Wrap Text
NT1 - Net 1 UEPS Technologies, Inc. - Announces 2010 second 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 2010 Second Quarter Results
JOHANNESBURG, February 9, 2010 - Net 1 UEPS Technologies, Inc. ("Net1" or the
"Company") (Nasdaq: UEPS; JSE: NT1) today announced results for the three and
six months ended December 31, 2009. Revenue during 2Q 2010 was $73.9 million, a
year over year increase of 20% in US dollars ("USD") and a decline of 8% in
constant currency. Earnings per share under US generally accepted accounting
principles ("GAAP") in 2Q 2010 was $0.42 versus $0.49 a year ago, a decline of
14% in USD and 34% in constant currency. Fundamental earnings per share for 2Q
2010 was $0.51 compared to $0.36 in the 2Q 2009, representing an increase of 42%
in USD and 8% in constant currency.
Revenue during the first half of fiscal 2010 ("F2010") was $139.4 million, a
year over year increase of 8% in US dollars ("USD") and a decline of 6% in
constant currency compared to the first half of fiscal 2009 ("F2009"). Earnings
per share under US generally accepted accounting principles ("GAAP") during
F2010 was $0.79 versus $0.94 a year ago, a decline of 16% in USD and 27% in
constant currency. Fundamental earnings per share for F2010 was $0.96 compared
to $0.75 for F2009, representing an increase of 28% in USD and 12% in constant
currency.
Summary Financial Metrics
Three months ended December 31,
2009 2008 % %
change change
in USD in ZAR
(All figures in USD `000s except per
share data)
Revenue 73,864 61,388 20% (8)%
GAAP net income 19,284 27,762 (31)% (47)%
Fundamental net income (1) 23,239 20,186 15% (12)%
GAAP earnings per share ($) (2) 0.42 0.49 (14)% (34)%
Fundamental earnings per share ($) (1) 0.51 0.36 42% 8%
(2)
Fully diluted shares outstanding 45,378 57,068 (20)%
(`000`s) (2)
Average period USD/ ZAR exchange rate 7.52 9.96 (23)%
Six months ended December 31,
2009 2008 % %
(2) change change
in USD in ZAR
(All figures in USD `000s except per
share data)
Revenue 139,378 129,323 8% (6)%
GAAP net income 37,225 54,006 (31)% (40)%
Fundamental net income (1) (2) 45,042 42,834 5% (9)%
GAAP earnings per share ($) (2) 0.79 0.94 (16)% (27)%
Fundamental earnings per share ($) (1) 0.96 0.75 28% 12%
(2)
Fully diluted shares outstanding 47,253 57,777 (18)%
(`000`s)
Average period USD/ ZAR exchange rate 7.67 8.80 (13)%
(1) Fundamental net income and earnings per share is GAAP net income and
earnings per share excluding the amortization of acquisition-related intangible
assets, net of deferred taxes, and stock-based compensation charges. In
addition, the calculation of fundamental net income and earnings per share for
2Q 2009 and the first six months of F2010 also excludes the effects of the
change in the Company`s fully distributed tax rate from 35.45% to 34.55%, JSE
Limited ("JSE") listing costs, a bank facility fee, goodwill impairment and a
foreign exchange gain, net of tax, related to a short-term investment.
(2) GAAP basic and fundamental earnings per share for 2Q 2009 and F2009, have
been retrospectively adjusted, as required by FSP EITF 03-6-1 (Topic 260), to
include participating securities in the weighted average number of outstanding
shares of common stock.
