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Net 1 UEPS Technologies, Inc. Reports 2012 Fourth Quarter and Full Year Results
Net 1 UEPS Technologies, Inc. Reports 2012 Fourth Quarter and Full Year Results
• Commenced grant payment process for approximately 9.2 million beneficiaries nationally on April 2, 2012;
• Revenue of $107.6 million, increased 30% in constant currency;
• Fundamental EPS of $0.27 including $9.1 million of direct implementation costs, decreased 21% in constant currency.
JOHANNESBURG, August 23, 2012 – Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today announced results
for the fourth quarter and full-year fiscal 2012.
Summary Financial Metrics
Three months ended June 30,
% change % change
2012 2011 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 107,616 97,368 11% 30%
GAAP net (loss) income (7,977) 6,832 (217%) (238%)
Fundamental net income (1) 12,208 17,607 (31%) (20%)
GAAP (loss) earnings per share ($) (0.17) 0.15 (216%) (237%)
Fundamental earnings per share ($) (1) 0.27 0.39 (31%) (21%)
Fully-diluted shares outstanding (‘000’s) 45,568 45,181 1%
Average period USD/ ZAR exchange rate 8.03 6.81 18%
Fiscal year ended June 30,
% change % change
2012 2011 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 390,264 343,420 14% 25%
GAAP net income 44,651 2,647 1,587% 1,761%
Fundamental net income (1) 64,094 68,932 (7%) 2%
GAAP earnings per share ($) 0.99 0.06 1,586% 1,760%
Fundamental earnings per share ($) (1) 1.42 1.53 (7%) 2%
Fully-diluted shares outstanding (‘000’s) 45,246 45,231 -
Average period USD/ ZAR exchange rate 7.72 7.00 10%
(1) Fundamental net income and earnings per share is a non-GAAP measure and is described below under “Use of Non-
GAAP Measures—Fundamental net income and fundamental earnings per share.” See Attachment B for a reconciliation of
GAAP net income (loss) to fundamental net income and earnings (loss) per share.
Factors impacting comparability of our Q4 2012 and Q4 2011 results
• Unfavorable impact from the strengthening of the US dollar: The US dollar appreciated by 18% against the ZAR
during the fourth quarter of fiscal 2012 which negatively impacted our reported results;
• Higher revenues and implementation costs paid as a result of our new contract with SASSA: We commenced
generating fees under our new SASSA contract during Q4 2012 and incurred additional implementation and staff
costs of $9.1 million;
• Fair value charge resulting from issue of equity instrument pursuant to BBBEE transaction: We recorded a fair
value charge of $14.2 million related to our BBBEE transaction which negatively impacted our reported results
during Q4 2012; and
• Capital gain paid related to intercompany transaction: We incurred a non-recurring capital gains tax of $1.5
million resulting from an intercompany capital transaction in South Africa.
Comments and Outlook
“I am delighted with our overall performance this quarter as it should demonstrate that the Company is now firmly on its way
to rekindling its previous appeal, as we overcome the challenges we have faced over the last few years,” said Dr. Serge
Belamant, Chairman and Chief Executive Officer of Net1. “All our business units, specifically those that can have
meaningful impact, including CPS, KSNET, VCC, MediKredit and NUETS have a robust pipeline of new and existing
opportunities, which in turn should begin to deliver improving financial contributions in the short-to-medium term. Our
technology is well placed to advance our business in many markets such as welfare systems, mobile-based payments, claims
adjudication, financial inclusion and UEPS/EMV card issuing. I am bullish on the future prospects of our Company and
believe we have all the tools required to create long-term value for our shareholders,” he concluded.
