Wrap Text
Net 1 UEPS Technologies, Inc. Reports Second Quarter 2013 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 Second Quarter 2013 Results
• Enrolled more than 9.5 million citizens in total by December 31, 2012;
• Revenue of $111 million, increased 29% in constant currency; and
• Fundamental EPS of $0.18 including $21 million of direct implementation and smart card costs.
JOHANNESBURG, February 8, 2013 – Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today announced results
for the second quarter fiscal 2013.
Summary Financial Metrics
Three months ended December 31,
% change % change
2012 2011 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 111,442 92,058 21% 29%
GAAP net income 2,629 25,094 (90%) (89%)
Fundamental net income (1) 8,051 17,677 (54%) (51%)
GAAP earnings per share ($) 0.06 0.56 (90%) (89%)
Fundamental earnings per share ($) (1) 0.18 0.39 (100%) (52%)
Fully-diluted shares outstanding (‘000’s) 45,567 44,967 1%
Average period USD/ ZAR exchange rate 8.74 8.18 7%
Six months ended December 31,
% change % change
2012 2011 in USD in ZAR
(All figures in USD ‘000s except per share data)
Revenue 223,124 191,984 16% 26%
GAAP net income 9,373 44,862 (79%) (77%)
Fundamental net income (1) 19,559 39,309 (50%) (45%)
GAAP earnings per share ($) 0.21 1.00 (79%) (78%)
Fundamental earnings per share ($) (1) 0.43 0.87 (100%) (46%)
Fully-diluted shares outstanding (‘000’s) 45,578 45,026 1%
Average period USD/ ZAR exchange rate 8.46 7.82 8%
(1) Fundamental net income and earnings per share are non-GAAP measures and are 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 to fundamental net income and earnings per share.
Factors impacting comparability of our Q2 2013 and Q2 2012 results
• Unfavorable impact from the strengthening of the US dollar: The US dollar appreciated by 7% against the ZAR
during Q2 2013 which negatively impacted our reported results;
• SASSA implementation costs: We continued implementing our SASSA contract during Q2 2013 and incurred
additional implementation and staff costs; and
• Fiscal 2012 impacted by change in South African tax law: As a result of the change in South African tax law that
replaced STC with a dividends withholding tax, Q2 2012 tax expense included a net taxation benefit of $11.8
million, as we recorded a $20.0 million deferred tax benefit which was offset by an $8.2 million foreign tax credit
valuation allowance.
Comments and Outlook
“We enrolled 12 million citizens by the end of January as part of our SASSA implementation and remain on track to
complete bulk enrollment by the end of March 2013,” said Dr. Serge Belamant, Chairman and Chief Executive Officer of
Net1. “We continue to cooperate with the DOJ and SEC on their investigations, but as a result of these investigations, we are
experiencing some adverse impact from the damage caused to our reputation, including our ability to execute certain aspects
of our strategic plan. The Supreme Court will hear the appeal of the August 2012 High Court judgment on February 15. We
believe we have a strong case and look forward to presenting our arguments to the Supreme Court,” he concluded.
“The successful implementation for SASSA is a one-off event and integral for the smooth transition and operation of South
Africa's social welfare program. Given the critical importance of this roll out, and the higher number of beneficiaries required
to be enrolled in the same time frame, our implementation costs are materially but proportionally higher than anticipated,”
said Herman Kotzé, Chief Financial Officer of Net1. “As a result, in fiscal 2013, we expect fundamental earnings per share to
be at least $0.95 assuming a constant currency base of ZAR 7.72/$1 and using our fiscal 2012 share count of 45 million
shares,” he concluded.
Progress of second phase of our SASSA contract implementation
We commenced the second phase of the enrollment process in early July 2012 and plan to be substantially complete by
March 2013, in accordance with the enrollment plan agreed with SASSA. Under our agreement with SASSA, we have to
enroll both the grant recipients (those individuals who receive the actual payment and are issued with our UEPS/EMV smart
card), as well as the grant beneficiaries (those individuals who have qualified for the social grant, but are not necessarily the
recipient of the grant). While the number of grant recipients on a national basis has consistently been quantified by SASSA at
9.4 million individuals, the number of beneficiaries is continually being revised by SASSA on an ongoing basis from an
initial estimate of approximately 15.5 million, to the current estimate of approximately 21.6 million. In order to complete the
second phase of the implementation on time, and given the significantly higher number of beneficiaries, we increased the
number of temporary employees that we hired for the entire second quarter of fiscal 2013from 2,500 to approximately 5,500.
