JOHANNESBURG, May 5, 2011 /PRNewswire/ -- 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, 2011 ("3Q 2011"). Revenue
for 3Q 2011 was $92.8 million, a year
over year increase of 28% in US dollars ("USD") and 19% in constant
currency. During 3Q 2011, net loss under US generally accepted
accounting principles ("GAAP") was $21.6
million versus net income of $18.8
million for the three months ended March 31, 2010 ("3Q 2010"). GAAP loss per share
for 3Q 2011 was $0.47 versus GAAP
earnings per share of $0.41 a year
ago. Fundamental earnings per share for 3Q 2011 was $0.38 compared to $0.51 for 3Q 2011, representing a decrease of 26%
in USD and 31% in constant currency.
Revenue during year to date fiscal 2011 ("F2011") was
$246.1 million, a year over year
increase of 16% in US dollars ("USD") and 8% in constant currency
compared to year to date fiscal 2010 ("F2010"). During F2011, net
loss under GAAP was $4.2 million
versus net income of $56.0 million
for F2010. Loss per share under GAAP during F2011 was $0.09 versus earnings per share of $1.20 a year ago, a decline of 108% in USD and
107% in constant currency. Fundamental earnings per share for F2011
was $1.13 compared to $1.47 for F2010, representing a decrease of 23%
in USD and 29% in constant currency.
Summary Financial
Metrics
|
|
|
|
|
Three months
ended March 31,
|
|
|
2011
|
2010
|
%
change
in
USD
|
%
change
in
ZAR
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
Revenue
|
92,758
|
72,291
|
28%
|
19%
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
(21,562)
|
18,772
|
(215)%
|
(206)%
|
|
|
|
|
|
|
|
Fundamental net income
(1)
|
17,144
|
23,189
|
(26)%
|
(31)%
|
|
|
|
|
|
|
|
GAAP (loss) earnings per share
($)
|
(0.47)
|
0.41
|
(222)%
|
(213)%
|
|
|
|
|
|
|
|
Fundamental earnings per share
($) (1)
|
0.38
|
0.51
|
(26)%
|
(31)%
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
('000's)
|
45,559
|
45,643
|
0%
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
6.99
|
7.53
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended March 31,
|
|
|
2011
|
2010
|
%
change
in
USD
|
%
change
in
ZAR
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
Revenue
|
246,052
|
211,669
|
16%
|
8%
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
(4,185)
|
55,997
|
(107)%
|
(107)%
|
|
|
|
|
|
|
|
Fundamental net income
(1)
|
51,176
|
68,327
|
(25)%
|
(30)%
|
|
|
|
|
|
|
|
GAAP (loss) earnings per share
($)
|
(0.09)
|
1.20
|
(108)%
|
(107)%
|
|
|
|
|
|
|
|
Fundamental earnings per
share ($) (1)
|
1.13
|
1.47
|
(23)%
|
(29)%
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
('000's)
|
45,489
|
46,725
|
(3)%
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
7.09
|
7.62
|
(7)%
|
|
|
|
|
(1) Fundamental net income and
earnings per share is GAAP net (loss) income and (loss) earnings
per share excluding the amortization of acquisition-related
intangible assets, net of deferred taxes, transaction-related costs
and stock-based compensation charges. In addition, the calculation
of fundamental net income and earnings per share for 3Q 2011 and
F2011 also excludes an impairment loss, net of deferred taxes, and
amortization of facility fees related to the KSNET
acquisition.
