Wrap Text
NT1 - Net1 - Net 1 UEPS Technologies, Inc. - Announces 2010 fourth quarter
and year end results and new contract with SASSA
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 Fourth Quarter and Year End
Results and New Contract with SASSA
JOHANNESBURG, August 26, 2010 - Net 1 UEPS Technologies, Inc. ("Net1" or the
"Company") (Nasdaq: UEPS; JSE: NT1) today announced results for the three
months ("4Q 2010") and year ended June 30, 2010 ("F2010"). Revenue for 4Q
2010 was $68.7 million, a year over year increase of 11% in US dollars
("USD") and 2% in constant currency. During 4Q 2010, net loss under US
generally accepted accounting principles ("GAAP") was $17.0 million versus
net income of $18.2 million for the three months ended June 30, 2009 ("4Q
2009") and includes a $37.4 million goodwill impairment charge related to
the Company`s Hardware, software and related technology sales segment for 4Q
2010. GAAP loss per share for 4Q 2010 was $0.37 versus GAAP earnings per
share of $0.33 a year ago. Fundamental earnings per share for 4Q 2010 was
$0.54 compared to $0.38 for 4Q 2009, representing an increase of 42% in USD
and 30% in constant currency.
Revenue for F2010 was $280.4 million, a year over year increase of 14% in US
dollars and a decline of 3% in constant currency compared to the year ended
June 30, 2009 ("F2009"). Earnings per share under GAAP during F2010 was
$0.84 versus $1.53 a year ago, a decline of 45% in USD and 53% in constant
currency. Fundamental earnings per share for F2010 was $2.01 compared to
$1.46 for F2009, representing an increase of 38% in USD and 17% in constant
currency.
Summary Financial Metrics
Three months ended June 30,
2010 2009 % change % change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 68,695 61,621 11% 2%
GAAP net income (17,007) 18,216 (193)% (186)%
Fundamental net income (1) 24,683 20,967 18% 8%
GAAP earnings per share ($) (0.37) 0.33 (212)% (203)%
(2)
Fundamental earnings per 0.54 0.38 42% 30%
share ($) (1) (2)
Fully-diluted shares 45,560 55,592 (18)%
outstanding (`000`s) (2)
Average period USD/ ZAR 7.56 8.26 (8)%
exchange rate
Year ended June 30,
2010 2009 % % change in
change ZAR
in USD
(All figures in USD `000s
except per share data)
Revenue 280,364 246,822 14% (3)%
GAAP net income 38,990 86,601 (55)% (62)%
Fundamental net income (1) 92,914 82,504 13% (4)%
(2)
GAAP earnings per share ($) 0.84 1.53 (45)% (53)%
(2)
Fundamental earnings per 2.01 1.46 38% 17%
share ($) (1) (2)
Fully-diluted shares 46,435 56,738 (18)%
outstanding (`000`s)
Average period USD/ ZAR 7.61 8.94 (15)%
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 the periods presented 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 impairments and a foreign exchange
gain, net of tax, related to a short-term investment.
(2) GAAP basic and fundamental earnings per share for 4Q 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 significant impact on the comparability of our 4Q
2010 and 4Q 2009 results:
* Favorable impact from the weakness of the US dollar: The US dollar
depreciated by 8% against the ZAR during 4Q 2010 which had a
positive impact on the Company`s reported results;
* Goodwill impairment losses: During 4Q 2010, the Company recognized a
goodwill impairment loss of $37.4 million (ZAR 284.4 million)
related to Net1 UTA which has been allocated to its Hardware,
software and related technology sales segment;
* Increased transaction volumes at EasyPay: Reported results were
positively impacted by increased transaction volumes at EasyPay
resulting primarily from growth in value-added services;
* Increased user adoption in Iraq: Reported results were favorably
impacted by increased transaction revenues from the adoption of
Net1`s UEPS technology in Iraq;
* Lower revenues and margins from hardware, software and related
technology sales segment: Hardware, software and related technology
sales segment was adversely impacted, in addition to the goodwill
impairment discussed above, by lower revenues and overall margin
generated by Net1 UTA, by fewer ad hoc sales to the Bank of Ghana
and weaker demand for the Company`s products as well as pricing
pressures resulting from the global recession in calendar 2009, all
of which was partially offset by hardware sales to Iraq;
* Lower net intangible asset amortization: In ZAR, reported results
for 4Q 2010 were positively impacted by lower intangible asset
amortization as RMT intangibles assets were fully amortized in 3Q
2010 and the majority of Prism and EasyPay`s acquisition-related
intangible assets were fully amortized in F2009. These intangible
asset amortization decreases were offset by increases in acquisition-
related intangible asset amortization related to the FIHRST and
MediKredit acquisitions;
* Lower net interest income: Interest income, net, was adversely
impacted by lower average daily ZAR cash balances and a lower
average deposit rate during 4Q 2010 compared to 4Q 2009; and
* 2009 profit on sale of traditional microlending business: During 4Q
2009, the Company recognized a profit on the sale of its traditional
microlending business of $1.2 million (ZAR 9.9 million).
