JOHANNESBURG, May 6 /PRNewswire-FirstCall/ -- Net 1 UEPS
Technologies, Inc. ("Net1" or the "Company") (Nasdaq: UEPS; JSE:
NT1) today announced results for the three and nine months ended
March 31, 2010. Revenue during 3Q
2010 was $72.3 million, a year over
year increase of 29% in US dollars ("USD") and a decline of 2% in
constant currency. Earnings per share under US generally accepted
accounting principles ("GAAP") in 3Q 2010 was $0.41 versus $0.26
a year ago, an increase of 58% in USD and 19% in constant currency.
Fundamental earnings per share for 3Q 2010 was $0.51 compared to $0.34 in 3Q 2009, representing an increase of 50%
in USD and 13% in constant currency.
Revenue during year to date fiscal 2010 ("F2010") was
$211.7 million, a year over year
increase of 14% in US dollars ("USD") and a decline of 4% in
constant currency compared to year to date fiscal 2009 ("F2009").
Earnings per share under US generally accepted accounting
principles ("GAAP") during F2010 was $1.20 versus $1.20
a year ago, the same in USD and a decrease of 16% in constant
currency. Fundamental earnings per share for F2010 was $1.47 compared to $1.08 for F2009, representing an increase of 36%
in USD and 14% in constant currency.
Summary Financial Metrics
|
|
|
Three months ended March
31,
|
|
|
2010
|
2009
|
%
change in USD
|
%
change in ZAR
|
|
(All figures in USD '000s except per
share data)
|
|
|
|
|
Revenue
|
72,291
|
55,878
|
29%
|
(2)%
|
|
|
|
|
|
|
|
GAAP net income
|
18,772
|
14,379
|
31%
|
(1)%
|
|
|
|
|
|
|
|
Fundamental net income (1)
|
23,189
|
18,739
|
24%
|
(6)%
|
|
|
|
|
|
|
|
GAAP earnings per share ($)
(2)
|
0.41
|
0.26
|
58%
|
19%
|
|
|
|
|
|
|
|
Fundamental earnings per share ($) (1)
(2)
|
0.51
|
0.34
|
50%
|
13%
|
|
|
|
|
|
|
|
Fully diluted shares outstanding
('000's) (2)
|
45,643
|
55,799
|
(18)%
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
7.53
|
9.96
|
(24)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March
31,
|
|
|
2010
|
2009
|
%
change in USD
|
%
change in ZAR
|
|
(All figures in USD '000s except per
share data)
|
|
|
|
|
Revenue
|
211,669
|
185,201
|
14%
|
(4)%
|
|
|
|
|
|
|
|
GAAP net income
|
55,997
|
68,385
|
(18)%
|
(31)%
|
|
|
|
|
|
|
|
Fundamental net income (1)
(2)
|
68,327
|
61,589
|
11%
|
(7)%
|
|
|
|
|
|
|
|
GAAP earnings per share ($)
(2)
|
1.20
|
1.20
|
0%
|
(16)%
|
|
|
|
|
|
|
|
Fundamental earnings per share ($) (1)
(2)
|
1.47
|
1.08
|
36%
|
14%
|
|
|
|
|
|
|
|
Fully diluted shares outstanding
('000's)
|
46,725
|
57,126
|
(18)%
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
7.62
|
9.08
|
(16)%
|
|
|
|
|
|
|
|
|
|
(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 3Q 2010 and 3Q
2009 and F2010 and F2009 also excludes, where applicable,
transaction-related costs, 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 3Q 2009
and F2009, have been retrospectively adjusted to include
participating securities in the weighted average number of
outstanding shares of common stock.
