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NT1 - Net 1 UEPS Technologies, Inc - Net 1 UEPS Technologies, Inc. Reports

Release Date: 26/08/2011 09:22
Code(s): NT1
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NT1 - Net 1 UEPS Technologies, Inc - Net 1 UEPS Technologies, Inc. Reports 2011 Fourth Quarter and Full Year Results Net 1 UEPS Technologies, Inc. Registered in the state of Florida, USA (IRS Employer Identification No. 98-0171860) Nasdaq share code: UEPS JSE share code: NT1 ISIN: US64107N2062 ("Net1" or "the Company") Net 1 UEPS Technologies, Inc. Reports 2011 Fourth Quarter and Full Year Results JOHANNESBURG, August 26, 2011 - Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today announced results for the three months ended June 30, 2011 ("4Q 2011") and the full 2011 fiscal year ("F2011"). Revenue for 4Q 2011 was $97.4 million, a year over year increase of 42% in US dollars ("USD") and 28% in constant currency. During 4Q 2011, net income under US generally accepted accounting principles ("GAAP") was $6.8 million versus net loss of $17.0 million for the three months ended June 30, 2010 ("4Q 2010"). GAAP earnings per share for 4Q 2011 was $0.15 versus GAAP loss per share of $0.37 a year ago. Fundamental earnings per share for 4Q 2011 was $0.39 compared to $0.54 for 4Q 2010, representing a decrease of 28% in USD and 35% in constant currency. Revenue for F2011 was $343.4 million, a year over year increase of 22% in USD and 13% in constant currency compared to fiscal 2010 ("F2010"). During F2011, net income under GAAP was $2.6 million versus net income of $39.0 million for F2010. Earnings per share under GAAP during F2011 was $0.06 versus earnings per share of $0.84 a year ago, a decline of 93% in USD and 94% in constant currency. Fundamental earnings per share for F2011 was $1.53 compared to $2.01 for F2010, representing a decrease of 24% in USD and 30% in constant currency. Summary Financial Metrics Three months ended June 30, 2011 2010 % change % change
in USD in ZAR (All figures in USD `000s except per share data) Revenue 97,368 68,695 42% 28% GAAP net income (loss) 6,832 (17,007) nm nm Fundamental net income (1) 17,607 24,683 (29)% (36)% GAAP earnings (loss) per share 0.15 (0.37) nm nm ($)
Fundamental earnings per share 0.39 0.54 (28)% (35)% ($) (1) Fully-diluted shares 45,181 45,560 (1)% outstanding (`000`s) Average period USD/ ZAR 6.81 7.56 (10)% exchange rate Year ended June 30, 2011 2010 % change % change in USD in ZAR (All figures in USD `000s except per share data) Revenue 343,420 280,364 22% 13% GAAP net income 2,647 38,990 (93)% (94)% Fundamental net income (1) 68,932 92,914 (26)% (32)% GAAP earnings per share ($) 0.06 0.84 (93)% (94)% Fundamental earnings per share 1.53 2.01 (24)% (30)% ($) (1)
Fully-diluted shares 45,231 46,435 (3)% outstanding (`000`s) Average period USD/ ZAR 7.00 7.61 (8)% exchange rate (1) Fundamental net income and earnings per share is GAAP net (loss) income and (loss) earnings per share excluding the amortization of acquisition- related intangible assets, net of deferred taxes, transaction-related costs and stock-based compensation charges. In addition, the calculation of fundamental net income and earnings per share for F2011, and where applicable, 4Q 2011, also excludes an impairment loss, net of deferred taxes, a valuation allowance related to Net1 UTA deferred tax assets, restructuring charges at Net1 UTA, a net gain related to a forward exchange contract related to intercompany dividends and amortization of facility fees related to the incurrence of KSNET acquisition debt. The following factors impacted the comparability of our 4Q 2011 and 4Q 2010 results: - SASSA price and volume reductions: Our current SASSA contract provides for price and volume reductions from our previous contract, which reduced 4Q 2011 revenue and operating income; - Valuation allowances related to Net1 UTA deferred tax assets: During 4Q 2011, we created a valuation allowance of $8.9 million related to Net1 UTA