Wrap Text
NT1 - Net 1 UEPS Technologies, Inc. - Announces 2010 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 2010 Third Quarter Results
JOHANNESBURG, May 7, 2010 - 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, 2010. Revenue during 3Q 2010 was $72.3 million, a
year over year increase of 29% in US dollars ("USD") and a decline of 2% in
constant currency. Earnings per share under US generally accepted accounting
principles ("GAAP") in 3Q 2010 was $0.41 versus $0.26 a year ago, an increase of
58% in USD and 19% in constant currency. Fundamental earnings per share for 3Q
2010 was $0.51 compared to $0.34 in 3Q 2009, representing an increase of 50% in
USD and 13% in constant currency.
Revenue during year to date fiscal 2010 ("F2010") was $211.7 million, a year
over year increase of 14% in US dollars ("USD") and a decline of 4% in constant
currency compared to year to date fiscal 2009 ("F2009"). Earnings per share
under US generally accepted accounting principles ("GAAP") during F2010 was
$1.20 versus $1.20 a year ago, the same in USD and a decrease of 16% in constant
currency. Fundamental earnings per share for F2010 was $1.47 compared to $1.08
for F2009, representing an increase of 36% in USD and 14% in constant currency.
Summary Financial Metrics
Three months ended March 31,
2010 2009 % %
change change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 72,291 55,878 29% (2)%
GAAP net income 18,772 14,379 31% (1)%
Fundamental net income (1) 23,189 18,739 24% (6)%
GAAP earnings per share ($) (2) 0.41 0.26 58% 19%
Fundamental earnings per share 0.51 0.34 50% 13%
($) (1) (2)
Fully diluted shares 45,643 55,799 (18)%
outstanding (`000`s) (2)
Average period USD/ ZAR 7.53 9.96 (24)%
exchange rate
Nine months ended March 31,
2010 2009 % %
change change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 211,669 185,201 14% (4)%
GAAP net income 55,997 68,385 (18)% (31)%
Fundamental net income (1) (2) 68,327 61,589 11% (7)%
GAAP earnings per share ($) (2) 1.20 1.20 0% (16)%
Fundamental earnings per share 1.47 1.08 36% 14%
($) (1) (2)
Fully diluted shares 46,725 57,126 (18)%
outstanding (`000`s)
Average period USD/ ZAR 7.62 9.08 (16)%
exchange rate
(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
3Q 2010 and 3Q 2009 and F2010 and F2009 also excludes, where applicable,
transaction-related costs, 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 3Q 2009 and F2009, have
been retrospectively adjusted to include participating securities in the
weighted average number of outstanding shares of common stock.
The following factors had a significant impact on the comparability of Net1`s 3Q
2010 results to last year:
- Favorable impact from the weakness of the US dollar: Emerging
market currencies were negatively impacted by the global
financial crisis during the last three months of calendar 2008
and the first half of calendar 2009. The US dollar depreciated
by 24% compared to the ZAR during the third quarter of fiscal
2010 compared to fiscal 2009 which has had a positive impact on
the Company`s reported results;
- Increased transaction volumes at EasyPay: Reported results were
favorably impacted by increased transaction volumes at EasyPay
resulting from growth in value-added services;
- Increased revenue from MediKredit at lower operating margins
than other transaction-based activity business: The MediKredit
acquisition positively impacted on the Company`s revenue during
the third quarter of fiscal 2010, however, because MediKredit
generates a lower operating margin than the Company`s other
transaction-based activity businesses, it negatively affected
reported segment margins;
- Increased user adoption in Iraq: Reported results were
positively impacted by increased transaction revenues from the
adoption of the Company`s UEPS technology in Iraq;
- Lower revenues and margins from hardware, software and related
technology sales segment: Hardware, software and related
technology sales segment continues to be adversely impacted by
lower revenues, primarily as a result of fewer ad hoc sales to
the Bank of Ghana when compared to a year ago, and overall
margin pressure at Net1 UAT and weaker demand for the Company`s
products as well as pricing pressures resulting from the global
recession, all of which was partially offset by hardware sales
to Iraq;
- Intangible asset amortization related to acquisitions: Reported
results were adversely impacted by additional intangible asset
amortization of approximately $0.5 million related to the RMT
acquisition, which closed in April 2009 and $0.5 million related
to the MediKredit acquisition, which closed in January 2010;
- Non-recurring items: During the third quarter of fiscal 2009 the
Company recognized a loss on the sale of its traditional
microlending business of $0.7 million (ZAR 7.4 million); and
- Lower weighted-average number of shares used to calculate
earnings per share: Our basic and diluted earnings per share
were positively impacted by the lower weighted-average number of
shares resulting from the repurchase of our common stock from
Brait S.A investment affiliates in July 2009.
