurred
transaction-related expenses of $0.5 million, primarily for the acquisition
of KSNET.
Comments and Outlook
"Our results for the third quarter of fiscal 2011 represent the performance by
our established businesses, namely pension and welfare, KSNET and EasyPay, which
were consistent with management`s expectations, as well as investments in Net1
Virtual Card and MediKredit to drive accelerating growth in those businesses,"
said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. "We are
disappointed though not surprised with the decision by one of Net1 UTA`s largest
customers to transition away from the DUET platform given our focus on
transitioning to a transaction based revenue stream as opposed to the sale of
hardware and software, which may not always be the preferred model by all
customers. However, this customer decision together with uncertainty surrounding
the timing and quantum of Net1 UTA`s future net cash inflows, resulted in the
evaluation and subsequent write down of its intangible assets related to
customer relationships during 3Q11. We have taken actions to return Net1 UTA to
at least break even in the near term and remain cautiously optimistic about its
prospects given its pipeline of opportunities. In April 2011, SASSA issued its
new long-term tender for the distribution of social grants in South Africa. Our
current contract with SASSA currently continues through September 30, 2011, and
as previously discussed, SASSA expects to conclude its evaluation process prior
to that time," he concluded.
"We remain comfortable with our Fundamental EPS guidance of at least $1.50 on a
constant currency basis for fiscal 2011. We continue to expect KSNET to be
accretive to Fundamental EPS for fiscal 2011, but it is too soon to provide
guidance on such level of accretion," said Herman Kotze, Chief Financial Officer
of Net1.
Results of Operations
Net1`s frequently asked questions and operating metrics will be updated and
posted on the Company`s website (www.net1.com).
SA transaction-based activities
SA transaction-based activities revenue was $47.3 million, down 7% compared with
3Q 2010 in USD and 14% lower on a constant currency basis. In ZAR, the decrease
in revenue was primarily due to the new SASSA contract at lower economics, which
was partially offset by increased transaction volumes at EasyPay and the
inclusion of FIHRST. Operating income margin of the Company`s SA transaction-
based activities decreased to 39% from 53% a year ago. The decrease was
primarily due to the lower revenues generated under the SASSA contract,
additional intangible asset amortization related to the acquisition of
MediKredit and FIHRST and lower margins at MediKredit and FIHRST compared with
the Company`s legacy SA transaction-based activities. Excluding amortization of
acquisition-related intangibles, 3Q 2011 segment operating margin was 42%
compared with 55% during 3Q 2010.
International transaction-based activities
KSNET is the largest contributor to the international transaction-based
activities segment. International transaction-based activities revenue was $24.6
million and segment operating margin was 3% in 3Q 2011. Excluding the
amortization of intangibles but including the start up costs related to the
launch of Virtual Card in the United States, segment operating margin was 16%.
Smart card accounts
Smart card account revenue was $8.3 million, up 4% compared with 3Q 2010 in USD
and 3% lower on a constant currency basis. Operating margin for the segment
remained consistent at 45%.
Financial services
Financial services revenue was $2.2 million, up 89% compared with 3Q 2010 in USD
and 75% higher on a constant currency basis, principally due to an increase in
lending activities. Operating margin for this segment increased to 78% from 72%
in 3Q 2010 largely as a result of the increased lending activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $10.4 million, down
16% compared with 3Q 2010 in USD and 22% lower on a constant currency basis. The
decrease in revenue and operating income for 3Q 2011 was primarily due lower
revenues generated by NUETS and other hardware businesses but partially offset
by increased sales at Net1 UTA. Excluding amortization of all intangibles and
the impairment loss, segment operating margin was (3)% compared to 5% during 3Q
2010.
Cash flow and liquidity
At March 31, 2011, the Company had cash and cash equivalents of $89 million,
down from $154 million at June 30, 2010. The decrease in cash was due primarily
to the use of approximately $124.3 million to fund a portion of the KSNET
purchase price and the payment of STC of $14.7 million incurred related to
dividends paid from South Africa to the United States connected with the KSNET
transaction. For 3Q 2011, the Company generated net cash flow of $28.3 million
for operating activities, compared to $31.7 million in 3Q 2010. The decrease in
operating cash flow resulted mainly from the SASSA price and volume reductions
which were effective July 1, 2010. Capital expenditures for 3Q 2011 and 2010
were $4.7 million and $1.0 million, respectively. During 3Q 2011, the Company
did not repurchase any shares under its $100 million authorization.