“We expect our quarterly performance in fiscal 2013 to improve sequentially as we progress through the year, although
quarterly results may still be lumpy given the timing and quantum of investments and start up costs to be incurred to ensure
the implementation of our SASSA contract,” said Herman Kotzé, Chief Financial Officer of Net1. “For fiscal year 2013, we
expect fundamental earnings per share to be at least $1.49, assuming the constant currency base of ZAR 7.72/$1 and using
our fiscal 2012 share count of 45 million shares. As always, fundamental earnings exclude amortization of intangibles, stock-
based charges and unusual non-recurring items,” he concluded.
Second phase of our new SASSA contract implementation
We successfully initiated the national grant payment process for approximately 9.2 million beneficiaries on April 2, 2012
having commenced implementation during Q3 2012. The implementation will be conducted in two phases. The first phase
involved issuing approximately 2.5 million MasterCard-branded debit cards to beneficiaries that we did not serve under our
previous contract, in order to establish the payment process to pay all social grants in the country. The second phase
commenced in early July 2012 and requires the re-registration of all 9.2 million grant recipients.
During Q4 2012 we incurred direct implementation expenses of approximately $9.1 million including staff, travel, premises
hire for enrollment, stationery, delivery and advertising costs. We also incurred implementation related capital expenditures
of approximately $13.4 million during Q4 2012. We continue to anticipate cumulative capital expenditures of $45 - $50
million tied to the implementation for our new national contract.
Results of Operations by Segment and Liquidity
Our frequently asked questions and operating metrics will be updated and posted on our website (www.net1.com).
South African transaction-based activities
Segment revenue was $58.4 million in Q4 2012, up 16% compared with Q4 2011 in USD and up 37% on a constant currency
basis. In ZAR, the increase in segment revenue was largely due to higher SASSA-related fees resulting from the payment of
grants nationwide, more prepaid airtime sales resulting primarily from the Eason acquisition and increased transaction
volumes in FIHRST. Segment operating income margin was 9% and 41%, respectively, and declined primarily due to
implementation costs and the inclusion of increased low-margin prepaid airtime sales as well as Eason intangible asset
amortization. Excluding amortization of acquisition-related intangibles, Q4 2012 segment operating income margin was 12%,
compared to 44% during Q4 2011.
International transaction-based activities
KSNET continues to contribute the majority of our revenues in this operating segment. Segment revenue was $31.0 million in
Q4 2012, up 11% compared with Q4 2011 in USD and 31% on a constant currency basis. Operating margin for the segment
is lower than most of our South African transaction-based businesses and was negatively impacted by start-up expenditures
related to our XeoHealth launch in the United States, MVC activities at Net1 UTA and on-going losses at Net1 Virtual Card,
but these expenses were partially offset by revenue contributions from KSNET, and to a lesser extent from XeoHealth and
NUETS’ initiative in Iraq. Excluding the amortization of intangibles but including the start-up costs referenced above, Q4
2012 operating income margin was 10% compared to 13% during Q4 2011.
Smart card accounts
Segment revenue was $8.2 million in Q4 2012, down 5% compared with Q4 2011 in USD but up 12% on a constant currency
basis, Q4 2012 segment operating income margin was 28%, compared to 45% during Q4 2011. We have reduced our pricing
for smart card accounts after taking into consideration the lower price and higher volumes of the new SASSA contract. The
new pricing, effective from April 1, 2012, reduced the average revenue from R5.50 to R4.00 and the operating income
margin from 45% to 29%.
Financial services
UEPS-based lending contributes the majority of the revenue and operating income in this operating segment. Segment
revenue was $1.8 million in Q4 2012, down 22% compared with Q4 2011 in USD and 8% lower on a constant currency
basis, principally due to a decrease in lending activities. Q4 2012 segment operating income margin was 54% compared with
72% during Q4 2011 and decreased primarily due to start-up expenditures incurred by SmartLife.
Hardware, software and related technology sales
Segment revenue was $8.2 million in Q4 2012, down 1% compared with Q4 2011 in USD and 17% higher on a constant
currency basis. In constant currency, the increase in revenue and operating income was due to improved software sales and
cost containment at Net1 UTA. Excluding amortization of all intangibles, and the intangible asset impairment in Q4 2011,
segment operating income margin was 25% compared to an operating loss margin of 23% during Q4 2011.
