Posted by: africanpressorganization | 10 February 2010

Net 1 UEPS Technologies, Inc. Announces 2010 Second Quarter Results

Net 1 UEPS Technologies, Inc. Announces 2010 Second Quarter Results

 

JOHANNESBURG, Feb. 9 /PRNewswire-FirstCall/ — Net 1 UEPS Technologies, Inc. (“Net1” or the “Company”) (Nasdaq: UEPS; JSE: NT1) today announced results for the three and six months ended December 31, 2009. Revenue during 2Q 2010 was $73.9 million, a year over year increase of 20% in US dollars (“USD”) and a decline of 8% in constant currency. Earnings per share under US generally accepted accounting principles (“GAAP”) in 2Q 2010 was $0.42 versus $0.49 a year ago, a decline of 14% in USD and 34% in constant currency. Fundamental earnings per share for 2Q 2010 was $0.51 compared to $0.36 in the 2Q 2009, representing an increase of 42% in USD and 8% in constant currency.

 

Revenue during the first half of fiscal 2010 (“F2010”) was $139.4 million, a year over year increase of 8% in US dollars (“USD”) and a decline of 6% in constant currency compared to the first half of fiscal 2009 (“F2009”). Earnings per share under US generally accepted accounting principles (“GAAP”) during F2010 was $0.79 versus $0.94 a year ago, a decline of 16% in USD and 27% in constant currency. Fundamental earnings per share for F2010 was $0.96 compared to $0.75 for F2009, representing an increase of 28% in USD and 12% in constant currency.

 

Summary Financial Metrics

 

 

 

Three months ended December 31,

——————————-

% change % change

2009 2008 in USD in ZAR

—- —- ——— ———

(All figures in USD ‘000s

except per share data)

Revenue 73,864 61,388 20% (8)%

 

GAAP net income 19,284 27,762 (31)% (47)%

 

Fundamental net income (1) 23,239 20,186 15% (12)%

 

GAAP earnings per

share ($) (2) 0.42 0.49 (14)% (34)%

 

Fundamental earnings per

share ($) (1) (2) 0.51 0.36 42% 8%

 

Fully diluted shares

outstanding (‘000’s) (2) 45,378 57,068 (20)%

 

Average period USD/ ZAR

exchange rate 7.52 9.96 (23)%

 

 

 

 

 

Six months ended December 31,

—————————–

% change % change

2009 2008 (2) in USD in ZAR

—- ——– ——— ———

(All figures in USD ‘000s

except per share data)

Revenue 139,378 129,323 8% (6)%

 

GAAP net income 37,225 54,006 (31)% (40)%

 

Fundamental net income (1)

(2) 45,042 42,834 5% (9)%

 

GAAP earnings per share ($)

(2) 0.79 0.94 (16)% (27)%

 

Fundamental earnings per

share ($) (1) (2) 0.96 0.75 28% 12%

 

Fully diluted shares

outstanding (‘000’s) 47,253 57,777 (18)%

 

Average period USD/ ZAR

exchange rate 7.67 8.80 (13)%

 

 

 

(1) Fundamental net income and earnings per share is GAAP net income and earnings per share excluding the amortization of acquisition-related intangible assets, net of deferred taxes, and stock-based compensation charges. In addition, the calculation of fundamental net income and earnings per share for 2Q 2009 and the first six months of F2010 also excludes the effects of the change in the Company’s fully distributed tax rate from 35.45% to 34.55%, JSE Limited (“JSE”) listing costs, a bank facility fee, goodwill impairment and a foreign exchange gain, net of tax, related to a short-term investment.

 

(2) GAAP basic and fundamental earnings per share for 2Q 2009 and F2009, have been retrospectively adjusted, as required by FSP EITF 03-6-1 (Topic 260), to include participating securities in the weighted average number of outstanding shares of common stock.

