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NT1
NT1
NT1 - Net 1 UEPS Technologies, Inc - Net 1 UEPS Technologies, Inc. Reports
2011 Fourth Quarter and Full Year 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. Reports 2011 Fourth Quarter and Full Year
Results
JOHANNESBURG, August 26, 2011 - Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS;
JSE: NT1) today announced results for the three months ended June 30, 2011
("4Q 2011") and the full 2011 fiscal year ("F2011"). Revenue for 4Q 2011 was
$97.4 million, a year over year increase of 42% in US dollars ("USD") and 28%
in constant currency. During 4Q 2011, net income under US generally accepted
accounting principles ("GAAP") was $6.8 million versus net loss of $17.0
million for the three months ended June 30, 2010 ("4Q 2010"). GAAP earnings
per share for 4Q 2011 was $0.15 versus GAAP loss per share of $0.37 a year
ago. Fundamental earnings per share for 4Q 2011 was $0.39 compared to $0.54
for 4Q 2010, representing a decrease of 28% in USD and 35% in constant
currency.
Revenue for F2011 was $343.4 million, a year over year increase of 22% in USD
and 13% in constant currency compared to fiscal 2010 ("F2010"). During F2011,
net income under GAAP was $2.6 million versus net income of $39.0 million for
F2010. Earnings per share under GAAP during F2011 was $0.06 versus earnings
per share of $0.84 a year ago, a decline of 93% in USD and 94% in constant
currency. Fundamental earnings per share for F2011 was $1.53 compared to $2.01
for F2010, representing a decrease of 24% in USD and 30% in constant currency.
Summary Financial Metrics
Three months ended June 30,
2011 2010 % change % change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 97,368 68,695 42% 28%
GAAP net income (loss) 6,832 (17,007) nm nm
Fundamental net income (1) 17,607 24,683 (29)% (36)%
GAAP earnings (loss) per share 0.15 (0.37) nm nm
($)
Fundamental earnings per share 0.39 0.54 (28)% (35)%
($) (1)
Fully-diluted shares 45,181 45,560 (1)%
outstanding (`000`s)
Average period USD/ ZAR 6.81 7.56 (10)%
exchange rate
Year ended June 30,
2011 2010 % change % change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 343,420 280,364 22% 13%
GAAP net income 2,647 38,990 (93)% (94)%
Fundamental net income (1) 68,932 92,914 (26)% (32)%
GAAP earnings per share ($) 0.06 0.84 (93)% (94)%
Fundamental earnings per share 1.53 2.01 (24)% (30)%
($) (1)
Fully-diluted shares 45,231 46,435 (3)%
outstanding (`000`s)
Average period USD/ ZAR 7.00 7.61 (8)%
exchange rate
(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 F2011, and where applicable,
4Q 2011, also excludes an impairment loss, net of deferred taxes, a valuation
allowance related to Net1 UTA deferred tax assets, restructuring charges at
Net1 UTA, a net gain related to a forward exchange contract related to
intercompany dividends and amortization of facility fees related to the
incurrence of KSNET acquisition debt.
The following factors impacted the comparability of our 4Q 2011 and 4Q 2010
results:
- SASSA price and volume reductions: Our current SASSA contract provides
for price and volume reductions from our previous contract, which reduced
4Q 2011 revenue and operating income;
- Valuation allowances related to Net1 UTA deferred tax assets: During 4Q
2011, we created a valuation allowance of $8.9 million related to Net1
UTA deferred tax assets;
- Favorable impact from the weakness of the US dollar: The US dollar
depreciated by 10% against the ZAR during 4Q 2011 versus 4Q 2010 which
positively impacted our results;
- Goodwill impairment during 4Q 2010: During 4Q 2010, we impaired goodwill
of $37.4 million related to Net1 UTA which was allocated to our hardware,
software and related technology sales segment. The impairment resulted in
a net loss for 4Q 2010;
- Increased revenue from KSNET at lower operating margins, before acquired
intangible asset amortization, than our legacy businesses: Our KSNET
acquisition contributed to an increase in 4Q 2011 revenue, however,
because KSNET has an operating margin, before acquired intangible asset
amortization, that is lower than our legacy businesses, it negatively
impacted our overall operating margin;
- Intangible asset amortization related to KSNET acquisition: In 4Q 2011,
we recorded additional intangible asset amortization related to the
acquisition of KSNET;
- Lower interest income and increased interest expense resulting from KSNET
acquisition: Use of a portion of our cash balances and incurrence of long-
term debt to fund the KSNET acquisition reduced our interest income and
increased our interest expense for 4Q 2011;
- Continued contributions from EasyPay: EasyPay experienced an increase in
transaction volumes in 4Q 2011 from growth in value-added services and
higher than expected activity at retailers;
- Lower revenues and margins from hardware, software and related technology
sales segment: Segment performance was adversely impacted by lower
revenues from all contributors to this operating segment;
- Reversal of stock-based compensation charges: We reversed prior year
stock-based compensation charges of $3.5 million, primarily as a result
of the forfeiture of a portion of the performance-based restricted stock
granted in August 2007;
- Restructuring charges incurred by Net1 UTA: During 4Q 2011, we incurred
restructuring charges related to our Net1 UTA operations of $0.6 million,
net of tax benefit; and
- Transaction-related expenses included in selling, general and
administration expense: During 4Q 2011, we incurred non-deductible
transaction-related expenses of $0.4 million, primarily for the KSNET
acquisition.