deferred tax assets; - Favorable impact from the weakness of the US dollar: The US dollar depreciated by 10% against the ZAR during 4Q 2011 versus 4Q 2010 which positively impacted our results; - Goodwill impairment during 4Q 2010: During 4Q 2010, we impaired goodwill of $37.4 million related to Net1 UTA which was allocated to our hardware, software and related technology sales segment. The impairment resulted in a net loss for 4Q 2010; - Increased revenue from KSNET at lower operating margins, before acquired intangible asset amortization, than our legacy businesses: Our KSNET acquisition contributed to an increase in 4Q 2011 revenue, however, because KSNET has an operating margin, before acquired intangible asset amortization, that is lower than our legacy businesses, it negatively impacted our overall operating margin; - Intangible asset amortization related to KSNET acquisition: In 4Q 2011, we recorded additional intangible asset amortization related to the acquisition of KSNET; - Lower interest income and increased interest expense resulting from KSNET acquisition: Use of a portion of our cash balances and incurrence of long- term debt to fund the KSNET acquisition reduced our interest income and increased our interest expense for 4Q 2011; - Continued contributions from EasyPay: EasyPay experienced an increase in transaction volumes in 4Q 2011 from growth in value-added services and higher than expected activity at retailers; - Lower revenues and margins from hardware, software and related technology sales segment: Segment performance was adversely impacted by lower revenues from all contributors to this operating segment; - Reversal of stock-based compensation charges: We reversed prior year stock-based compensation charges of $3.5 million, primarily as a result of the forfeiture of a portion of the performance-based restricted stock granted in August 2007; - Restructuring charges incurred by Net1 UTA: During 4Q 2011, we incurred restructuring charges related to our Net1 UTA operations of $0.6 million, net of tax benefit; and - Transaction-related expenses included in selling, general and administration expense: During 4Q 2011, we incurred non-deductible transaction-related expenses of $0.4 million, primarily for the KSNET acquisition. Comments and Outlook "While fiscal 2011 was a challenging year for Net1, it was also transformational with the acquisition of KSNET and the commercialization of some of our newer technologies," said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. "We remain committed to SASSA and look forward to the outcome of the current tender process. In the mean time, we will focus on driving incremental long-term growth by building on our existing capabilities at KSNET and EasyPay and scaling up our newer initiatives and technologies," he concluded. "During fiscal 2012, we anticipate growth at KSNET and EasyPay and some of our other smaller units. However, we expect our pension and welfare business to remain flat and our earnings growth to be weighed down by our meaningful investments in MVC, XeoHealth and EP Kiosk. As a result of these factors and assuming our existing contract with SASSA remains in effect for the full year on the existing terms and conditions, we would expect to generate Fundamental EPS of at least $1.55 on a constant currency basis in fiscal 2012," said Herman Kotze, Chief Financial Officer of Net1. Results of Operations Our frequently asked questions and operating metrics will be updated and posted on our website (www.net1.com). South African transaction-based activities South African transaction-based activities revenue was $50.3 million in 4Q 2011, consistent when compared with 4Q 2010 in USD and 10% lower on a constant currency basis. In ZAR, the decrease in revenue was primarily due to the lower economics of the current SASSA contract, compared with our previous contract, which was partially offset by increased transaction volumes at EasyPay and the inclusion of FIHRST. Operating income margin