 

The following factors had significant impact on the comparability of Net1’s 2Q 2010 results to last year:

 

Favorable impact from the weakness of the US dollar: The US dollar depreciated by 23% compared to the ZAR during the second quarter of fiscal 2010 compared to fiscal 2009 which has had a positive impact on the Company’s reported results;

Cost management and improvement in merchant adoption in our pension and welfare operations: The Company’s second quarter of fiscal 2010 results were favorably impacted by cost management controls and continued increases in merchant adoption;

Increased transaction volumes at EasyPay: The Company’s reported results were favorably impacted by increased transaction volumes at EasyPay resulting from growth in value-added services and higher than expected activity at retailers during the Christmas season;

Increased user adoption in Iraq: The Company’s reported results were positively impacted by increased transaction revenues from the adoption of its UEPS technology in Iraq;

Lower revenues and margins from hardware, software and related technology sales segment: The Company’s hardware, software and related technology sales segment was adversely impacted by fewer ad hoc sales to the Bank of Ghana, lower revenues and overall margin generated by Net1 Universal Technologies (Austria) AG (“Net1 UAT”) and weaker demand for its products as well as pricing pressures resulting from the global recession, but partially offset by hardware sales to Iraq;

Intangible asset amortization related to acquisition: The Company’s reported results were adversely impacted by additional intangible asset amortization of approximately $0.5 million related to the RMT Systems (Pty) Ltd (“RMT”) acquisition, which closed in April 2009; and

Non-recurring items: During the second quarter of fiscal 2009 the Company recognized a foreign exchange gain of $20.6 million (ZAR 202.3 million) resulting from an asse! t swap a rrangement and the Company impaired goodwill with a value of $1.8 million (ZAR 18.0 million).

 

Comments and Outlook

 

“I am extremely pleased with our second quarter results, which demonstrate the strength of our business model and the power of our technology,” said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. “While we faced difficult year-over-year comparisons from our hardware, software and related technology sales segment, and last year’s large foreign exchange gain, we continue to grow both revenue and profitability in our core transaction-based businesses. We remain an integral distributor of welfare grants for the South African government, and over the next few years, we have a much clearer path to drive the globalization of our technology. We remain committed to delivering sustainable growth for all of our stake holders, and to that effect I am pleased to announce that our Board has authorized a new $50 million share repurchase program,” he concluded.

 

“We remain comfortable with our guidance of at least 20% constant currency fundamental earnings per share growth for fiscal year 2010,” said Herman Kotze, Chief Financial Officer of Net1. “Our growth during 2Q 2010 was driven by EasyPay, Iraq and the further penetration of our merchant acquiring platform,” he concluded.

 

Results of Operations

 

Net1’s frequently asked questions and operating metrics will be updated and posted on the Company’s website (www.net1.com).

 

Transaction-based activities

 

Transaction-based activities revenue was $45.4 million, up 38% compared with 2Q 2009 in USD and 6% on a constant currency basis. Revenue increased as a result of increased transaction volumes at EasyPay and a modest contribution from our pension and welfare operations. Operating margin increased to 59% from 54% during 2Q 2009 primarily due to cost management and continued increases in merchant adoption in our pension and welfare operations, increased transaction fees from the utilization of our UEPS system in Iraq and improved margins at EasyPay. Excluding amortization of intangibles for EasyPay and RMT, segment operating margin was 61% compared with 55% during 2Q 2009.

 

Smart card accounts

 

Smart card account revenue was $8.1 million, up 21% compared with 2Q 2009 in USD and 7% lower on a constant currency basis. Operating margin for the segment remained consistent at 45% for 2Q 2010 and 2Q 2009.

 

Financial services

 

Financial services revenue was $0.9 million, down 40% compared with 2Q 2009 in USD and 54% on a constant currency basis, principally due to the divestiture of the Company’s traditional microlending business in 3Q 2009. Operating margin for the operating segment however, improved significantly to 64% from (110)% in 2Q 2009 as a result of the sale of this low-margin business, and higher profitability in our underlying UEPS-based lending activities.

 

Hardware, software and related technology sales

 

Hardware, software and related technology sales revenue was $19.5 million, down 5% compared with 2Q 2009 in USD and 27% on a constant currency basis. The decrease in revenue and operating income is primarily due to lower revenues at Net1 UAT and lower ad hoc hardware and software development sales in 2010 as compared with the prior year when we recorded revenue from sales under our Ghana contract, offset marginally by increased hardware sales to Iraq. As a result operating margin for the operating segment decreased to 9% from 27% in 2Q 2009. Excluding amortization of all intangibles, segment operating margin was 22% compared to 41% during 2Q 2009.

