Wrap Text
NT1 - Net 1 UEPS Technologies, Inc. Announces 2011 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 2011 Second Quarter Results
JOHANNESBURG, February 3, 2011 - 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, 2010 ("2Q 2011"). Revenue for 2Q
2011 was $89.0 million, a year over year increase of 21% in US dollars
("USD") and 36% in constant currency. During 2Q 2011, net income under US
generally accepted accounting principles ("GAAP") was $9.9 million versus
net income of $19.3 million for the three months ended December 31, 2009
("2Q 2010"). GAAP earnings per share for 2Q 2011 was $0.22 versus GAAP
earnings per share of $0.42 a year ago. Fundamental earnings per share for
2Q 2011 was $0.39 compared to $0.51 for 2Q 2010, representing a decrease of
24% in USD and 30% in constant currency.
Revenue during the first half of fiscal 2011 ("1H2011") was $153.3 million,
a year over year increase of 10% in US dollars ("USD") and 2% in constant
currency compared to the first half of fiscal 2010 ("1H2010"). Earnings per
share under GAAP during 1H2011 was $0.38 versus $0.79 a year ago, a decline
of 52% in USD and 55% in constant currency. Fundamental earnings per share
for 1H2011 was $0.75 compared to $0.96 for 1H2010, representing a decrease
of 22% in USD and 27% in constant currency.
Summary Financial Metrics
Three months ended December 31,
2010 2009 % %
change change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 89,011 73,864 21% 36%
GAAP net income 9,948 19,284 (48)% (52)%
Fundamental net income (1) 17,511 23,239 (25)% (30)%
GAAP earnings per share ($) 0.22 0.42 (48)% (52)%
Fundamental earnings per 0.39 0.51 (24)% (30)%
share ($) (1)
Fully-diluted shares 45,494 45,588 0%
outstanding (`000`s)
Average period USD/ ZAR 6.94 7.52 (8)%
exchange rate
Six months ended December 31,
2010 2009 % %
change change
in USD in ZAR
(All figures in USD `000s
except per share data)
Revenue 153,294 139,378 10% 2%
GAAP net income 17,377 37,225 (53)% (57)%
Fundamental net income (1) 34,034 45,043 (24)% (30)%
GAAP earnings per share ($) 0.38 0.79 (52)% (55)%
Fundamental earnings per 0.75 0.96 (22)% (27)%
share ($) (1)
Fully-diluted shares 45,455 47,253 (4)%
outstanding (`000`s)
Average period USD/ ZAR 7.14 7.67 (7)%
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 2Q 2011 also excludes transaction-related costs and an
unrealized foreign exchange gain (related to foreign exchange contracts
entered into in order to hedge the fluctuations in the ZAR/ US dollar
related to the anticipated flow of funds from South Africa to the United
States to fund a portion of the KSNET ("KSNET") purchase price).
The following factors had an influence on the comparability of our 2Q 2011
and 2Q 2010 results:
SASSA price and volume reductions: The Company`s new contract with SASSA has
reduced its revenue and operating income as a result of the previously
announced price and volume reductions;
Favorable impact from the weakness of the US dollar: The US dollar
depreciated by 8% compared to the ZAR during the second quarter of fiscal
2011 compared to fiscal 2010 which has had a positive impact on the Company
reported results;
Increased revenue from KSNET at lower operating margins, before acquired
intangible asset amortization, than the Company`s legacy business: The
Company`s KSNET acquisition in October 2010 positively impacted its revenue
during the second quarter of fiscal 2011, however, because KSNET has an
operating margin, before acquired intangible asset amortization, that is
lower than the Company`s legacy businesses, it negatively impacted its
operating margin. The inclusion of KSNET in the Company`s results has also
contributed to the increase in selling, general and administration and
depreciation and amortization expenses;
Increased transaction volumes at EasyPay: The Company`s reported results
were favorably impacted by increased transaction volumes at EasyPay
resulting from growth in value-added services;
Increased revenue from MediKredit and FIRHST at lower operating margins than
other SA transaction-based activity business: The Company`s MediKredit and
FIHRST acquisitions positively impacted its revenue during the second
quarter of fiscal 2011, however, because MediKredit generated a modest
operating loss and FIHRST has operating margin that is lower than the
Company`s other transaction-based activity businesses, they negatively
impacted its operating margin. The inclusion of these businesses in the
Company`s results has also contributed to the increase in selling, general
and administration expense;
Increased user adoption in Iraq: The Company`s reported results were
positively impacted by increased transaction revenues at NUETS 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 lower revenues at Net1 UTA, offset by ad
hoc hardware sales;
Intangible asset amortization related to acquisitions: The Company`s
reported results were adversely impacted by additional intangible asset
amortization of approximately $2.0 million related to the acquisitions of
KSNET in the second quarter of fiscal 2011, as well as MediKredit and FIHRST
during the third quarter of fiscal 2010;
Lower interest income and increased interest expense resulting from KSNET
acquisition: The Company`s reported results were adversely impacted by lower
interest income due to the payment of a portion of the KSNET purchase price
in cash and increased interest expense due to the payment of a portion of
the KSNET purchase price utilizing long-term debt and facility fees of
approximately $1.7 million; and
Non-recurring items included in selling, general and administration expense:
During the second quarter of fiscal 2011, we recognized an unrealized
foreign exchange gain of $2.7 million and incurred transaction-related
expenses of $1.8 million, primarily for the acquisition of KSNET.