SASSA Contract Update
On August 24, 2010, the Company entered into a new service level agreement
with the South African Social Security Agency ("SASSA") which replaces its
previous SASSA contract that expired on June 30, 2010. The new agreement is
retroactively effective from July 1, 2010 and expires on March 31, 2011.
Under the new contract, the Company will continue to provide its social
welfare grants distribution service to SASSA in five of South Africa`s nine
provinces. As was the case with the Company`s previous contract with SASSA,
the new contract contains a standard pricing formula for all provinces based
on a transaction fee per beneficiary paid, regardless of the number or
amount of grants paid per beneficiary, calculated on a guaranteed minimum
number of beneficiaries per month. However, the new contract provides for a
reduction in both the level of the transaction fee per beneficiary paid and
the guaranteed minimum number of beneficiaries. Because the Company
continues to derive a substantial percentage of its revenues from the SASSA
contract, it expects that the terms of the new contract will materially
reduce its revenues, operating income, net income and cash flow for the year
ended June 30, 2011.
Comments and Outlook
"This year has been difficult for us due primarily to the uncertainties
pertaining to our SASSA contract," said Dr. Serge Belamant, Chairman and
Chief Executive Officer of Net1. "South Africa has been put under austerity
measures that have led to the cancellation of many social benefits which
were found to have been granted without proper consideration or approval. In
addition, reductions in fees were mandated to all grant distributors to
reduce the overall cost of grant administration. We expect personnel and
structural changes to be made within SASSA during 2011 which should lead to
a more specific governmental direction and to which we can align ourselves
in order to continue to play a significant role in this market segment," he
said.
"On a more positive note, I am excited about the continuing success of our
technology in Iraq and Ghana as well as the imminent launch of our Virtual
Card initiative in the United States. The company continues to grow in
strength in many different markets and our diverse product range enables us
to participate across multiple transaction processing segments. Looking
forward, we will continue to focus our strategic efforts on the
diversification of our business, by leading with innovative and relevant
technology, strengthening of business development teams, and deploying
capital where appropriate toward acquisition opportunities. We remain
committed to driving long-term sustainable growth for the company and thus
for all of our stakeholders," he concluded.
"Given the fact that our new service level agreement with SASSA runs through
March 31, 2011, to coincide with government`s fiscal year end, it is
difficult to provide guidance for the full fiscal year 2011. However,
assuming the contract were to run for the duration of fiscal year 2011, we
would expect to generate Fundamental EPS of at least $1.50 on a constant
currency basis," 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).
Transaction-based activities
Transaction-based activities revenue was $50.1 million, up 28% compared with
4Q 2009 in USD and 17% higher on a constant currency basis. Revenue
increased as a result of higher transaction volumes at EasyPay, the growing
utilization of the Company`s UEPS system in Iraq and the acquisition of
MediKredit and FIHRST. Operating margin decreased to 51% from 58% during 4Q
2010 primarily due to additional intangible asset amortization related to
the acquisition of MediKredit and FIHRST, and lower margin contribution from
the Company`s MediKredit and FIHRST operations compared with the Company`s
legacy transaction-based activities, 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, 4Q 2010 segment
operating margin was 54% compared with 60% during 4Q 2009.