Cash flow and liquidity
At June 30, 2012, we had cash and cash equivalents of $39 million, down from $95 million at June 30, 2011. The decrease in
cash was due to a strengthening in the USD against the ZAR, the implementation of our new SASSA contract, the repayment
of principal under our KSNET debt and the acquisition of SmartLife and the Eason prepaid electricity and airtime business,
offset by cash generated from operations and a net settlement received from the former shareholders of KSNET. For Q4
2012, net cash used by operating activities was $22.6 million, compared net cash generated of $12.8 million in Q4 2011.
Excluding the impact of interest paid under our Korean debt, the decrease in cash provided by operating activities resulted
from significant implementation costs related to our SASSA contract and, due to the timing of the opening of the July 2012
pay cycle, as we did not have any significant amounts due to non-prefunded merchants participating in our merchant
acquiring system as of June 30, 2012. Capital expenditures for Q4 2012 and 2011 were $16 million and $6 million,
respectively, and have increased primarily due to acquisition of payment vehicles and other equipment for our new SASSA
contract and payment processing terminals in Korea.
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
Fundamental net income and earnings per share is GAAP net income (loss) and earnings (loss) per share to adjusted for (1)
the amortization of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3)
unusual non-recurring items, including the effects of a change in South African tax law and the creation of a valuation
allowance related to foreign tax credits, equity instrument charge related to our BBBEE transaction, capital gains taxes paid
resulting from an intercompany capital transaction in South Africa, intangible asset impairments, amortization of KSNET
debt facility fees, restructuring charges, profit on liquidation of SmartSwitch Nigeria and transaction-related costs.
Management believes that the fundamental net income and earnings per share metric enhances 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 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 the loss (profit) on sale of property, plant and
equipment, net of related tax effects, the loss attributable to the sale of 10% of SmartLife, the profit on liquidation of
SmartSwitch Nigeria and the impairment of intangible assets. Attachment C presents the reconciliation between our net
income used to calculate earnings per share basic and diluted and HEPS basic and diluted.
Conference Call
We will host a conference call to review Q4 2012 results on August 24, 2012, 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 14, 2012.
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 and Iraq. In addition, Net1’s
proprietary Mobile Virtual Card technology offers secure mobile payments and banking services in developed and emerging
countries while its MediKredit and XeoHealth subsidiaries provide its proprietary 5010 and ICD-10 compliant real-time
claims adjudication system.
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 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
Three months ended Fiscal year ended (A)
June 30, June 30,
2012 2011 2012 2011
(In thousands, except per share data) (In thousands, except per share data)
REVENUE $ 107,616 $ 97,368 $ 390,264 $ 343,420
EXPENSE
Cost of goods sold, IT processing, servicing and
support 41,395 33,307 141,000 109,858
Selling, general and administration 45,107 27,985 137,404 119,692
Equity instrument issued pursuant to BBBEE
transaction 14,211 - 14,211 -
Depreciation and amortization 9,305 9,483 36,499 34,671
Impairment of intangibles - - 41,771
OPERATING (LOSS) INCOME (2,402) 26,593 61,150 37,428
INTEREST INCOME 2,595 1,704 8,576 7,654
INTEREST EXPENSE 2,130 2,523 9,345 8,672
INCOME (LOSS) BEFORE INCOME TAXES (1,937) 25,774 60,381 36,410
INCOME TAX EXPENSE 6,151 19,085 15,936 33,525
NET (LOSS) INCOME FROM CONTINUING
OPERATIONS BEFORE EARNINGS (LOSS)