of our South African transaction- based activities decreased to 40% from 51% a year ago. The decrease was primarily due to the lower revenues generated under the SASSA contract, additional intangible asset amortization related to the acquisition of MediKredit and FIHRST and lower margins at MediKredit and FIHRST compared with our legacy South African transaction-based activities. Excluding amortization of acquisition-related intangibles, 4Q 2011 segment operating margin was 43% compared with 54% during 4Q 2010. International transaction-based activities KSNET is the largest contributor to the international transaction-based activities segment. International transaction-based activities revenue was $27.9 million and segment operating margin was 3% in 4Q 2011. Excluding the amortization of intangibles but including the start up costs related to the launch of Net1 Virtual Card in the United States, segment operating margin was 15%. Smart card accounts Smart card account revenue was $8.6 million in 4Q 2011, up 10% compared with 4Q 2010 in USD and 1% lower on a constant currency basis. Operating margin for the segment remained consistent at 45%. Financial services Financial services revenue was $2.3 million in 4Q 2011, up 86% compared with 4Q 2010 in USD and 67% higher on a constant currency basis, principally due to an increase in lending activities. Operating margin for this segment remained constant at 79% when compared to 4Q 2010. Hardware, software and related technology sales Hardware, software and related technology sales revenue was $8.3 million in 4Q 2011, down 13% compared with 4Q 2010 in USD and 22% lower on a constant currency basis. The decrease in revenue and operating income for 4Q 2011 was primarily due to lower revenues by all major contributors to this operating segment as a result of challenging trading conditions and the ad hoc nature of some of these sales. Excluding amortization of all intangibles and Net 1 UTA`s restructuring charges, segment operating margin was (16)% compared to (11)% during 4Q 2010. Cash flow and liquidity At June 30, 2011, we had cash and cash equivalents of $95 million, down from $154 million at June 30, 2010. The decrease in cash was due primarily to the use of approximately $124.3 million to fund a portion of the KSNET purchase price and the payment of STC of $14.7 million incurred related to dividends paid from South Africa to the United States connected with the KSNET transaction. For 4Q 2011, we generated net cash flow of $12.8 million for operating activities, compared to $13.8 million in 4Q 2010. The decrease in operating cash flow resulted mainly from the SASSA price and volume reductions which were effective July 1, 2010. Capital expenditures for 4Q 2011 and 2010 were $5.6 million and $0.4 million, respectively. During 4Q 2011, we repurchased $1 million worth of shares under our $100 million authorization. Use of Non-GAAP Measures US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using the non-GAAP measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP measures. Fundamental net income and fundamental earnings per share Our GAAP net income (loss) and earnings (loss) per share for 4Q 2011, 4Q 2010, F2011 and F2010 include amortization of intangible assets, transaction-related costs and stock-based compensation. GAAP net income (loss) and earnings (loss) per share for 4Q 2011 and F2011 includes a valuation allowance related to Net1 UTA deferred tax assets, restructuring charges at Net1 UTA and amortization of facility fees related to the debt incurred to fund a portion of the purchase price of KSNET. F2011 also includes an impairment loss, net of deferred taxes and a net gain related to a forward exchange contract related to intercompany dividends. We excludes all of the above-mentioned amounts when calculating fundamental net income and earnings per share, because management believes that these adjustments enhance its own evaluation, as well as an investor`s understanding, of our financial performance. Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share. Headline earnings per share ("HEPS") The inclusion of HEPS in this press release is a requirement of our listing on the JSE. HEPS basic and diluted is calculated using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards. HEPS basic and diluted is calculated as GAAP net income (loss) adjusted for impairment losses, net of taxes, and the loss (profit) on sale of property, plant and equipment, net of related tax effects. Attachment C presents the reconciliation between our net income (loss) used to calculate earnings (loss) per share basic and diluted and HEPS basic and diluted. Conference Call We will host a conference call to review 4Q 2011 and F2011 results on August 26, 2011 at 8:00 Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852 (Canada only), 0-800-917-7042 (U.K. only) or 0-800- 200-648 (South Africa only) ten minutes prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on our homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for replay on our website through September 16, 2011. About Net1 (www.net1.com) We are a leading provider of alternative payment systems that leverage our Universal Electronic Payment System, or UEPS, to facilitate biometrically secure real-time electronic transaction processing to unbanked and under- banked populations of developing economies around the world in an online or offline environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification. We operate market-leading payment processors in South Africa, Republic of Korea, Ghana and Iraq. In addition, our proprietary Mobile Virtual Card technology offers secure mobile payments and banking services in developed and emerging countries. We have a primary listing on the Nasdaq and a secondary listing on the JSE Limited. Forward-Looking Statements This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events. Investor Relations Contact: Dhruv Chopra Vice President of Investor Relations Phone: +1-212-626-6675 Email: dchopra@net1.com NET 1 UEPS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS for the years ended June 30, 2011, 2010 and 2009 2011 2010 2009
(In thousands, except per share data) REVENUE $ 343,420 $ 280,364 $ 246,822 Sale of goods 30,130 36,228 47,003 Loan-based interest and fees 7,276 4,214 5,659 received Services rendered 306,014 239,922 194,160
EXPENSE Cost of goods sold, IT processing, 109,858 72,973 70,091 servicing and support Selling, general and administration 119,692 80,854 64,833 Depreciation and amortization 34,671 19,348 17,082 PROFIT ON SALE OF MICROLENDING - - 455 BUSINESS
IMPAIRMENT LOSSES 41,771 37,378 1,836 OPERATING INCOME 37,428 69,811 93,435
FOREIGN EXCHANGE GAIN RELATED TO SHORT- - - 26,657 TERM INVESTMENT INTEREST (EXPENSE) INCOME, net (1,018) 9,069 10,828 INCOME BEFORE INCOME TAXES 36,410 78,880 130,920 INCOME TAX EXPENSE 33,525 40,822 42,744 NET INCOME BEFORE EARNINGS (LOSS) FROM 2,885 38,058 88,176 EQUITY-ACCOUNTED INVESTMENTS
EARNINGS (LOSS) FROM EQUITY-ACCOUNTED (339) 93 (874) INVESTMENTS NET INCOME 2,546 38,151 87,302 (ADD) LESS: NET (LOSS) INCOME (101) (839) 701 ATTRIBUTABLE TO NON-CONTROLLING INTEREST NET INCOME ATTRIBUTABLE TO NET1 $ 2,647 $ 38,990 $ 86,601 Net income per share Basic earnings attributable to Net1 0.06 0.84 1.53 shareholders in $
Diluted earnings attributable to 0.06 0.84 1.53 Net1 shareholders in $ NET 1 UEPS TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS as of June 30, 2011 and 2010 2011 2010 (In thousands, except share data)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 95,263 $ 153,742 Pre-funded social welfare grants receivable 4,579 6,660 Accounts receivable, net 82,780 41,854 Finance loans receivable, net 8,141 4,221 Deferred expenditure on smart cards 51 - Inventory 6,725 3,622 Deferred income taxes 15,882 16,330 Total current assets before settlement 213,421 226,429 assets Settlement assets 186,668 83,661 Total current assets 400,089 310,090 PROPERTY, PLANT AND EQUIPMENT, net 35,807 7,286 