The following factors had a significant impact on the
comparability of Net1's 3Q 2010 results to last year:
- Favorable impact from the weakness of the US
dollar: Emerging market currencies were negatively impacted
by the global financial crisis during the last three months of
calendar 2008 and the first half of calendar 2009. The US dollar
depreciated by 24% compared to the ZAR during the third quarter of
fiscal 2010 compared to fiscal 2009 which has had a positive impact
on the Company's reported results;
- Increased transaction volumes at EasyPay:
Reported results were favorably impacted by increased transaction
volumes at EasyPay resulting from growth in value-added
services;
- Increased revenue from MediKredit at lower operating
margins than other transaction-based activity business: The
MediKredit acquisition positively impacted on the Company's revenue
during the third quarter of fiscal 2010, however, because
MediKredit generates a lower operating margin than the Company's
other transaction-based activity businesses, it negatively affected
reported segment margins;
- Increased user adoption in Iraq: Reported results were positively
impacted by increased transaction revenues from the adoption of the
Company's UEPS technology in Iraq;
- Lower revenues and margins from hardware, software and
related technology sales segment: Hardware, software and
related technology sales segment continues to be adversely impacted
by lower revenues, primarily as a result of fewer ad hoc sales to
the Bank of Ghana when compared to
a year ago, and overall margin pressure at Net1 UAT and weaker
demand for the Company's products as well as pricing pressures
resulting from the global recession, all of which was partially
offset by hardware sales to Iraq;
- Intangible asset amortization related to
acquisitions: Reported results were adversely impacted by
additional intangible asset amortization of approximately
$0.5 million related to the RMT
acquisition, which closed in April
2009 and $0.5 million related
to the MediKredit acquisition, which closed in January 2010;
- Non-recurring items: During the third quarter of
fiscal 2009 the Company recognized a loss on the sale of its
traditional microlending business of $0.7
million (ZAR 7.4 million);
and
- Lower weighted-average number of shares used to calculate
earnings per share: Our basic and diluted earnings per
share were positively impacted by the lower weighted-average number
of shares resulting from the repurchase of our common stock from
Brait S.A investment affiliates in July
2009.
Comments and Outlook
"I am extremely pleased with our third 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. "We
recognize that the pace of our international expansion has been
slower than expected, however we have the management commitment,
proposals and incentives to drive accelerating growth in our new
initiatives over the coming quarters. We remain in active
discussions with the South African government for the distribution
of social welfare grants, and anticipate a conclusion to the
process over the next 4-6 weeks. We are and expect to remain an
integral distributor of welfare grants for the South African
government. We are committed to driving long-term sustainable
growth for all our stakeholders and to that effect, I am pleased to
announce that our Board has doubled our share repurchase
authorization to $100 million. I
would also like to welcome the MediKredit and FIHRST teams to the
Net1 family," he concluded.
"While our full year 2010 constant currency results will
ultimately depend on changes, if any, in the terms of our contract
with SASSA, which may be applied retrospectively to April 1, 2010 to coincide with government's
fiscal year, we are currently unable to accurately forecast our
constant currency guidance until our negotiations with SASSA have
been finalized," said Herman Kotze,
Chief Financial Officer of Net1. "Our growth during 3Q 2010 was
driven by EasyPay, Iraq and the
addition of MediKredit," 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 $50.9 million, up 41% compared with 3Q 2009 in
USD and 7% on a constant currency basis. Revenue increased as a
result of increased transaction volumes at EasyPay, the growing
utilization of the Company's UEPS system in Iraq and the acquisition of MediKredit.
Operating margin decreased to 53% from 60% during 3Q 2010 primarily
due to additional intangible asset amortization related to the
acquisition of MediKredit, lower margins in the Company's
MediKredit operation compared with the Company's transaction-based
activities and ad hoc hardware maintenance charges at Easypay,
which was partially offset by increased transaction fees from the
utilization of the Company's UEPS system in Iraq. Excluding amortization of
acquisition-related intangibles, 3Q 2010 segment operating margin
was 55% compared with 61% during 3Q 2009.
Smart card accounts
Smart card account revenue was $8.0
million, up 19% compared with 3Q 2009 in USD and 10% lower
on a constant currency basis. Operating margin for the segment
remained consistent at 45% for 3Q 2010 and 3Q 2009.
Financial services
Financial services revenue was $1.1
million, down 15% compared with 3Q 2009 in USD and 36% on a
constant currency basis, principally due to the divestiture of the
Company's traditional microlending business in 3Q 2009. However,
operating margin for this segment, adjusted for the loss related to
the sale in 3Q 2009, improved significantly to 72% from 35% in 3Q
2009 as a result of the sale of this low-margin business, and
higher profitability from the Company's underlying UEPS-based
lending activities.