Comments and Outlook
"The second quarter of fiscal 2011 was a transformational quarter for us
with the closing of our KSNET acquisition, which diversifies our revenue,
earnings and product portfolio, as well as reduces Net1`s dependency on any
one single economy, currency or political jurisdiction. Our revenue and
profitability in 2Q 2011 continued to be negatively impacted by the
previously announced reduction in the economics of our contract with SASSA,
but offset by the inclusion of KSNET for two months of the quarter and
sustained growth at EasyPay," said Dr. Serge Belamant, Chairman and Chief
Executive Officer of Net1. "In January 2011 we extended our contract with
SASSA for a period of six months to September 30, 2011, under the same terms
and conditions of the existing contract. We expect SASSA to commence a new
tender process for the distribution of social grants in South Africa in the
near future, and remain well positioned to capitalize on our market leading
solution, distribution and position. Separately, in 2Q 2011 KSNET`s
performance was in-line with management`s expectations while Net1 made
demonstrable progress in the deployment of our newer Virtual Card and
EasyPay Kiosk initiatives," he concluded.
"We remain comfortable with our Fundamental EPS guidance of at least $1.50
on a constant currency basis for fiscal 2011. We continue to expect KSNET to
be accretive to Fundamental EPS for fiscal 2011, but it is too soon to
provide guidance on such level of accretion," said Herman Kotze, Chief
Financial Officer of Net1.
Results of Operations
Net1`s frequently asked questions and operating metrics will be updated and
posted on the Company`s website (www.net1.com).
SA transaction-based activities
SA transaction-based activities revenue was $46.6 million, up 3% compared
with 2Q 2010 in USD and 5% lower on a constant currency basis. In ZAR, the
decrease in revenue was primarily due to the new SASSA contract at lower
economics, which was partially offset by increased transaction volumes at
EasyPay and the inclusion of MediKredit and FIHRST. Operating income margin
of the Company`s SA transaction-based activities decreased to 40% from 59% a
year ago. The decrease was primarily due to the lower revenues generated
under the SASSA contract, additional intangible asset amortization related
to the acquisition of MediKredit and FIHRST and lower margins at MediKredit
and FIHRST compared with the Company`s legacy SA transaction-based
activities. Excluding amortization of acquisition-related intangibles, 2Q
2011 segment operating margin was 43% compared with 61% during 2Q 2010.
International transaction-based activities
The Company`s new International transaction-based activities segment
includes the operations of KSNET, Net1 Virtual Card and NUETS` operations in
Iraq. International transaction-based activities revenue was $17 million and
segment operating margin was 2%. Excluding the amortization of intangibles,
segment operating margin was 14%. KSNET is the largest contributor to the
segment and has been included in the Company`s results from November 1,
2010.
Smart card accounts
Smart card account revenue was $8.4 million, up 4% compared with 2Q 2010 in
USD and 4% lower on a constant currency basis. Operating margin for the
segment remained consistent at 45%.