EQUITY-ACCOUNTED INVESTMENTS 1,860 2,598 GOODWILL 209,570 76,346 INTANGIBLE ASSETS, net 119,856 68,347 OTHER LONG-TERM ASSETS, including available for 14,463 7,423 sale securities TOTAL ASSETS 781,645 472,090 LIABILITIES CURRENT LIABILITIES Accounts payable 11,360 3,596 Other payables 71,265 50,855 Current portion of long-term borrowings 15,062 - Income taxes payable 6,709 3,476 Total current liabilities before 104,396 57,927 settlement obligations Settlement obligations 186,668 83,661 Total current liabilities 291,064 141,588 DEFERRED INCOME TAXES 52,785 38,858 LONG-TERM BORROWINGS 110,504 - OTHER LONG-TERM LIABILITIES, including non- 1,272 4,343 controlling interest loans TOTAL LIABILITIES 455,625 184,789 COMMITMENTS AND CONTINGENCIES EQUITY COMMON STOCK Authorized shares: 200,000,000 with $0.001 par value; Issued and outstanding shares, net of 59 59 treasury: 2011: 45,152,805; 2010: 45,378,397 PREFERRED STOCK Authorized shares: 50,000,000 with $0.001 par value; Issued and outstanding shares, net of - - treasury: 2011: -; 2010: - ADDITIONAL PAID-IN CAPITAL 136,430 133,543 TREASURY SHARES, AT COST: 2011: 13,274,434; (174,694) (173,671) 2010: 13,149,042 ACCUMULATED OTHER COMPREHENSIVE LOSS (33,779) (66,396)
RETAINED EARNINGS 394,990 392,343 TOTAL NET1 EQUITY 323,006 285,878
NON-CONTROLLING INTEREST 3,014 1,423 TOTAL EQUITY 326,020 287,301
TOTAL LIABILITIES AND EQUITY $ 781,645 $ 472,090 NET 1 UEPS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS for the years ended June 30, 2011, 2010 and 2009 2011 2010 2009 (In thousands)
Cash flows from operating activities Net income $ $ 38,151 $ 87,302 2,546
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,348 17,082 34,671 Impairment of intangible asset 41,771 - - Impairment of goodwill - 37,378 1,836 Loss (Earnings) from equity- 339 (93) 874 accounted investments Fair value adjustment 728 78 (4,402) Interest payable 2,487 301 425 Facility fee amortized - 1,100 1,958 (Profit) Loss on disposal of (5) 69 85 property, plant and equipment Profit on disposal of VinaPay (14) - (455) (2011) and Moneyline business (2009) Stock compensation charge, net of 1,720 5,670 5,026 forfeitures Decrease (Increase) in accounts (3,568) 4,666 14,639 receivable, pre-funded social welfare grants receivable and finance loans receivable Decrease in deferred expenditure - 8 50 on smart cards Decrease (Increase) in inventory 289 3,867 (81) Decrease in accounts payable and (1,041) (27,138) (8,788) other payables Decrease in taxes payable (7,582) (3,339) (1,800) Decrease in deferred taxes (6,040) (4,586) (13,858) Net cash provided by operating 66,223 68,683 106,768 activities
Cash flows from investing activities Capital expenditures (15,053) (2,730) (4,770) Proceeds from disposal of 76 106 159 property, plant and equipment Acquisition of KSNET, net of cash (230,225) - - acquired Acquisition of MediKredit, FIHRST - (10,319) (1,381) and RMT, net of cash acquired Acquisition of Net1 UTA, net of - - (97,992) cash acquired Acquisition of available-for-sale - - (3,422) securities Proceeds from disposal of VinaPay 150 - - Acquisition of and advance of (375) - (450) loans to equity-accounted investments Repayment of loan by equity- 475 - - accounted investment Other investing activities 35 - - Net change in settlement assets (78,768) (77,243) - Net cash used in investing (323,685) (90,186) (107,856) activities
Cash flows from financing activities Proceeds from issue of common - 720 271 stock Loan portion related to options 20 - - Acquisition of treasury stock (1,023) (126,304) (39,412) Long-term borrowings obtained 116,353 - - Proceeds from short-term loan - - 110,000 facility Repayment of short-term loan - - (110,000) facility Payment of facility fee (3,088) - (1,100) Repayment of short-term borrowings (6,705) - - Proceeds from bank overdraft - - 2,843 Repayment of bank overdraft (462) (137) (2,850) Acquisition of remaining 19.9% of (594) - - Net1 UTA Net change in settlement 78,768 77,243 - obligations Net cash provided by (used in) 183,269 (48,478) (40,248) financing activities Effect of exchange rate changes on 15,714 2,937 (10,353) cash Net decrease in cash and cash (58,479) (67,044) (51,689) equivalents