Smart card accounts
Smart card account revenue was $7.8 million, up 2% compared with 4Q 2009 in
USD and 6% lower on a constant currency basis. Operating margin for the
segment remained consistent at 45%.
Financial services
Financial services revenue was $1.2 million, up 42% compared with 4Q 2009 in
USD and 31% higher on a constant currency basis, principally due to an
increase in lending activities. Excluding the impact of the 3Q 2009 profit
on sale of the traditional microlending business and the allowance for
credit losses related to the sale, operating margin for this segment
increased to 79% from 32% in 4Q 2009 largely as a result of the increased
lending activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $9.6 million,
down 31% compared with 4Q 2009 in USD and 37% lower on a constant currency
basis. The decrease in revenue and operating income for 4Q 2010 was
primarily due to lower revenues at Net1 UTA and the goodwill impairment
discussed above, as well as lower ad hoc hardware sales in 4Q 2010 as
compared with the prior year when the Company recorded revenue from sales
under its Ghana contract. These decreases were offset marginally by
increased hardware sales to Iraq. Excluding amortization of all intangibles
and the impairment of goodwill, segment operating margin was (11%) compared
to 3% during 4Q 2009.
For 4Q 2010, the Company recognized an impairment loss of $37.4 million (ZAR
284.4 million) as a result of deteriorating trading conditions in this
segment, particularly at Net1 UTA, and uncertainty surrounding contract
finalization dates which would impact future cash flows.
Cash flow and liquidity
At June 30, 2010, the Company had cash and equivalents of $154 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 in July 2009. For 4Q 2010, operating cash flow was negative $13.8
million, compared to positive $88.8 million in 4Q 2009. The decrease in
operating cash flow resulted mainly from the removal of the requirement to
pre-fund social welfare grant payments in 4Q 2009, lower accounts payable
and other payables balances, as well as an ad hoc payment of taxation,
Secondary Taxation on Companies in South Africa of $12.1 million. Capital
expenditures for 4Q 2010 and 2009 were $0.4 million and $1.0 million,
respectively. Capital expenditures for each of F2010 and F2009 were
approximately $2.7 million and $4.7 million. For F2010, the Company
generated operating cash flow of $68.7 million compared to $106.8 million in
F2009. During 4Q 2010, the Company did not repurchase any shares under its
$100 million authorization.
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
months and year ended June 30, 2010 and 2009 include amortization of
intangibles and stock-based compensation. In addition, in 2010, goodwill
impairment and 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 year ended June 30, 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 fourth quarter results on August
27, 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 September 17, 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.
Audited Condensed Consolidated Statements of Operations
Three months ended Year ended
June 30, June 30,
2010 2009 2010 2009
(In thousands, except (In thousands, except per
per share data) share data)
REVENUE $ 68,695 $ 61,621 $ 280,364 $ 246,822
EXPENSE
Cost of goods sold, 17,321 18,455 72,973 70,091
IT processing,
servicing and support
Selling, general and 21,867 16,752 80,854 64,833
administration
Depreciation and 4,964 5,132 19,348 17,082
amortization
PROFIT ON SALE OF - (1,197) - (455)
MICROLENDING BUSINESS
IMPAIRMENT OF GOODWILL 37,378 37,378 1,836