Comments and Outlook
"While fiscal 2011 was a challenging year for Net1, it was also
transformational with the acquisition of KSNET and the commercialization of
some of our newer technologies," said Dr. Serge Belamant, Chairman and Chief
Executive Officer of Net1. "We remain committed to SASSA and look forward to
the outcome of the current tender process. In the mean time, we will focus on
driving incremental long-term growth by building on our existing capabilities
at KSNET and EasyPay and scaling up our newer initiatives and technologies,"
he concluded.
"During fiscal 2012, we anticipate growth at KSNET and EasyPay and some of our
other smaller units. However, we expect our pension and welfare business to
remain flat and our earnings growth to be weighed down by our meaningful
investments in MVC, XeoHealth and EP Kiosk. As a result of these factors and
assuming our existing contract with SASSA remains in effect for the full year
on the existing terms and conditions, we would expect to generate Fundamental
EPS of at least $1.55 on a constant currency basis in fiscal 2012," said
Herman Kotze, Chief Financial Officer of Net1.
Results of Operations
Our frequently asked questions and operating metrics will be updated and
posted on our website (www.net1.com).
South African transaction-based activities
South African transaction-based activities revenue was $50.3 million in 4Q
2011, consistent when compared with 4Q 2010 in USD and 10% lower on a constant
currency basis. In ZAR, the decrease in revenue was primarily due to the lower
economics of the current SASSA contract, compared with our previous contract,
which was partially offset by increased transaction volumes at EasyPay and the
inclusion of FIHRST. Operating income margin of our South African transaction-
based activities decreased to 40% from 51% 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
our legacy South African transaction-based activities. Excluding amortization
of acquisition-related intangibles, 4Q 2011 segment operating margin was 43%
compared with 54% during 4Q 2010.
International transaction-based activities
KSNET is the largest contributor to the international transaction-based
activities segment. International transaction-based activities revenue was
$27.9 million and segment operating margin was 3% in 4Q 2011. Excluding the
amortization of intangibles but including the start up costs related to the
launch of Net1 Virtual Card in the United States, segment operating margin was
15%.
Smart card accounts
Smart card account revenue was $8.6 million in 4Q 2011, up 10% compared with
4Q 2010 in USD and 1% lower on a constant currency basis. Operating margin for
the segment remained consistent at 45%.
Financial services
Financial services revenue was $2.3 million in 4Q 2011, up 86% compared with
4Q 2010 in USD and 67% higher on a constant currency basis, principally due to
an increase in lending activities. Operating margin for this segment remained
constant at 79% when compared to 4Q 2010.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $8.3 million in 4Q
2011, down 13% compared with 4Q 2010 in USD and 22% lower on a constant
currency basis. The decrease in revenue and operating income for 4Q 2011 was
primarily due to lower revenues by all major contributors to this operating
segment as a result of challenging trading conditions and the ad hoc nature of
some of these sales. Excluding amortization of all intangibles and Net 1 UTA`s
restructuring charges, segment operating margin was (16)% compared to (11)%
during 4Q 2010.
Cash flow and liquidity
At June 30, 2011, we had cash and cash equivalents of $95 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 4Q 2011, we generated net cash flow of $12.8 million for
operating activities, compared to $13.8 million in 4Q 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 4Q 2011 and 2010
were $5.6 million and $0.4 million, respectively. During 4Q 2011, we
repurchased $1 million worth of shares under our $100 million authorization.
