JOHANNESBURG, Feb. 3, 2011 /PRNewswire/ -- 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, 2010 ("2Q 2011").
Revenue for 2Q 2011 was $89.0
million, a year over year increase of 21% in US dollars
("USD") and 36% in constant currency. During 2Q 2011, net income
under US generally accepted accounting principles ("GAAP") was
$9.9 million versus net income of
$19.3 million for the three months
ended December 31, 2009 ("2Q 2010").
GAAP earnings per share for 2Q 2011 was $0.22 versus GAAP earnings per share of
$0.42 a year ago. Fundamental
earnings per share for 2Q 2011 was $0.39 compared to $0.51 for 2Q 2010, representing a decrease of 24%
in USD and 30% in constant currency.
Revenue during the first half of fiscal 2011 ("1H2011") was
$153.3 million, a year over year
increase of 10% in US dollars ("USD") and 2% in constant currency
compared to the first half of fiscal 2010 ("1H2010"). Earnings per
share under GAAP during 1H2011 was $0.38 versus $0.79
a year ago, a decline of 52% in USD and 55% in constant currency.
Fundamental earnings per share for 1H2011 was $0.75 compared to $0.96 for 1H2010, representing a decrease of 22%
in USD and 27% in constant currency.
Summary Financial Metrics
|
|
|
Three months
ended December 31,
|
|
|
2010
|
2009
|
%
change
in USD
|
%
change
in ZAR
|
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
|
Revenue
|
89,011
|
73,864
|
21%
|
36%
|
|
|
|
|
|
|
|
|
GAAP net income
|
9,948
|
19,284
|
(48)%
|
(52)%
|
|
|
|
|
|
|
|
|
Fundamental net income
(1)
|
17,511
|
23,239
|
(25)%
|
(30)%
|
|
|
|
|
|
|
|
|
GAAP earnings per share
($)
|
0.22
|
0.42
|
(48)%
|
(52)%
|
|
|
|
|
|
|
|
|
Fundamental earnings per share
($) (1)
|
0.39
|
0.51
|
(24)%
|
(30)%
|
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
('000's)
|
45,494
|
45,588
|
0%
|
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
6.94
|
7.52
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended December 31,
|
|
|
2010
|
2009
|
%
change
in USD
|
%
change
in ZAR
|
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
|
Revenue
|
153,294
|
139,378
|
10%
|
2%
|
|
|
|
|
|
|
|
|
GAAP net income
|
17,377
|
37,225
|
(53)%
|
(57)%
|
|
|
|
|
|
|
|
|
Fundamental net income
(1)
|
34,034
|
45,043
|
(24)%
|
(30)%
|
|
|
|
|
|
|
|
|
GAAP earnings per share
($)
|
0.38
|
0.79
|
(52)%
|
(55)%
|
|
|
|
|
|
|
|
|
Fundamental earnings per share
($) (1)
|
0.75
|
0.96
|
(22)%
|
(27)%
|
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
('000's)
|
45,455
|
47,253
|
(4)%
|
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
7.14
|
7.67
|
(7)%
|
|
|
|
(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 2011 also excludes transaction-related
costs and an unrealized foreign exchange gain
(related to foreign exchange contracts
entered into in order to hedge the fluctuations in the ZAR/ US
dollar related to the anticipated flow of funds from South Africa
to the United States to fund a portion of the KSNET ("KSNET")
purchase price).