Hardware, software and related technology
sales
Hardware, software and related technology sales revenue was
$12.3 million, up 4% compared with 3Q
2009 in USD and down 21% on a constant currency basis. The decrease
in revenue and operating income was primarily due to lower revenues
at Net1 UAT and lower ad hoc hardware sales in 2010 as compared
with the prior year when the Company recorded revenue from sales
under its Ghana contract, which
was offset marginally by increased hardware sales to Iraq. As a result, operating margin for this
segment decreased to (15)% from (12)% in 3Q 2009. Excluding
amortization of all intangibles, segment operating margin was 5%
compared to 12% during 3Q 2009.
Cash flow and liquidity
At March 31, 2010, the Company had
cash and equivalents of $184 million,
down from $221 million at
June 30, 2009. The decrease was
primarily attributable to the repurchase of the Company's common
stock from Brait S.A.'s investment affiliates. For 3Q 2010, the
Company generated operating cash flow of $31.7 million compared to $5.1 million in 3Q 2009. The increase in
operating cash flow results mainly from the removal of the
requirement to pre-fund social welfare grant payments in 4Q 2009.
Capital expenditures for 3Q 2010 and 2009 were $1.0 million and $0.4
million, respectively. Capital expenditures for each of
F2010 and F2009 were approximately $2.3
million and $3.7 million. For
F2010, the Company generated operating cash flow of $82.4 million compared to $18.0 million in F2009. During 3Q 2010 the
Company did not repurchase any shares out of the $50 million authorization approved in
February 2010.
Share repurchase authorization
On May 5, 2010, the Company's
Board of Directors authorized an increase in the Company's share
repurchase program by an additional $50 million, resulting in a repurchase program of
up to $100 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.
FIHRST purchase
On March 31 2010, the Company
acquired the FIHRST business and related software for ZAR 70 million (approximately $9 million) in cash. FIHRST offers a third party
payroll payments solution to South African companies, representing
approximately 700,000 employees with a transaction volume of
approximately R40 billion per annum.
Use of Non-GAAP Measures
US securities laws require that when Net1 publish any non-GAAP
measures, it 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 nine months
March 31, 2010 and 2009, include
amortization of intangibles and stock-based compensation. In
addition, in 2010, transaction-related costs are included and in
2009, JSE listing costs, a bank facility fee, goodwill impairment
and a foreign exchange gain, net of tax, related to a short-term
investment are included. 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 nine months ended March
31, 2009. The Company excludes all of the above-mentioned
amounts when calculating fundamental net income and earnings per
share, because management believes that these adjustments enhance
its own evaluation, as well as an investor's understanding, of the
Company's financial performance. Attachment B presents the
reconciliation between GAAP and fundamental net income and earnings
per share.
Headline earnings per share
("HEPS")
The inclusion of HEPS in this press release is a requirement of
the Company's listing on the JSE. HEPS basic and diluted is
calculated using net income which has been determined based on
GAAP. Accordingly, this may differ to the headline earnings per
share calculation of other companies listed on the JSE as these
companies may report their financial results under a different
financial reporting framework, including but not limited to,
International Financial Reporting Standards. HEPS basic and diluted
is calculated as GAAP net income adjusted for the loss (profit) on
sale of property, plant and equipment, net of related tax effects.
Attachment C presents the reconciliation between the Company's net
income used to calculate earnings per share basic and diluted and
HEPS basic and diluted.
Conference Call
Net1 will host a conference call to review third quarter results
on May 7, 2010, at 8:00 a.m. 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)
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 May 30, 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. Net1's 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. Net1's
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/smartcard)
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.
|
|
NET 1 UEPS
TECHNOLOGIES, INC.