The following factors had significant impact on the comparability of Net1`s 2Q
2010 results to last year:
- Favorable impact from the weakness of the US dollar: The US dollar
depreciated by 23% compared to the ZAR during the second quarter of
fiscal 2010 compared to fiscal 2009 which has had a positive impact
on the Company`s reported results;
- Cost management and improvement in merchant adoption in our pension
and welfare operations: The Company`s second quarter of fiscal 2010
results were favorably impacted by cost management controls and
continued increases in merchant adoption;
- Increased transaction volumes at EasyPay: The Company`s reported
results were favorably impacted by increased transaction volumes at
EasyPay resulting from growth in value-added services and higher
than expected activity at retailers during the Christmas season;
- Increased user adoption in Iraq: The Company`s reported results were
positively impacted by increased transaction revenues from the
adoption of its UEPS technology in Iraq;
- Lower revenues and margins from hardware, software and related
technology sales segment: The Company`s hardware, software and
related technology sales segment was adversely impacted by fewer ad
hoc sales to the Bank of Ghana, lower revenues and overall margin
generated by Net1 Universal Technologies (Austria) AG ("Net1 UAT")
and weaker demand for its products as well as pricing pressures
resulting from the global recession, but partially offset by
hardware sales to Iraq;
- Intangible asset amortization related to acquisition: The Company`s
reported results were adversely impacted by additional intangible
asset amortization of approximately $0.5 million related to the RMT
Systems (Pty) Ltd ("RMT") acquisition, which closed in April 2009;
and
- Non-recurring items: During the second quarter of fiscal 2009 the
Company recognized a foreign exchange gain of $20.6 million (ZAR
202.3 million) resulting from an asset swap arrangement and the
Company impaired goodwill with a value of $1.8 million (ZAR 18.0
million).
Comments and Outlook
"I am extremely pleased with our second quarter results, which demonstrate the
strength of our business model and the power of our technology," said Dr. Serge
Belamant, Chairman and Chief Executive Officer of Net1. "While we faced
difficult year-over-year comparisons from our hardware, software and related
technology sales segment, and last year`s large foreign exchange gain, we
continue to grow both revenue and profitability in our core transaction-based
businesses. We remain an integral distributor of welfare grants for the South
African government, and over the next few years, we have a much clearer path to
drive the globalization of our technology. We remain committed to delivering
sustainable growth for all of our stake holders, and to that effect I am pleased
to announce that our Board has authorized a new $50 million share repurchase
program," he concluded.
"We remain comfortable with our guidance of at least 20% constant currency
fundamental earnings per share growth for fiscal year 2010," said Herman Kotze,
Chief Financial Officer of Net1. "Our growth during 2Q 2010 was driven by
EasyPay, Iraq and the further penetration of our merchant acquiring platform,"
he concluded.
Results of Operations
Net1`s frequently asked questions and operating metrics will be updated and
posted on the Company`s website (www.net1.com).
Transaction-based activities
Transaction-based activities revenue was $45.4 million, up 38% compared with 2Q
2009 in USD and 6% on a constant currency basis. Revenue increased as a result
of increased transaction volumes at EasyPay and a modest contribution from our
pension and welfare operations. Operating margin increased to 59% from 54%
during 2Q 2009 primarily due to cost management and continued increases in
merchant adoption in our pension and welfare operations, increased transaction
fees from the utilization of our UEPS system in Iraq and improved margins at
EasyPay. Excluding amortization of intangibles for EasyPay and RMT, segment
operating margin was 61% compared with 55% during 2Q 2009.
Smart card accounts
Smart card account revenue was $8.1 million, up 21% compared with 2Q 2009 in USD
and 7% lower on a constant currency basis. Operating margin for the segment
remained consistent at 45% for 2Q 2010 and 2Q 2009.
Financial services
Financial services revenue was $0.9 million, down 40% compared with 2Q 2009 in
USD and 54% on a constant currency basis, principally due to the divestiture of
the Company`s traditional microlending business in 3Q 2009. Operating margin for
the operating segment however, improved significantly to 64% from (110)% in 2Q
2009 as a result of the sale of this low-margin business, and higher
profitability in our underlying UEPS-based lending activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $19.5 million, down
5% compared with 2Q 2009 in USD and 27% on a constant currency basis. The
decrease in revenue and operating income is primarily due to lower revenues at
Net1 UAT and lower ad hoc hardware and software development sales in 2010 as
compared with the prior year when we recorded revenue from sales under our Ghana
contract, offset marginally by increased hardware sales to Iraq. As a result
operating margin for the operating segment decreased to 9% from 27% in 2Q 2009.
Excluding amortization of all intangibles, segment operating margin was 22%
compared to 41% during 2Q 2009.
Cash flow and liquidity
At December 31, 2009, the Company had cash and equivalents of $153 million, down
from $221 million at June 30, 2009. For 2Q 2010, the Company generated operating
cash flow of $13.8 million compared to $45.9 million in 2Q 2009. The decrease in
operating cash flow results primarily from the foreign exchange gain realized
during 2Q 2009. Capital expenditures for 2Q 2010 and 2009 were $0.7 million and
$0.4 million, respectively. Capital expenditures for each of F2010 and F2009
were approximately $1.3 million and $3.3 million. For F2010, the Company
generated operating cash flow of $50.7 million compared to $12.9 million in
F2009.