OPERATING INCOME (12,835) 22,479 69,811 93,435
FOREIGN EXCHANGE GAIN - - - 26,657
RELATED TO SHORT-TERM
INVESTMENT
INTEREST INCOME, net 2,599 3,238 9,069 10,828
INCOME BEFORE INCOME (10,236) 25,717 78,880 130,920
TAXES
INCOME TAX EXPENSE 7,858 7,300 40,822 42,744
NET INCOME FROM (18,094) 18,417 38,058 88,176
CONTINUING OPERATIONS
BEFORE LOSS FROM EQUITY-
ACCOUNTED INVESTMENTS
LOSS FROM EQUITY- 518 (77) 93 (874)
ACCOUNTED INVESTMENTS
NET INCOME (17,576) 18,340 38,151 87,302
(ADD) LESS: NET (LOSS) (569) 124 (839) 701
INCOME ATTRIBUTABLE TO
NON-CONTROLLING
INTEREST
NET INCOME ATTRIBUTABLE $ (17,007) $ 18,216 $ 38,990 $ 86,601
TO NET1
Net income per share,
in cents
Basic earnings (37.5) 32.9 84.3 153.1
attributable to Net1
shareholders
Diluted earnings (37.3) 32.8 84.0 152.6
attributable to Net1
shareholders
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2010 and 2009
2010 2009
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 153,742 $ 220,786
Pre-funded social welfare grants 6,660 4,930
receivable
Accounts receivable, net 41,854 42,475
Finance loans receivable, net 4,221 2,563
Deferred expenditure on smart - 8
cards
Inventory 3,622 7,250
Deferred income taxes 16,330 12,282
Total current assets before funds 226,429 290,294
held for clients
Funds held for clients 83,661 -
Total current assets 310,090 290,294
OTHER LONG-TERM ASSETS, including 7,423 7,147
available for sale securities
PROPERTY, PLANT AND EQUIPMENT, net 7,286 7,376
EQUITY-ACCOUNTED INVESTMENTS 2,598 2,583
GOODWILL 76,346 116,197
INTANGIBLE ASSETS, net 68,347 75,890
TOTAL ASSETS 472,090 499,487
LIABILITIES
CURRENT LIABILITIES
Accounts payable 3,596 5,481
Other payables 50,855 61,454
Income taxes payable 3,476 10,874
Total current liabilities before 57,927 77,809
client fund obligations
Client fund obligations 83,661 -
Total current liabilities 141,588 77,809
DEFERRED INCOME TAXES 38,858 41,737
INTEREST BEARING LIABILITIES - non- 4,343 4,185
controlling interest loans
COMMITMENTS AND CONTINGENCIES - -
TOTAL LIABILITIES 184,789 123,731
EQUITY
COMMON STOCK
Authorized shares: 200,000,000
with $0.001 par value;
Issued and outstanding shares, net 59 59
of treasury: 2010: 45,378,397;
2009: 54,506,487
PREFERRED STOCK
Authorized shares: 50,000,000 with
$0.001 par value;
Issued and outstanding shares, net - -
of treasury: 2010: -; 2009: -
ADDITIONAL PAID-IN CAPITAL 133,543 126,914
TREASURY SHARES, AT COST: 2010: (173,671) (48,637)
13,149,042; 2009: 3,927,516
ACCUMULATED OTHER COMPREHENSIVE LOSS (66,396) (58,472)
RETAINED EARNINGS 392,343 353,353
TOTAL NET1 EQUITY 285,878 373,217
NON-CONTROLLING INTEREST 1,423 2,539
TOTAL EQUITY 287,301 375,756
TOTAL LIABILITIES AND EQUITY $ 472,090 $ 499,487
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 30, 2010, 2009 and 2008
2010 2009 2008
(In thousands)
Cash flows from operating
activities
Net income $ 38,151 $ 87,302 $ 85,880
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 19,348 17,082 10,822
(Earnings) Loss from equity- (93) 874 1,036
accounted investments
Fair value adjustment 78 (4,402) (269)
Interest payable 301 425 434
Facility fee amortized - 1,100 -
Loss (Profit) on disposal of 69 85 (110)
property, plant and equipment
Profit on disposal of business - (455) -
Stock compensation charge, net 5,670 5,026 3,971
of forfeitures
Impairment of goodwill 37,378 1,836 -
Decrease (Increase) in accounts 4,666 14,639 (9,983)
receivable, pre-funded social
welfare grants receivable and
finance loans receivable
Decrease in deferred expenditure 8 50 416
on smart cards
Decrease (Increase) in inventory 3,867 (81) (1,138)
(Decrease) Increase in accounts (27,138) (8,788) 24,353