|
|
|
|
|
|
|
The following factors had an influence on the comparability of
our 2Q 2011 and 2Q 2010 results:
- SASSA price and volume reductions: The Company's
new contract with SASSA has reduced its revenue and operating
income as a result of the previously announced price and volume
reductions;
- Favorable impact from the weakness of the US
dollar: The US dollar depreciated by 8% compared to the ZAR
during the second quarter of fiscal 2011 compared to fiscal 2010
which has had a positive impact on the Company reported
results;
- Increased revenue from KSNET at lower operating margins,
before acquired intangible asset amortization, than the Company's
legacy business: The Company's KSNET acquisition in
October 2010 positively impacted its
revenue during the second quarter of fiscal 2011, however, because
KSNET has an operating margin, before acquired intangible asset
amortization, that is lower than the Company's legacy businesses,
it negatively impacted its operating margin. The inclusion of KSNET
in the Company's results has also contributed to the increase in
selling, general and administration and depreciation and
amortization expenses;
- 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;
- Increased revenue from MediKredit and FIRHST at lower
operating margins than other SA transaction-based activity
business: The Company's MediKredit and FIHRST acquisitions
positively impacted its revenue during the second quarter of fiscal
2011, however, because MediKredit generated a modest operating loss
and FIHRST has operating margin that is lower than the Company's
other transaction-based activity businesses, they negatively
impacted its operating margin. The inclusion of these businesses in
the Company's results has also contributed to the increase in
selling, general and administration expense;
- Increased user adoption in Iraq: The Company's reported results
were positively impacted by increased transaction revenues at NUETS
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 lower revenues at Net1 UTA, offset by ad hoc hardware
sales;
- Intangible asset amortization related to
acquisitions: The Company's reported results were adversely
impacted by additional intangible asset amortization of
approximately $2.0 million related to
the acquisitions of KSNET in the second quarter of fiscal 2011, as
well as MediKredit and FIHRST during the third quarter of fiscal
2010;
- Lower interest income and increased interest expense
resulting from KSNET acquisition: The Company's reported
results were adversely impacted by lower interest income due to the
payment of a portion of the KSNET purchase price in cash and
increased interest expense due to the payment of a portion of the
KSNET purchase price utilizing long-term debt and facility fees of
approximately $1.7 million; and
- Non-recurring items included in selling, general and
administration expense: During the second quarter of fiscal
2011, we recognized an unrealized foreign exchange gain of
$2.7 million and incurred
transaction-related expenses of $1.8
million, primarily for the acquisition of KSNET.
Comments and Outlook
"The second quarter of fiscal 2011 was a transformational
quarter for us with the closing of our KSNET acquisition, which
diversifies our revenue, earnings and product portfolio, as well as
reduces Net1's dependency on any one single economy, currency or
political jurisdiction. Our revenue and profitability in 2Q 2011
continued to be negatively impacted by the previously announced
reduction in the economics of our contract with SASSA, but offset
by the inclusion of KSNET for two months of the quarter and
sustained growth at EasyPay," said Dr. Serge Belamant, Chairman and Chief Executive
Officer of Net1. "In January 2011 we
extended our contract with SASSA for a period of six months to
September 30, 2011, under the same
terms and conditions of the existing contract. We expect SASSA to
commence a new tender process for the distribution of social grants
in South Africa in the near
future, and remain well positioned to capitalize on our market
leading solution, distribution and position. Separately, in 2Q 2011
KSNET's performance was in-line with management's expectations
while Net1 made demonstrable progress in the deployment of our
newer Virtual Card and EasyPay Kiosk initiatives," he
concluded.
"We remain comfortable with our Fundamental EPS guidance of at
least $1.50 on a constant currency
basis for fiscal 2011. We continue to expect KSNET to be accretive
to Fundamental EPS for fiscal 2011, but it is too soon to provide
guidance on such level of accretion," said Herman Kotze, Chief Financial Officer of
Net1.
Results of Operations
Net1's frequently asked questions and operating metrics will be
updated and posted on the Company's website (www.net1.com).
SA transaction-based activities
SA transaction-based activities revenue was $46.6 million, up 3% compared with 2Q 2010 in USD
and 5% lower on a constant currency basis. In ZAR, the decrease in
revenue was primarily due to the new SASSA contract at lower
economics, which was partially offset by increased transaction
volumes at EasyPay and the inclusion of MediKredit and FIHRST.
Operating income margin of the Company's SA transaction-based
activities decreased to 40% from 59% a year ago. The decrease was
primarily due to the lower revenues generated under the SASSA
contract, additional intangible asset amortization related to the
acquisition of MediKredit and FIHRST and lower margins at
MediKredit and FIHRST compared with the Company's legacy SA
transaction-based activities. Excluding amortization of
acquisition-related intangibles, 2Q 2011 segment operating margin
was 43% compared with 61% during 2Q 2010.