The total number of temporary employees is significantly more than the 2,500 we previously expected at the beginning of
fiscal 2013 as the actual number of individuals (grant recipients plus grant beneficiaries) that SASSA has asked us to enroll
has increased substantially. During Q2 2013, we enrolled a further 2.7 million grant recipients and an additional 3.8 million
beneficiaries.
During Q2 2013 we incurred direct implementation expenses of approximately $18.0 million (ZAR 157.1 million) including
staff, travel, temporary infrastructure hire, fixed premises hire for enrollment and stationery costs. We are unable to quantify
the value of time spent by our executives and pension and welfare operations managers and staff that service the five
provinces in which we operated under the previous contract and that have assisted in the implementation of the national
contract. Our implementation expenditure during Q2 2013 was materially higher than we had previously anticipated due to
the significant number of grant recipients and beneficiaries that we enrolled during the quarter, especially in the rural and
deep rural areas. In order to meet our enrollment obligations in accordance with the timetable agreed with SASSA we
incurred higher than anticipated temporary infrastructure hire, travel and staff expenditures. We expect this level of
expenditure to reduce slightly during the third quarter of fiscal 2013, as our efforts are now focused primarily on urban areas.
We also expensed $3.0 million (ZAR 26.6 million) related to the cost of the UEPS/EMV smart cards issued during the
quarter, which is not included in the $18.0 million (ZAR 157.1 million) above.
We also incurred approximately $0.7 million in capital expenditures related to the implementation during Q2 2013. Since
inception of the implementation we have incurred cumulative capital expenditures of $25.2 million. We anticipate cumulative
capital expenditures related to the ramp of our national contract to be in the $30 million range. We have lowered our expected
capital expenditure range related to the implementation of our SASSA contract given the decision to expense the cost of
smart cards rather than capitalize those costs.
When we signed our Service Level Agreement with SASSA in February 2012, we anticipated total cash outlays of
approximately $68 to $95 million from February 2012 through March 2013, including direct implementation costs of $5-10
million per quarter, as well as capital expenditures of $45-50 million, in order to build our infrastructure, register 15.6 million
beneficiaries and roll out our biometrically secure UEPS/EMV technology nationally. With one more quarter of bulk
enrollment remaining, our total cash outlay to date has been $74 million for direct implementation expenses, smart card costs
and capital expenditures. We therefore would be in-line with the mid-point of our initial total cash outlay range assuming the
volume of enrollments had not changed. Having to register the incremental 6 million people and therefore employ our
temporary staff for longer, should result in our total cash outlay being between $100 and $105 million by March 2013. We
also expect that by the end of the bulk enrollment period, roughly 10-15% of beneficiaries would not have come for re-
registration and therefore we would have to rely on SASSA's efforts to encourage those beneficiaries to re-register, which
would require us to maintain at least some if not all of our enrollment infrastructure for a couple of months in Q4 2013. Given
our enrollment experience to date however, we are unsure of what proportion of un-registered people would ultimately come
for re-registration as some of the remainder may be duplicate recipients or recipients that do not exist altogether.
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 $60.8 million in Q2 2013, up 31% compared with Q2 2012 in USD and up 40% on a constant currency
basis. In ZAR, the increases in segment revenue were primarily due to higher revenues earned under our new SASSA
contract. Segment operating income margin was 3% and 34%, respectively, and declined primarily due to SASSA
implementation costs. Excluding amortization of acquisition-related intangibles, Q2 2013 segment operating income margin
was 6%, compared to 38% during Q2 2012.
International transaction-based activities
KSNET continues to contribute the majority of our revenues in this operating segment. Segment revenue was $33.1 million in
Q2 2013, up 15% compared with Q2 2012 in USD and 23% 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 continued competition
in the Korean marketplace but was partially offset by increased revenue contributions from KSNET, NUETS’ initiative in
Iraq and SmartSwitch Botswana and favorable currency movement between the Korean won and the US dollar. Excluding the
amortization of intangibles but including the start-up costs referenced above, Q2 2013 operating income margin was 11%
compared to 12% during Q2 2012.
Smart card accounts
Segment revenue was $8.2 million in Q2 2013, up 13% compared with Q2 2012 in USD and 21% on a constant currency
basis. Q2 2013 segment operating income margin was 29%, compared to 45% during Q2 2012. We have reduced our pricing
for smart card accounts after taking into consideration the lower price and higher volumes of the new SASSA contract.