Comments and Outlook
"I am extremely pleased with our third 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. "We recognize that the
pace of our international expansion has been slower than expected, however we
have the management commitment, proposals and incentives to drive accelerating
growth in our new initiatives over the coming quarters. We remain in active
discussions with the South African government for the distribution of social
welfare grants, and anticipate a conclusion to the process over the next 4-6
weeks. We are and expect to remain an integral distributor of welfare grants for
the South African government. We are committed to driving long-term sustainable
growth for all our stakeholders and to that effect, I am pleased to announce
that our Board has doubled our share repurchase authorization to $100 million. I
would also like to welcome the MediKredit and FIHRST teams to the Net1 family,"
he concluded.
"While our full year 2010 constant currency results will ultimately depend on
changes, if any, in the terms of our contract with SASSA, which may be applied
retrospectively to April 1, 2010 to coincide with government`s fiscal year, we
are currently unable to accurately forecast our constant currency guidance until
our negotiations with SASSA have been finalized," said Herman Kotze, Chief
Financial Officer of Net1. "Our growth during 3Q 2010 was driven by EasyPay,
Iraq and the addition of MediKredit," 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 $50.9 million, up 41% compared with 3Q
2009 in USD and 7% on a constant currency basis. Revenue increased as a result
of increased transaction volumes at EasyPay, the growing utilization of the
Company`s UEPS system in Iraq and the acquisition of MediKredit. Operating
margin decreased to 53% from 60% during 3Q 2010 primarily due to additional
intangible asset amortization related to the acquisition of MediKredit, lower
margins in the Company`s MediKredit operation compared with the Company`s
transaction-based activities and ad hoc hardware maintenance charges at Easypay,
which was partially offset by increased transaction fees from the utilization of
the Company`s UEPS system in Iraq. Excluding amortization of acquisition-related
intangibles, 3Q 2010 segment operating margin was 55% compared with 61% during
3Q 2009.
Smart card accounts
Smart card account revenue was $8.0 million, up 19% compared with 3Q 2009 in USD
and 10% lower on a constant currency basis. Operating margin for the segment
remained consistent at 45% for 3Q 2010 and 3Q 2009.
Financial services
Financial services revenue was $1.1 million, down 15% compared with 3Q 2009 in
USD and 36% on a constant currency basis, principally due to the divestiture of
the Company`s traditional microlending business in 3Q 2009. However, operating
margin for this segment, adjusted for the loss related to the sale in 3Q 2009,
improved significantly to 72% from 35% in 3Q 2009 as a result of the sale of
this low-margin business, and higher profitability from the Company`s underlying
UEPS-based lending activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $12.3 million, up 4%
compared with 3Q 2009 in USD and down 21% on a constant currency basis. The
decrease in revenue and operating income was primarily due to lower revenues at
Net1 UAT and lower ad hoc hardware sales in 2010 as compared with the prior year
when the Company recorded revenue from sales under its Ghana contract, which was
offset marginally by increased hardware sales to Iraq. As a result, operating
margin for this segment decreased to (15)% from (12)% in 3Q 2009. Excluding
amortization of all intangibles, segment operating margin was 5% compared to 12%
during 3Q 2009.