|
|
Unaudited
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
|
March
31,
|
|
|
March
31,
|
|
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
(In thousands,
except per share data)
|
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
72,291
|
$
|
55,878
|
|
$
|
211,669
|
$
|
185,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT processing,
servicing and support
|
|
17,910
|
|
15,225
|
|
|
55,652
|
|
51,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
|
22,381
|
|
14,772
|
|
|
58,987
|
|
48,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
5,141
|
|
4,266
|
|
|
14,384
|
|
11,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS ON SALE OF MICROLENDING
BUSINESS
|
|
-
|
|
742
|
|
|
-
|
|
742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IMPAIRMENT OF GOODWILL
|
|
-
|
|
-
|
|
|
-
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
26,859
|
|
20,873
|
|
|
82,646
|
|
70,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOREIGN EXCHANGE GAIN RELATED TO
SHORT-TERM INVESTMENT
|
|
-
|
|
-
|
|
|
-
|
|
26,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME, net
|
|
2,206
|
|
2,125
|
|
|
6,470
|
|
7,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
29,065
|
|
22,998
|
|
|
89,116
|
|
105,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
10,441
|
|
8,543
|
|
|
32,964
|
|
35,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS
|
|
18,624
|
|
14,455
|
|
|
56,152
|
|
69,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM EQUITY-ACCOUNTED
INVESTMENTS
|
|
(44)
|
|
(261)
|
|
|
(425)
|
|
(797)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
18,580
|
|
14,194
|
|
|
55,727
|
|
68,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ADD) LESS: NET (LOSS) INCOME
ATTRIBUTABLE TO NON-CONTROLLING INTEREST
|
|
(192)
|
|
(185)
|
|
|
(270)
|
|
577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
NET1
|
$
|
18,772
|
$
|
14, 379
|
|
$
|
55,997
|
$
|
68,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share, in
cents
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
attributable to Net1 shareholders
|
|
41.4
|
|
25.8
|
|
|
120.3
|
|
120.1
|
|
Diluted earnings
attributable to Net1 shareholders
|
|
41.1
|
|
25.8
|
|
|
119.8
|
|
119.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS
TECHNOLOGIES, INC.
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
(A)
|
|
|
|
March
31,
|
|
June
30,
|
|
|
|
2010
|
|
2009
|
|
|
|
(In thousands,
except share data)
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
184,341
|
|
$
|
220,786
|
|
|
Pre-funded social welfare grants
receivable
|
|
4,752
|
|
|
4,930
|
|
|
Accounts receivable, net of allowances
of – March: $475; June: $395
|
|
46,822
|
|
|
42,475
|
|
|
Finance loans receivable, net of
allowances of – March: $245; June: $226
|
|
4,575
|
|
|
2,563
|
|
|
Deferred expenditure on smart
cards
|
|
13
|
|
|
8
|
|
|
Inventory
|
|
5,195
|
|
|
7,250
|
|
|
Deferred income taxes
|
|
12,491
|
|
|
12,282
|
|
|
Total current assets before
funds held for clients
|
|
258,189
|
|
|
290,294
|
|
|
Funds held for
clients
|
|
3,304
|
|
|
-
|
|
|
Total
current assets
|
|
261,493
|
|
|
290,294
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM ASSETS, including
available for sale securities
|
|
6,896
|
|
|
7,147
|
|
PROPERTY, PLANT AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION OF – March: $37,666; June:
$28,169
|
|
8,269
|
|
|
7,376
|
|
EQUITY-ACCOUNTED
INVESTMENTS
|
|
2,158
|
|
|
2,583
|
|
GOODWILL
|
|
119,418
|
|
|
116,197
|
|
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF – March: $32,281; June: $31,150
|
|
78,278
|
|
|
75,890
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
476,512
|
|
|
499,487
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable
|
|
6,594
|
|
|
5,481
|
|
|
Other payables
|
|
77,422
|
|
|
61,454
|
|
|
Income taxes payable
|
|
15,136
|
|
|
10,874
|
|
|
Total current liabilities
before client fund obligations
|
|
99,152
|
|
|
77,809
|
|
|
Client fund
obligations
|
|
3,304
|
|
|
-
|
|
|
Total
current liabilities
|
|
102,456
|
|
|
77,809
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAXES
|
|
50,220
|
|
|
41,737
|
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM LIABILITIES, including
non-controlling interest loans
|
|
5,274
|
|
|
4,185
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
157,950
|
|
|
123,731
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET1 EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
STOCK
|
|
|
|
|
|
|
|
Authorized:
200,000,000 with $0.001 par value;
|
|
|
|
|
|
|
|
Issued and
outstanding shares, net of treasury - March: 45,378,397;
June: 54,506,487
|
|
59
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
PAID-IN-CAPITAL
|
|
132,133
|
|
|
126,914
|
|
|
|
|
|
|
|
|
|
|
TREASURY SHARES,
AT COST: March: 13,149,042; June:
3,927,516
|
|
(173,671)
|
|
|
(48,637)
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED OTHER
COMPREHENSIVE LOSS
|
|
(51,496)
|
|
|
(58,472)
|
|
|
|
|
|
|
|
|
|
|
RETAINED
EARNINGS
|
|
409,350
|
|
|
353,353
|
|
|
|
|
|
|
|
|
|
TOTAL NET1
EQUITY
|
|
316,375
|
|
|
373,217
|
|
|
|
|
|
|
|
|
|
|
NON-CONTROLLING INTEREST
|
|
2,187
|
|
|
2,539
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY
|
|
318,562
|
|
|
375,756
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
|
$
|
476,512
|
|
$
|
499,487
|
|
|
|
|
|
|
|
|
|
|
(A) – Derived from audited financial
statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS
TECHNOLOGIES, INC.