|
|
|
|
|
|
|
The following factors impacted the comparability of our 3Q 2011
and 3Q 2010 results:
- Impairment loss related to Net1 UTA customer
relationships: The Company recorded an impairment loss of
$41.8 million related to Net1 UTA's
customer relationships, which resulted in an operating loss for the
quarter. The Company also reversed a deferred tax liability of
$10.4 million associated with these
customer relationships. As a result, the Company's reported net
income was reduced by $31.3
million;
- SASSA price and volume reductions: The Company's
contract with SASSA has reduced its revenue and operating income,
before impairment loss, 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 7% compared to the ZAR
during the third quarter of fiscal 2011 compared to fiscal 2010
which positively impacted the Company's reported results;
- Increased revenue from KSNET at lower operating margins
than the Company's legacy businesses, before acquired intangible
asset amortization: The KSNET acquisition increased the
Company's revenue during the entire third quarter of fiscal 2011,
however, because KSNET has an operating margin that is lower than
the Company's legacy businesses, before acquired intangible asset
amortization, it reduced the Company's overall 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:
Reported results were favorably impacted by increased transaction
volumes at EasyPay resulting from growth in value-added
services;
- Lower revenue and operating loss generated by
MediKredit: MediKredit's revenue for the third quarter of
fiscal 2011 was lower than the comparable period due to the
inclusion in the third quarter of fiscal 2010 of claims processing
support fees received from a customer it lost in late calendar 2009
and which contractually continued to pay fees through the end of
April 2010. MediKredit generated an
operating loss during the third quarter of fiscal 2011, in line
with the Company's expectations;
- Increased revenue from FIHRST at lower operating margins
than other SA transaction-based activity business: FIHRST
increased the Company's revenue during the third quarter of fiscal
2011, however, because FIHRST has an operating margin that is lower
than the Company's other SA transaction-based activity businesses,
it negatively impacted the Company's overall operating margin. The
inclusion of FIHRST in the Company's results has also contributed
to the increase in selling, general and administration
expense;
- Increased user adoption in Iraq: The Company recorded increased
transaction revenues at NUETS from the adoption of the Company's
UEPS technology in Iraq;
- Lower revenues and margins from hardware, software and
related technology sales segment: The hardware, software
and related technology sales segment was adversely impacted by
lower revenues at NUETS, partially offset by increased sales by
Net1 UTA;
- Intangible asset amortization related to
acquisitions: Reported results were adversely impacted by
additional intangible asset amortization of approximately
$3.1 million related to the
acquisition of KSNET in the second quarter of fiscal 2011, as well
as FIHRST during the third quarter of fiscal 2010;
- Lower interest income and increased interest expense
resulting from KSNET acquisition: 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
- Non-recurring items included in selling, general and
administration expense: During the third quarter of fiscal
2011, the Company incurred transaction-related expenses of
$0.5 million, primarily for the
acquisition of KSNET.
Comments and Outlook
"Our results for the third quarter of fiscal 2011 represent the
performance by our established businesses, namely pension and
welfare, KSNET and EasyPay, which were consistent with management's
expectations, as well as investments in Net1 Virtual Card and
MediKredit to drive accelerating growth in those businesses," said
Dr. Serge Belamant, Chairman and
Chief Executive Officer of Net1. "We are disappointed though not
surprised with the decision by one of Net1 UTA's largest customers
to transition away from the DUET platform given our focus on
transitioning to a transaction based revenue stream as opposed to
the sale of hardware and software, which may not always be the
preferred model by all customers. However, this customer decision
together with uncertainty surrounding the timing and quantum of
Net1 UTA's future net cash inflows, resulted in the evaluation and
subsequent write down of its intangible assets related to customer
relationships during 3Q11. We have taken actions to return Net1 UTA
to at least break even in the near term and remain cautiously
optimistic about its prospects given its pipeline of opportunities.
In April 2011, SASSA issued its new
long-term tender for the distribution of social grants in
South Africa. Our current contract
with SASSA currently continues through September 30, 2011, and as previously discussed,
SASSA expects to conclude its evaluation process prior to that
time," 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 $47.3 million, down 7% compared with 3Q 2010 in
USD and 14% 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 FIHRST.
Operating income margin of the Company's SA transaction-based
activities decreased to 39% from 53% 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, 3Q 2011 segment operating margin
was 42% compared with 55% during 3Q 2010.