Use of Non-GAAP Measures
US securities laws require that when we publish any non-GAAP measures, we
disclose the reason for using the non-GAAP measure and provide 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
Our GAAP net income (loss) and earnings (loss) per share for 4Q 2011, 4Q 2010,
F2011 and F2010 include amortization of intangible assets, transaction-related
costs and stock-based compensation. GAAP net income (loss) and earnings (loss)
per share for 4Q 2011 and F2011 includes a valuation allowance related to Net1
UTA deferred tax assets, restructuring charges at Net1 UTA and amortization of
facility fees related to the debt incurred to fund a portion of the purchase
price of KSNET. F2011 also includes an impairment loss, net of deferred taxes
and a net gain related to a forward exchange contract related to intercompany
dividends. We 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 our 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 our 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 income (loss) 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 our net income (loss) used to
calculate earnings (loss) per share basic and diluted and HEPS basic and
diluted.
Conference Call
We will host a conference call to review 4Q 2011 and F2011 results on August
26, 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 our 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 our website through September 16, 2011.
About Net1 (www.net1.com)
We are a leading provider of alternative payment systems that leverage our
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.
We operate market-leading payment processors in South Africa, Republic of
Korea, Ghana and Iraq. In addition, our proprietary Mobile Virtual Card
technology offers secure mobile payments and banking services in developed and
emerging countries.
We have 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
our actual results, levels of activity, performance or achievements to differ
materially from those expressed in such forward-looking statements are
included in our filings with the Securities and Exchange Commission. We
undertake no obligation to revise any of these statements to reflect future
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended June 30, 2011, 2010 and 2009
2011 2010 2009
(In thousands, except per share data)
REVENUE $ 343,420 $ 280,364 $ 246,822
Sale of goods 30,130 36,228 47,003
Loan-based interest and fees 7,276 4,214 5,659
received
Services rendered 306,014 239,922 194,160
EXPENSE
Cost of goods sold, IT processing, 109,858 72,973 70,091
servicing and support
Selling, general and administration 119,692 80,854 64,833
Depreciation and amortization 34,671 19,348 17,082
PROFIT ON SALE OF MICROLENDING - - 455
BUSINESS
IMPAIRMENT LOSSES 41,771 37,378 1,836
OPERATING INCOME 37,428 69,811 93,435
FOREIGN EXCHANGE GAIN RELATED TO SHORT- - - 26,657
TERM INVESTMENT
INTEREST (EXPENSE) INCOME, net (1,018) 9,069 10,828
INCOME BEFORE INCOME TAXES 36,410 78,880 130,920
INCOME TAX EXPENSE 33,525 40,822 42,744
NET INCOME BEFORE EARNINGS (LOSS) FROM 2,885 38,058 88,176
EQUITY-ACCOUNTED INVESTMENTS
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED (339) 93 (874)
INVESTMENTS
NET INCOME 2,546 38,151 87,302
(ADD) LESS: NET (LOSS) INCOME (101) (839) 701
ATTRIBUTABLE TO NON-CONTROLLING
INTEREST
NET INCOME ATTRIBUTABLE TO NET1 $ 2,647 $ 38,990 $ 86,601
Net income per share
Basic earnings attributable to Net1 0.06 0.84 1.53
shareholders in $
Diluted earnings attributable to 0.06 0.84 1.53
Net1 shareholders in $
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2011 and 2010
2011 2010
(In thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 95,263 $ 153,742
Pre-funded social welfare grants receivable 4,579 6,660
Accounts receivable, net 82,780 41,854
Finance loans receivable, net 8,141 4,221
Deferred expenditure on smart cards 51 -
Inventory 6,725 3,622
Deferred income taxes 15,882 16,330
Total current assets before settlement 213,421 226,429
assets
Settlement assets 186,668 83,661
Total current assets 400,089 310,090
PROPERTY, PLANT AND EQUIPMENT, net 35,807 7,286
EQUITY-ACCOUNTED INVESTMENTS 1,860 2,598
GOODWILL 209,570 76,346
INTANGIBLE ASSETS, net 119,856 68,347