payable and other payables
(Decrease) Increase in taxes (7,582) (3,339) 1,369
payable
(Decrease) Increase in deferred (6,040) (4,586) 1,979
taxes
Net cash provided by operating 68,683 106,768 118,760
activities
Cash flows from investing
activities
Capital expenditures (2,730) (4,770) (3,563)
Proceeds from disposal of 106 159 160
property, plant and equipment
Acquisition of available for - (3,422) -
sale securities
Acquisition of MediKredit and (10,319) - -
FIHRST, net of cash acquired
Acquisition of Net1 UTA, net of - (97,992) -
cash acquired
Acquisition of RMT, net of cash - (1,381) -
acquired
Acquisition of and advance of - (450) (500)
loans to equity-accounted
investments
Net change in funds held for (77,243) - -
clients
Net cash used in investing (90,186) (107,856) (3,903)
activities
Cash flows from financing
activities
Proceeds from issue of common 720 271 2,845
stock
Acquisition of treasury stock (126,304) (39,412) -
Proceeds from short-term loan - 110,000 -
facility
Repayment of short-term loan - (110,000) -
facility
Payment of facility fee - (1,100) -
Repayment of non-controlling - - -
interest loan
Net change in client funds 77,243 - -
obligations
Proceeds from bank overdraft - 2,843 1,462
Repayment of bank overdraft (137) (2,850) (1,443)
Net cash (used in) provided by (48,478) (40,248) 2,864
financing activities
Effect of exchange rate changes 2,937 (10,353) (16,973)
on cash
Net (decrease) increase in cash (67,044) (51,689) 100,748
and cash equivalents
Cash and cash equivalents - 220,786 272,475 171,727
beginning of year
Cash and cash equivalents at end $ 153,742 $ 220,786 $ 272,475
of year
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended June 30, 2010 and 2009 and March 31, 2010
Change - Change - constant
actual exchange rate(1)
Key segmental Q4 `10 Q4 `09 Q3 `10 Q4 `10 Q4 `10 Q4 `10 Q4 `10
data, in `000, vs vs vs vs
except margins Q4 `09 Q3 `10 Q4 `09 Q3 `10
Revenue:
Transaction- 28% (1)% 17% (1)%
based $50,115 $39,240 $50,854
activities
Smart card 7,804 7,619 7,956 2% (2)% (6)% (2)%
accounts
Financial 1,224 859 1,149 42% 7% 31% 7%
services
Hardware, (31)% (23)% (37)% (22)%
software and 9,552 13,903 12,332
related
technology
sales
Total 11% (5)% 2% (5)%
consolidated $68,695 $61,621 $72,291
revenue
Consolidated
operating
income (loss):
Transaction- 14% (4)% 5% (3)%
based $25,798 $22,580 $26,837
activities
Smart card 2% (2)% (6)% (2)%
accounts 3,547 3,463 3,616
Financial (34)% 17% (39)% 18%
services 973 1,470 831
Hardware, nm nm nm nm
software and (40,673) (2,731)
related (1,798)
technology
sales
Corporate/ (2,480) (2,627) 8% (6)% (1)% (5)%
Eliminations (2,303)
Total $(12,835) $26,859 nm nm nm nm
operating $22,479
income
Operating
income margin
(%)
Transaction- 51% 58% 53%
based
activities
Smart card 45% 45% 45%
accounts
Financial 79% 171% 72%
services
Hardware, (426)% (20)% (15)%
software and
related
technology
sales
Overall (19)% 36% 37%
operating
margin
Year ended June 30, 2010 and 2009
Change - Change -
actual constant
exchange
rate(1)
Key segmental 2010 2009 2010 2010
data, in `000, vs vs
except margins 2009 2009
Revenue:
Transaction-based $191,362 $148,399 29% 10%
activities
Smart card 31,971 29,576 8% (8)%
accounts
Financial services 4,023 5,430 (26)% (37)%
Hardware, software 63,417 (16)% (29)%
and related 53,008
technology sales
Total consolidated $280,364 $246,822 14% (3)%
revenue
Consolidated
operating income
(loss):
Transaction-based $106,036 $83,509 27% 8%
activities
Smart card 14,532 13,442 8% (8)%
accounts
Financial services nm nm
2,881 (34)
Hardware, software 5,498 nm nm
and related (42,524)
technology sales
Corporate/ (11,114) 24% 5%