International transaction-based activities
KSNET is the largest contributor to the international
transaction-based activities segment. International
transaction-based activities revenue was $24.6 million and segment operating margin was 3%
in 3Q 2011. Excluding the amortization of intangibles but including
the start up costs related to the launch of Virtual Card in
the United States, segment
operating margin was 16%.
Smart card accounts
Smart card account revenue was $8.3
million, up 4% compared with 3Q 2010 in USD and 3% lower on
a constant currency basis. Operating margin for the segment
remained consistent at 45%.
Financial services
Financial services revenue was $2.2
million, up 89% compared with 3Q 2010 in USD and 75% higher
on a constant currency basis, principally due to an increase in
lending activities. Operating margin for this segment increased to
78% from 72% in 3Q 2010 largely as a result of the increased
lending activities.
Hardware, software and related technology
sales
Hardware, software and related technology sales revenue was
$10.4 million, down 16% compared with
3Q 2010 in USD and 22% lower on a constant currency basis. The
decrease in revenue and operating income for 3Q 2011 was primarily
due lower revenues generated by NUETS and other hardware businesses
but partially offset by increased sales at Net1 UTA. Excluding
amortization of all intangibles and the impairment loss, segment
operating margin was (3)% compared to 5% during 3Q 2010.
Cash flow and liquidity
At March 31, 2011, the Company had
cash and cash equivalents of $89
million, down from $154
million at June 30, 2010. The
decrease in cash was due primarily to the use of approximately
$124.3 million to fund a portion of
the KSNET purchase price and the payment of STC of $14.7 million incurred related to dividends paid
from South Africa to the United States connected with the KSNET
transaction. For 3Q 2011, the Company generated net cash flow of
$28.3 million for operating
activities, compared to $31.7 million
in 3Q 2010. The decrease in operating cash flow resulted mainly
from the SASSA price and volume reductions which were effective
July 1, 2010. Capital expenditures
for 3Q 2011 and 2010 were $4.7
million and $1.0 million,
respectively. During 3Q 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 (loss) income and (loss) earnings per
share for 3Q 2011 and 3Q 2010 include amortization of intangible
assets, transaction-related costs and stock-based compensation. In
addition, GAAP net (loss) income and (loss) earnings per share for
3Q 2010 and F2011 includes an impairment loss and facility fee
amortization related to the KSNET acquisition. 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 (loss) 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 (loss) income adjusted for impairment
losses, net of taxes, and 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 (loss) 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 6, 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
May 27, 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 and Iraq. 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
|
|
Nine months
ended
|
|
|
|
|
March
31,
|
|
|
March
31,
|
|
|
|
|
2011
|
|
2010
|
|
|
2011
|
|
2010
|
|
|
|
(In thousands, except per share data)
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
92,758
|
$
|
72,291
|
|
$
|
246,052
|
$
|
211,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT
processing, servicing and support
|
|
29,302
|
|
17,910
|
|
|
76,551
|
|
55,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
|
32,618
|
|
22,381
|
|
|
91,707
|
|
58,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
11,192
|
|
5,141
|
|
|
25,188
|
|
14,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss
|
|
41,771
|
|
-
|
|
|
41,771
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING (LOSS)
INCOME
|
|
(22,125)
|
|
26,859
|
|
|
10,835
|
|
82,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST (EXPENSE) INCOME,
net
|
|
(955)
|
|
2,206
|
|
|
(199)
|
|
6,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME BEFORE INCOME
TAXES
|
|
(23,080)
|
|
29,065
|
|
|
10,636
|
|
89,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX (BENEFIT)
EXPENSE
|
|
(1,603)
|
|
10,441
|
|
|
14,440
|
|
32,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME FROM
CONTINUING OPERATIONS BEFORE LOSS FROM EQUITY-ACCOUNTED
INVESTMENTS
|
|
(21,477)
|
|
18,624
|
|
|
(3,804)
|
|
56,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM EQUITY-ACCOUNTED
INVESTMENTS
|
|
(127)
|
|
(44)
|
|
|
(509)
|
|
(425)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
|
|
(21,604)
|
|
18,580
|
|
|
(4,313)
|
|
55,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADD NET LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
|
|
(42)
|
|
(192)
|
|
|
(128)
|
|
(270)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME ATTRIBUTABLE
TO NET1
|
$
|
(21,562)
|
$
|
18,772
|
|
$
|
(4,185)
|
$
|
55,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share, in
United States dollars
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings
attributable to Net1 shareholders
|
|
($0.47)
|
|
$0.41
|
|
|
($0.09)
|
|
$1.20
|
|
Diluted (loss) earnings
attributable to Net1 shareholders
|
|
($0.47)
|
|
$0.41
|
|
|
($0.09)
|
|
$1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET 1 UEPS
TECHNOLOGIES, INC.