Financial services
UEPS-based lending contributes the majority of the revenue and operating income in this operating segment. Segment
revenue was $1.4 million in Q2 2013, down 26% compared with Q2 2012 in USD and 20% lower on a constant currency
basis, principally due to a decrease in lending activities. Q2 2013 segment operating income margin was 72% compared with
53% during Q2 2012 primarily as a result of an improved margin in our UEPS-based lending book resulting from a better
loss experience, offset by start-up expenditures related to Smart Life and other financial services offerings.
Hardware, software and related technology sales
Segment revenue was $7.9 million in Q2 2013, up 4% compared with Q2 2012 in USD and 12% on a constant currency
basis. In constant currency, the increase in revenue and operating income resulted primarily from an increase in royalty fees,
offset by a lower contribution from all other contributors to hardware and software sales. Excluding amortization of all
intangibles, segment operating income margin was 10% compared to 12% during Q2 2012.
Cash flow and liquidity
At December 31, 2012, we had cash and cash equivalents of $38 million, down from $39 million at June 30, 2012. The
decrease in our cash balances from June 30, 2012, was primarily from implementation costs and capital expenditures incurred
to implement our SASSA contract, a scheduled repayment of our Korean debt and the acquisition of Pbel and SmartSwitch
Botswana. For Q2 2013, net cash utilized by operating activities was $6.9 million compared with $6.2 million in Q2 2012.
Excluding the impact of interest received, interest paid under our Korean debt and taxes paid, the decrease in cash provided
by operating activities resulted from significant implementation costs related to our SASSA contract, partially offset by cash
generated from operations. Capital expenditures for Q2 2013 and 2012 were $5.6 million and $5.1 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 and earnings per share 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 amortization of KSNET debt facility fees, as well as (a) in fiscal 2013, DOJ and SEC
investigations-related expenses and acquisition-related costs; and (b) in fiscal 2012, the effects of a change in South African
tax law and the creation of a valuation allowance related to foreign tax credits, the profit on liquidation of SmartSwitch
Nigeria and loss on sale of 10% of Smart Life. 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 adjusted for the profit on sale of property, plant and equipment,
net of related tax effects, the loss attributable to the sale of 10% of Smart Life and the profit on liquidation of SmartSwitch
Nigeria. 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 Q2 2013 results on February 8, 2013, 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 March 1, 2013.
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.
Unaudited Condensed Consolidated Statements of Operations
Three months ended Six months ended
December 31, December 31,
2012 2011 2012 2011
(In thousands, except per share data) (In thousands, except per share data)
REVENUE $ 111,442 $ 92,058 $ 223,124 $ 191,984
EXPENSE
Cost of goods sold, IT processing, servicing
and support 47,227 34,168 92,328 67,112
Selling, general and administration 48,756 28,872 96,008 55,929
Depreciation and amortization 10,487 8,790 20,491 17,869
OPERATING INCOME 4,972 20,228 14,297 51,074
INTEREST INCOME 2,589 1,820 5,680 3,817
INTEREST EXPENSE 2,023 2,355 4,094 4,971
INCOME BEFORE INCOME TAXES 5,538 19,693 15,883 49,920
INCOME TAX EXPENSE 2,971 (5,378) 6,700 5,174
NET INCOME BEFORE EARNINGS FROM
EQUITY-ACCOUNTED INVESTMENTS 2,567 25,071 9,183 44,746
EARNINGS FROM EQUITY-ACCOUNTED
INVESTMENTS 54 19 182 104
NET INCOME 2,621 25,090 9,365 44,850
LESS (ADD) NET INCOME (LOSS)
ATTRIBUTABLE TO NON-CONTROLLING
INTEREST (8) (4) (8) (12)
NET INCOME ATTRIBUTABLE TO NET1 $ 2,629 $ 25,094 $ 9,373 $ 44,862