FROM EQUITY-ACCOUNTED INVESTMENTS (8,088) 6,689 44,445 2,885
EARNINGS (LOSS) FROM EQUITY-
ACCOUNTED INVESTMENTS 120 170 220 (339)
NET (LOSS) INCOME (7,968) 6,859 44,665 2,546
LESS (ADD) NET INCOME (LOSS)
ATTRIBUTABLE TO NON-CONTROLLING
INTEREST 9 27 14 (101)
NET (LOSS) INCOME ATTRIBUTABLE TO NET1 $ (7,977) $ 6,832 $ 44,651 $ 2,647
Net (loss) income per share attributable to Net1
shareholders, in United States dollars
Basic ($0.17) $0.15 $0.99 $0.06
Diluted ($0.17) $0.15 $0.99 $0.06
(A) – Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(A) (A)
June 30, June 30,
2012 2011
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 39,123 $ 95,263
Pre-funded social welfare grants receivable 9,684 4,579
Accounts receivable, net 101,918 82,780
Finance loans receivable 8,141 8,141
Deferred expenditure on smart cards 4,587 51
Inventory 6,192 6,725
Deferred income taxes 5,591 15,882
Total current assets before settlement assets 175,236 213,421
Settlement assets 409,166 186,668
Total current assets 584,402 400,089
PROPERTY, PLANT AND EQUIPMENT, NET 52,616 35,807
EQUITY-ACCOUNTED INVESTMENTS 1,508 1,860
GOODWILL 182,737 209,570
INTANGIBLE ASSETS, NET 93,930 119,856
OTHER LONG-TERM ASSETS 40,700 14,463
TOTAL ASSETS 955,893 781,645
LIABILITIES
CURRENT LIABILITIES
Accounts payable 13,172 11,360
Other payables 42,157 71,265
Current portion of long-term borrowings 14,019 15,062
Income taxes payable 6,019 6,709
Total current liabilities before settlement obligations 75,367 104,396
Settlement obligations 409,166 186,668
Total current liabilities 484,533 291,064
DEFERRED INCOME TAXES 20,988 52,785
LONG-TERM BORROWINGS 79,760 110,504
OTHER LONG-TERM LIABILITIES 25,791 1,272
TOTAL LIABILITIES 611,072 455,625
COMMITMENTS AND CONTINGENCIES
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury - June: 45,548,902; June:
45,152,805 59 59
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 153,360 136,430
TREASURY SHARES, AT COST: June: 13,455,090; June: 13,274,434 (175,823) (174,694)
ACCUMULATED OTHER COMPREHENSIVE LOSS (75,722) (33,779)
RETAINED EARNINGS 439,641 394,990
TOTAL NET1 EQUITY 341,515 323,006
NON-CONTROLLING INTEREST 3,306 3,014
TOTAL EQUITY 344,821 326,020
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 955,893 $ 781,645
(A) – Derived from audited financial statements
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
Three months ended Fiscal year ended
June 30, June 30,
2012 2011 2012 2011
(In thousands) (In thousands)
Cash flows from operating activities
Net (loss) income $ (7,968) $ 6,859 $ 44,665 $ 2,546
Depreciation and amortization 9,305 9,483 36,499 34,671
Impairment of intangible asset - - - 41,771
(Earnings) Loss from equity-accounted investments (120) (170) (220) 339
Fair value adjustment (1,392) 73 (3,375) 728
Interest payable 4,354 941 8,823 2,487
Facility fee amortized (126) 117 389 1,958
(Profit) Loss on disposal of property, plant and
equipment (7) - (64) (5)
Net loss (profit) on sale of 10% of SmartLife (2012)
and VinaPay (2011) - 5 81 (14)
Profit on liquidation of subsidiary - (14) (3,994) -
Realized loss on sale of SmartLife investments - - 25 -
Stock compensation charge, net of forfeitures 893 - 2,775 1,720
Fair value of BBBEE equity instrument granted 14,211 (2,873) 14,211 -
(Increase) Decrease in accounts and finance loans
receivable, and pre-funded grants receivable (16,653) (576) (31,974) (3,568)
(Increase) Decrease in deferred expenditure on smart
cards (4,484) (5,640) (4,554) -
(Increase) Decrease in inventory (456) 452 (717) 289
Decrease in accounts payable and other payables (16,731) 1,242 (18,534) (1,041)
Decrease in taxes payable (2,147) (7,710) (7,483) (1,800)
Decrease in deferred taxes (1,257) 10,580 (16,147) (13,858)
Net cash (used in) provided by operating activities (22,578) 12,769 20,406 66,223
Cash flows from investing activities
Capital expenditures (15,702) (5,595) (39,167) (15,053)
Proceeds from disposal of property, plant and
equipment 379 48 764 76
Acquisitions, net of cash acquired - - (6,154) -
Settlement from former shareholders of KSNET - - 4,945 -