International transaction-based
activities
The Company's new International transaction-based activities
segment includes the operations of KSNET, Net1 Virtual Card and
NUETS' operations in Iraq.
International transaction-based activities revenue was $17 million and segment operating margin was 2%.
Excluding the amortization of intangibles, segment operating margin
was 14%. KSNET is the largest contributor to the segment and has
been included in the Company's results from November 1, 2010.
Smart card accounts
Smart card account revenue was $8.4
million, up 4% compared with 2Q 2010 in USD and 4% lower on
a constant currency basis. Operating margin for the segment
remained consistent at 45%.
Financial services
Financial services revenue was $1.6
million, up 89% compared with 2Q 2010 in USD and 74% higher
on a constant currency basis, principally due to an increase in
lending activities. Operating margin for this segment increased to
76% from 64% in 2Q 2010 largely as a result of the increased
lending activities.
Hardware, software and related technology
sales
Hardware, software and related technology sales revenue was
$15.4 million, down 21% compared with
2Q 2010 in USD and 27% lower on a constant currency basis. The
decrease in revenue and operating income for 2Q 2011 was primarily
due lower revenues generated by Net1 UTA, partially offset by ad
hoc hardware sales. Excluding amortization of all intangibles and
the impairment of goodwill, segment operating margin was 14%
compared to 22% during 2Q 2010.
Cash flow and liquidity
At December 31, 2010, the Company
had cash and cash equivalents of $71
million, down from $154
million at June 30, 2010. For
2Q 2011, the Company utilized net cash of $8.1 million for operating activities, compared
to generating operating cash flow of $13.8
million in 2Q 2010. The decrease in operating cash flow
resulted mainly from the SASSA price and volume reductions which
were effective July 1, 2010 and
provisional tax and Secondary Taxation on Companies payments of
$31 million in 2Q 2011, compared to
provisional tax payments in 2Q 2010 of $16
million. Capital expenditures for 2Q 2011 and 2010 were
$4.0 million and $0.7 million, respectively. On October 29, 2010, the Company paid approximately
$240 million to acquire KSNET, which
was funded from $124 million of the
Company's cash reserves and from $116
million in long-term borrowings. During 2Q 2011, the Company
did not repurchase any shares under its $100
million authorization.
Use of Non-GAAP Measures
US securities laws require that when the Company publishes any
non-GAAP measures, it discloses the reason for using the non-GAAP
measure and provides 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
The Company's GAAP net income and earnings per share for 2Q 2011
and 2Q 2010 include amortization of intangible assets and
stock-based compensation. In addition, GAAP net income and earnings
per share for 2Q 2011 includes transaction-related costs and an
unrealized foreign exchange gain described above. 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 second quarter
results on February 4, 2011 at
8:00 Eastern Time. To participate in
the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852
(Canada only), 0-800-917-7042
(U.K. only) or 0-800-200-648 (South
Africa only) ten minutes prior to the start of the call.
Callers should request "Net1 call" upon dial-in. The call will also
be webcast on the Net1 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 the Net1
website through February 25,
2011.
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, Iraq
and Uzbekistan. In addition,
Net1's proprietary Mobile Virtual Card technology offers secure
mobile payments and banking services in developed and emerging
countries.
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
|
|
Six months
ended
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
(In
thousands, except per share data)
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
89,011
|
$
|
73,864
|
|
$
|
153,294
|
$
|
139,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT
processing, servicing and support
|
|
29,182
|
|
20,915
|
|
|
47,249
|
|
37,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
|
28,763
|
|
18,866
|
|
|
59,089
|
|
36,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
9,092
|
|
4,664
|
|
|
13,996
|
|
9,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
21,974
|
|
29,419
|
|
|
32,960
|
|
55,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST (EXPENSE) INCOME,
net
|
|
(2,080)
|
|
1,893
|
|
|
756
|
|
4,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
19,894
|
|
31,312
|
|
|
33,716
|
|
60,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
9,836
|
|
11,492
|
|
|
16,043
|
|
22,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING
OPERATIONS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS
|
|
10,058
|
|
19,820
|
|
|
17,673
|
|
37,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM EQUITY-ACCOUNTED
INVESTMENTS
|
|
(166)
|
|
(270)
|
|
|
(382)
|
|
(381)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
9,892
|
|
19,550
|
|
|
17,291
|
|
37,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ADD) LESS: NET (LOSS) INCOME
ATTRIBUTABLE TO NON-CONTROLLING INTEREST
|
|
(56)
|
|
266
|
|
|
(86)
|
|
(78)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
NET1
|
$
|
9,948
|
$
|
19,284
|
|
$
|
17,377
|
$
|
37,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share, in United
States dollars
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
attributable to Net1 shareholders
|
|
$0.22
|
|
$0.43
|
|
|
$0.38
|
|
$0.79
|
|
|
Diluted earnings
attributable to Net1 shareholders
|
|
$0.22
|
|
$0.42
|
|
|
$0. 38
|
|
$0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS
TECHNOLOGIES, INC.