Use of Non-GAAP Measures
US securities laws require that when the Company publishes any non-GAAP
measures, it discloses the reason for using the non-GAAP measure and provides
reconciliation to the directly comparable GAAP measure. The presentation of
fundamental net income and fundamental earnings per share and headline earnings
per share are non-GAAP measures.
Fundamental net income and fundamental earnings per share
The Company`s GAAP net (loss) income and (loss) earnings per share for 3Q 2011
and 3Q 2010 include amortization of intangible assets, transaction-related costs
and stock-based compensation. In addition, GAAP net (loss) income and (loss)
earnings per share for 3Q 2010 and F2011 includes an impairment loss and
facility fee amortization related to the KSNET acquisition. The Company excludes
all of the above-mentioned amounts when calculating fundamental net income and
earnings per share, because management believes that these adjustments enhance
its own evaluation, as well as an investor`s understanding, of the Company`s
financial performance. Attachment B presents the reconciliation between GAAP and
fundamental net income and earnings per share.
Headline earnings per share ("HEPS")
The inclusion of HEPS in this press release is a requirement of the Company`s
listing on the JSE. HEPS basic and diluted is calculated using net (loss) income
which has been determined based on GAAP. Accordingly, this may differ to the
headline earnings per share calculation of other companies listed on the JSE as
these companies may report their financial results under a different financial
reporting framework, including but not limited to, International Financial
Reporting Standards. HEPS basic and diluted is calculated as GAAP net (loss)
income adjusted for impairment losses, net of taxes, and the loss (profit) on
sale of property, plant and equipment, net of related tax effects. Attachment C
presents the reconciliation between the Company`s net (loss) income used to
calculate earnings per share basic and diluted and HEPS basic and diluted.
Conference Call
Net1 will host a conference call to review third quarter results on May 6, 2011
at 8:00 Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S.
only), 1-866-605-3852 (Canada only), 0-800-917-7042 (U.K. only) or 0-800-200-648
(South Africa only) ten minutes prior to the start of the call. Callers should
request "Net1 call" upon dial-in. The call will also be webcast on the Net1
homepage, www.net1.com. Please click on the webcast link at least ten minutes
prior to the call. A webcast of the call will be available for replay on the
Net1 website through May 27, 2011.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its
Universal Electronic Payment System, or UEPS, to facilitate biometrically secure
real-time electronic transaction processing to unbanked and under-banked
populations of developing economies around the world in an online or offline
environment. In addition to payments, UEPS can be used for banking, healthcare
management, payroll, remittances, voting and identification.
Net1 operates market-leading payment processors in South Africa, Republic of
Korea, Ghana and Iraq. In addition, Net1`s proprietary Mobile Virtual Card
technology offers secure mobile payments and banking services in developed and
emerging countries.
Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE
Limited.
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and
unknown risks and uncertainties. A discussion of various factors that cause the
Company`s actual results, levels of activity, performance or achievements to
differ materially from those expressed in such forward-looking statements are
included in the Company`s filings with the Securities and Exchange Commission.
The Company undertakes no obligation to revise any of these statements to
reflect future circumstances or the occurrence of unanticipated events.
Investor Relations Contact:
Dhruv Chopra
Vice President of Investor Relations
Phone: +1-212-626-6675
Email: dchopra@net1.com
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Nine months ended
March 31, March 31,
2011 2010 2011 2010