Unaudited
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
|
March
31,
|
|
|
March
31,
|
|
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
(In
thousands)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
18,580
|
|
14,194
|
|
$
|
55,727
|
$
|
68,962
|
|
Depreciation and
amortization
|
|
5,141
|
|
4,266
|
|
|
14,384
|
|
11,950
|
|
Impairment of goodwill
|
|
-
|
|
-
|
|
|
-
|
|
1,836
|
|
Loss from equity-accounted
investments
|
|
44
|
|
261
|
|
|
425
|
|
797
|
|
Fair value adjustments
|
|
183
|
|
487
|
|
|
12
|
|
(1,957)
|
|
Unrealized foreign exchange gain
related to short-term investment
|
|
-
|
|
-
|
|
|
-
|
|
(1,015)
|
|
Interest payable
|
|
74
|
|
105
|
|
|
229
|
|
336
|
|
Loss on disposal of property, plant
and equipment
|
|
29
|
|
9
|
|
|
31
|
|
9
|
|
Loss on sale of microlending
business
|
|
-
|
|
742
|
|
|
-
|
|
742
|
|
Stock-based compensation
charge
|
|
1,400
|
|
1,317
|
|
|
4,254
|
|
3,868
|
|
Facility fee
amortized
|
|
-
|
|
-
|
|
|
-
|
|
1,100
|
|
(Increase) Decrease in
accounts receivable, pre-funded social welfare grants
receivable and finance loans receivable
|
|
(3,314)
|
|
(17,329)
|
|
|
2,736
|
|
(55,120)
|
|
Decrease (Increase) in deferred expenditure on
smart cards
|
|
55
|
|
84
|
|
|
(5)
|
|
57
|
|
(Increase) Decrease
in
inventory
|
|
(221)
|
|
(1,538)
|
|
|
2,465
|
|
(1,244)
|
|
Increase (Decrease) in accounts payable
and other payables
|
|
1,325
|
|
2,215
|
|
|
(8,017)
|
|
(15,374)
|
|
Increase in taxes payable
|
|
7,343
|
|
475
|
|
|
7,027
|
|
4,659
|
|
Increase (Decrease) in deferred taxes
|
|
1,070
|
|
(182)
|
|
|
3,181
|
|
(1,601)
|
|
|
Net cash provided by operating
activities
|
|
31,709
|
|
5,106
|
|
|
82,449
|
|
18,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(984)
|
|
(413)
|
|
|
(2,310)
|
|
(3,696)
|
|
Proceeds from disposal of property,
plant and equipment
|
|
62
|
|
1
|
|
|
124
|
|
3
|
|
Acquisition of MediKredit, net of cash
acquired
|
|
(981)
|
|
-
|
|
|
(981)
|
|
-
|
|
Acquisition of available for sale
security
|
|
-
|
|
(3,422)
|
|
|
-
|
|
(3,422)
|
|
Acquisition of Net1 UAT, net of cash
acquired
|
|
-
|
|
(1,906)
|
|
|
-
|
|
(97,992)
|
|
Acquisition of shares in
equity-accounted investments
|
|
-
|
|
(150)
|
|
|
-
|
|
(450)
|
|
Net change in funds held for
clients
|
|
280
|
|
-
|
|
|
280
|
|
-
|
|
|
Net cash used in investing
activities
|
|
(1,623)
|
|
(5,890)
|
|
|
(2,887)
|
|
(105,557)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of share capital,
net of share issue expenses
|
|
-
|
|
-
|
|
|
720
|
|
155
|
|
Treasury stock acquired
|
|
-
|
|
-
|
|
|
(126,304)
|
|
(24,752)
|
|
Proceeds from short-term loan
facility
|
|
-
|
|
-
|
|
|
-
|
|
110,000
|
|
Repayment of short-term loan
facility
|
|
-
|
|
-
|
|
|
-
|
|
(110,000)
|
|
Payment of facility fee
|
|
-
|
|
-
|