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
Unaudited
|
|
(A)
|
|
|
|
December
31,
|
|
June
30,
|
|
|
|
2010
|
|
2010
|
|
|
|
(In
thousands, except share data)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
71,383
|
|
$
|
153,742
|
|
|
Pre-funded social welfare grants
receivable
|
|
4,772
|
|
|
6,660
|
|
|
Accounts receivable, net of
allowances of – December: $1,687; June: $807
|
|
76,308
|
|
|
41,854
|
|
|
Finance loans receivable, net of
allowances of – December: $-; June: $-
|
|
9,511
|
|
|
4,221
|
|
|
Inventory
|
|
6,986
|
|
|
3,622
|
|
|
Deferred income taxes
|
|
17,655
|
|
|
16,330
|
|
|
Total current assets
before settlement assets
|
|
186,615
|
|
|
226,429
|
|
|
Settlement
assets
|
|
157,448
|
|
|
83,661
|
|
|
Total current assets
|
|
344,063
|
|
|
310,090
|
|
|
PROPERTY, PLANT AND EQUIPMENT,
NET OF ACCUMULATED DEPRECIATION OF – December: $43,635; June:
$35,271
|
|
32,738
|
|
|
7,286
|
|
|
EQUITY-ACCOUNTED
INVESTMENTS
|
|
2,452
|
|
|
2,598
|
|
|
GOODWILL
|
|
184,215
|
|
|
76,346
|
|
|
INTANGIBLE ASSETS, NET OF
ACCUMULATED AMORTIZATION OF –
December: $48,034; June:
$34,226
|
|
192,022
|
|
|
68,347
|
|
|
OTHER LONG-TERM ASSETS,
including available for sale securities
|
|
15,016
|
|
|
7,423
|
|
|
TOTAL ASSETS
|
|
770,506
|
|
|
472,090
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
Bank overdraft
|
|
420
|
|
|
-
|
|
|
Accounts payable
|
|
13,410
|
|
|
3,596
|
|
|
Other payables
|
|
72,941
|
|
|
50,855
|
|
|
Current portion of long-term
borrowings
|
|
7,166
|
|
|
-
|
|
|
Income taxes payable
|
|
5,553
|
|
|
3,476
|
|
|
Total current liabilities
before settlement obligations
|
|
99,490
|
|
|
57,927
|
|
|
Settlement
obligations
|
|
157,448
|
|
|
83,661
|
|
|
Total current liabilities
|
|
256,938
|
|
|
141,588
|
|
|
DEFERRED INCOME TAXES
|
|
62,052
|
|
|
38,858
|
|
|
LONG-TERM BORROWINGS
|
|
107,934
|
|
|
|
|
|
OTHER LONG-TERM LIABILITIES,
including non-controlling interest loans
|
|
5,219
|
|
|
4,343
|
|
|
TOTAL LIABILITIES
|
|
432,143
|
|
|
184,789
|
|
|
|
|
|
|
|
|
|
|
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: 45,535,353; June: 45,378,397
|
|
59
|
|
|
59
|
|
|
PREFERRED STOCK
|
|
|
|
|
|
|
|
Authorized shares: 50,000,000
with $0.001 par value;
|
|
|
|
|
|
|
|
Issued and outstanding shares,
net of treasury: 2010: -; 2009:
-
|
|
-
|
|
|
-
|
|
|
ADDITIONAL
PAID-IN-CAPITAL
|
|
137,614
|
|
|
133,543
|
|
|
TREASURY SHARES, AT COST:
December: 13,149,042; June:
13,149,042
|
|
(173,671)
|
|
|
(173,671)
|
|
|
ACCUMULATED OTHER
COMPREHENSIVE LOSS
|
|
(38,381)
|
|
|
(66,396)
|
|
|
RETAINED
EARNINGS
|
|
409,720
|
|
|
392,343
|
|
|
TOTAL NET1
EQUITY
|
|
335,341
|
|
|
285,878
|
|
|
NON-CONTROLLING
INTEREST
|
|
3,022
|
|
|
1,423
|
|
|
TOTAL EQUITY
|
|
338,363
|
|
|
287,301
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
|
770,506
|
|
$
|
472,090
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
(In