(In thousands, except (In thousands, except
per share data) per share data)
REVENUE $ 92,758 $ 72,291 $ 246,052 $ 211,669
EXPENSE
Cost of goods sold, IT 29,302 17,910 76,551 55,652
processing, servicing
and support
Selling, general and 32,618 22,381 91,707 58,987
administration
Depreciation and 11,192 5,141 25,188 14,384
amortization
Impairment loss 41,771 - 41,771 -
OPERATING (LOSS) INCOME (22,125) 26,859 10,835 82,646
INTEREST (EXPENSE) INCOME, (955) 2,206 (199) 6,470
net
(LOSS) INCOME BEFORE (23,080) 29,065 10,636 89,116
INCOME TAXES
INCOME TAX (BENEFIT) (1,603) 10,441 14,440 32,964
EXPENSE
NET (LOSS) INCOME FROM (21,477) 18,624 (3,804) 56,152
CONTINUING OPERATIONS
BEFORE LOSS FROM EQUITY-
ACCOUNTED INVESTMENTS
LOSS FROM EQUITY-ACCOUNTED (127) (44) (509) (425)
INVESTMENTS
NET (LOSS) INCOME (21,604) 18,580 (4,313) 55,727
ADD NET LOSS ATTRIBUTABLE (42) (192) (128) (270)
TO NON-CONTROLLING
INTEREST
NET (LOSS) INCOME $ (21,562) $ 18,772 $ (4,185) $ 55,997
ATTRIBUTABLE TO NET1
Net (loss) income per
share, in United States
dollars
Basic (loss) earnings ($0.47) $0.41 ($0.09) $1.20
attributable to Net1
shareholders
Diluted (loss) earnings ($0.47) $0.41 ($0.09) $1.20
attributable to Net1
shareholders
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudit (A)
ed
March June 30,
31,
2011 2010
(In thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 88,890 $ 153,742
Pre-funded social welfare grants 3,199 6,660
receivable
Accounts receivable, net of allowances of 75,125 41,854
- March: $398; June: $807
Finance loans receivable 8,514 4,221
Inventory 7,113 3,622
Deferred income taxes 18,748 16,330
Total current assets before settlement 201,589 226,429
assets
Settlement assets 146,441 83,661
Total current assets 348,030 310,090
PROPERTY, PLANT AND EQUIPMENT, NET OF 33,861 7,286
ACCUMULATED DEPRECIATION OF - March: $46,189;
June: $35,271
EQUITY-ACCOUNTED INVESTMENTS 1,893 2,598
GOODWILL 187,026 76,346
INTANGIBLE ASSETS, NET OF ACCUMULATED 147,922 68,347
AMORTIZATION OF -
March: $31,764; June: $34,226
OTHER LONG-TERM ASSETS, including available 21,640 7,423
for sale securities
TOTAL ASSETS 740,372 472,090
LIABILITIES
CURRENT LIABILITIES
Bank overdraft 454 -
Accounts payable 16,101 3,596
Other payables 62,471 50,855
Current portion of long-term borrowings 7,347 -
Income taxes payable 12,771 3,476
Total current liabilities before 99,144 57,927
settlement obligations
Settlement obligations 146,441 83,661
Total current liabilities 245,585 141,588
DEFERRED INCOME TAXES 58,698 38,858
LONG-TERM BORROWINGS 115,205 -
OTHER LONG-TERM LIABILITIES, including non- 1,029 4,343
controlling interest loans
TOTAL LIABILITIES 420,517 184,789
COMMITMENTS AND CONTINGENCIES - -
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par
value;
Issued and outstanding shares, net of 59 59
treasury - March: 45,535,353; June:
45,378,397
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001
par value;
Issued and outstanding shares, net of - -
treasury: 2011: -; 2010: -
ADDITIONAL PAID-IN-CAPITAL 139,211 133,543
TREASURY SHARES, AT COST: March: 13,149,042; (173,671) (173,671)
June: 13,149,042
ACCUMULATED OTHER COMPREHENSIVE LOSS (36,900) (66,396)
RETAINED EARNINGS 388,158 392,343
TOTAL NET1 EQUITY 316,857 285,878
NON-CONTROLLING INTEREST 2,998 1,423
TOTAL EQUITY 319,855 287,301
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY $ 740,372 $ 472,090
(A) - Derived from audited financial
statements
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended Nine months ended
March 31, March 31,
2011 2010 2011 2010
(In thousands) (In thousands)
Cash flows from
operating activities
Net (loss) income $ (21,604) $ 18,580 $ (4,313) $ 55,727
Depreciation and 11,192 5,141 25,188 14,384
amortization
Impairment loss 41,771 - 41,771 -
Loss from equity- 127 44 509 425
accounted investments
Fair value adjustments 417 183 655 12
Interest payable 1,406 74 1,546 229
(Loss) Profit on (2) 29 (10) 31
disposal of property,
plant and equipment
Stock-based compensation 1,597 1,400 4,593 4,254
charge
Facility fee amortized 113 - 1,841 -
Decrease (Increase) in 3,896 (3,314) 2,648 2,736
accounts receivable, pre-
funded social welfare
grants receivable and
finance loans receivable