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
Unaudited
|
|
(A)
|
|
|
|
March
31,
|
|
June
30,
|
|
|
|
2011
|
|
2010
|
|
|
|
(In
thousands, except share data)
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
88,890
|
|
$
|
153,742
|
|
|
Pre-funded social welfare grants
receivable
|
|
3,199
|
|
|
6,660
|
|
|
Accounts receivable, net of
allowances of – March: $398; June: $807
|
|
75,125
|
|
|
41,854
|
|
|
Finance loans
receivable
|
|
8,514
|
|
|
4,221
|
|
|
Inventory
|
|
7,113
|
|
|
3,622
|
|
|
Deferred income taxes
|
|
18,748
|
|
|
16,330
|
|
|
Total current assets
before settlement assets
|
|
201,589
|
|
|
226,429
|
|
|
Settlement
assets
|
|
146,441
|
|
|
83,661
|
|
|
Total current assets
|
|
348,030
|
|
|
310,090
|
|
PROPERTY, PLANT AND EQUIPMENT,
NET OF ACCUMULATED
DEPRECIATION OF – March:
$46,189; June: $35,271
|
|
33,861
|
|
|
7,286
|
|
EQUITY-ACCOUNTED
INVESTMENTS
|
|
1,893
|
|
|
2,598
|
|
GOODWILL
|
|
187,026
|
|
|
76,346
|
|
INTANGIBLE ASSETS, NET OF
ACCUMULATED AMORTIZATION OF –
March: $31,764; June:
$34,226
|
|
147,922
|
|
|
68,347
|
|
OTHER LONG-TERM ASSETS,
including available for sale securities
|
|
21,640
|
|
|
7,423
|
|
TOTAL ASSETS
|
|
740,372
|
|
|
472,090
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
Bank overdraft
|
|
454
|
|
|
-
|
|
|
Accounts payable
|
|
16,101
|
|
|
3,596
|
|
|
Other payables
|
|
62,471
|
|
|
50,855
|
|
|
Current portion of long-term
borrowings
|
|
7,347
|
|
|
-
|
|
|
Income taxes payable
|
|
12,771
|
|
|
3,476
|
|
|
Total current liabilities
before settlement obligations
|
|
99,144
|
|
|
57,927
|
|
|
Settlement
obligations
|
|
146,441
|
|
|
83,661
|
|
|
Total current liabilities
|
|
245,585
|
|
|
141,588
|
|
DEFERRED INCOME TAXES
|
|
58,698
|
|
|
38,858
|
|
LONG-TERM BORROWINGS
|
|
115,205
|
|
|
-
|
|
OTHER LONG-TERM LIABILITIES,
including non-controlling interest loans
|
|
1,029
|
|
|
4,343
|
|
TOTAL LIABILITIES
|
|
420,517
|
|
|
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 - March: 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: 2011: -; 2010:
-
|
|
-
|
|
|
-
|
|
ADDITIONAL
PAID-IN-CAPITAL
|
|
139,211
|
|
|
133,543
|
|
TREASURY SHARES, AT COST:
March: 13,149,042; June:
13,149,042
|
|
(173,671)
|
|
|
(173,671)
|
|
ACCUMULATED OTHER
COMPREHENSIVE LOSS
|
|
(36,900)
|
|
|
(66,396)
|
|
RETAINED
EARNINGS
|
|
388,158
|
|
|
392,343
|
|
TOTAL NET1
EQUITY
|
|
316,857
|
|
|
285,878
|
|
NON-CONTROLLING
INTEREST
|
|
2,998
|
|
|
1,423
|
|
TOTAL EQUITY
|
|
319,855
|
|
|
287,301
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
|
740,372
|
|
$
|
472,090
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
|
2011
|
|
2010
|
|
|
2011
|
|
2010
|
|
|
|
(In
thousands)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
$
|
(21,604)
|
$
|
18,580
|
|
$
|
(4,313)
|
$
|
55,727
|
|
Depreciation and
amortization