 

Cash flow and liquidity

 

At December 31, 2009, the Company had cash and equivalents of $153 million, down from $221 million at June 30, 2009. For 2Q 2010, the Company generated operating cash flow of $13.8 million compared to $45.9 million in 2Q 2009. The decrease in operating cash flow results primarily from the foreign exchange gain realized during 2Q 2009. Capital expenditures for 2Q 2010 and 2009 were $0.7 million and $0.4 million, respectively. Capital expenditures for each of F2010 and F2009 were approximately $1.3 million and $3.3 million. For F2010, the Company generated operating cash flow of $50.7 million compared to $12.9 million in F2009.

 

Share repurchase authorization

 

On February 5, 2010, the Company’s Board of Directors authorized the repurchase of up to $50 million of the Company’s common stock. The authorization does not have an expiration date.

 

The share repurchase authorization will be used at management’s discretion, subject to limitations imposed by SEC Rule 10b-18 and other legal requirements and subject to price and other internal limitations established by the Board. Repurchases will be funded from the Company’s available cash. Share repurchases may be made through open market purchases, privately negotiated transactions, or both. There can be no assurance that the Company will purchase any shares or any particular number of shares.

 

The authorization may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, liquidity and other factors that management deems appropriate.

 

MediKredit Closing

 

In January 2010, the Company acquired 100% of MediKredit Integrated Healthcare Solutions (Pty) Ltd (“MediKredit”) for ZAR 74 million (approximately $10 million) in cash after all regulatory approvals were obtained. MediKredit is a South African private company that offers transaction processing, financial and clinical risk management solutions to both funders and providers of healthcare.

 

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

 

Under GAAP, the Company is required to fair value all intangible assets on the date of the acquisition and amortize these intangible assets over their expected useful lives. In addition, under GAAP, the Company is required to measure the fair value of options and other stock-based awards, and recognize a stock-based compensation charge over the requisite service period. The Company’s GAAP net income and earnings per share for the three and six months December 31, 2009 and 2008, include amortization of intangibles and stock-based compensation, as well as, in 2008, JSE listing costs, a bank facility fee, goodwill impairment and a foreign exchange gain, net of tax, related to a short-term investment. Finally, the effect of the change in the fully distributed tax rate from 35.45% to 34.55% in July 2008 was included in net income and earnings per share for the six months ended December 31, 2008. The Company excludes all of the above-mentioned amounts when calculating fundamental net income and earnings per share, because management believes that these adjustments enhance its own evaluation, as well as an investor’s understanding, of the Company’s financial performance. Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share.

 

Headline earnings per share (“HEPS”)

 

The inclusion of HEPS in this press release is a requirement of 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 loss (profit) on sale of property, plant and equipment, net of related tax effects. 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

 

Net1 will host a conference call to review second quarter results on February 10, 2010, at 8:00 a.m. Eastern Time. To participate in the call, dial 1-800-860-2442 (US only), 1-866-605-3852 (Canada only), 0-800-917-7042 (UK only) or 0-800-200-648 (South Africa only) five minutes prior to the start of the call. Callers should request “Net1 call” upon dial-in. The call will also be webcast on the Net1 homepage, www.net1.com. Please click on the webcast link at least 10 minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through March 3, 2010.

 

About Net1 (www.net1.com)

 

Net1 provides its universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies. Our market-leading system enables the estimated four billion people who generally have limited or no access to a bank account, to enter affordably into electronic transactions with each other, government agencies, employers, merchants and other financial service providers. Our universal electronic payment system, or UEPS, uses smart cards that operate in real-time but offline, unlike traditional payment systems offered by major banking institutions that require immediate access through a communications network to a centralized computer. This offline capability means that users of the Net1 system can enter into transactions at any time with other card holders even in the most remote areas so long as a portable offline smart card reader is available. In addition to payments and purchases, UEPS can be used for banking, healthcare management, international money transfers, voting and identification.

 

Net1 also focuses on the development and provision of secure transaction technology, solutions and services and offers transaction processing, financial and clinical risk management solutions to both funders and providers of healthcare. Its core competencies around secure online transaction processing, cryptography and integrated circuit card (chip/smart card) technologies are principally applied to electronic commerce transactions in the telecommunications, banking, retail, petroleum and utilities market sectors.