thousands)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
9,892
|
$
|
19,550
|
|
$
|
17,291
|
$
|
37,147
|
|
|
Depreciation and
amortization
|
|
9,092
|
|
4,664
|
|
|
13,996
|
|
9,243
|
|
|
Loss from equity-accounted
investments
|
|
166
|
|
270
|
|
|
382
|
|
381
|
|
|
Fair value
adjustments
|
|
3,344
|
|
(29)
|
|
|
238
|
|
(171)
|
|
|
Interest payable
|
|
67
|
|
77
|
|
|
140
|
|
155
|
|
|
Profit on disposal of property,
plant and equipment
|
|
(3)
|
|
3
|
|
|
(8)
|
|
2
|
|
|
Stock-based compensation
charge
|
|
1,558
|
|
1,432
|
|
|
2,996
|
|
2,854
|
|
|
Decrease in accounts
receivable, pre-funded social welfare grants
receivable and finance loans
receivable
|
|
(13,563)
|
|
491
|
|
|
(2,608)
|
|
5,990
|
|
|
(Increase) Decrease
in inventory
|
|
2,168
|
|
1,671
|
|
|
66
|
|
2,686
|
|
|
Increase in accounts
payable and other payables
|
|
(2,248)
|
|
(9,367)
|
|
|
3,777
|
|
(9,342)
|
|
|
Increase in taxes
payable
|
|
(6,364)
|
|
(6,527)
|
|
|
(1,230)
|
|
(316)
|
|
|
(Decrease) Increase
in deferred taxes
|
|
(12,165)
|
|
1,536
|
|
|
(12,938)
|
|
2,111
|
|
|
Net cash (used in) provided by
operating activities
|
|
(8,056)
|
|
13,771
|
|
|
22,102
|
|
50,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(4,011)
|
|
(685)
|
|
|
(4,779)
|
|
(1,326)
|
|
|
Proceeds from disposal of
property, plant and equipment
|
|
11
|
|
13
|
|
|
18
|
|
62
|
|
|
Advance of loans to
equity-accounted investment
|
|
-
|
|
-
|
|
|
(375)
|
|
-
|
|
|
Repayment of loan by
equity-accounted investment
|
|
34
|
|
-
|
|
|
407
|
|
-
|
|
|
Acquisition of KSNET, net of
cash acquired
|
|
(230,225)
|
|
-
|
|
|
(230,225)
|
|
-
|
|
|
Net change in settlement
assets
|
|
(31,641)
|
|
-
|
|
|
(47,185)
|
|
-
|
|
|
Net cash used in investing
activities
|
|
(265,832)
|
|
(672)
|
|
|
(282,139)
|
|
(1,264)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
Loan portion related to
options
|
|
-
|
|
-
|
|
|
20
|
|
720
|
|
|
Treasury stock
acquired
|
|
-
|
|
-
|
|
|
-
|
|
(126,304)
|
|
|
Long-term borrowings
obtained
|
|
116,353
|
|
-
|
|
|
116,353
|
|
-
|
|
|
Acquisition of remaining 19.9%
of Net1 UTA
|
|
(594)
|
|
-
|
|
|
(594)
|
|
-
|
|
|
Repayment of short-term
borrowings
|
|
419
|
|
-
|
|
|
419
|
|
(137)
|
|
|
Net change in settlement
obligations
|
|
31,641
|
|
-
|
|
|
47,185
|
|
-
|
|
|
Net cash generated from (used
in) financing activities
|
|
147,819
|
|
-
|
|
|
163,383
|
|
(125,721)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash
|
|
(2,709)
|
|
460
|
|
|
14,295
|
|
8,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
and cash equivalents
|
|
(128,778)
|
|
13,559
|
|
|
(82,359)
|
|
(67,915)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents –
beginning of period
|
|
200,161
|
|
139,312
|
|
|
153,742
|
|
220,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – end
of period
|
$
|
71,383
|
$
|
152,871
|
|
$
|
71,383
|
$
|
152,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS
Technologies, Inc.