Cash and cash equivalents - 153,742 220,786 272,475 beginning of year Cash and cash equivalents at end $ 95,263 $ 153,742 $ 220,786 of year Net 1 UEPS Technologies, Inc. Attachment A Operating segment revenue, operating (loss) income and operating margin: Three months ended June 30, 2011 and 2010 and March 31, 2011 Change - Change - actual constant
exchange rate(1) Key segmental Q4 `11 Q4 `10 Q3 `11 Q4 Q4 `11 Q4 Q4 `11 data, in `000, `11 vs `11 vs except margins vs Q3 `11 vs Q3 `11 Q4`1 Q4 0 `10 Revenue: SA transaction-$50,267 $50,115 $47,313 -% 6% (10) 4% based % activities International nm 13% nm 10% transaction- 27,900 - 24,627 based activities Smart card 8,623 7,804 8,288 10% 4% (1)% 1% accounts Financial 2,274 1,224 2,168 86% 5% 67% 2% services Hardware, 9,552 (13) (20)% (22) (22)% software and 8,304 10,362 % % related technology sales Total $97,368 $68,695 $92,758 42% 5% 28% 2% consolidated revenue
Consolidated operating income (loss): SA transaction-$20,347 $25,798 $18,309 (21) 11% (29) 8% based % % activities International 4% transaction- 811 - 780 nm nm nm based activities Operating 4,257 9% income - 3,904 nm nm nm excluding amortization Amortization (3,446) - (3,124) nm 10% nm nm of intangible assets Smart card 3,919 3,547 3,767 10% 4% (1)% 1% accounts Financial 1,797 973 1,701 85% 6% 66% 3% services Hardware, (40,673) (94) (95)% (95) (95)% software and (2,367) (44,584) % % related technology sales Corporate/ 2,086 (2,480) (2,098) nm (199)% nm (197)% Eliminations Total $26,593 $(12,835) $(22,125) nm nm nm nm operating (loss) income
Operating income margin (%) SA transaction-40% 51% 39% based activities International 3% - 3% transaction- based activities International 15% - 16% transaction- based activities excluding amortization Smart card 45% 45% 45% accounts Financial 79% 79% 78% services Hardware, (29)% (426)% (430)% software and related technology sales Overall 27% (19)% (24)% operating margin (1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the fourth quarter of fiscal 2011 also prevailed during the fourth quarter of fiscal 2010 and the third quarter of fiscal 2011. Year ended June 30, 2011 and 2010 Change - Change - actual constant
exchange rate(1) Key segmental data, in `000, F2011 F2010 F2011 F2011 except margins vs vs F2010 F2010 Revenue: SA transaction-based $188,590 $191,362 (1)% (9)% activities International transaction- nm nm based activities 69,947 - Smart card accounts 33,315 31,971 4% (4)% Financial services 7,313 4,023 82% 67% Hardware, software and (17)% (23)% related technology sales 44,255 53,008 Total consolidated revenue $343,420 $280,364 22% 13%
Consolidated operating income (loss): SA transaction-based $74,642 $106,036 (30)% (35)% activities International transaction- nm nm based activities 1,707 - Operating income excluding nm nm amortization 10,309 - Amortization of intangible (8,602) - nm nm assets Smart card accounts 15,140 14,532 4% (4)% Financial services 5,658 2,881 96% 81% Hardware, software and 17% 8% related technology sales (49,930) (42,524) Corporate/ Eliminations (9,789) (11,114) (12)% (19)% Total operating income $37,428 $69,811 (46)% (51)% Operating income margin (%) SA transaction-based 40% 55% activities International transaction- based activities 2% - International transaction- based activities excluding 15% - amortization Smart card accounts 45% 45% Financial services 77% 72% Hardware, software and related technology sales (113)% (80)% Overall operating margin 11% 25% (1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during year to date fiscal 2011 also prevailed during year to date fiscal 2010. Net 1 UEPS Technologies, Inc. Attachment B Reconciliation of GAAP net income (loss) to fundamental net income: Three months ended June 30, 2011 and 2010 Net EPS (LPS), Net EPS(LPS), Income (loss) basic Income (loss) basic (USD`000) (USD) (ZAR`000) (ZAR) 2011 2010 20 2010 2011 2010 201 2010 11 1