Cash flow and liquidity
At March 31, 2010, the Company had cash and equivalents of $184 million, down
from $221 million at June 30, 2009. The decrease was primarily attributable to
the repurchase of the Company`s common stock from Brait S.A.`s investment
affiliates. For 3Q 2010, the Company generated operating cash flow of $31.7
million compared to $5.1 million in 3Q 2009. The increase in operating cash flow
results mainly from the removal of the requirement to pre-fund social welfare
grant payments in 4Q 2009. Capital expenditures for 3Q 2010 and 2009 were $1.0
million and $0.4 million, respectively. Capital expenditures for each of F2010
and F2009 were approximately $2.3 million and $3.7 million. For F2010, the
Company generated operating cash flow of $82.4 million compared to $18.0 million
in F2009. During 3Q 2010 the Company did not repurchase any shares out of the
$50 million authorization approved in February 2010.
Share repurchase authorization
On May 5, 2010, the Company`s Board of Directors authorized an increase in the
Company`s share repurchase program by an additional $50 million, resulting in a
repurchase program of up to $100 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.
FIHRST purchase
On March 31 2010, the Company acquired the FIHRST business and related software
for ZAR 70 million (approximately $9 million) in cash. FIHRST offers a third
party payroll payments solution to South African companies, representing
approximately 700,000 employees with a transaction volume of approximately R40
billion per annum.
Use of Non-GAAP Measures
US securities laws require that when Net1 publish any non-GAAP measures, it
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 nine months March 31, 2010 and
2009, include amortization of intangibles and stock-based compensation. In
addition, in 2010, transaction-related costs are included and in 2009, JSE
listing costs, a bank facility fee, goodwill impairment and a foreign exchange
gain, net of tax, related to a short-term investment are included. 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 nine months
ended March 31, 2009. 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 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 the
Company`s 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 third quarter results on May 7, 2010,
at 8:00 a.m. 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) 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 May 30, 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. Net1`s 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. Net1`s
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/smartcard) 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 Nine months ended
March 31, March 31,
2010 2009 2010 2009
(In thousands, (In thousands,
except per share except per share
data) data)
REVENUE $ 72,291 $ 55,878 $ 211,669 $ 185,201
EXPENSE
Cost of goods sold, IT 17,910 15,225 55,652 51,636
processing, servicing and
support
Selling, general and 22,381 14,772 58,987 48,081
administration
Depreciation and 5,141 4,266 14,384 11,950
amortization
LOSS ON SALE OF MICROLENDING - 742 - 742
BUSINESS
IMPAIRMENT OF GOODWILL - - - 1,836
OPERATING INCOME 26,859 20,873 82,646 70,956
FOREIGN EXCHANGE GAIN - - - 26,657
RELATED TO SHORT-TERM
INVESTMENT
INTEREST INCOME, net 2,206 2,125 6,470 7,590
INCOME BEFORE INCOME TAXES 29,065 22,998 89,116 105,203
INCOME TAX EXPENSE 10,441 8,543 32,964 35,444
NET INCOME FROM CONTINUING 18,624 14,455 56,152 69,759
OPERATIONS BEFORE LOSS FROM
EQUITY-ACCOUNTED INVESTMENTS
LOSS FROM EQUITY-ACCOUNTED (44) (261) (425) (797)
INVESTMENTS
NET INCOME 18,580 14,194 55,727 68,962
(ADD) LESS: NET (LOSS) (192) (185) (270) 577
INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO $ 18,772 $ 14, 379 $ 55,997 $ 68,385
NET1
Net income per share, in
cents
Basic earnings attributable 41.4 25.8 120.3 120.1