Financial services
Financial services revenue was $1.6 million, up 89% compared with 2Q 2010 in
USD and 74% higher on a constant currency basis, principally due to an
increase in lending activities. Operating margin for this segment increased
to 76% from 64% in 2Q 2010 largely as a result of the increased lending
activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $15.4 million,
down 21% compared with 2Q 2010 in USD and 27% lower on a constant currency
basis. The decrease in revenue and operating income for 2Q 2011 was
primarily due lower revenues generated by Net1 UTA, partially offset by ad
hoc hardware sales. Excluding amortization of all intangibles and the
impairment of goodwill, segment operating margin was 14% compared to 22%
during 2Q 2010.
Cash flow and liquidity
At December 31, 2010, the Company had cash and cash equivalents of $71
million, down from $154 million at June 30, 2010. For 2Q 2011, the Company
utilized net cash of $8.1 million for operating activities, compared to
generating operating cash flow of $13.8 million in 2Q 2010. The decrease in
operating cash flow resulted mainly from the SASSA price and volume
reductions which were effective July 1, 2010 and provisional tax and
Secondary Taxation on Companies payments of $31 million in 2Q 2011, compared
to provisional tax payments in 2Q 2010 of $16 million. Capital expenditures
for 2Q 2011 and 2010 were $4.0 million and $0.7 million, respectively. On
October 29, 2010, the Company paid approximately $240 million to acquire
KSNET, which was funded from $124 million of the Company`s cash reserves and
from $116 million in long-term borrowings. During 2Q 2011, the Company did
not repurchase any shares under its $100 million authorization.
Use of Non-GAAP Measures
US securities laws require that when the Company publishes any non-GAAP
measures, it discloses the reason for using the non-GAAP measure and
provides reconciliation to the directly comparable GAAP measure. The
presentation of fundamental net income and fundamental earnings per share
and headline earnings per share are non-GAAP measures.
Fundamental net income and fundamental earnings per share
The Company`s GAAP net income and earnings per share for 2Q 2011 and 2Q 2010
include amortization of intangible assets and stock-based compensation. In
addition, GAAP net income and earnings per share for 2Q 2011 includes
transaction-related costs and an unrealized foreign exchange gain described
above. 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 second quarter results on
February 4, 2011 at 8:00 Eastern Time. To participate in the call, dial 1-
800-860-2442 (U.S. only), 1-866-605-3852 (Canada only), 0-800-917-7042 (U.K.
only) or 0-800-200-648 (South Africa only) ten minutes prior to the start of
the call. Callers should request "Net1 call" upon dial-in. The call will
also be webcast on the Net1 homepage, www.net1.com. Please click on the
webcast link at least ten minutes prior to the call. A webcast of the call
will be available for replay on the Net1 website through February 25, 2011.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its
Universal Electronic Payment System, or UEPS, to facilitate biometrically
secure real-time electronic transaction processing to unbanked and under-
banked populations of developing economies around the world in an online or
offline environment. In addition to payments, UEPS can be used for banking,
healthcare management, payroll, remittances, voting and identification.
Net1 operates market-leading payment processors in South Africa, Republic of
Korea, Ghana, Iraq and Uzbekistan. In addition, Net1`s proprietary Mobile
Virtual Card technology offers secure mobile payments and banking services
in developed and emerging countries.
Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE
Limited.
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and
unknown risks and uncertainties. A discussion of various factors that cause
the Company`s actual results, levels of activity, performance or
achievements to differ materially from those expressed in such forward-
looking statements are included in the Company`s filings with the Securities
and Exchange Commission. The Company undertakes no obligation to revise any
of these statements to reflect future circumstances or the occurrence of
unanticipated events.