|
|
11,192
|
|
5,141
|
|
|
25,188
|
|
14,384
|
|
Impairment loss
|
|
41,771
|
|
-
|
|
|
41,771
|
|
-
|
|
Loss from equity-accounted
investments
|
|
127
|
|
44
|
|
|
509
|
|
425
|
|
Fair value
adjustments
|
|
417
|
|
183
|
|
|
655
|
|
12
|
|
Interest payable
|
|
1,406
|
|
74
|
|
|
1,546
|
|
229
|
|
(Loss) Profit on disposal of
property, plant and equipment
|
|
(2)
|
|
29
|
|
|
(10)
|
|
31
|
|
Stock-based compensation
charge
|
|
1,597
|
|
1,400
|
|
|
4,593
|
|
4,254
|
|
Facility fee
amortized
|
|
113
|
|
-
|
|
|
1,841
|
|
-
|
|
Decrease (Increase) in accounts
receivable, pre-funded social welfare grants
receivable and finance loans
receivable
|
|
3,896
|
|
(3,314)
|
|
|
2,648
|
|
2,736
|
|
Decrease (Increase) in deferred
expenditure on smart cards
|
|
-
|
|
55
|
|
|
-
|
|
(5)
|
|
(Increase) Decrease
in inventory
|
|
(229)
|
|
(221)
|
|
|
(163)
|
|
2,465
|
|
(Decrease) Increase
in accounts payable and other
payables
|
|
(6,060)
|
|
1,325
|
|
|
(2,283)
|
|
(8,017)
|
|
Increase (Decrease)
in taxes payable
|
|
7,140
|
|
7,343
|
|
|
5,910
|
|
7,027
|
|
(Decrease) Increase
in deferred taxes
|
|
(11,500)
|
|
1,070
|
|
|
(24,438)
|
|
3,181
|
|
|
Net cash provided by operating
activities
|
|
28,264
|
|
31,709
|
|
|
53,454
|
|
82,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
(4,679)
|
|
(984)
|
|
|
(9,458)
|
|
(2,310)
|
|
Proceeds from disposal of
property, plant and equipment
|
|
10
|
|
62
|
|
|
28
|
|
124
|
|
Advance of loans to
equity-accounted investment
|
|
-
|
|
-
|
|
|
(375)
|
|
-
|
|
Repayment of loan by
equity-accounted investment
|
|
33
|
|
-
|
|
|
440
|
|
-
|
|
Acquisition of KSNET, net of
cash acquired
|
|
-
|
|
-
|
|
|
(230,225)
|
|
-
|
|
Acquisition of MediKredit, net
of cash acquired
|
|
-
|
|
(981)
|
|
|
-
|
|
(981)
|
|
Net change in settlement
assets
|
|
7,397
|
|
280
|
|
|
(39,788)
|
|
280
|
|
|
Net cash provided by (used in)
investing activities
|
|
2,761
|
|
(1,623)
|
|
|
(279,378)
|
|
(2,887)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
|
Loan portion related to
options
|
|
-
|
|
-
|
|
|
20
|
|
720
|
|
Treasury stock
acquired
|
|
-
|
|
-
|
|
|
-
|
|
(126,304)
|
|
Long-term borrowings
obtained
|
|
-
|
|
-
|
|
|
116,353
|
|
-
|
|
Facilities fees paid
|
|
-
|
|
-
|
|
|
(3,088)
|
|
-
|
|
Acquisition of remaining 19.9%
of Net1 UTA
|
|
-
|
|
-
|
|
|
(594)
|
|
-
|
|
Repayment of short-term
borrowings
|
|
(7,124)
|
|
-
|
|
|
(6,705)
|
|
(137)
|
|
Net change in settlement
obligations
|
|
(7,397)
|
|
(280)
|
|
|
39,788
|
|
(280)
|
|
|
Net cash (used in) generated
from financing activities
|
|
(14,521)
|
|
(280)
|
|
|
145,774
|
|
(126,001)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash
|
|
1,003
|
|
1,664
|
|
|
15,298
|
|
9,994
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
|
17,507
|
|
31,470
|
|
|
(64,852)
|
|