Share repurchase authorization
On February 5, 2010, the Company`s Board of Directors authorized the repurchase
of up to $50 million of the Company`s common stock. The authorization does not
have an expiration date.
The share repurchase authorization will be used at management`s discretion,
subject to limitations imposed by SEC Rule 10b-18 and other legal requirements
and subject to price and other internal limitations established by the Board.
Repurchases will be funded from the Company`s available cash. Share repurchases
may be made through open market purchases, privately negotiated transactions, or
both. There can be no assurance that the Company will purchase any shares or any
particular number of shares.
The authorization may be suspended, terminated or modified at any time for any
reason, including market conditions, the cost of repurchasing shares, liquidity
and other factors that management deems appropriate.
MediKredit Closing
In January 2010, the Company acquired 100% of MediKredit Integrated Healthcare
Solutions (Pty) Ltd ("MediKredit") for ZAR 74 million (approximately $10
million) in cash after all regulatory approvals were obtained. MediKredit is a
South African private company that offers transaction processing, financial and
clinical risk management solutions to both funders and providers of healthcare.
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
Under GAAP, the Company is required to fair value all intangible assets on the
date of the acquisition and amortize these intangible assets over their expected
useful lives. In addition, under GAAP, the Company is required to measure the
fair value of options and other stock-based awards, and recognize a stock-based
compensation charge over the requisite service period. The Company`s GAAP net
income and earnings per share for the three and six months December 31, 2009 and
2008, include amortization of intangibles and stock-based compensation, as well
as, in 2008, JSE listing costs, a bank facility fee, goodwill impairment and a
foreign exchange gain, net of tax, related to a short-term investment. Finally,
the effect of the change in the fully distributed tax rate from 35.45% to 34.55%
in July 2008 was included in net income and earnings per share for the six
months ended December 31, 2008. 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 our listing on
the JSE. HEPS basic and diluted is calculated using net 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 adjusted for
the loss (profit) on sale of property, plant and equipment, net of related tax
effects. Attachment C presents the reconciliation between our net 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 second quarter results on February
10, 2010, at 8:00 a.m. Eastern Time. To participate in the call, dial 1-800-860-
2442 (US only), 1-866-605-3852 (Canada only), 0-800-917-7042 (UK only) or 0-800-
200-648 (South Africa only) five 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 10
minutes prior to the call. A webcast of the call will be available for replay on
the Net1 website through March 3, 2010.
About Net1 (www.net1.com)
Net1 provides its universal electronic payment system, or UEPS, as an
alternative payment system for the unbanked and under-banked populations of
developing economies. Our market-leading system enables the estimated four
billion people who generally have limited or no access to a bank account, to
enter affordably into electronic transactions with each other, government
agencies, employers, merchants and other financial service providers. Our
universal electronic payment system, or UEPS, uses smart cards that operate in
real-time but offline, unlike traditional payment systems offered by major
banking institutions that require immediate access through a communications
network to a centralized computer. This offline capability means that users of
the Net1 system can enter into transactions at any time with other card holders
even in the most remote areas so long as a portable offline smart card reader is
available. In addition to payments and purchases, UEPS can be used for banking,
healthcare management, international money transfers, voting and identification.
Net1 also focuses on the development and provision of secure transaction
technology, solutions and services and offers transaction processing, financial
and clinical risk management solutions to both funders and providers of
healthcare. Its core competencies around secure online transaction processing,
cryptography and integrated circuit card (chip/smart card) technologies are
principally applied to electronic commerce transactions in the
telecommunications, banking, retail, petroleum and utilities market sectors.