Investor Relations Contact:
Dhruv Chopra
Vice President of Investor Relations
Phone: +1-212-626-6675
Email: dchopra@net1.com
NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Six months ended
December 31, December 31,
2010 2009 2010 2009
(In thousands, (In thousands, except
except per share per share data)
data)
REVENUE $ 89,011 $ 73,864 $ 153,294 $ 139,378
EXPENSE
Cost of goods sold, IT 29,182 20,915 47,249 37,742
processing, servicing and
support
Selling, general and 28,763 18,866 59,089 36,606
administration
Depreciation and 9,092 4,664 13,996 9,243
amortization
OPERATING INCOME 21,974 29,419 32,960 55,787
INTEREST (EXPENSE) INCOME, (2,080) 1,893 756 4,264
net
INCOME BEFORE INCOME TAXES 19,894 31,312 33,716 60,051
INCOME TAX EXPENSE 9,836 11,492 16,043 22,523
NET INCOME FROM CONTINUING 10,058 19,820 17,673 37,528
OPERATIONS BEFORE LOSS FROM
EQUITY-ACCOUNTED INVESTMENTS
LOSS FROM EQUITY-ACCOUNTED (166) (270) (382) (381)
INVESTMENTS
NET INCOME 9,892 19,550 17,291 37,147
(ADD) LESS: NET (LOSS) (56) 266 (86) (78)
INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO $ 9,948 $ 19,284 $ 17,377 $ 37,225
NET1
Net income per share, in
United States dollars
Basic earnings attributable $0.22 $0.43 $0.38 $0.79
to Net1 shareholders
Diluted earnings $0.22 $0.42 $0. 38 $0.79
attributable to Net1
shareholders
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudit (A)
ed
Decembe June 30,
r 31,
2010 2010
(In thousands, except
share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 71,383 $ 153,742
Pre-funded social welfare grants 4,772 6,660
receivable
Accounts receivable, net of allowances of 76,308 41,854
- December: $1,687; June: $807
Finance loans receivable, net of 9,511 4,221
allowances of - December: $-; June: $-
Inventory 6,986 3,622
Deferred income taxes 17,655 16,330
Total current assets before settlement 186,615 226,429
assets
Settlement assets 157,448 83,661
Total current assets 344,063 310,090
PROPERTY, PLANT AND EQUIPMENT, NET OF 32,738 7,286
ACCUMULATED DEPRECIATION OF - December:
$43,635; June: $35,271
EQUITY-ACCOUNTED INVESTMENTS 2,452 2,598
GOODWILL 184,215 76,346
INTANGIBLE ASSETS, NET OF ACCUMULATED 192,022 68,347
AMORTIZATION OF -
December: $48,034; June: $34,226
OTHER LONG-TERM ASSETS, including available 15,016 7,423
for sale securities
TOTAL ASSETS 770,506 472,090
LIABILITIES
CURRENT LIABILITIES
Bank overdraft 420 -
Accounts payable 13,410 3,596
Other payables 72,941 50,855
Current portion of long-term borrowings 7,166 -
Income taxes payable 5,553 3,476
Total current liabilities before 99,490 57,927
settlement obligations
Settlement obligations 157,448 83,661
Total current liabilities 256,938 141,588
DEFERRED INCOME TAXES 62,052 38,858
LONG-TERM BORROWINGS 107,934
OTHER LONG-TERM LIABILITIES, including non- 5,219 4,343
controlling interest loans
TOTAL LIABILITIES 432,143 184,789
COMMITMENTS AND CONTINGENCIES - -
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par
value;
Issued and outstanding shares, net of 59 59
treasury - December: 45,535,353; June:
45,378,397
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001
par value;
Issued and outstanding shares, net of - -
treasury: 2010: -; 2009: -
ADDITIONAL PAID-IN-CAPITAL 137,614 133,543
TREASURY SHARES, AT COST: December: (173,671 (173,671
13,149,042; June: 13,149,042 ) )
ACCUMULATED OTHER COMPREHENSIVE LOSS (38,381) (66,396)
RETAINED EARNINGS 409,720 392,343
TOTAL NET1 EQUITY 335,341 285,878
NON-CONTROLLING INTEREST 3,022 1,423
TOTAL EQUITY 338,363 287,301
TOTAL LIABILITIES AND SHAREHOLDERS` EQUITY $ 770,506 $ 472,090
(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,
2010 2009 2010 2009
(In thousands) (In thousands)
Cash flows from operating
activities
Net income $9,892 $ 19,550 $ 17,291 $ 37,147
Depreciation and 9,092 4,664 13,996 9,243
amortization
Loss from equity-accounted 166 270 382 381