Net income per share, in United States dollars
Basic earnings attributable to Net1
shareholders $0.06 $0.56 $0.21 $1.00
Diluted earnings attributable to Net1
shareholders $0.06 $0.56 $0.21 $1.00
NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
Unaudited (A)
December 31, June 30,
2012 2012
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 38,116 $ 39,123
Pre-funded social welfare grants receivable 8,024 9,684
Accounts receivable, net of allowances of – December: $1,027; June: $788 105,104 101,918
Finance loans receivable 6,979 8,141
Deferred expenditure on smart cards 8,306 4,587
Inventory 9,869 6,192
Deferred income taxes 5,976 5,591
Total current assets before settlement assets 182,374 175,236
Settlement assets 414,621 409,166
Total current assets 596,995 584,402
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF – December: $85,023; June: $74,242 55,746 52,616
EQUITY-ACCOUNTED INVESTMENTS 1,192 1,508
GOODWILL 193,133 182,737
INTANGIBLE ASSETS, net 92,287 93,930
OTHER LONG-TERM ASSETS, including reinsurance assets 41,010 40,700
TOTAL ASSETS 980,363 955,893
LIABILITIES 38,116
CURRENT LIABILITIES
Accounts payable 12,881 13,172
Other payables 36,960 40,167
Current portion of long-term borrowings 15,221 14,019
Income taxes payable 5,317 6,019
Total current liabilities before settlement obligations 70,379 73,377
Settlement obligations 414,621 409,166
Total current liabilities 485,000 482,543
DEFERRED INCOME TAXES 20,999 20,988
LONG-TERM BORROWINGS 78,989 79,760
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities 25,107 25,791
TOTAL LIABILITIES 610,095 609,082
COMMITMENTS AND CONTINGENCIES
EQUITY
NET1 EQUITY:
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury - December: 45,600,471;
June: 45,548,902 59 59
PREFERRED STOCK
Authorized shares: 50,000,000 with $0.001 par value;
Issued and outstanding shares, net of treasury: December: -; June: - - -
ADDITIONAL PAID-IN-CAPITAL 159,002 155,350
TREASURY SHARES, AT COST: December: 13,455,090; June: 13,455,090 (175,823) (175,823)
ACCUMULATED OTHER COMPREHENSIVE LOSS (65,282) (75,722)
RETAINED EARNINGS 449,014 439,641
TOTAL NET1 EQUITY 366,970 343,505
NON-CONTROLLING INTEREST 3,298 3,306
TOTAL EQUITY 370,268 346,811
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 980,363 $ 955,893
(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,
2012 2011 2012 2011
(In thousands) (In thousands)
Cash flows from operating activities
Net income $ 2,621 $ 25,090 $ 9,365 $ 44,850
Depreciation and amortization 10,487 8,790 20,491 17,869
(Earnings) Loss from equity-accounted
investments (54) (19) (182) (104)
Fair value adjustments 1,000 (551) 707 (772)
Interest payable 1,117 2,113 2,309 3,775
Profit on disposal of property, plant and equipment (86) (26) (86) (34)
Net loss on sale of 10% of SmartLife - 81 - 81
Profit on liquidation of SmartSwitch Nigeria - - - (3,994)
Realized loss on sale of SmartLife investments - - - 25
Stock-based compensation charge 1,117 543 2,233 1,039
Facility fee amortized 76 83 164 199
Decrease in accounts receivable, pre-funded social
welfare grants receivable and finance loans
receivable (5,061) (19,044) 831 (15,795)
(Increase) Decrease in deferred expenditure on
smart cards (3,668) (58) (3,701) (14)
Increase in inventory (2,582) 920 (3,508) 601
(Decrease ) Increase in accounts payable and other
payables (4,939) (2,679) (6,288) (2,348)
Increase (Decrease) in taxes payable (6,032) (7,355) (594) (10,962)
(Decrease) Increase in deferred taxes (916) (14,088) (2,932) (13,396)
Net cash provided by operating activities (6,920) (6,200) 18,809 21,020
Cash flows from investing activities
Capital expenditures (5,597) (5,120) (12,050) (9,586)
Proceeds from disposal of property, plant and
equipment 251 174 356 268
Acquisition of Pbel, net of cash acquired (230) 0 (2,143) 0
Acquisition of prepaid business, net of cash
acquired - (4,481) - (4,481)
Acquisition of Smart Life, net of cash acquired - - - (1,673)