OTHER LONG-TERM ASSETS, including available for 14,463 7,423
sale securities
TOTAL ASSETS 781,645 472,090
LIABILITIES
CURRENT LIABILITIES
Accounts payable 11,360 3,596
Other payables 71,265 50,855
Current portion of long-term borrowings 15,062 -
Income taxes payable 6,709 3,476
Total current liabilities before 104,396 57,927
settlement obligations
Settlement obligations 186,668 83,661
Total current liabilities 291,064 141,588
DEFERRED INCOME TAXES 52,785 38,858
LONG-TERM BORROWINGS 110,504 -
OTHER LONG-TERM LIABILITIES, including non- 1,272 4,343
controlling interest loans
TOTAL LIABILITIES 455,625 184,789
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized shares: 200,000,000 with $0.001
par value;
Issued and outstanding shares, net of 59 59
treasury: 2011: 45,152,805;
2010: 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 136,430 133,543
TREASURY SHARES, AT COST: 2011: 13,274,434; (174,694) (173,671)
2010: 13,149,042
ACCUMULATED OTHER COMPREHENSIVE LOSS (33,779) (66,396)
RETAINED EARNINGS 394,990 392,343
TOTAL NET1 EQUITY 323,006 285,878
NON-CONTROLLING INTEREST 3,014 1,423
TOTAL EQUITY 326,020 287,301
TOTAL LIABILITIES AND EQUITY $ 781,645 $ 472,090
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 30, 2011, 2010 and 2009
2011 2010 2009
(In thousands)
Cash flows from operating
activities
Net income $ $ 38,151 $ 87,302
2,546
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 19,348 17,082
34,671
Impairment of intangible asset 41,771 - -
Impairment of goodwill - 37,378 1,836
Loss (Earnings) from equity- 339 (93) 874
accounted investments
Fair value adjustment 728 78 (4,402)
Interest payable 2,487 301 425
Facility fee amortized - 1,100
1,958
(Profit) Loss on disposal of (5) 69 85
property, plant and equipment
Profit on disposal of VinaPay (14) - (455)
(2011) and Moneyline business
(2009)
Stock compensation charge, net of 1,720 5,670 5,026
forfeitures
Decrease (Increase) in accounts (3,568) 4,666 14,639
receivable, pre-funded social
welfare grants receivable and
finance loans receivable
Decrease in deferred expenditure - 8 50
on smart cards
Decrease (Increase) in inventory 289 3,867 (81)
Decrease in accounts payable and (1,041) (27,138) (8,788)
other payables
Decrease in taxes payable (7,582) (3,339)
(1,800)
Decrease in deferred taxes (6,040) (4,586)
(13,858)
Net cash provided by operating 66,223 68,683 106,768
activities
Cash flows from investing
activities
Capital expenditures (15,053) (2,730) (4,770)
Proceeds from disposal of 76 106 159
property, plant and equipment
Acquisition of KSNET, net of cash (230,225) - -
acquired
Acquisition of MediKredit, FIHRST - (10,319) (1,381)
and RMT, net of cash acquired
Acquisition of Net1 UTA, net of - - (97,992)
cash acquired
Acquisition of available-for-sale - - (3,422)
securities
Proceeds from disposal of VinaPay 150 - -
Acquisition of and advance of (375) - (450)
loans to equity-accounted
investments
Repayment of loan by equity- 475 - -
accounted investment
Other investing activities 35 - -
Net change in settlement assets (78,768) (77,243) -
Net cash used in investing (323,685) (90,186) (107,856)
activities
Cash flows from financing
activities
Proceeds from issue of common - 720 271
stock
Loan portion related to options 20 - -
Acquisition of treasury stock (1,023) (126,304) (39,412)
Long-term borrowings obtained 116,353 - -
Proceeds from short-term loan - - 110,000
facility
Repayment of short-term loan - - (110,000)
facility
Payment of facility fee (3,088) - (1,100)
Repayment of short-term borrowings (6,705) - -
Proceeds from bank overdraft - - 2,843
Repayment of bank overdraft (462) (137) (2,850)
Acquisition of remaining 19.9% of (594) - -
Net1 UTA
Net change in settlement 78,768 77,243 -
obligations
Net cash provided by (used in) 183,269 (48,478) (40,248)
financing activities
Effect of exchange rate changes on 15,714 2,937 (10,353)
cash
Net decrease in cash and cash (58,479) (67,044) (51,689)
equivalents
Cash and cash equivalents - 153,742 220,786 272,475
beginning of year
Cash and cash equivalents at end $ 95,263 $ 153,742 $ 220,786
of year
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating (loss) income and operating margin:
Three months ended June 30, 2011 and 2010 and March 31, 2011
Change - Change -
actual constant
exchange