investments
Fair value adjustments 3,344 (29) 238 (171)
Interest payable 67 77 140 155
Profit on disposal of (3) 3 (8) 2
property, plant and
equipment
Stock-based compensation 1,558 1,432 2,996 2,854
charge
Decrease in accounts (13,563) 491 (2,608) 5,990
receivable, pre-funded
social welfare grants
receivable and finance
loans receivable
(Increase) Decrease in 2,168 1,671 66 2,686
inventory
Increase in accounts (2,248) (9,367) 3,777 (9,342)
payable and other payables
Increase in taxes payable (6,364) (6,527) (1,230) (316)
(Decrease) Increase in (12,165) 1,536 (12,938) 2,111
deferred taxes
Net cash (used in) (8,056) 13,771 22,102 50,740
provided by operating
activities
Cash flows from investing
activities
Capital expenditures (4,011) (685) (4,779) (1,326)
Proceeds from disposal of 11 13 18 62
property, plant and
equipment
Advance of loans to equity- - - (375) -
accounted investment
Repayment of loan by equity- 34 - 407 -
accounted investment
Acquisition of KSNET, net (230,225) - (230,225) -
of cash acquired
Net change in settlement (31,641) - (47,185) -
assets
Net cash used in investing (265,832) (672) (282,139) (1,264)
activities
Cash flows from financing
activities
Loan portion related to - - 20 720
options
Treasury stock acquired - - - (126,304)
Long-term borrowings 116,353 - 116,353 -
obtained
Acquisition of remaining (594) - (594) -
19.9% of Net1 UTA
Repayment of short-term 419 - 419 (137)
borrowings
Net change in settlement 31,641 - 47,185 -
obligations
Net cash generated from 147,819 - 163,383 (125,721)
(used in) financing
activities
Effect of exchange rate (2,709) 460 14,295 8,330
changes on cash
Net (decrease) increase in (128,778) 13,559 (82,359) (67,915)
cash and cash equivalents
Cash and cash equivalents - 200,161 139,312 153,742 220,786
beginning of period
Cash and cash equivalents - $71,383 $ 152,871 $71,383 $ 152,871
end of period
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended December 31, 2010 and 2009 and September 30, 2010
Change - Change -
actual constant
exchange
rate(1)
Key segmental data, in Q2 `11 Q2 `10 Q1 `11 Q2 Q2 Q2 Q2
`000, except margins `11 `11 `11 `11
vs vs vs vs
Q2 Q1 Q2 Q1
`10 `11 `10 `11
Revenue:
SA transaction-based $46,58 $45,41 $44,892 3% 4% (5)% (3)%
activities 8 5
International - nm nm nm nm
transaction-based 16,950 -
activities
Smart card accounts 8,434 8,137 7,970 4% 6% (4)% (1)%
Financial services 1,623 858 1,248 89% 30% 74% 22%
Hardware, software and 19,454 (21) 52% (27) 42%
related technology sales 15,416 10,173 % %
Total consolidated $89,01 $73,86 $64,283 21% 38% 11% 30%
revenue 1 4
Consolidated operating
income (loss):
SA transaction-based $18,54 $26,73 $17,776 (31) 4% (36) (2)%
activities 7 3 % %
International - nm nm nm nm
transaction-based 327 -
activities
Operating income 2,359 - nm nm nm nm
excluding amortization -
Amortization of (2,032 - -
intangible assets )
Smart card accounts 3,832 3,699 3,622 4% 6% (4)% (1)%
Financial services 1,231 546 929 125% 33% 108% 24%
Hardware, software and (319) 1,660 (119 (88) (118 (89)
related technology sales (2,660) )% % )% %
Corporate/ Eliminations (1,644 (3,219 (8,681) (49) (81) (53) (82)
) ) % % % %
Total operating income $21,97 $29,41 $10,986 (25) 100% (31) 87%
4 9 % %
Operating income margin
(%)
SA transaction-based 40% 59% 40%
activities
International 2% - -
transaction-based
activities
International 14% - -
transaction-based
activities excluding
amortization
Smart card accounts 45% 45% 45%
Financial services 76% 64% 74%
Hardware, software and (2)% 9% (26)%
related technology sales
Overall operating margin 25% 40% 17%
(1) - This information shows what the change in these items would have been
if the USD/ ZAR exchange rate that prevailed during the second quarter of
fiscal 2011 also prevailed during the second quarter of fiscal 2010 and the
first quarter of fiscal 2011.