(36,445)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents –
beginning of period
|
|
71,383
|
|
152,871
|
|
|
153,742
|
|
220,786
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents – end
of period
|
$
|
88,890
|
$
|
184,341
|
|
$
|
88,890
|
$
|
184,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net 1 UEPS
Technologies, Inc.
Attachment
A
Operating
segment revenue, operating (loss) income and operating
margin:
Three months
ended March 31, 2011 and 2010 and December 31, 2010
|
|
|
|
|
|
|
|
|
|
Change -
actual
|
Change –
constant exchange rate(1)
|
|
Key
segmental data, in '000, except margins
|
Q3
'11
|
|
Q3
'10
|
|
Q2
'11
|
Q3
'11
vs
Q3
'10
|
Q3
'11
vs
Q2
'11
|
Q3
'11
vs
Q3
'10
|
Q3
'11
vs
Q2
'11
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$47,313
|
|
$50,854
|
|
$46,588
|
(7)%
|
2%
|
(14)%
|
2%
|
|
International
transaction-based activities
|
24,627
|
|
-
|
|
16,950
|
nm
|
nm
|
nm
|
nm
|
|
Smart card
accounts
|
8,288
|
|
7,956
|
|
8,434
|
4%
|
(2)%
|
(3)%
|
(1)%
|
|
Financial
services
|
2,168
|
|
1,149
|
|
1,623
|
89%
|
34%
|
75%
|
34%
|
|
Hardware, software and
related technology sales
|
10,362
|
|
12,332
|
|
15,416
|
(16)%
|
(33)%
|
(22)%
|
(32)%
|
|
Total
consolidated revenue
|
$92,758
|
|
$72,291
|
|
$89,011
|
28%
|
4%
|
19%
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$18,309
|
|
$26,837
|
|
$18,547
|
(32)%
|
(1)%
|
(37)%
|
(1)%
|
|
International
transaction-based activities
|
780
|
|
-
|
|
327
|
nm
|
139%
|
nm
|
nm
|
|
Operating income excluding
amortization
|
3,904
|
|
-
|
|
2,359
|
nm
|
65%
|
nm
|
nm
|
|
Amortization of intangible
assets
|
(3,124)
|
|
-
|
|
(2,032)
|
nm
|
54%
|
nm
|
nm
|
|
Smart card
accounts
|
3,767
|
|
3,616
|
|
3,832
|
4%
|
(2)%
|
(3)%
|
(1)%
|
|
Financial
services
|
1,701
|
|
831
|
|
1,231
|
105%
|
38%
|
90%
|
39%
|
|
Hardware, software and
related technology sales
|
(44,584)
|
|
(1,798)
|
|
(319)
|
nm
|
nm
|
nm
|
nm
|
|
Corporate/
Eliminations
|
(2,098)
|
|
(2,627)
|
|
(1,644)
|
(20)%
|
28%
|
(26)%
|
28%
|
|
Total
operating (loss) income
|
$(22,125)
|
|
$26,859
|
|
$21,974
|
(182)%
|
(201)%
|
(176)%
|
(201)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income margin (%)
|
|
|
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
39%
|
|
53%
|
|
40%
|
|
|
|
|
|
International
transaction-based activities
|
3%
|
|
-
|
|
2%
|
|
|
|
|
|
International
transaction-based activities excluding amortization
|
16%
|
|
-
|
|
14%
|
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
45%
|
|
|
|
|
|
Financial
services
|
78%
|
|
72%
|
|
76%
|
|
|
|
|
|
Hardware, software and
related technology sales
|
(430)%
|
|
(15)%
|
|
(2)%
|
|
|
|
|
|
Overall operating
margin
|
(24)%
|
|
37%
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2011 also prevailed during the third quarter of
fiscal 2010 and the second quarter of fiscal
2011.