 

Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE Limited.

 

Forward-Looking Statements

 

This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause the Company’s actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.

 

 

 

Investor Relations Contact:

Dhruv Chopra

Vice President of Investor Relations

Phone: +1-212-626-6675

Email: dchopra@net1.com

 

 

 

 

NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations

 

Three months Six months

ended ended

—– —–

December 31, December 31,

———— ————

2009 2008 2009 2008

—- —- —- —-

(In thousands, (In thousands,

except per share data) except per share data)

 

REVENUE $73,864 $61,388 $139,378 $129,323

 

EXPENSE

 

Cost of goods

sold, IT

processing,

servicing and

support 20,915 17,175 37,742 36,411

 

Selling, general

and

administration 18,866 15,311 36,606 33,309

 

Depreciation and

amortization 4,664 4,261 9,243 7,684

 

IMPAIRMENT OF

GOODWILL – 1,836 – 1,836

— —– — —–

 

OPERATING INCOME 29,419 22,805 55,787 50,083

 

FOREIGN EXCHANGE

GAIN RELATED TO

SHORT-TERM

INVESTMENT – 20,581 – 26,657

 

INTEREST INCOME,

net 1,893 2,303 4,264 5,465

—– —– —– —–

 

INCOME BEFORE

INCOME TAXES 31,312 45,689 60,051 82,205

 

INCOME TAX EXPENSE 11,492 16,999 22,523 26,901

—— —— —— ——

 

NET INCOME FROM

CONTINUING

OPERATIONS BEFORE

LOSS FROM EQUITY-

ACCOUNTED

INVESTMENTS 19,820 28,690 37,528 55,304

 

LOSS FROM EQUITY-

ACCOUNTED

INVESTMENTS (270) (226) (381) (536)

—- —- —- —-

 

NET INCOME 19,550 28,464 37,147 54,768

 

LESS(ADD): NET

INCOME (LOSS)

ATTRIBUTABLE TO

NON-CONTROLLING

INTEREST 266 702 (78) 762

— — — —

 

NET INCOME

ATTRIBUTABLE TO

NET1 $19,284 $27,762 $37,225 $54,006

——- ——- ——- ——-

 

Net income per

share, in cents

Basic earnings

attributable to

Net1 shareholders 42.5 48.6 79.0 93.8

Diluted earnings

attributable to

Net1 shareholders 42.3 48.5 78.8 93.5

 

 

 

 

 

NET 1 UEPS TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets

 

Unaudited (A)

December 31, June 30,

2009 2009

—- —-

(In thousands, except share data)

 

ASSETS

CURRENT ASSETS

Cash and cash equivalents $152,871 $220,786

Pre-funded social

welfare grants

receivable 1,592 4,930

Accounts receivable, net

of allowances of –

December: $374; June:

$395 42,213 42,475

Finance loans receivable,

net of allowances of –

December: $244; June:

$226 4,548 2,563

Deferred expenditure on

smart cards 70 8

Inventory 4,953 7,250

Deferred income taxes 9,191 12,282

—– ——

Total current assets 215,438 290,294

 

OTHER LONG-TERM ASSETS,

including available for

sale securities 6,886 7,147

PROPERTY, PLANT AND

EQUIPMENT, NET OF

ACCUMULATED DEPRECIATION

OF – December: $31,559;

June: $28,169 7,075 7,376

EQUITY-ACCOUNTED

INVESTMENTS 2,265 2,583

GOODWILL 121,295 116,197

INTANGIBLE ASSETS, NET OF

ACCUMULATED AMORTIZATION

OF – December: $39,854; June: $31,150 70,806 75,890

—— ——

TOTAL ASSETS 423,765 499,487

——- ——-

 

LIABILITIES

CURRENT LIABILITIES

Accounts payable 4,347 5,481

Other payables 57,431 61,454

Income taxes payable 7,598 10,874

—– ——

Total current liabilities 69,376 77,809

 

DEFERRED INCOME TAXES 46,876 41,737

 

OTHER LONG-TERM

LIABILITIES, including

non-controlling

interest loans 4,200 4,185

 

COMMITMENTS AND

CONTINGENCIES – –

— —

 

TOTAL LIABILITIES 120,452 123,731

——- ——-

 