Decrease (Increase) in - 55 - (5)
deferred expenditure on
smart cards
(Increase) Decrease in (229) (221) (163) 2,465
inventory
(Decrease) Increase in (6,060) 1,325 (2,283) (8,017)
accounts payable and
other payables
Increase (Decrease) in 7,140 7,343 5,910 7,027
taxes payable
(Decrease) Increase in (11,500) 1,070 (24,438) 3,181
deferred taxes
Net cash provided by 28,264 31,709 53,454 82,449
operating activities
Cash flows from
investing activities
Capital expenditures (4,679) (984) (9,458) (2,310)
Proceeds from disposal 10 62 28 124
of property, plant and
equipment
Advance of loans to - - (375) -
equity-accounted
investment
Repayment of loan by 33 - 440 -
equity-accounted
investment
Acquisition of KSNET, - - (230,225) -
net of cash acquired
Acquisition of - (981) - (981)
MediKredit, net of cash
acquired
Net change in settlement 7,397 280 (39,788) 280
assets
Net cash provided by 2,761 (1,623) (279,378) (2,887)
(used in) investing
activities
Cash flows from
financing activities
Loan portion related to - - 20 720
options
Treasury stock acquired - - - (126,304
)
Long-term borrowings - - 116,353 -
obtained
Facilities fees paid - - (3,088) -
Acquisition of remaining - - (594) -
19.9% of Net1 UTA
Repayment of short-term (7,124) - (6,705) (137)
borrowings
Net change in settlement (7,397) (280) 39,788 (280)
obligations
Net cash (used in) (14,521) (280) 145,774 (126,001
generated from )
financing activities
Effect of exchange rate 1,003 1,664 15,298 9,994
changes on cash
Net increase (decrease) 17,507 31,470 (64,852) (36,445)
in cash and cash
equivalents
Cash and cash 71,383 152,871 153,742 220,786
equivalents - beginning
of period
Cash and cash $ 88,890 $ 184,341 $ 88,890 $ 184,341
equivalents - end of
period
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating (loss) income and operating margin:
Three months ended March 31, 2011 and 2010 and December 31, 2010
Change - actual Change -
constant
exchange
rate(1)
Key Q3 `11 Q3 `10 Q2 `11 Q3 `11 Q3 `11 Q3 `11 Q3 `11
segmental vs vs vs vs
data, in Q3 `10 Q2 `11 Q3 `10 Q2 `11
`000, except
margins
Revenue:
SA $47,313 $50,854 $46,588 (7)% 2% (14)% 2%
transaction-
based
activities
Internationa 24,627 - nm nm nm nm
l 16,950
transaction-
based
activities
Smart card 8,288 7,956 8,434 4% (2)% (3)% (1)%
accounts
Financial 2,168 1,149 1,623 89% 34% 75% 34%
services
Hardware, 10,362 12,332 (16)% (33)% (22)% (32)%
software and 15,416
related
technology
sales
Total $92,758 $72,291 $89,011 28% 4% 19% 5%
consolidated
revenue
Consolidated
operating
income
(loss):
SA $18,309 $26,837 $18,547 (32)% (1)% (37)% (1)%
transaction-
based
activities
Internationa 780 - nm 139% nm nm
l 327
transaction-
based
activities
Operating 3,904 - nm 65% nm nm
income 2,359
excluding
amortization
Amortization (3,124) - (2,032) nm 54% nm nm
of
intangible
assets
Smart card 3,767 3,616 3,832 4% (2)% (3)% (1)%
accounts
Financial 1,701 831 1,231 105% 38% 90% 39%
services
Hardware, (44,584) (1,798) nm nm nm nm
software and (319)
related
technology
sales
Corporate/ (2,098) (2,627) (1,644) (20)% 28% (26)% 28%
Eliminations
Total $(22,125) $26,859 $21,974 (182)% (201)% (176)% (201)%
operating
(loss)
income
Operating
income
margin (%)
SA 39% 53% 40%
transaction-
based
activities
Internationa 3% - 2%
l
transaction-
based
activities
Internationa 16% - 14%
l
transaction-
based
activities
excluding
amortization
Smart card 45% 45% 45%
accounts
Financial 78% 72% 76%
services
Hardware, (430)% (15)% (2)%
software and
related
technology
sales
Overall (24)% 37% 25%
operating
margin
Nine months ended March 31, 2011 and 2010
Change - Change - constant
actual exchange rate(1)
Key segmental data, in Q3 `11 Q3 `10 Q3 `11 Q3 `11
`000, except margins vs vs
Q3 `10 Q3 `11
Revenue:
SA transaction-based $138,323 $141,24 (2)% (9)%
activities 7
International 42,047 - nm nm
transaction-based
activities
Smart card accounts 24,692 24,167 2% (5)%
Financial services 5,039 2,799 80% 67%
Hardware, software and 35,951 43,456 (17)% (23)%
related technology
sales
Total consolidated $246,052 $211,66 16% 8%
revenue 9
Consolidated operating
income (loss):
SA transaction-based $54,295 $80,238 (32)% (37)%
activities
International 896 nm nm