|
|
-
|
|
(1,100)
|
|
Repayment of non-controlling interest
loan
|
|
-
|
|
-
|
|
|
(137)
|
|
-
|
|
Net change in client funds
obligations
|
|
(280)
|
|
-
|
|
|
(280)
|
|
-
|
|
Proceeds from bank
overdrafts
|
|
-
|
|
2,401
|
|
|
-
|
|
2,496
|
|
Repayment of loans
|
|
-
|
|
(2,252)
|
|
|
-
|
|
(2,252)
|
|
|
Net cash (used in) provided by
financing activities
|
|
(280)
|
|
149
|
|
|
(126,001)
|
|
(25,453)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash
|
|
1,664
|
|
(2,996)
|
|
|
9,994
|
|
(38,445)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents
|
|
31,470
|
|
(3,631)
|
|
|
(36,445)
|
|
(151,450)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – beginning
of period
|
|
152,871
|
|
124,656
|
|
|
220,786
|
|
272,475
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – end of
period
|
$
|
184,341
|
|
121,025
|
|
$
|
184,341
|
$
|
121,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating
margin:
Three months ended March 31,
2010 and 2009 and December 31, 2009
|
|
|
|
|
|
|
|
Change -
actual
|
Change – constant
exchange rate(1)
|
|
Key segmental
data, in '000, except margins
|
Q3
'10
|
|
Q3
'09
|
|
Q2
'10
|
Q3
'10
vs
Q3
'09
|
Q3
'10
vs
Q2
'10
|
Q3
'10
vs
Q3
'09
|
Q3
'10
vs
Q2
'10
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$50,854
|
|
$35,995
|
|
$45,415
|
41%
|
12%
|
7%
|
12%
|
|
Smart card
accounts
|
7,956
|
|
6,676
|
|
$8,137
|
19%
|
(2)%
|
(10)%
|
(2)%
|
|
Financial
services
|
1,149
|
|
1,357
|
|
$858
|
(15)%
|
34%
|
(36)%
|
34%
|
|
Hardware, software
and related technology sales
|
12,332
|
|
11,850
|
|
19,454
|
4%
|
(37)%
|
(21)%
|
(37)%
|
|
Total consolidated
revenue
|
$72,291
|
|
$55,878
|
|
$73,864
|
29%
|
(2)%
|
(2)%
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$26,837
|
|
$21,638
|
|
$26,733
|
24%
|
0%
|
(6)%
|
1%
|
|
Smart card
accounts
|
3,616
|
|
3,034
|
|
3,699
|
19%
|
(2)%
|
(10)%
|
(2)%
|
|
Financial
services
|
831
|
|
(261)
|
|
546
|
(418)%
|
52%
|
(341)%
|
52%
|
|
Hardware, software
and related technology sales
|
(1,798)
|
|
(1,398)
|
|
1,660
|
29%
|
(208)%
|
(3)%
|
(208)%
|
|
Corporate/
Eliminations
|
(2,627)
|
|
(2,140)
|
|
(3,219)
|
23%
|
(18)%
|
(7)%
|
(18)%
|
|
Total operating
income
|
$26,859
|
|
$20,873
|
|
$29,419
|
29%
|
(9)%
|
(3)%
|
(9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
margin (%)
|
|
|
|
|
|
|
|
|
|
|
Transaction-based
activities
|
53%
|
|
60%
|
|
59%
|
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
45%
|
|
|
|
|
|
Financial
services
|
72%
|
|
(19)%
|
|
64%
|
|
|
|
|
|
Hardware, software
and related technology sales
|
(15)%
|
|
(12)%
|
|
9%
|
|
|
|
|
|
Overall operating
margin
|
37%
|
|
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 third quarter of fiscal
2010 also prevailed during the third quarter of fiscal 2009 and the