EQUITY

 

NET1 EQUITY:

 

COMMON STOCK

Authorized: 200,000,000

with $0.001 par value;

Issued and outstanding

shares, net of treasury

– December: 45,378,397;

June: 54,506,487 59 59

 

ADDITIONAL PAID-IN-

CAPITAL 130,493 126,914

 

TREASURY SHARES, AT COST:

December: 13,149,042;

June: 3,927,516 (173,671) (48,637)

 

ACCUMULATED OTHER

COMPREHENSIVE LOSS (46,666) (58,472)

 

RETAINED EARNINGS 390,578 353,353

——- ——-

TOTAL NET1 EQUITY 300,793 373,217

 

NON-CONTROLLING INTEREST 2,520 2,539

—– —–

TOTAL EQUITY 303,313 375,756

——- ——-

TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY $423,765 $499,487

——– ——–

 

(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,

———— ————

2009 2008 2009 2008

—- —- —- —-

(In thousands) (In thousands)

 

Cash flows from

operating

activities

Net income $19,550 28,464 $37,147 $54,768

Depreciation and

amortization 4,664 4,261 9,243 7,684

Impairment of

goodwill – 1,836 – 1,836

Loss from equity-

accounted

investments 270 226 381 536

Fair value

adjustments (29) (2,472) (171) (2,444)

Unrealized

foreign exchange

reversal (gain)

related to

short-term

investment – 5,061 – (1,015)

Interest payable 77 (408) 155 231

Loss (Profit) on

disposal of

property, plant

and equipment 3 (1) 2 –

Stock-based

compensation

charge 1,432 1,346 2,854 2,551

Facility fee

amortized – 352 – 1,100

Decrease

(Increase) in

accounts

receivable, pre-

funded social

welfare grants

receivable and

finance loans

receivable 521 8,350 6,050 (37,791)

Increase in

deferred

expenditure on

smart cards (30) (4) (60) (27)

Decrease in

inventory 1,671 511 2,686 294

Decrease in

accounts payable

and other

payables (9,367) (3,174) (9,342) (17,589)

(Decrease)

Increase in

taxes payable (6,527) 775 (316) 4,184

Increase

(Decrease) in

deferred taxes 1,536 751 2,111 (1,419)

—– — —– ——

Net cash provided

by operating

activities 13,771 45,874 50,740 12,899

—— —— —— ——

 

Cash flows from

investing

activities

Capital

expenditures (685) (439) (1,326) (3,283)

Proceeds from

disposal of

property, plant

and equipment 13 1 62 2

Acquisition of

Net1 UAT, net of

cash acquired – (458) – (95,786)

Acquisition of

shares in

equity-

accounted

investments – (50) – (600)

— — — —-

Net cash used in

investing

activities (672) (946) (1,264) (99,667)

—- —- —— ——-

 

Cash flows from

financing

activities

Proceeds from

issue of share

capital, net of

share issue

expenses – – 720 155

Treasury stock

acquired – (24,752) (126,304) (24,752)

Proceeds from

short-term loan

facility – – – 110,000

Repayment of

short-term loan

facility – (110,000) – (110,000)

Payment of

facility fee – – – (1,100)

Repayment of non-

controlling

interest loan – – (137) –

Proceeds from

bank overdrafts – 94 – 95

Repayment of

loans – – – –

— — — —

Net cash used in

financing

activities – (134,658) (125,721) (25,602)

— ——– ——– ——-

 

Effect of

exchange rate

changes on cash 460 (31,538) 8,330 (35,449)

— ——- —– ——-

 

Net increase

(decrease) in

cash and cash

equivalents 13,559 (121,268) (67,915) (147,819)

 

Cash and cash

equivalents –

beginning of

period 139,312 245,924 220,786 272,475

——- ——- ——- ——-

 

Cash and cash

equivalents –

end of period $152,871 124,656 $152,871 $124,656

——– ——- ——– ——–

 

 

 

Net 1 UEPS Technologies, Inc.