Six months ended December 31, 2010 and 2009
Change - Change -
actual constant
exchange
rate(1)
Key segmental data, in Q2 `11 Q2 `10 Q2 `11 Q2 `11
`000, except margins vs vs
Q2 `10 Q1 `11
Revenue:
SA transaction-based $91,010 $90,393 1% (6)%
activities
International nm nm
transaction-based 17,420 -
activities
Smart card accounts 16,404 16,211 1% (6)%
Financial services 2,871 1,650 74% 62%
Hardware, software and 31,124 (18)% (23)%
related technology sales 25,589
Total consolidated $153,294 $139,378 10% 2%
revenue
Consolidated operating
income (loss):
SA transaction-based $35,986 $53,401 (33)% (37)%
activities
International nm nm
transaction-based 116 -
activities
Operating income 2,148 - nm nm
excluding amortization
Amortization of (2,032) -
intangible assets
Smart card accounts 7,454 7,369 1% (6)%
Financial services 2,160 1,077 101% 87%
Hardware, software and (2,979) (53) 5521% 5132%
related technology sales
Corporate/ Eliminations (9,777) (6,007) 63% 51%
Total operating income $32,960 $55,787 (41)% (45)%
Operating income margin
(%)
SA transaction-based 40% 59%
activities
International
transaction-based 1% -
activities
International 12% -
transaction-based
activities excluding
amortization
Smart card accounts 45% 45%
Financial services 75% 65%
Hardware, software and
related technology sales (12)% -
Overall operating margin 22% 40%
(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 2011 also
prevailed during the first half of fiscal 2010.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended December 31, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD) (ZAR`000) (ZAR)
2010 2009 2010 2009 2010 2009 2010 2009
GAAP 9,948 19,284 0.22 0.42 69,040 145,091 1.52 3.20
Amortization 4,302 2,524 29,857 18,988
of intangible
assets(1)
Customer 3,726 3,346 25,862 25,171
relationship
s
Software and 1,939 - 13,458 -
unpatented
technology
Trademarks 176 90 1,220 679
Database 73 507
Deferred tax (1,612) (912) (11,190) (6,862)
benefit
Stock-based 1,558 1,431 10,813 10,767
charge(2)
Gain on FEC, (1,799) - (12,485) -
net of tax
Facility fees 1,728 - 11,993 -
for KSNET debt
Acquisition - 1,774 - 12,313 -
related costs.
Fundamental 17,511 23,239 0.39 0.51 121,531 174,846 2.67 3.85
(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.
Six months ended December 31, 2010 and 2009
Net Income EPS, basic Net income EPS, basic
(USD`000) (USD) (ZAR`000) (ZAR)
2010 2009 2010 2009 2010 2009 2010 2009
GAAP 17,377 37,225 0.38 0.79 124,089 285,601 2.73 6.06
Amortization of 6,916 4,964 49,393 38,080
intangible
assets(1)
Customer 6,281 6,582 44,858 50,494
relationships
Software and 2,897 - 20,687 -
unpatented
technology
Trademarks 268 177 1,915 1,358
Deferred tax 142 - 1,013 -
benefit
Deferred tax (2,672) (1,795) (19,080 (13,772
benefit ) )
Stock-based 2,996 2,854 21,394 21,897
charge(2)
Gain on FEC, net (114) - (813) -
of tax
Facility fees 1,728 - 12,340 -
for KSNET debt
Acquisition - 5,131 - 36,640 -
related costs.
Fundamental 34,034 45,043 0.75 0.96 243,043 345,578 5.35 7.34
(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 used to calculate earnings per share basic and
diluted and headline earnings per share basic and diluted:
Three months ended December 31, 2010 and 2009
2010 2009
Net income (USD`000) 9,948 19,284
Adjustments:
Profit on sale of property, plant and (3) 3
equipment (USD`000)
Tax effects on above (USD`000) 1 (1)
Net income used to calculate headline 9,946 19,286
earnings (USD`000)
Weighted average number of shares used to 45,433 45,378
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,494 45,588
calculate net income per share diluted
earnings and headline earnings per share
diluted earnings (`000)
Headline earnings per share:
Basic earnings - common stock and linked 22 43
units, in US cents
Diluted earnings - common stock and 22 42
linked units, in US cents
Six months ended December 31, 2010 and 2009
2010 2009
Net income (USD`000) 17,377 37,225
Adjustments:
Loss (Profit) on sale of property, plant (8) 2
and equipment (USD`000)
Tax effects on above (USD`000) 3 (1)
Net income used to calculate headline 17,372 37,226
earnings (USD`000)
Weighted average number of shares used to 45,409 47,097
calculate net income per share basic
earnings and headline earnings per share
basic earnings (`000)
Weighted average number of shares used to 45,455 47,253
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 38 79
units, in US cents
Diluted earnings - common stock and 38 79
linked units, in US cents
Johannesburg
4 February 2011
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 04/02/2011 07:05:11 Supplied by www.sharenet.co.za
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