Attachment
A
Operating
segment revenue, operating income and operating
margin:
Three months
ended December 31, 2010 and 2009 and September 30,
2010
|
|
|
|
|
|
|
|
Change -
actual
|
Change –
constant
exchange
rate(1)
|
|
|
Key
segmental data, in '000, except margins
|
Q2
'11
|
|
Q2
'10
|
|
Q1
'11
|
Q2
'11
vs
Q2 '10
|
Q2
'11
vs
Q1 '11
|
Q2
'11
vs
Q2 '10
|
Q2
'11
vs
Q1 '11
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$46,588
|
|
$45,415
|
|
$44,892
|
3%
|
4%
|
(5)%
|
(3)%
|
|
|
International
transaction-based activities
|
16,950
|
|
-
|
|
-
|
nm
|
nm
|
nm
|
nm
|
|
|
Smart card
accounts
|
8,434
|
|
8,137
|
|
7,970
|
4%
|
6%
|
(4)%
|
(1)%
|
|
|
Financial
services
|
1,623
|
|
858
|
|
1,248
|
89%
|
30%
|
74%
|
22%
|
|
|
Hardware, software and
related technology sales
|
15,416
|
|
19,454
|
|
10,173
|
(21)%
|
52%
|
(27)%
|
42%
|
|
|
Total
consolidated revenue
|
$89,011
|
|
$73,864
|
|
$64,283
|
21%
|
38%
|
11%
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$18,547
|
|
$26,733
|
|
$17,776
|
(31)%
|
4%
|
(36)%
|
(2)%
|
|
|
International
transaction-based activities
|
327
|
|
-
|
|
-
|
nm
|
nm
|
nm
|
nm
|
|
|
Operating income excluding
amortization
|
2,359
|
|
-
|
|
-
|
nm
|
nm
|
nm
|
nm
|
|
|
Amortization of intangible
assets
|
(2,032)
|
|
-
|
|
-
|
|
|
|
|
|
|
Smart card
accounts
|
3,832
|
|
3,699
|
|
3,622
|
4%
|
6%
|
(4)%
|
(1)%
|
|
|
Financial
services
|
1,231
|
|
546
|
|
929
|
125%
|
33%
|
108%
|
24%
|
|
|
Hardware, software and
related technology sales
|
(319)
|
|
1,660
|
|
(2,660)
|
(119)%
|
(88)%
|
(118)%
|
(89)%
|
|
|
Corporate/
Eliminations
|
(1,644)
|
|
(3,219)
|
|
(8,681)
|
(49)%
|
(81)%
|
(53)%
|
(82)%
|
|
|
Total
operating income
|
$21,974
|
|
$29,419
|
|
$10,986
|
(25)%
|
100%
|
(31)%
|
87%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income margin (%)
|
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
40%
|
|
59%
|
|
40%
|
|
|
|
|
|
|
International
transaction-based activities
|
2%
|
|
-
|
|
-
|
|
|
|
|
|
|
International
transaction-based activities excluding amortization
|
14%
|
|
-
|
|
-
|
|
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
45%
|
|
|
|
|
|
|
Financial
services
|
76%
|
|
64%
|
|
74%
|
|
|
|
|
|
|
Hardware, software and
related technology sales
|
(2)%
|
|
9%
|
|
(26)%
|
|
|
|
|
|
|
Overall operating
margin
|
25%
|
|
40%
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2011 also prevailed during the second
quarter of fiscal 2010 and the first quarter of fiscal
2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended December 31, 2010 and 2009
|
|
|
|
|
|
|
Change
-
actual
|
Change
–
constant
exchange
rate(1)
|
|
|
Key
segmental data, in '000, except margins
|
Q2
'11
|
|
Q2
'10
|
|
Q2
'11
vs
Q2 '10
|
Q2
'11
vs
Q1 '11
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$91,010
|
|
$90,393
|
|
1%
|
(6)%
|
|
|
International
transaction-based activities