 

Attachment A

 

Operating segment revenue, operating income and operating margin:

 

Three months ended December 31, 2009 and 2008 and September 30, 2009

 

 

 

Change –

constant

exchange

Change – actual rate(1)

————— ——-

Q2 ’10 Q2 ’10 Q2 ’10 Q2 ’10

Key segmental —— —— —— ——

data, in vs vs vs vs

‘000, except — — — —

margins Q2 ’10 Q2 ’09 Q1 ’10 Q2 ’09 Q1 ’10 Q2 ’09 Q1 ’10

—— —— —— —— —— —— ——

Revenue:

Transaction-

based

activities $45,415 $32,820 $44,978 38% 1% 6% (3)%

Smart card

accounts 8,137 6,711 8,074 21% 1% (7)% (3)%

Financial

services 858 1,430 792 (40)% 8% (54)% 4%

Hardware,

software and

related

technology

sales 19,454 20,427 11,670 (5)% 67% (27)% 60%

—— —— ——

Total

consolidated

revenue $73,864 $61,388 $65,514 20% 13% (8)% 9%

——- ——- ——-

 

Consolidated

operating

income

(loss):

Transaction-

based

activities $26,733 $17,653 $26,668 51% 0% 16% (3)%

Smart card

accounts 3,699 3,050 3,670 21% 1% (7)% (3)%

Financial

services 546 (1,570) 531 (135)% 3% (127)% (1)%

Hardware,

software and

related

technology

sales 1,660 5,493 (1,713) (70)% (197)% (77)% (193)%

Corporate/

Eliminations (3,219) (1,821) (2,788) 77% 15% 35% 11%

—— —— ——

Total

operating

income $29,419 $22,805 $26,368 29% 12% (1)% 7%

——- ——- ——-

 

Operating

income

margin (%)

Transaction-

based

activities 59% 54% 59%

Smart card

accounts 45% 45% 45%

Financial

services 64% (110)% 67%

Hardware,

software and

related

technology

sales 9% 27% (15)%

Overall

operating

margin 40% 37% 40%

 

 

(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 2010 also prevailed during the second quarter of fiscal

2009 and the first quarter of fiscal 2010.

 

 

 

Six months ended December 31, 2009 and 2008

 

 

 

Change –

constant

Change – exchange

actual rate(1)

——– ——–

Q2 ’10 Q2 ’10

Key segmental —— ——

data, in vs vs

‘000, except — —

margins Q2 ’10 Q2 ’09 Q2 ’09 Q1 ’10

—— —— —— ——

Revenue:

Transaction-

based

activities $90,393 $73,164 24% 8%

Smart card

accounts 16,211 15,281 6% (8)%

Financial

services 1,650 3,214 (49)% (55)%

Hardware,

software and

related

technology

sales 31,124 37,664 (17)% (28)%

—— ——

Total

consolidated

revenue 139,378 129,323 8% (6)%

——- ——-

 

Consolidated operating

income (loss):

Transaction-

based

activities $53,401 $39,291 36% 18%

Smart card

accounts 7,369 6,945 6% (8)%

Financial

services 1,077 (1,243) (187)% (176)%

Hardware,

software and

related

technology

sales (53) 9,627 (101)% (100)%

Corporate/

Eliminations (6,007) (4,537) 32% 15%

—— ——

Total

operating

income $55,787 $50,083 11% (3)%

——- ——-

 

Operating income

margin (%)

Transaction-

based

activities 59% 54%

Smart card

accounts 45% 45%

Financial

services 65% (39)%

Hardware,

software and

related

technology

sales -% 26%

Overall

operating

margin 40% 39%

 

 

(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 2010 also prevailed during the first half of fiscal 2009.

 

 

 

Net 1 UEPS Technologies, Inc.

 

Attachment B

 

Reconciliation of GAAP net income to fundamental net income:

 

Three months ended December 31, 2009 and 2008

 

 

 

Net Income EPS, basic Net income EPS, basic

(USD’000) (USD cents) (ZAR’000) (ZAR cents)

——— ——— ——— ———

2009 2008 2009 2008 2009 2008 2009 2008

—- —- —- —- —- —- —- —-

 

GAAP 19,284 27,762 43 49 145,091 272,875 320 478

 

Amortization of

intangible

assets(1) 2,524 2,276 18,988 22,371

—– —– —— ——

Customer

relationships 3,346 2,412 25,171 23,713

Software and

unpatented

technology – 676 – 6,642

Trademarks 90 69 679 679

Deferred tax

benefit (912) (881) (6,862) (8,663)