Settlement from former shareholders of KSNET - 4,945 - 4,945
Repayment of loan by equity-accounted
investment - 30 3 63
Purchase of investments related to insurance
business - - - (2,320)
Proceeds from maturity of investments related to
insurance business - - 545 2,321
Net change in settlement assets (72,835) 30,349 (12,056) 33,796
Net cash provided by (used in) investing
activities (78,411) 25,897 (25,345) 23,333
Cash flows from financing activities
Repayment of long-term borrowings (7,307) (7,185) (7,307) (7,185)
Proceeds from issue of common stock - 0 240 0
Proceeds on sale of 10% of SmartLife - 107 - 107
Acquisition of treasury stock - 0 - (1,129)
Net change in settlement obligations 72,835 (30,349) 12,056 (33,796)
Net cash used in financing activities 65,528 (37,427) 4,989 (42,003)
Effect of exchange rate changes on cash 375 (3,389) 540 (16,749)
Net increase in cash and cash equivalents (19,428) (21,119) (1,007) (14,399)
Cash and cash equivalents – beginning of
period 57,544 101,983 39,123 95,263
Cash and cash equivalents – end of period $ 38,116 $ 80,864 $ 38,116 $ 80,864
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended December 31, 2012 and 2011 and September 30, 2012
Change – constant
Change - actual exchange rate(1)
Q2 ‘13 Q2 ‘13 Q2 ‘13 Q2 ‘13
vs vs vs vs
Key segmental data, in $ ’000, Q2 ‘13 Q2 ‘12 Q1 ‘13 Q2‘12 Q1 ‘13 Q2‘12 Q1 ‘13
Revenue:
SA transaction-based activities .......... $60,764 $46,448 $61,364 31% (1%) 40% 5%
International transaction-based
activities ............................................. 33,113 28,835 31,649 15% 5% 23% 11%
Smart card accounts ........................... 8,219 7,264 8,364 13% (2%) 21% 4%
Financial services ............................... 1,448 1,944 1,384 (26%) 5% (20%) 11%
Hardware, software and related
technology sales ................................. 7,898 7,567 8,921 4% (11%) 12% (6%)
Total consolidated revenue .......... $111,442 $92,058 $111,682 21% 0% 29% 6%
Consolidated operating (loss) income:
SA transaction-based activities .......... $1,933 $15,766 $6,400 (88%) (70%) (87%) (68%)
Operating income excluding
amortization.................................... 3,398 17,463 7,849 (81%) (57%) (79%) (54%)
Amortization of intangible assets ... (1,465) (1,697) (1,449) (14%) 1% (8%) 7%
International transaction-based
activities ............................................. 202 241 (171) (16%) (218%) (10%) (225%)
Operating income excluding
amortization.................................... 3,515 3,369 2,981 4% 18% 12% 25%
Amortization of intangible assets ... (3,313) (3,128) (3,152) 6% 5% 13% 11%
Smart card accounts ........................... 2,342 3,302 2,385 (29%) (2%) (24%) 4%
Financial services ............................... 1,048 1,026 1,097 2% (4%) 9% 1%
Hardware, software and related
technology sales ................................. 795 909 1,984 (13%) (60%) (6%) (58%)
Operating income excluding
amortization.................................... 878 997 2,072 (12%) (58%) (6%) (55%)
Amortization of intangible assets ... (83) (88) (88) (6%) (6%) 1% (0%)
Corporate/ Eliminations ..................... (1,348) (1,016) (2,370) 33% (43%) 42% (40%)
Total operating income ................. $4,972 $20,228 $9,325 (75%) (47%) (74%) (44%)
Operating income margin (%)
SA transaction-based activities .......... 3% 34% 10%
International transaction-based
activities ............................................. 1% 1% (1%)
International transaction-based
activities excluding amortization ........ 11% 12% 9%
Smart card accounts ........................... 29% 45% 29%
Financial services ............................... 72% 53% 79%
Hardware, software and related
technology sales ................................. 10% 12% 22%
Overall operating margin.................... 4% 22% 8%
(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 2013 also prevailed during the second quarter of fiscal 2012 and the first quarter of fiscal 2013.