|
17,420
|
|
-
|
|
nm
|
nm
|
|
|
Smart card
accounts
|
16,404
|
|
16,211
|
|
1%
|
(6)%
|
|
|
Financial
services
|
2,871
|
|
1,650
|
|
74%
|
62%
|
|
|
Hardware, software and
related technology sales
|
25,589
|
|
31,124
|
|
(18)%
|
(23)%
|
|
|
Total
consolidated revenue
|
$153,294
|
|
$139,378
|
|
10%
|
2%
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$35,986
|
|
$53,401
|
|
(33)%
|
(37)%
|
|
|
International
transaction-based activities
|
116
|
|
-
|
|
nm
|
nm
|
|
|
Operating income excluding
amortization
|
2,148
|
|
-
|
|
nm
|
nm
|
|
|
Amortization of intangible
assets
|
(2,032)
|
|
-
|
|
|
|
|
|
Smart card
accounts
|
7,454
|
|
7,369
|
|
1%
|
(6)%
|
|
|
Financial
services
|
2,160
|
|
1,077
|
|
101%
|
87%
|
|
|
Hardware, software and
related technology sales
|
(2,979)
|
|
(53)
|
|
5521%
|
5132%
|
|
|
Corporate/
Eliminations
|
(9,777)
|
|
(6,007)
|
|
63%
|
51%
|
|
|
Total
operating income
|
$32,960
|
|
$55,787
|
|
(41)%
|
(45)%
|
|
|
|
|
|
|
|
|
|
|
Operating
income margin (%)
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
40%
|
|
59%
|
|
|
|
|
|
International
transaction-based activities
|
1%
|
|
-
|
|
|
|
|
|
International
transaction-based activities excluding amortization
|
12%
|
|
-
|
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
|
|
|
|
Financial
services
|
75%
|
|
65%
|
|
|
|
|
|
Hardware, software and
related technology sales
|
(12)%
|
|
-
|
|
|
|
|
|
Overall operating
margin
|
22%
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2011 also prevailed during the first half of fiscal
2010.
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS
Technologies, Inc.
Attachment
B
Reconciliation of GAAP net
income to fundamental net income:
Three months
ended December 31, 2010 and 2009
|
|
|
|
Net
Income
(USD'000)
|
EPS,
basic
(USD)
|
|
Net
income
(ZAR'000)
|
EPS,
basic
(ZAR)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
9,948
|
19,284
|
0.22
|
0.42
|
|
69,040
|
145,091
|
1.52
|
3.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
4,302
|
2,524
|
|
|
|
29,857
|
18,988
|
|
|
|
|
Customer
relationships
|
3,726
|
3,346
|
|
|
|
25,862
|
25,171
|
|
|
|
|
Software and unpatented
technology
|
1,939
|
-
|
|
|
|
13,458
|
-
|
|
|
|
|
Trademarks
|
176
|
90
|
|
|
|
1,220
|
679
|
|
|
|
|
Database
|
73
|
|
|
|
|
507
|
|
|
|
|
|
Deferred tax
benefit
|
(1,612)
|
(912)
|
|
|
|
(11,190)
|
(6,862)
|
|
|
|
|
Stock-based charge(2)
|
1,558
|
1,431
|
|
|
|
10,813
|
10,767
|
|
|
|
|
Gain on FEC, net of
tax
|
(1,799)
|
-
|
|
|
|
(12,485)
|
-
|
|
|
|
|
Facility fees for KSNET
debt
|
1,728
|
-
|
|
|
|
11,993
|
-
|
|
|
|
|
Acquisition-related
costs
|
1,774
|
-
|
|
|
|
12,313
|
-
|
|
|
|
|
Fundamental
|
17,511
|
23,239
|
0.39
|
0.51
|
|
121,531
|
174,846
|
2.67
|
3.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amortization
of acquisition-related intangibles, net of deferred tax
benefit.