Acquisition of available-for-sale securities - - (948) (230,225)
Purchase of investments related to SmartLife - - (2,320) -
Proceeds from maturity of investments related to
SmartLife - - 2,321 -
Proceeds from disposal of VinaPay - 150 - 150
Acquisition of and advance of loans to equity-
accounted investments - - - (375)
Repayment of loan by equity-accounted investment 29 35 122 475
Other investing activities, net (1) 35 (1) 35
Net change in settlement assets (381,062) (38,980) (252,101) (78,768)
Net cash used in investing activities (396,357) (44,307) (292,539) (323,685)
Cash flows from financing activities
Long-term borrowings (repaid) obtained (7,145) - (19,172) 116,353
Acquisition of treasury stock - (1,023) (1,129) (1,023)
Proceeds on sale of 10% of SmartLife - - 107 -
Loan portion related to options - - - 20
Payment of facility fee - - - (3,088)
Repayment of short-term borrowings - - - (6,705)
Repayment of bank overdraft - (462) - (462)
Acquisition of remaining 19.9% of Net1 UTA - - - (594)
Net change in settlement obligations 381,062 38,980 252,101 78,768
Net cash generated from financing activities 373,917 37,495 231,907 183,269
Effect of exchange rate changes on cash (4,109) 416 (15,914) 15,714
Net (decrease) increase in cash and cash
equivalents (49,127) 6,373 (56,140) (58,479)
Cash and cash equivalents – beginning of period 88,250 88,890 95,263 153,742
Cash and cash equivalents – end of period $ 39,123 $ 95,263 $ 39,123 $ 95,263
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating (loss) income and operating margin:
Three months ended June 30, 2012 and 2011 and March 31, 2012
Change – constant
Change - actual exchange rate(1)
Q4 ‘12 Q4 ‘12 Q4 ‘12 Q4 ‘12
Key segmental data, in ’000, except vs vs vs vs
margins Q4 ‘12 Q4 ‘11 Q3 ‘12 Q4‘11 Q3 ‘12 Q4 ‘11 Q3 ‘12
Revenue:
SA transaction-based activities .......... $58,434 $50,267 $46,423 16% 26% 37% 29%
International transaction-based
activities ............................................. 31,003 27,900 28,188 11% 10% 31% 13%
Smart card accounts ........................... 8,189 8,623 7,558 (5%) 8% 12% 11%
Financial services ............................... 1,777 2,278 2,289 (22%) (22%) (8%) (21%)
Hardware, software and related
technology sales ................................. 8,213 8,300 6,206 (1%) 32% 17% 35%
Total consolidated revenue .......... $107,616 $97,368 $90,664 11% 19% 30% 21%
Consolidated operating (loss) income:
SA transaction-based activities .......... $5,181 $20,776 $8,694 (75%) (40%) (71%) (39%)
Operating income excluding
amortization.................................... 6,809 22,241 10,452 (69%) (35%) (64%) (33%)
Amortization of intangible assets ... (1,628) (1,465) (1,758) 11% (7%) 31% (5%)
International transaction-based
activities ............................................. 137 75 195 83% (30%) 116% (28%)
Operating income excluding
amortization.................................... 3,130 3,521 3,387 (11%) (8%) 5% (5%)
Amortization of intangible assets ... (2,993) (3,446) (3,192) (13%) (6%) 2% (4%)
Smart card accounts ........................... 2,333 3,919 3,435 (40%) (32%) (30%) (31%)
Financial services ............................... 951 1,634 1,248 (42%) (24%) (31%) (22%)
Hardware, software and related
technology sales ................................. 2,074 (1,898) (1,301) nm nm nm nm
Operating income excluding
amortization.................................... 2,164 (1,731) (1,209) nm nm nm nm
Amortization of intangible assets ... (90) (167) (92) (46%) (2%) (36%) 0%
Corporate/ Eliminations ..................... (13,078) 2,087 207 nm nm nm nm
Total operating (loss) income ....... $(2,402) $26,593 $12,478 nm nm nm nm
Operating income margin (%)
SA transaction-based activities .......... 9% 41% 19%
International transaction-based
activities ............................................. 0% 0% 1%
International transaction-based
activities excluding amortization........ 10% 13% 12%
Smart card accounts ........................... 29% 45% 45%
Financial services ............................... 54% 72% 55%