GAAP 6,832 (17,007) 15 (37) 46,517 (128,631) 103 (283) Amortizat 3,646 2,569 24,827 19,433 ion of intangibl e assets(1) Custome 2,837 2,520 19,318 19,060 r relatio nships Softwar 13,269 7,046 e and 1,949 932 unpaten ted technol ogy Tradema 218 89 1,482 679 rks Databas 74 67 507 507 e Deferre (1,432) (1,039) (9,749) (7,859) d tax benefit Stock- (2,873) 1,416 (19,561) 10,710 based charge(2) Impairmen - 37,378 - 282,709 t loss, net Restructu 637 - ring 4,337 - charges at Net1 UTA Facility 118 - 803 - fees for KSNET debt Valuation 8,856 - 60,298 - allowance related to Net1UTA DTA Acquisiti 391 327 2,664 2,473 on- related costs. Fundament 17,607 24,683 39 54 119,885 186,694 266 411 al
(1) Amortization of acquisition-related intangibles, net of deferred tax benefit. (2) Includes stock-based compensation charges related to options and non-vested stock awards. Year ended June 30, 2011 and 2010 Net EPS, Net EPS, income basic income basic (USD`000) (USD) (ZAR`000) (ZAR) 2011 2010 2011 2010 2011 2010 2011 2010 GAAP 2,647 38,990 6 84 18,518 296,686 41 642
Amortizat 15,708 10,261 109,898 78,082 ion of intangibl e assets(1) Custome 13,397 12,297 93,731 93,575 r relatio nships Softwar e and 7,301 1,351 51,079 10,284 unpaten ted technol ogy Tradema 704 357 4,926 2,716 rks Databas 290 133 2,026 1,013 e Deferre (5,984) (3,877) (41,864) (29,506) d tax benefit Stock- 1,717 5,670 12,012 43,145 based charge(2) Gain on (114) - (798) - FEC, net of tax Impairmen 31,339 37,378 219,254 284,420 t loss, net Restructu 777 - 5,436 - ring charges at Net1 UTA Facility 1,953 - 13,664 - fees for KSNET debt Valuation allowance 8,856 - 61,958 - related to Net1UTA DTA Acquisiti 6,049 615 42,319 4,680 on- related costs. Fundament 68,932 92,914 153 201 482,261 707,013 1,068 1,529 al (1) Amortization of acquisition-related intangibles, net of deferred tax benefit. (2) Includes stock-based compensation charges related to options and non-vested stock awards. Net 1 UEPS Technologies, Inc. Attachment C Reconciliation of net income (loss) used to calculate earnings per share basic and diluted and headline earnings per share basic and diluted: Three months ended June 30, 2011 and 2010 2011 2010
Net income (loss) (USD`000) 6,832 (17,007) Adjustments: Impairment loss (USD`000) - 37,378 (Profit) Loss on sale of property, plant and 5 63 equipment (USD`000) Tax effects on above (USD`000) (2) (22) Net income used to calculate headline earnings 6,835 20,412 (USD`000) Weighted average number of shares used to calculate 45,136 45,378 net income per share basic earnings and headline earnings per share basic earnings (`000) Weighted average number of shares used to calculate 45,164 45,560 net income per share diluted earnings and headline earnings per share diluted earnings (`000) Headline earnings per share: Basic earnings - common stock and linked units, in US 15 45 cents Diluted earnings - common stock and linked units, in 15 45 US cents Year ended June 30, 2011 and 2010 2011 2010 Net income (USD`000) 2,647 38,990 Adjustments: Impairment loss (USD`000) 41,771 37,378 (Profit) Loss on sale of property, plant and equipment (USD`000) (5) 69 Tax effects on above (USD`000) (10,430) (24) Net income used to calculate headline earnings 33,983 76,413 (USD`000) Weighted average number of shares used to calculate net income per share basic earnings and headline 45,175 46,245 earnings per share basic earnings (`000) Weighted average number of shares used to calculate net income per share diluted earnings and headline 45,231 46,435 earnings per share diluted earnings (`000) Headline earnings per share: Basic earnings - common stock and linked units, in US 75 165 cents Diluted earnings - common stock and linked units, in 75 165 US cents Johannesburg 26 August 2011 Sponsor to Net1 Deutsche Securities (SA) (Proprietary) Limited Date: 26/08/2011 09:22:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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