second quarter of fiscal 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2010 and 2009
|
|
|
|
|
|
|
Change -
actual
|
Change – constant
exchange rate(1)
|
|
Key segmental
data, in '000, except margins
|
Q3
'10
|
|
Q3
'09
|
|
Q3
'10
vs
Q3
'09
|
Q3
'10
vs
Q3
'09
|
|
Revenue:
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$141,247
|
|
$109,159
|
|
29%
|
9%
|
|
Smart card
accounts
|
$24,167
|
|
21,957
|
|
10%
|
(8)%
|
|
Financial
services
|
$2,799
|
|
4,571
|
|
(39)%
|
(49)%
|
|
Hardware, software
and related technology sales
|
$43,456
|
|
49,514
|
|
(12)%
|
(26)%
|
|
Total consolidated
revenue
|
$211,669
|
|
$185,201
|
|
14%
|
(4)%
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$80,238
|
|
$60,929
|
|
32%
|
11%
|
|
Smart card
accounts
|
10,985
|
|
9,979
|
|
10%
|
(8)%
|
|
Financial
services
|
1,908
|
|
(1,504)
|
|
(227)%
|
(206)%
|
|
Hardware, software
and related technology sales
|
(1,851)
|
|
8,229
|
|
(122)%
|
(119)%
|
|
Corporate/
Eliminations
|
(8,634)
|
|
(6,677)
|
|
29%
|
9%
|
|
Total operating
income
|
$82,646
|
|
$70,956
|
|
16%
|
(2)%
|
|
|
|
|
|
|
|
|
|
Operating income
margin (%)
|
|
|
|
|
|
|
|
Transaction-based
activities
|
57%
|
|
56%
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
|
|
|
Financial
services
|
68%
|
|
(33)%
|
|
|
|
|
Hardware, software
and related technology sales
|
(4)%
|
|
17%
|
|
|
|
|
Overall operating
margin
|
39%
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) – This information
shows what the change in these items would have been if the USD/
ZAR exchange rate that prevailed during year to date fiscal 2010
also prevailed during year to date fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net
income:
Three months ended March 31,
2010 and 2009
|
|
|
|
Net
Income
(USD'000)
|
EPS,
basic
(USD
cents)
|
|
Net
income
(ZAR'000)
|
EPS,
basic
(ZAR
cents)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
18,772
|
14,379
|
41
|
26
|
|
141,431
|
143,241
|
312
|
257
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
2,733
|
2,301
|
|
|
|
20,595
|
22,923
|
|
|
|
|
Customer
relationships
|
3,192
|
2,454
|
|
|
|
24,053
|
24,446
|
|
|
|
|
Software and
unpatented technology
|
430
|
667
|
|
|
|
3,239
|
6,642
|
|
|
|
|
Trademarks
|
90
|
68
|
|
|
|
679
|
679
|
|
|
|
|
Database
|
67
|
-
|
|
|
|
507
|
-
|
|
|
|
|
Deferred tax
benefit
|
(1,046)
|
(888)
|
|
|
|
(7,883)
|
(8,844)
|
|
|
|
Stock-based charge
|
1,401
|
1,317
|
|
|
|
10,555
|
13,120
|
|
|
|
Loss on sale of Moneyline
|
-
|
742
|
|
|
|
-
|
7,392
|
|
|
|
Acquisition-related costs
|
283
|
-
|
|
|
|
2,135
|
-
|
|
|
|
Fundamental
|
23,189
|
18,739
|
51
|
34
|
|
174,716
|
186,676
|
385
|
335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amortization of Prism, EasyPay,
RMT, MediKredit and BGS intangibles, net of deferred tax
benefit.