to Net1 shareholders
Diluted earnings 41.1 25.8 119.8 119.7
attributable to Net1
shareholders
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited (A)
March 31, June 30,
2010 2009
(In thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 184,341 $ 220,786
Pre-funded social welfare grants 4,752 4,930
receivable
Accounts receivable, net of allowances of 46,822 42,475
- March: $475; June: $395
Finance loans receivable, net of 4,575 2,563
allowances of - March: $245; June: $226
Deferred expenditure on smart cards 13 8
Inventory 5,195 7,250
Deferred income taxes 12,491 12,282
Total current assets before funds held 258,189 290,294
for clients
Funds held for clients 3,304 -
Total current assets 261,493 290,294
OTHER LONG-TERM ASSETS, including available 6,896 7,147
for sale securities
PROPERTY, PLANT AND EQUIPMENT, NET OF 8,269 7,376
ACCUMULATED DEPRECIATION OF - March: $37,666;
June: $28,169
EQUITY-ACCOUNTED INVESTMENTS 2,158 2,583
GOODWILL 119,418 116,197
INTANGIBLE ASSETS, NET OF ACCUMULATED 78,278 75,890
AMORTIZATION OF -
March: $32,281; June: $31,150
TOTAL ASSETS 476,512 499,487
LIABILITIES
CURRENT LIABILITIES
Accounts payable 6,594 5,481
Other payables 77,422 61,454
Income taxes payable 15,136 10,874
Total current liabilities before 99,152 77,809
client fund obligations
Client fund obligations 3,304 -
Total current liabilities 102,456 77,809
DEFERRED INCOME TAXES 50,220 41,737
OTHER LONG-TERM LIABILITIES, including non- 5,274 4,185
controlling interest loans
COMMITMENTS AND CONTINGENCIES - -
TOTAL LIABILITIES 157,950 123,731
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par
value;
Issued and outstanding shares, net of 59 59
treasury - March: 45,378,397; June:
54,506,487
ADDITIONAL PAID-IN-CAPITAL 132,133 126,914
TREASURY SHARES, AT COST: March: (173,671) (48,637)
13,149,042; June: 3,927,516
ACCUMULATED OTHER COMPREHENSIVE LOSS (51,496) (58,472)
RETAINED EARNINGS 409,350 353,353
TOTAL NET1 EQUITY 316,375 373,217
NON-CONTROLLING INTEREST 2,187 2,539
TOTAL EQUITY 318,562 375,756
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY $ 476,512 $ 499,487
(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,
2010 2009 2010 2009
(In thousands) (In thousands)
Cash flows from operating
activities
Net income $ 18,580 14,194 $ 55,727 $ 68,962
Depreciation and 5,141 4,266 14,384 11,950
amortization
Impairment of goodwill - - - 1,836
Loss from equity-accounted 44 261 425 797
investments
Fair value adjustments 183 487 12 (1,957)
Unrealized foreign exchange - - - (1,015)
gain related to short-term
investment
Interest payable 74 105 229 336
Loss on disposal of 29 9 31 9
property, plant and
equipment
Loss on sale of - 742 - 742
microlending business
Stock-based compensation 1,400 1,317 4,254 3,868
charge
Facility fee amortized - - - 1,100
(Increase) Decrease in (3,314) (17,329) 2,736 (55,120)
accounts receivable, pre-
funded social welfare
grants receivable and
finance loans receivable
Decrease (Increase) in 55 84 (5) 57
deferred expenditure on
smart cards
(Increase) Decrease in (221) (1,538) 2,465 (1,244)
inventory
Increase (Decrease) in 1,325 2,215 (8,017) (15,374)
accounts payable and other
payables
Increase in taxes payable 7,343 475 7,027 4,659
Increase (Decrease) in 1,070 (182) 3,181 (1,601)
deferred taxes
Net cash provided by 31,709 5,106 82,449 18,005
operating activities
Cash flows from investing
activities
Capital expenditures (984) (413) (2,310) (3,696)
Proceeds from disposal of 62 1 124 3
property, plant and
equipment
Acquisition of MediKredit, (981) - (981) -
net of cash acquired
Acquisition of available - (3,422) - (3,422)
for sale security
Acquisition of Net1 UAT, - (1,906) - (97,992)
net of cash acquired
Acquisition of shares in - (150) - (450)
equity-accounted
investments
Net change in funds held 280 - 280 -
for clients
Net cash used in (1,623) (5,890) (2,887) (105,557)