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 Six months ended
December 31, December 31,
2009 2008 2009 2008
(In thousands, (In thousands, except
except per share per share data)
data)
REVENUE $ 73,864 $ 61,388 $ 139,378 $ 129,323
EXPENSE
Cost of goods sold, IT 20,915 17,175 37,742 36,411
processing, servicing and
support
Selling, general and 18,866 15,311 36,606 33,309
administration
Depreciation and 4,664 4,261 9,243 7,684
amortization
IMPAIRMENT OF GOODWILL - 1,836 - 1,836
OPERATING INCOME 29,419 22,805 55,787 50,083
FOREIGN EXCHANGE GAIN RELATED - 20,581 - 26,657
TO SHORT-TERM INVESTMENT
INTEREST INCOME, net 1,893 2,303 4,264 5,465
INCOME BEFORE INCOME TAXES 31,312 45,689 60,051 82,205
INCOME TAX EXPENSE 11,492 16,999 22,523 26,901
NET INCOME FROM CONTINUING 19,820 28,690 37,528 55,304
OPERATIONS BEFORE LOSS FROM
EQUITY-ACCOUNTED INVESTMENTS
LOSS FROM EQUITY-ACCOUNTED (270) (226) (381) (536)
INVESTMENTS
NET INCOME 19,550 28,464 37,147 54,768
LESS(ADD): NET INCOME (LOSS) 266 702 (78) 762
ATTRIBUTABLE TO NON-
CONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO $ 19,284 $ 27,762 $ 37,225 $ 54,006
NET1
Net income per share, in
cents
Basic earnings attributable 42.5 48.6 79.0 93.8
to Net1 shareholders
Diluted earnings attributable 42.3 48.5 78.8 93.5
to Net1 shareholders
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited (A)
December June 30,
31,
2009 2009
(In thousands, except
share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 152,871 $ 220,786
Pre-funded social welfare grants receivable 1,592 4,930
Accounts receivable, net of allowances of - 42,213 42,475
December: $374; June: $395
Finance loans receivable, net of allowances 4,548 2,563
of - December: $244; June: $226
Deferred expenditure on smart cards 70 8
Inventory 4,953 7,250
Deferred income taxes 9,191 12,282
Total current assets 215,438 290,294
OTHER LONG-TERM ASSETS, including available for 6,886 7,147
sale securities
PROPERTY, PLANT AND EQUIPMENT, NET OF 7,075 7,376
ACCUMULATED DEPRECIATION OF - December:
$31,559; June: $28,169
EQUITY-ACCOUNTED INVESTMENTS 2,265 2,583
GOODWILL 121,295 116,197
INTANGIBLE ASSETS, NET OF ACCUMULATED 70,806 75,890
AMORTIZATION OF -
December: $39,854; June: $31,150
TOTAL ASSETS 423,765 499,487
LIABILITIES
CURRENT LIABILITIES
Accounts payable 4,347 5,481
Other payables 57,431 61,454
Income taxes payable 7,598 10,874
Total current liabilities 69,376 77,809
DEFERRED INCOME TAXES 46,876 41,737
OTHER LONG-TERM LIABILITIES, including non- 4,200 4,185
controlling interest loans
COMMITMENTS AND CONTINGENCIES - -
TOTAL LIABILITIES 120,452 123,731
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par
value;
Issued and outstanding shares, net of 59 59
treasury - December: 45,378,397; June:
54,506,487
ADDITIONAL PAID-IN-CAPITAL 130,493 126,914
TREASURY SHARES, AT COST: December: (173,671) (48,637)
13,149,042; June: 3,927,516
ACCUMULATED OTHER COMPREHENSIVE LOSS (46,666) (58,472)
RETAINED EARNINGS 390,578 353,353
TOTAL NET1 EQUITY 300,793 373,217
NON-CONTROLLING INTEREST 2,520 2,539
TOTAL EQUITY 303,313 375,756
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY $ 423,765 $ 499,487
(A) - Derived from audited financial
statements
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended Six months ended
December 31, December 31,
2009 2008 2009 2008
(In thousands) (In thousands)
Cash flows from operating
activities
Net income $ 19,550 28,464 $ 37,147 $ 54,768
Depreciation and 4,664 4,261 9,243 7,684
amortization
Impairment of goodwill - 1,836 - 1,836
Loss from equity-accounted 270 226 381 536
investments
Fair value adjustments (29) (2,472) (171) (2,444)
Unrealized foreign - 5,061 - (1,015)
exchange reversal (gain)
related to short-term
investment
Interest payable 77 (408) 155 231
Loss (Profit) on disposal 3 (1) 2 -
of property, plant and
equipment
Stock-based compensation 1,432 1,346 2,854 2,551
charge
Facility fee amortized - 352 - 1,100