Hardware, software and related
technology sales ................................. 25% (23%) (21%)
Overall operating margin.................... (2%) 27% 14%
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during
Q4 2012 also prevailed during Q4 2011 and Q3 2012.
Fiscal year ended June 30, 2012 and 2011
Change –
constant
Change - exchange
actual rate(1)
F2012 F2012
Key segmental data, in ’000, except vs vs
margins F2012 F2011 F2011 F2011
Revenue:
SA transaction-based activities .......... $201,207 $189,206 6% 17%
International transaction-based
activities ............................................. 118,281 70,382 100% 100%
Smart card accounts ........................... 31,263 33,315 (6%) 4%
Financial services ............................... 8,121 7,350 10% 22%
Hardware, software and related
technology sales ................................. 31,392 43,167 (27%) (20%)
Total consolidated revenue .......... $390,264 $343,420 14% 25%
Consolidated operating income (loss):
SA transaction-based activities .......... $49,824 $75,668 (34%) (27%)
Operating income excluding
amortization.................................... 55,995 81,370 (31%) (24%)
Amortization of intangible assets ... (6,171) (5,702) 8% 19%
International transaction-based
activities ............................................. 1,257 (220) (671%) (730%)
Operating income excluding
amortization.................................... 14,272 8,382 70% 88%
Amortization of intangible assets ... (13,015) (8,602) 51% 67%
Smart card accounts ........................... 12,820 15,140 (15%) (7%)
Financial services ............................... 4,636 4,999 (7%) 2%
Hardware, software and related
technology sales ................................. 3,619 (48,372) (107%) (108%)
Operating income excluding
amortization.................................... 3,990 787 407% 459%
Impairment of intangible assets ...... - (41,771) nm nm
Amortization of intangible assets ... (371) (7,388) (95%) (94%)
Corporate/ Eliminations ..................... (11,006) (9,787) 12% 24%
Total operating income ................. $61,150 $37,428 63% 80%
Operating income margin (%)
SA transaction-based activities .......... 25% 40%
International transaction-based
activities ............................................. 1% (0%)
International transaction-based
activities excluding amortization........ 12% 12%
Smart card accounts ........................... 41% 45%
Financial services ............................... 57% 68%
Hardware, software and related
technology sales ................................. 12% (112%)
Overall operating margin.................... 16% 11%
(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange
rate that prevailed during fiscal 2012 also prevailed during fiscal 2011.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net (loss) income and (loss) earnings per share, basic, to fundamental net income and
earnings per share, basic:
Three months ended June 30, 2012 and 2011
(L)EPS, (L)EPS,
Net (loss) income basic Net (loss) income basic
(USD’000) (USD) (ZAR’000) (ZAR)
2012 2011 2012 2011 2012 2011 2012 2011
GAAP...................................................... (7,977) 6,832 (0.17) 0.15 (64,078) 46,517 (1.41) 1.03
Intangible asset amortization, net....... 3,532 3,646 28,381 24,828
Stock-based compensation charge ..... 893 (2,873) 7,173 (19,561)
Facility fees for KSNET debt ............ 84 118 675 803
BBBEE charge ................................ 14,211 - 112,066 -
Capital taxes paid ............................... 1,465 11,768
Valuation allowances ......................... - 8,856 - 60,298
Restructuring charges at Net1UTA .... - 637 - 4,337
Acquisition-related costs .................... - 391 - 2,664
Fundamental ............................ 12,208 17,607 0.27 0.39 95,985 119,886 2.11 2.66
Fiscal year ended June 30, 2012 and 2011
Net income EPS, basic Net Income EPS, basic
(USD’000) (USD) ( ZAR’000) (ZAR)
2012 2011 2012 2011 2012 2011 2012 2011
GAAP.................................................. 44,651 2,647 0.99 0.06 344,643 18,518 7.63 0.41