investing activities
Cash flows from financing
activities
Proceeds from issue of - - 720 155
share capital, net of share
issue expenses
Treasury stock acquired - - (126,304) (24,752)
Proceeds from short-term - - - 110,000
loan facility
Repayment of short-term - - - (110,000)
loan facility
Payment of facility fee - - - (1,100)
Repayment of non- - - (137) -
controlling interest loan
Net change in client funds (280) - (280) -
obligations
Proceeds from bank - 2,401 - 2,496
overdrafts
Repayment of loans - (2,252) - (2,252)
Net cash (used in) (280) 149 (126,001) (25,453)
provided by financing
activities
Effect of exchange rate 1,664 (2,996) 9,994 (38,445)
changes on cash
Net increase (decrease) in 31,470 (3,631) (36,445) (151,450)
cash and cash equivalents
Cash and cash equivalents - 152,871 124,656 220,786 272,475
beginning of period
Cash and cash equivalents - $ 184,341 121,025 $ 184,341 $ 121,025
end of period
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended March 31, 2010 and 2009 and December 31, 2009
Change - actual Change -
constant
exchange
rate(1)
Key segmental Q3 `10 Q3 `09 Q2 `10 Q3 `10 Q3 `10 Q3 `10 Q3
data, in `000, vs vs vs `10
except margins Q3 `09 Q2 `10 Q3 `09 vs
Q2
`10
Revenue:
Transaction-based $50,854 $35,995 $45,415 41% 12% 7% 12%
activities
Smart card 7,956 6,676 $8,137 19% (2)% (10)% (2)%
accounts
Financial 1,149 1,357 $858 (15)% 34% (36)% 34%
services
Hardware, 12,332 11,850 19,454 4% (37)% (21)% (37)%
software and
related
technology sales
Total $72,291 $55,878 $73,864 29% (2)% (2)% (2)%
consolidated
revenue
Consolidated
operating income
(loss):
Transaction-based $26,837 $21,638 $26,733 24% 0% (6)% 1%
activities
Smart card 3,616 3,034 3,699 19% (2)% (10)% (2)%
accounts
Financial 831 (261) 546 (418)% 52% (341)% 52%
services
Hardware, (1,798) (1,398) 1,660 29% (208)% (3)% (208)
software and %
related
technology sales
Corporate/ (3,219) 23% (18)% (7)% (18)%
Eliminations (2,627) (2,140)
Total operating $26,859 $20,873 $29,419 29% (9)% (3)% (9)%
income
Operating income
margin (%)
Transaction-based 53% 60% 59%
activities
Smart card 45% 45% 45%
accounts
Financial 72% (19)% 64%
services
Hardware, (15)% (12)% 9%
software and
related
technology sales
Overall operating 37% 37% 40%
margin
Nine months ended March 31, 2010 and 2009
Change - Change -
actual constant
exchange
rate(1)
Key segmental data, in Q3 `10 Q3 `09 Q3 `10 Q3 `10
`000, except margins vs vs
Q3 `09 Q3 `09
Revenue:
Transaction-based $141,247 $109,159 29% 9%
activities
Smart card accounts $24,167 21,957 10% (8)%
Financial services $2,799 4,571 (39)% (49)%
Hardware, software and 49,514 (12)% (26)%
related technology $43,456
sales
Total consolidated $211,669 $185,201 14% (4)%
revenue
Consolidated operating
income (loss):
Transaction-based $80,238 $60,929 32% 11%
activities
Smart card accounts 10,985 9,979 10% (8)%
Financial services 1,908 (1,504) (227)% (206)%
Hardware, software and (1,851) 8,229 (122)% (119)%
related technology
sales
Corporate/ Eliminations (8,634) (6,677) 29% 9%
Total operating income $82,646 $70,956 16% (2)%
Operating income margin
(%)
Transaction-based 57% 56%
activities
Smart card accounts 45% 45%
Financial services 68% (33)%
Hardware, software and
related technology (4)% 17%
sales
Overall operating 39% 38%
margin
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended March 31, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD cents) (ZAR`000) (ZAR cents)
2010 2009 2010 2009 2010 2009 2010 2009
GAAP 18,772 14,379 41 26 141,431 143,241 312 257
Amortization 2,733 2,301 20,595 22,923
of
intangible
assets(1)
Customer 3,192 2,454 24,053 24,446
relationsh
ips
Software 430 667 3,239 6,642
and
unpatented
technology
Trademarks 90 68 679 679
Database 67 - 507 -
Deferred (1,046) (888) (7,883) (8,844)
tax
benefit
Stock-based 1,401 1,317 10,555 13,120
charge
Loss on sale - 742 - 7,392
of
Moneyline.