|
|
|
(2) Includes
stock-based compensation charges related to options and non-vested
stock awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended December 31, 2010 and 2009
|
|
|
|
Net
Income
(USD'000)
|
EPS,
basic
(USD)
|
|
Net
income
(ZAR'000)
|
EPS,
basic
(ZAR)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
17,377
|
37,225
|
0.38
|
0.79
|
|
124,089
|
285,601
|
2.73
|
6.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
6,916
|
4,964
|
|
|
|
49,393
|
38,080
|
|
|
|
|
Customer
relationships
|
6,281
|
6,582
|
|
|
|
44,858
|
50,494
|
|
|
|
|
Software and unpatented
technology
|
2,897
|
-
|
|
|
|
20,687
|
-
|
|
|
|
|
Trademarks
|
268
|
177
|
|
|
|
1,915
|
1,358
|
|
|
|
|
Deferred tax
benefit
|
142
|
-
|
|
|
|
1,013
|
-
|
|
|
|
|
Deferred tax
benefit
|
(2,672)
|
(1,795)
|
|
|
|
(19,080)
|
(13,772)
|
|
|
|
|
Stock-based charge(2)
|
2,996
|
2,854
|
|
|
|
21,394
|
21,897
|
|
|
|
|
Gain on FEC, net of
tax
|
(114)
|
-
|
|
|
|
(813)
|
-
|
|
|
|
|
Facility fees for KSNET
debt
|
1,728
|
-
|
|
|
|
12,340
|
-
|
|
|
|
|
Acquisition-related
costs
|
5,131
|
-
|
|
|
|
36,640
|
-
|
|
|
|
|
Fundamental
|
34,034
|
45,043
|
0.75
|
0.96
|
|
243,043
|
345,578
|
5.35
|
7.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amortization
of acquisition-related intangibles, net of deferred tax
benefit.
|
|
|
(2) Includes
stock-based compensation charges related to options and non-vested
stock awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS
Technologies, Inc.
Attachment
C
Reconciliation of net income
used to calculate earnings per share basic and diluted and headline
earnings per share basic and diluted:
Three months
ended December 31, 2010 and 2009
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Net income (USD'000)
|
9,948
|
|
19,284
|
|
|
Adjustments:
|
|
|
|
|
|
Profit on sale of
property, plant and equipment (USD'000)
|
(3)
|
|
3
|
|
|
Tax effects on above
(USD'000)
|
1
|
|
(1)
|
|
|
|
|
|
|
|
Net income used to calculate
headline earnings (USD'000)
|
9,946
|
|
19,286
|
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share basic earnings and
headline earnings per share basic earnings ('000)
|
45,433
|
|
45,378
|
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share diluted earnings and
headline earnings per share diluted earnings ('000)
|
45,494
|
|
45,588
|
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
|
Basic earnings – common
stock and linked units, in US cents
|
22
|
|
43
|
|
|
Diluted earnings – common
stock and linked units, in US cents
|
22
|
|
42
|
|
|
|
|
|
|
|
|
Six months
ended December 31, 2010 and 2009
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Net income (USD'000)
|
17,377
|
|
37,225
|
|
|
Adjustments:
|
|
|
|
|
|
Loss (Profit) on sale of
property, plant and equipment (USD'000)
|
(8)
|
|
2
|
|
|
Tax effects on above
(USD'000)
|
3
|
|
(1)
|
|
|
|
|
|
|
|
Net income used to calculate
headline earnings (USD'000)
|
17,372
|
|
37,226
|
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share basic earnings and
headline earnings per share basic earnings ('000)
|
45,409
|
|
47,097
|
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share diluted earnings and
headline earnings per share diluted earnings ('000)
|
45,455
|
|
47,253
|
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
|
Basic earnings – common
stock and linked units, in US cents
|
38
|
|
79
|
|
|
Diluted earnings – common
stock and linked units, in US cents
|
38
|
|
79
|
|
|
|
|
|
|
|
SOURCE Net 1 UEPS Technologies, Inc.