rate(1)
Key segmental Q4 `11 Q4 `10 Q3 `11 Q4 Q4 `11 Q4 Q4 `11
data, in `000, `11 vs `11 vs
except margins vs Q3 `11 vs Q3 `11
Q4`1 Q4
0 `10
Revenue:
SA transaction-$50,267 $50,115 $47,313 -% 6% (10) 4%
based %
activities
International nm 13% nm 10%
transaction- 27,900 - 24,627
based
activities
Smart card 8,623 7,804 8,288 10% 4% (1)% 1%
accounts
Financial 2,274 1,224 2,168 86% 5% 67% 2%
services
Hardware, 9,552 (13) (20)% (22) (22)%
software and 8,304 10,362 % %
related
technology
sales
Total $97,368 $68,695 $92,758 42% 5% 28% 2%
consolidated
revenue
Consolidated
operating
income (loss):
SA transaction-$20,347 $25,798 $18,309 (21) 11% (29) 8%
based % %
activities
International 4%
transaction- 811 - 780 nm nm nm
based
activities
Operating 4,257 9%
income - 3,904 nm nm nm
excluding
amortization
Amortization (3,446) - (3,124) nm 10% nm nm
of intangible
assets
Smart card 3,919 3,547 3,767 10% 4% (1)% 1%
accounts
Financial 1,797 973 1,701 85% 6% 66% 3%
services
Hardware, (40,673) (94) (95)% (95) (95)%
software and (2,367) (44,584) % %
related
technology
sales
Corporate/ 2,086 (2,480) (2,098) nm (199)% nm (197)%
Eliminations
Total $26,593 $(12,835) $(22,125) nm nm nm nm
operating
(loss) income
Operating
income margin
(%)
SA transaction-40% 51% 39%
based
activities
International 3% - 3%
transaction-
based
activities
International 15% - 16%
transaction-
based
activities
excluding
amortization
Smart card 45% 45% 45%
accounts
Financial 79% 79% 78%
services
Hardware, (29)% (426)% (430)%
software and
related
technology
sales
Overall 27% (19)% (24)%
operating
margin
(1) - This information shows what the change in these items would have been if
the USD/ ZAR exchange rate that prevailed during the fourth quarter of fiscal
2011 also prevailed during the fourth quarter of fiscal 2010 and the third
quarter of fiscal 2011.
Year ended June 30, 2011 and 2010
Change - Change -
actual constant
exchange
rate(1)
Key segmental data, in `000, F2011 F2010 F2011 F2011
except margins vs vs
F2010 F2010
Revenue:
SA transaction-based $188,590 $191,362 (1)% (9)%
activities
International transaction- nm nm
based activities 69,947 -
Smart card accounts 33,315 31,971 4% (4)%
Financial services 7,313 4,023 82% 67%
Hardware, software and (17)% (23)%
related technology sales 44,255 53,008
Total consolidated revenue $343,420 $280,364 22% 13%
Consolidated operating income
(loss):
SA transaction-based $74,642 $106,036 (30)% (35)%
activities
International transaction- nm nm
based activities 1,707 -
Operating income excluding nm nm
amortization 10,309 -
Amortization of intangible (8,602) - nm nm
assets
Smart card accounts 15,140 14,532 4% (4)%
Financial services 5,658 2,881 96% 81%
Hardware, software and 17% 8%
related technology sales (49,930) (42,524)
Corporate/ Eliminations (9,789) (11,114) (12)% (19)%
Total operating income $37,428 $69,811 (46)% (51)%
Operating income margin (%)
SA transaction-based 40% 55%
activities
International transaction-
based activities 2% -
International transaction-
based activities excluding 15% -
amortization
Smart card accounts 45% 45%
Financial services 77% 72%
Hardware, software and
related technology sales (113)% (80)%
Overall operating margin 11% 25%
(1) - This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during year to date
fiscal 2011 also prevailed during year to date fiscal 2010.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income (loss) to fundamental net income:
Three months ended June 30, 2011 and 2010
Net EPS (LPS), Net EPS(LPS),
Income (loss) basic Income (loss) basic
(USD`000) (USD) (ZAR`000) (ZAR)
2011 2010 20 2010 2011 2010 201 2010
11 1
GAAP 6,832 (17,007) 15 (37) 46,517 (128,631) 103 (283)
Amortizat 3,646 2,569 24,827 19,433
ion of
intangibl
e
assets(1)
Custome 2,837 2,520 19,318 19,060
r
relatio
nships
Softwar 13,269 7,046
e and 1,949 932
unpaten
ted
technol
ogy
Tradema 218 89 1,482 679
rks
Databas 74 67 507 507
e
Deferre (1,432) (1,039) (9,749) (7,859)
d tax
benefit
Stock- (2,873) 1,416 (19,561) 10,710
based
charge(2)
Impairmen - 37,378 - 282,709
t loss,
net
Restructu 637 -
ring 4,337 -
charges
at Net1
UTA
Facility 118 - 803 -
fees for
KSNET
debt
Valuation 8,856 - 60,298 -
allowance
related
to
Net1UTA
DTA
Acquisiti 391 327 2,664 2,473
on-
related
costs.