—- —- —— ——

Stock-based

charge 1,431 1,346 10,767 13,230

JSE listing

costs – 84 – 826

Facility fee – 352 – 3,460

Foreign

exchange gain

related to a

short-term

investment,

net of tax of

$7,111 – (13,470) – (132,397)

Impairment of

goodwill – 1,836 – 18,046

— —– — ——

Fundamental 23,239 20,186 51 36 174,846 198,411 385 348

—— —— ——- ——-

 

(1) Amortization of Prism, EasyPay, RMT and BGS intangibles, net of

deferred tax benefit.

(2) Includes stock-based compensation charges related to options and

non-vested stock awards.

 

 

 

Six months ended December 31, 2009 and 2008

 

 

 

 

Net Income EPS, basic Net income EPS, basic

(USD’000) (USD cents) (ZAR’000) (ZAR cents)

——— ——— ——— ———-

2009 2008 2009 2008 2009 2008 2009 2008

—- —- —- —- —- —- —- —-

 

GAAP 37,225 54,006 79 94 285,601 475,302 606 826

 

Amortization

of intangible

assets(1) 4,964 3,749 38,080 32,995

—– —– —— ——

Customer

relationships 6,582 3,609 50,494 31,759

Software and

unpatented

technology – 1,509 – 13,284

Trademarks 177 154 1,358 1,358

Deferred tax

benefit (1,795) (1,523) (13,772) (13,406)

—— —— ——- ——-

Stock-based

charge(2) 2,854 2,551 21,897 22,451

JSE listing

costs – 495 – 4,356

Facility fee – 1,100 – 9,681

Foreign

exchange

gain

related to

a short-

term

investment,

net of tax

of $9,210 – (17,447) – (153,549)

Impairment

of goodwill – 1,836 – 16,158

Change in

tax rate – (3,456) – (26,524)

— —— — ——-

Fundamental 45,043 42,834 96 74 345,578 380,870 734 662

—— —— ——- ——-

 

(1) Amortization of Prism, EasyPay, RMT and BGS intangibles, net of

deferred tax benefit.

(2) Includes stock-based compensation charges related to options and

non-vested stock awards.

 

 

 

Net 1 UEPS Technologies, Inc.

 

Attachment C

 

Reconciliation of net income used to calculate earnings per share basic and diluted and headline earnings per share basic and diluted:

 

Three months ended December 31, 2009 and 2008

 

 

 

 

2009 2008

—- —-

Net income (USD’000) 19,284 27,762

Adjustments:

Impairment of goodwill – 1,836

Loss (Profit) on sale of property,

plant and equipment (USD’000) 3 (1)

Tax effects on above (USD’000) (1) –

 

 

Net income used to calculate headline

earnings (USD’000) 19,286 29,597

—— ——

 

Weighted average number of shares used

to calculate net income per share

basic earnings and headline earnings

per share basic earnings (‘000) 45,378 57,068

 

Weighted average number of shares used

to calculate net income per share

diluted earnings and headline

earnings per share diluted earnings

(‘000) 45,588 57,777

 

Headline earnings per share:

Basic earnings – common stock and

linked units, in US cents 43 52

Diluted earnings – common stock and

linked units, in US cents 42 51

 

 

 

Six months ended December 31, 2009 and 2008

 

 

 

 

2009 2008

—- —-

Net income (USD’000) 37,225 54,006

Adjustments:

Impairment of goodwill 1,836

Loss (Profit) on sale of property,

plant and equipment (USD’000) 2 –

Tax effects on above (USD’000) (1) –

 

 

Net income used to calculate headline

earnings (USD’000) 37,226 55,842

—— ——

 

Weighted average number of shares used

to calculate net income per share

basic earnings and headline earnings

per share basic earnings (‘000) 47,097 57,550

 

Weighted average number of shares used

to calculate net income per share

diluted earnings and headline

earnings per share diluted earnings

(‘000) 47,253 57,777

 

Headline earnings per share:

Basic earnings – common stock and

linked units, in US cents 79 97

Diluted earnings – common stock and

linked units, in US cents 79 97

 

 

 

SOURCE

Net 1 UEPS Technologies, Inc.


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