Six months ended December 31, 2012 and 2011
Change –
constant
Change - exchange
actual rate(1)
F2013 F2013
Key segmental data, in ’000, except vs vs
margins F2013 F2012 F2012 F2012
Revenue:
SA transaction-based activities .......... $122,128 $96,350 27% 37%
International transaction-based
activities ............................................. 64,762 59,090 10% 19%
Smart card accounts ........................... 16,583 15,516 7% 16%
Financial services ............................... 2,832 4,055 (30%) (24%)
Hardware, software and related
technology sales ................................. 16,819 16,973 (1%) 7%
Total consolidated revenue .......... $223,124 $191,984 16% 26%
Consolidated operating income (loss):
SA transaction-based activities .......... $8,333 $35,949 (77%) (75%)
International transaction-based
activities ............................................. 31 925 (97%) (96%)
Operating income excluding
amortization.................................... 6,499 7,355 (12%) (4%)
Amortization of intangible assets ... (6,468) (6,430) 1% 9%
Smart card accounts ........................... 4,727 7,052 (33%) (28%)
Financial services ............................... 2,145 2,437 (12%) (5%)
Hardware, software and related
technology sales ................................. 2,779 2,846 (2%) 6%
Corporate/ Eliminations ..................... (3,718) 1,865 (299%) (316%)
Total operating income ................. 14,297 $51,074 (72%) (70%)
Operating income margin (%)
SA transaction-based activities .......... 7% 37%
International transaction-based
activities ............................................. 0% 2%
International transaction-based
activities excluding amortization ........ 10% 12%
Smart card accounts ........................... 29% 45%
Financial services ............................... 76% 60%
Hardware, software and related
technology sales ................................. 17% 17%
Overall operating margin.................... 6% 27%
(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 2013 also prevailed during the first half of fiscal 2012.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income and earnings per share, basic, to fundamental net income and earnings per share,
basic:
Three months ended December 31, 2012 and 2011
EPS,
Net income EPS, basic Net income basic
(USD’000) (USD) (ZAR’000) (ZAR)
2012 2011 2012 2011 2012 2011 2012 2011
GAAP................................................ 2,629 25,094 0.06 0.56 22,979 205,148 0.50 4.57
Intangible asset amortization, net. 3,640 3,656 31,817 29,893
Stock-based compensation charge 1,117 543 9,763 4,439
Facility fees for KSNET debt ...... 76 110 664 899
DOJ and SEC investigations-
related expenses ........................... 561 - 4,903 -
Acquisition-related costs .............. 28 - 245 -
Change in tax law ........................ - (20,031) - (163,760)
Create FTC valuation allowance .. - 8,232 - 67,298
Loss on sale of 10% of Smart Life . - 73 - 597
Fundamental ...................... 8,051 17,677 0.18 0.39 70,371 144,514 1.55 3.22
Six months ended December 31, 2012 and 2011
EPS,
Net income EPS, basic Net income basic
(USD’000) (USD) (ZAR’000) (ZAR)
2012 2011 2012 2011 2012 2011 2012 2011
GAAP................................................ 9,373 44,862 0.21 1.00 79,268 350,808 1.74 7.80
Intangible asset amortization, net. 7,155 7,196 60,518 56,268
Stock-based compensation charge 2,233 1,040 18,885 8,132
Facility fees for KSNET debt ...... 164 211 1,387 1,650
DOJ and SEC investigations-
related expenses ........................... 561 - 4,744 -
Acquisition-related costs .............. 73 - 617 -
Change in tax law ........................ - (18,315) - (150,373)
Create FTC valuation allowance .. - 8,232 - 67,588
Profit on liquidation of subsidiary - (3,994) - (31,232)
Loss on sale of 10% of Smart Life . - 77 - 602
Fundamental ...................... 19,559 39,309 0.43 0.87 165,419 303,443 3.63 6.74
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, 2012 and 2011
2012 2011
Net income (USD’000)......................................................................................................... 2,629 25,094
Adjustments: ..........................................................................................................................
Loss on sale of 10% of Smart Life ................................................................................... - 73
Profit on sale of property, plant and equipment ............................................................... (86) (26)
Tax effects on above ........................................................................................................ 24 7
Net income used to calculate headline earnings (USD’000) ................................................. 2,567 25,148
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 45,545 44,935
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 45,567 44,967
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 0.06 0.56
Diluted, in USD ............................................................................................................... 0.06 0.56
Six months ended December 31, 2012 and 2011
2012 2011
Net income (USD’000)......................................................................................................... 9,373 44,862
Adjustments: ..........................................................................................................................
Profit on liquidation of SmartSwitch Nigeria .................................................................. - (3,994)
Loss on sale of 10% of Smart Life ................................................................................... - 77
Profit on sale of property, plant and equipment ............................................................... (86) (34)
Tax effects on above ........................................................................................................ 24 10
Net income used to calculate headline earnings (USD’000) ................................................. 9,311 40,921
Weighted average number of shares used to calculate net income per share basic earnings
and headline earnings per share basic earnings (‘000) .......................................................... 45,530 44,995
Weighted average number of shares used to calculate net income per share diluted
earnings and headline earnings per share diluted earnings (‘000) ......................................... 45,578 45,026
Headline earnings per share:..................................................................................................
Basic, in USD .................................................................................................................. 0.20 0.91
Diluted, in USD ............................................................................................................... 0.20 0.91
Johannesburg
8 February 2013
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
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