Fundament 17,607 24,683 39 54 119,885 186,694 266 411
al
(1) Amortization of acquisition-related intangibles, net of deferred tax
benefit.
(2) Includes stock-based compensation charges related to options and non-vested
stock awards.
Year ended June 30, 2011 and 2010
Net EPS, Net EPS,
income basic income basic
(USD`000) (USD) (ZAR`000) (ZAR)
2011 2010 2011 2010 2011 2010 2011 2010
GAAP 2,647 38,990 6 84 18,518 296,686 41 642
Amortizat 15,708 10,261 109,898 78,082
ion of
intangibl
e
assets(1)
Custome 13,397 12,297 93,731 93,575
r
relatio
nships
Softwar
e and 7,301 1,351 51,079 10,284
unpaten
ted
technol
ogy
Tradema 704 357 4,926 2,716
rks
Databas 290 133 2,026 1,013
e
Deferre (5,984) (3,877) (41,864) (29,506)
d tax
benefit
Stock- 1,717 5,670 12,012 43,145
based
charge(2)
Gain on (114) - (798) -
FEC, net
of tax
Impairmen 31,339 37,378 219,254 284,420
t loss,
net
Restructu 777 - 5,436 -
ring
charges
at Net1
UTA
Facility 1,953 - 13,664 -
fees for
KSNET
debt
Valuation
allowance 8,856 - 61,958 -
related
to
Net1UTA
DTA
Acquisiti 6,049 615 42,319 4,680
on-
related
costs.
Fundament 68,932 92,914 153 201 482,261 707,013 1,068 1,529
al
(1) Amortization of acquisition-related intangibles, net of deferred tax
benefit.
(2) Includes stock-based compensation charges related to options and non-vested
stock awards.
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net income (loss) used to calculate earnings per share basic
and diluted and headline earnings per share basic and diluted:
Three months ended June 30, 2011 and 2010
2011 2010
Net income (loss) (USD`000) 6,832 (17,007)
Adjustments:
Impairment loss (USD`000) - 37,378
(Profit) Loss on sale of property, plant and 5 63
equipment (USD`000)
Tax effects on above (USD`000) (2) (22)
Net income used to calculate headline earnings 6,835 20,412
(USD`000)
Weighted average number of shares used to calculate 45,136 45,378
net income per share basic earnings and headline
earnings per share basic earnings (`000)
Weighted average number of shares used to calculate 45,164 45,560
net income per share diluted earnings and headline
earnings per share diluted earnings (`000)
Headline earnings per share:
Basic earnings - common stock and linked units, in US 15 45
cents
Diluted earnings - common stock and linked units, in 15 45
US cents
Year ended June 30, 2011 and 2010
2011 2010
Net income (USD`000) 2,647 38,990
Adjustments:
Impairment loss (USD`000)
41,771 37,378
(Profit) Loss on sale of property, plant and
equipment (USD`000) (5) 69
Tax effects on above (USD`000) (10,430)
(24)
Net income used to calculate headline earnings 33,983 76,413
(USD`000)
Weighted average number of shares used to calculate
net income per share basic earnings and headline 45,175 46,245
earnings per share basic earnings (`000)
Weighted average number of shares used to calculate
net income per share diluted earnings and headline 45,231 46,435
earnings per share diluted earnings (`000)
Headline earnings per share:
Basic earnings - common stock and linked units, in US 75 165
cents
Diluted earnings - common stock and linked units, in 75 165
US cents
Johannesburg
26 August 2011
Sponsor to Net1
Deutsche Securities (SA) (Proprietary) Limited
Date: 26/08/2011 09:22:01 Produced by the JSE SENS Department.
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