(2) Includes stock-based compensation
charges related to options and non-vested stock awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
2010 and 2009
|
|
|
|
Net
Income
(USD'000)
|
EPS,
basic
(USD
cents)
|
|
Net
income
(ZAR'000)
|
EPS,
basic
(ZAR
cents)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
55,997
|
68,385
|
120
|
120
|
|
426,961
|
621,137
|
918
|
1,091
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
7,694
|
6,068
|
|
|
|
58,658
|
55,111
|
|
|
|
|
Customer
relationships
|
9,775
|
6,070
|
|
|
|
74,526
|
55,130
|
|
|
|
|
Software and
unpatented technology
|
425
|
2,194
|
|
|
|
3,239
|
19,926
|
|
|
|
|
Trademarks
|
267
|
224
|
|
|
|
2,036
|
2,036
|
|
|
|
|
Database
|
66
|
|
|
|
|
507
|
|
|
|
|
|
Deferred tax
benefit
|
(2,839)
|
(2,420)
|
|
|
|
(21,650)
|
(21,981)
|
|
|
|
Stock-based
charge(2)
|
4,254
|
3,868
|
|
|
|
32,435
|
35,133
|
|
|
|
JSE listing costs
|
-
|
495
|
|
|
|
-
|
4,496
|
|
|
|
Facility fee
|
-
|
1,100
|
|
|
|
-
|
9,991
|
|
|
|
Foreign exchange gain related to a
short-term investment, net of tax of $9,210
|
-
|
(17,447)
|
|
|
|
-
|
(158,469)
|
|
|
|
Impairment of goodwill
|
-
|
1,836
|
|
|
|
-
|
16,676
|
|
|
|
Change in tax rate
|
-
|
(3,458)
|
|
|
|
-
|
(31,409)
|
|
|
|
Loss on sale of Moneyline
|
-
|
742
|
|
|
|
-
|
6,740
|
|
|
|
Acquisition-related
costs.
|
382
|
-
|
|
|
|
2,911
|
-
|
|
|
|
Fundamental
|
68,327
|
61,589
|
147
|
108
|
|
520,965
|
559,406
|
1,120
|
983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amortization of Prism, EasyPay,
RMT, MediKredit 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 March 31,
2010 and 2009
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
Net income (USD'000)
|
18,772
|
|
14,379
|
|
Adjustments:
|
|
|
|
|
Loss on sale of
Moneyline
|
-
|
|
742
|
|
Loss (Profit) on
sale of property, plant and equipment (USD'000)
|
29
|
|
9
|
|
Tax effects on
above (USD'000)
|
(10)
|
|
(3)
|
|
|
|
|
|
|
Net income used to calculate headline
earnings (USD'000)
|
18,791
|
|
15,127
|
|
|
|
|
|
|
Weighted average number of shares used
to calculate net income per share basic earnings and headline
earnings per share basic earnings ('000)
|
45,378
|
|
55,673
|
|
|
|
|
|
|
Weighted average number of shares used
to calculate net income per share diluted earnings and headline
earnings per share diluted earnings ('000)
|
45,643
|
|
55,798
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
Basic earnings –
common stock and linked units, in US cents
|
41
|
|
27
|
|
Diluted earnings –
common stock and linked units, in US cents
|
41
|
|
27
|
|
|
|
|
|
|
|
Nine months ended March 31,
2010 and 2009
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
Net income (USD'000)
|
55,997
|
|
68,385
|
|
Adjustments:
|
|
|
|
|
Impairment of
goodwill
|
-
|
|
1,836
|
|
Loss on sale of
Moneyline
|
-
|
|
742
|
|
Loss (Profit) on
sale of property, plant and equipment (USD'000)
|
31
|
|
9
|
|
Tax effects on
above (USD'000)
|
(11)
|
|
(3)
|
|
|
|
|
|
|
Net income used to calculate headline
earnings (USD'000)
|
56,017
|
|
70,969
|
|
|
|
|
|
|
Weighted average number of shares used
to calculate net income per share basic earnings and headline
earnings per share basic earnings ('000)
|
46,532
|
|
56,933
|
|
|
|
|
|
|
Weighted average number of shares used
to calculate net income per share diluted earnings and headline
earnings per share diluted earnings ('000)
|
46,725
|
|
57,126
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
Basic earnings –
common stock and linked units, in US cents
|
120
|
|
125
|
|
Diluted earnings –
common stock and linked units, in US cents
|
120
|
|
124
|
|
|
|
|
|
|
|
SOURCE Net 1 UEPS Technologies, Inc.