transaction-based -
activities
Operating income 6,052 - nm nm
excluding amortization
Amortization of (5,156) -
intangible assets
Smart card accounts 11,221 10,985 2% (5)%
Financial services 3,861 1,908 102% 88%
Hardware, software and (47,563) (1,851) nm nm
related technology
sales
Corporate/ (11,875) (8,634) 38% 28%
Eliminations
Total operating income $10,835 $82,646 (87)% (88)%
Operating income
margin (%)
SA transaction-based 39% 57%
activities
International
transaction-based 2% -
activities
International -
transaction-based 11%
activities excluding
amortization
Smart card accounts 45% 45%
Financial services 77% 68%
Hardware, software and
related technology (132)% (4)%
sales
Overall operating 4% 39%
margin
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended March 31, 2011 and 2010
Net (loss) (LPS) EPS, Net (loss) (LPS) EPS,
income basic income basic
(USD`000) (USD) (ZAR`000) (ZAR)
2011 2010 2011 2010 2011 2010 2011 2010
GAAP (21,562) 18,772 (0.47) 0.41 (150,617) 141,431 (3.31) 3.12
Amorti- 5,133 2,733 35,857 20,595
zation of
intangible
assets(1)
Customer 4,289 3,192 29,958 24,053
relation-
nships
Software
and 2,428 430 16,964 3,239
unpatente
d
technolog
y
Trademark 217 90 1,517 679
s
Database 73 67 507 507
Deferred (1,874) (1,046) (13,089) (7,883)
tax
benefit
Stock-based 1,596 1,401 11,149 10,555
charge(2)
Impairment 31,339 - 218,912 -
loss, net
Facility 113 - 789 -
fees for
KSNET debt
Acquisition- 525 283 3,666 2,135
related
costs.
Fundamental 17,144 23,189 0.38 0.51 119,756 174,716 2.63 3.85
Nine months ended March 31, 2011 and 2010
Net (loss) (LPS) EPS, Net (loss) (LPS) EPS,
income basic income basic
(USD`000) (USD) (ZAR`000) (ZAR)
2011 2010 2011 2010 2011 2010 2011 2010
GAAP (4,185) 55,997 (0.09) 1.20 (29,668) 426,961 (0.65) 9.18
Amorti- 12,049 7,694 85,421 58,658
zation of
intangible
assets(1)
Customer 10,571 9,775 74,939 74,526
relations
hips
Software
and 5,325 425 37,745 3,239
unpate-
nted
techn-
ology
Trade- 485 267 3,440 2,036
marks
Database 214 66 1,520 507
Deferred (4,546) (2,839) (32,223) (21,650
tax )
benefit
Stock-based 4,590 4,254 32,539 32,435
charge(2)
Loss on (114) - (808) -
FEC, net of
tax
Impairment 31,339 222,165
loss, net
Facility 1,841 - 13,053 -
fees for
KSNET debt
Acquisition- 5,656 382 40,095 2,911
related
costs.
Fundamental 51,176 68,327 1.13 1.47 362,797 520,965 7.99 11.2
0
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net (loss) income used to calculate earnings per share basic
and diluted and headline earnings per share basic and diluted:
Three months ended March 31, 2011 and 2010
2011 2010
Net (loss) income (USD`000) (21,562) 18,772
Adjustments:
Impairment loss (USD`000) 41,771 -
(Profit) Loss on sale of property, plant (2) 29
and equipment (USD`000)
Tax effects on above (USD`000) (10,431) (10)
Net income used to calculate headline 9,776 18,791
earnings (USD`000)
Weighted average number of shares used to 45,452 45,378
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,559 45,643
calculate net income per share diluted
earnings and headline earnings per share
diluted earnings (`000)
Headline earnings per share:
Basic earnings - common stock and linked 22 41
units, in US cents
Diluted earnings - common stock and 21 41
linked units, in US cents
Nine months ended March 31, 2011 and 2010
2011 2010
Net (loss) income (USD`000) (4,185) 55,997
Adjustments:
Impairment loss (USD`000) 41,771 -
(Profit) Loss on sale of property, plant (10) 31
and equipment (USD`000)
Tax effects on above (USD`000) (10,429) (11)
Net income used to calculate headline 27,147 56,017
earnings (USD`000)
Weighted average number of shares used to 45,423 46,532
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,489 46,725
calculate net income per share diluted
earnings and headline earnings per share
diluted earnings (`000)
Headline earnings per share:
Basic earnings - common stock and linked 60 120
units, in US cents
Diluted earnings - common stock and 60 120
linked units, in US cents
Johannesburg
6 May 2011
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 06/05/2011 09:27:16 Produced by the JSE SENS Department.
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