Decrease (Increase) in 521 8,350 6,050 (37,791)
accounts receivable, pre-
funded social welfare
grants receivable and
finance loans receivable
Increase in deferred (30) (4) (60) (27)
expenditure on smart cards
Decrease in inventory 1,671 511 2,686 294
Decrease in accounts (9,367) (3,174) (9,342) (17,589)
payable and other payables
(Decrease) Increase in (6,527) 775 (316) 4,184
taxes payable
Increase (Decrease) in 1,536 751 2,111 (1,419)
deferred taxes
Net cash provided by 13,771 45,874 50,740 12,899
operating activities
Cash flows from investing
activities
Capital expenditures (685) (439) (1,326) (3,283)
Proceeds from disposal of 13 1 62 2
property, plant and
equipment
Acquisition of Net1 UAT, - (458) - (95,786)
net of cash acquired
Acquisition of shares in - (50) - (600)
equity-accounted
investments
Net cash used in (672) (946) (1,264) (99,667)
investing activities
Cash flows from financing
activities
Proceeds from issue of - - 720 155
share capital, net of
share issue expenses
Treasury stock acquired - (24,752) (126,304) (24,752)
Proceeds from short-term - - - 110,000
loan facility
Repayment of short-term - (110,000) - (110,000
loan facility )
Payment of facility fee - - - (1,100)
Repayment of non- - - (137) -
controlling interest loan
Proceeds from bank - 94 - 95
overdrafts
Repayment of loans - - - -
Net cash used in - (134,658) (125,721) (25,602)
financing activities
Effect of exchange rate 460 (31,538) 8,330 (35,449)
changes on cash
Net increase (decrease) in 13,559 (121,268) (67,915) (147,819
cash and cash equivalents )
Cash and cash equivalents 139,312 245,924 220,786 272,475
- beginning of period
Cash and cash equivalents $ 152,871 124,656 $ 152,871 $ 124,656
- end of period
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended December 31, 2009 and 2008 and September 30, 2009
Change - Change -
actual constant
exchange
rate(1)
Key segmental Q2 `10 Q2 `09 Q1 `10 Q2 `10 Q2 `10 Q2 `10 Q2 `10
data, in `000, vs vs vs vs
except margins Q2 `09 Q1 `10 Q2 `09 Q1 `10
Revenue:
Transaction- $45,415 $32,820 $44,978 38% 1% 6% (3)%
based activities
Smart card 8,137 6,711 8,074 21% 1% (7)% (3)%
accounts
Financial 858 1,430 792 (40)% 8% (54)% 4%
services
Hardware, 19,454 20,427 11,670 (5)% 67% (27)% 60%
software and
related
technology sales
Total $73,864 $61,388 $65,514 20% 13% (8)% 9%
consolidated
revenue
Consolidated
operating income
(loss):
Transaction- $26,733 $17,653 $26,668 51% 0% 16% (3)%
based activities
Smart card 3,699 3,050 3,670 21% 1% (7)% (3)%
accounts
Financial 546 (1,570) 531 (135)% 3% (127)% (1)%
services
Hardware, 1,660 5,493 (1,713) (70)% (197)% (77)% (193)%
software and
related
technology sales
Corporate/ (3,219) (1,821) (2,788) 77% 15% 35% 11%
Eliminations
Total operating $29,419 $22,805 $26,368 29% 12% (1)% 7%
income
Operating income
margin (%)
Transaction- 59% 54% 59%
based activities
Smart card 45% 45% 45%
accounts
Financial 64% (110)% 67%
services
Hardware, 9% 27% (15)%
software and
related
technology sales
Overall 40% 37% 40%
operating margin
Six months ended December 31, 2009 and 2008
Change - Change -
actual constant
exchange
rate(1)
Key segmental data, in `000, Q2 `10 Q2 `09 Q2 `10 Q2 `10
except margins vs vs
Q2 `09 Q1 `10
Revenue:
Transaction-based activities $90,393 $73,164 24% 8%
Smart card accounts 16,211 15,281 6% (8)%
Financial services 1,650 3,214 (49)% (55)%
Hardware, software and 31,124 37,664 (17)% (28)%
related technology sales
Total consolidated revenue 139,378 129,323 8% (6)%
Consolidated operating income
(loss):
Transaction-based activities $53,401 $39,291 36% 18%
Smart card accounts 7,369 6,945 6% (8)%
Financial services 1,077 (1,243) (187)% (176)%
Hardware, software and (53) 9,627 (101)% (100)%
related technology sales
Corporate/ Eliminations (6,007) (4,537) 32% 15%
Total operating income $55,787 $50,083 11% (3)%
Operating income margin (%)
Transaction-based activities 59% 54%