Eliminations (8,980)
Total operating $69,811 $93,435 (25)% (36)%
income
Operating income
margin (%)
Transaction-based 55% 56%
activities
Smart card 45% 45%
accounts
Financial services 72% (1)%
Hardware, software
and related (80)% 9%
technology sales
Overall operating 25% 38%
margin
(1) - This information shows what the change in these items would have
been if the USD/ ZAR exchange rate that prevailed during F2010 also
prevailed during F2009.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended June 30, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD (ZAR`000) (ZAR cents)
cents)
2010 2009 2010 2009 2010 2009 2010 2009
GAAP (17,007) 18,216 (37) 33 (128,631) 150,414 (283) 272
Amortization 2,569 2,857 19,433 23,592
of intangible
assets(1)
Customer 2,520 3,089 25,506
relationship 19,060
s
Software and
unpatented 932 804 6,642
technology 7,046
Trademarks 89 82 679
679
Database 67 -
507 -
Deferred tax (1,039) (1,118) (7,859) (9,235)
benefit
Stock-based 1,416 1,158 10,710 9,562
charge(2)
Impairment of 37,378
goodwill - 282,709 -
Change in tax
rate - (67) - (553)
Profit on sale -
of Moneyline. (1,197) (9,884)
Acquisition-
related costs. 327 - 2,473 -
Fundamental 24,683 20,967 54 38 186,694 173,131 411 313
Year ended June 30, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD cents) (ZAR`000) (ZAR cents)
2010 2009 2010 200 2010 2009 2010 2009
9
GAAP 38,990 86,601 84 153 296,686 774,187 642 1,369
Amortization
of intangible 10,261 8,871 78,082 79,314
assets(1)
Customer 9,110 93,575 81,450
relationshi 12,297
ps
Software
and 1,351 2,972 10,284 26,569
unpatented
technology
Trademarks 357 304 2,716 2,715
Database 133 - 1,013 -
Deferred (3,877) (3,515) (29,506) (31,420)
tax benefit
Stock-based 5,670 5,026 43,145 44,931
charge(2)
JSE listing - 4,425
costs - 495
Facility fee - 1,100 - 9,834
Foreign - (17,447) - (155,971)
exchange gain
related to a
short-term
investment,
net of tax of
$7,110
Impairment of 1,836 16,413
goodwill 37,378 284,420
Change in tax - (31,493)
rate - (3,523)
Profit on - - (4,068)
sale of (455)
Moneyline.
Acquisition- 615 - 4,680 -
related
costs.
Fundamental 92,914 82,504 201 146 707,013 737,572 1,529 1,304
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 June 30, 2010 and 2009
2010 2009
Net income (USD`000) (17,007) 18,216
Adjustments:
Impairment of goodwill 37,378 -
Profit on sale of Moneyline (1,197)
Loss on sale of property, plant and 63 76
equipment (USD`000)
Tax effects on above (USD`000) (22) (26)
Net income used to calculate headline 20,412 17,069
earnings (USD`000)
Weighted average number of shares used to 45,378 55,398
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,560 55,592
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 45 31
units, in US cents
Diluted earnings - common stock and 45 31
linked units, in US cents
Year ended June 30, 2010 and 2009
2010 2009
Net income (USD`000) 38,990 86,601
Adjustments:
Impairment of goodwill 37,378 1,836
Profit on sale of Moneyline - (455)
Loss on sale of property, plant and 69 85
equipment (USD`000)
Tax effects on above (USD`000) (24) (29)
Net income used to calculate headline 76,413 88,038
earnings (USD`000)
Weighted average number of shares used to 46,245 56,552
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 46,435 56,738
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 165 156
units, in US cents
Diluted earnings - common stock and 165 155
linked units, in US cents
Johannesburg
27 August 2010
Sponsor to Net1
Deutsche Securities (SA) (Proprietary) Limited
Date: 27/08/2010 09:30:01 Supplied by www.sharenet.co.za
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