Intangible asset amortization, net... 14,602 15,708 112,719 109,897
Stock-based compensation charge . 2,775 1,717 21,419 12,012
Facility fees for KSNET debt ........ 389 1,953 3,003 13,664
Change in tax law .......................... (18,315) - (150,373) -
BBBEE charge ............................... 14,211 - 112,066 -
Valuation allowances ..................... 8,232 8,856 67,588 61,958
Profit on liquidation of subsidiary . (3,994) - (30,828) -
Capital taxes paid ........................... 1,465 - 11,308 -
Loss on sale of 10% of SmartLife .. 78 - 602 -
Intangible assets impairment, net ... - 31,339 - 219,254
Acquisition-related costs. ............... - 6,049 - 42,319
Restructuring charges at Net1UTA - 777 - 5,436
Gain on FEC, net. .......................... - (114) - (798)
Fundamental ........................ 64,094 68,932 1.42 1.53 492,147 482,260 10.89 10.68
Net 1 UEPS Technologies, Inc.
Attachment C
Reconciliation of net income (loss) used to calculate earnings (loss) per share basic and diluted and headline earnings
per share basic and diluted:
Three months ended June 30, 2012 and 2011
2012 2011
Net (loss) income (USD’000) ............................................................................................... (7,977) 6,832
Adjustments: ..........................................................................................................................
(Profit) Loss on sale of property, plant and equipment .................................................... (7) 5
Tax effects on above ........................................................................................................ 2 (2)
Net (loss) income used to calculate headline earnings (USD’000) ....................................... (7,982) 6,835
Weighted average number of shares used to calculate net (loss) income per share basic
(loss) earnings and headline (loss) earnings per share basic (loss) earnings (‘000) .............. 45,498 45,452
Weighted average number of shares used to calculate net (loss) income per share diluted
(loss) earnings and headline (loss) earnings per share diluted (loss) earnings (‘000)............ 45,568 45,559
Headline (loss) earnings per share: ........................................................................................
Basic, in USD .................................................................................................................. (0.17) 0.15
Diluted, in USD ............................................................................................................... (0.17) 0.15
Fiscal year ended June 30, 2012 and 2011
2012 2011
Net income (USD’000).......................................................................................................... 44,651 2,647
Adjustments: ..........................................................................................................................
Profit on liquidation of subsidiary ................................................................................... (3,994) -
Loss on sale of 10% of SmartLife .................................................................................... 78 -
Intangible assets impairment............................................................................................ - 41,771
Profit on sale of property, plant and equipment ............................................................... (64) (5)
Tax effects on above ........................................................................................................ 18 (10,430)
Net income used to calculate headline earnings (USD’000) ................................................. 40,689 33,983
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 45,186 45,175
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 45,246 45,231
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 0.90 0.75
Diluted, in USD ............................................................................................................... 0.90 0.75
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