Acquisition- 283 - 2,135 -
related
costs.
Fundamental 23,189 18,739 51 34 174,716 186,676 385 335
(1) Amortization of Prism, EasyPay, RMT, MediKredit and BGS intangibles, net
of deferred tax benefit.
(2) Includes stock-based compensation charges related to options and non-
vested stock awards.
Nine months ended March 31, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD cents) (ZAR`000) (ZAR cents)
2010 2009 2010 2009 2010 2009 2010 2009
GAAP 55,997 68,385 120 120 426,961 621,137 918 1,091
Amortizatio 7,694 6,068 58,658 55,111
n of
intangible
assets(1)
Customer 9,775 6,070 74,526 55,130
relation-
ships
Software 425 2,194 3,239 19,926
and unpa-
tented
tech-
nology
Trade- 267 224 2,036 2,036
marks
Database 66 507
Deferred (2,839) (2,420) (21,650) (21,981)
tax
benefit
Stock-based 4,254 3,868 32,435 35,133
charge(2)
JSE listing - 495 - 4,496
costs
Facility - 1,100 - 9,991
fee
Foreign - (17,447) - (158,469)
exchange
gain
related to
a short-
term
investment,
net of tax
of $9,210
Impairment - 1,836 - 16,676
of goodwill
Change in - (3,458) - (31,409)
tax rate
Loss on - 742 - 6,740
sale of
Moneyline.
Acquisition- 382 - 2,911 -
related
costs
Fundamental 68,327 61,589 147 108 520,965 559,406 1,12 983
0
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 March 31, 2010 and 2009
2010 2009
Net income (USD`000) 18,772 14,379
Adjustments:
Loss on sale of Moneyline - 742
Loss (Profit) on sale of property, plant 29 9
and equipment (USD`000)
Tax effects on above (USD`000) (10) (3)
Net income used to calculate headline 18,791 15,127
earnings (USD`000)
Weighted average number of shares used to 45,378 55,673
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,643 55,798
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 41 27
units, in US cents
Diluted earnings - common stock and 41 27
linked units, in US cents
Nine months ended March 31, 2010 and 2009
2010 2009
Net income (USD`000) 55,997 68,385
Adjustments:
Impairment of goodwill - 1,836
Loss on sale of Moneyline - 742
Loss (Profit) on sale of property, plant 31 9
and equipment (USD`000)
Tax effects on above (USD`000) (11) (3)
Net income used to calculate headline 56,017 70,969
earnings (USD`000)
Weighted average number of shares used to 46,532 56,933
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 46,725 57,126
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 120 125
units, in US cents
Diluted earnings - common stock and 120 124
linked units, in US cents
Johannesburg
7 May 2010
Sponsor to Net1
Deutsche Securities (SA) (Proprietary) Limited
Date: 07/05/2010 09:24:01 Supplied by www.sharenet.co.za
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