Smart card accounts 45% 45%
Financial services 65% (39)%
Hardware, software and -% 26%
related technology sales
Overall operating margin 40% 39%
(1) - This information shows what the change in these items would have been
if the USD/ ZAR exchange rate that prevailed during the first half of fiscal
2010 also prevailed during the first half of fiscal 2009.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended December 31, 2009 and 2008
Net Income EPS, Net income EPS,
(USD`000) basic (ZAR`000) basic
(USD (ZAR
cents) cents)
2009 2008 2009 2008 2009 2008 2009 2008
GAAP 19,284 27,762 43 49 145,091 272,875 320 478
Amortization of 2,524 2,276 18,988 22,371
intangible
assets(1)
Customer 3,346 2,412 25,171 23,713
relationships
Software and - 676 - 6,642
unpatented
technology
Trademarks 90 69 679 679
Deferred tax (912) (881) (6,862) (8,663)
benefit
Stock-based 1,431 1,346 10,767 13,230
charge
JSE listing - 84 - 826
costs
Facility fee - 352 - 3,460
Foreign exchange - (13,470) - (132,397
gain related to )
a short-term
investment, net
of tax of $7,111
Impairment of - 1,836 - 18,046
goodwill
Fundamental 23,239 20,186 51 36 174,846 198,411 385 348
(1) Amortization of Prism, EasyPay, RMT and BGS intangibles, net of
deferred tax benefit.
(2) Includes stock-based compensation charges related to options and non-
vested stock awards.
Six months ended December 31, 2009 and 2008
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD (ZAR`000) (ZAR cents)
cents)
2009 2008 2009 2008 2009 2008 2009 2008
GAAP 37,225 54,006 79 94 285,601 475,302 606 826
Amortization 4,964 3,749 38,080 32,995
of
intangible
assets(1)
Customer 6,582 3,609 50,494 31,759
relationsh
ips
Software - 1,509 - 13,284
and
unpatented
technology
Trademarks 177 154 1,358 1,358
Deferred (1,795) (1,523) (13,772 (13,406)
tax )
benefit
Stock-based 2,854 2,551 21,897 22,451
charge(2)
JSE listing - 495 - 4,356
costs
Facility fee - 1,100 - 9,681
Foreign -
exchange
gain related - (17,447 (153,549)
to a short- )
term
investment,
net of tax
of $9,210
Impairment - 1,836 - 16,158
of goodwill
Change in - (3,456) - (26,524)
tax rate
Fundamental 45,043 42,834 96 74 345,578 380,870 734 662
(1) Amortization of Prism, EasyPay, RMT and BGS 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 used to calculate earnings per share basic and
diluted and headline earnings per share basic and diluted:
Three months ended December 31, 2009 and 2008
2009 2008
Net income (USD`000) 19,284 27,762
Adjustments:
Impairment of goodwill - 1,836
Loss (Profit) on sale of property, plant and 3 (1)
equipment (USD`000)
Tax effects on above (USD`000) (1) -
Net income used to calculate headline earnings 19,286 29,597
(USD`000)
Weighted average number of shares used to 45,378 57,068
calculate net income per share basic earnings and
headline earnings per share basic earnings (`000)
Weighted average number of shares used to 45,588 57,777
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 units, in 43 52
US cents
Diluted earnings - common stock and linked units, 42 51
in US cents
Six months ended December 31, 2009 and 2008
2009 2008
Net income (USD`000) 37,225 54,006
Adjustments:
Impairment of goodwill 1,836
Loss (Profit) on sale of property, plant and 2 -
equipment (USD`000)
Tax effects on above (USD`000) (1) -
Net income used to calculate headline earnings 37,226 55,842
(USD`000)
Weighted average number of shares used to 47,097 57,550
calculate net income per share basic earnings and
headline earnings per share basic earnings (`000)
Weighted average number of shares used to 47,253 57,777
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 units, in 79 97
US cents
Diluted earnings - common stock and linked units, 79 97
in US cents
Johannesburg
10 February 2010
Sponsor to Net1
Deutsche Securities (SA) (Proprietary) Limited
Date: 10/02/2010 07:05:12 Supplied by www.sharenet.co.za
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