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended March 31, 2011 and 2010
|
|
|
|
|
|
|
|
|
Change
-
actual
|
Change
–
constant
exchange
rate(1)
|
|
Key
segmental data, in '000, except margins
|
Q3
'11
|
|
Q3
'10
|
|
Q3
'11
vs
Q3
'10
|
Q3
'11
vs
Q3
'11
|
|
Revenue:
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$138,323
|
|
$141,247
|
|
(2)%
|
(9)%
|
|
International
transaction-based activities
|
42,047
|
|
-
|
|
nm
|
nm
|
|
Smart card
accounts
|
24,692
|
|
24,167
|
|
2%
|
(5)%
|
|
Financial
services
|
5,039
|
|
2,799
|
|
80%
|
67%
|
|
Hardware, software and
related technology sales
|
35,951
|
|
43,456
|
|
(17)%
|
(23)%
|
|
Total
consolidated revenue
|
$246,052
|
|
$211,669
|
|
16%
|
8%
|
|
|
|
|
|
|
|
|
|
Consolidated
operating income (loss):
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
$54,295
|
|
$80,238
|
|
(32)%
|
(37)%
|
|
International
transaction-based activities
|
896
|
|
-
|
|
nm
|
nm
|
|
Operating income excluding
amortization
|
6,052
|
|
-
|
|
nm
|
nm
|
|
Amortization of intangible
assets
|
(5,156)
|
|
-
|
|
|
|
|
Smart card
accounts
|
11,221
|
|
10,985
|
|
2%
|
(5)%
|
|
Financial
services
|
3,861
|
|
1,908
|
|
102%
|
88%
|
|
Hardware, software and
related technology sales
|
(47,563)
|
|
(1,851)
|
|
nm
|
nm
|
|
Corporate/
Eliminations
|
(11,875)
|
|
(8,634)
|
|
38%
|
28%
|
|
Total
operating income
|
$10,835
|
|
$82,646
|
|
(87)%
|
(88)%
|
|
|
|
|
|
|
|
|
|
Operating
income margin (%)
|
|
|
|
|
|
|
|
SA transaction-based
activities
|
39%
|
|
57%
|
|
|
|
|
International
transaction-based activities
|
2%
|
|
-
|
|
|
|
|
International
transaction-based activities excluding amortization
|
11%
|
|
-
|
|
|
|
|
Smart card
accounts
|
45%
|
|
45%
|
|
|
|
|
Financial
services
|
77%
|
|
68%
|
|
|
|
|
Hardware, software and
related technology sales
|
(132)%
|
|
(4)%
|
|
|
|
|
Overall operating
margin
|
4%
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 2011 also prevailed during year to date fiscal
2010.
|
|
|
|
|
|
|
|
|
Net 1 UEPS
Technologies, Inc.
Attachment
B
Reconciliation of GAAP net
income to fundamental net income:
Three months
ended March 31, 2011 and 2010
|
|
|
|
|
|
Net
(loss)
income
(USD'000)
|
(LPS)
EPS,
basic
(USD)
|
|
Net
(loss)
income
(ZAR'000)
|
(LPS)
EPS,
basic
(ZAR)
|
|
|
2011
|
2010
|
2011
|
2010
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
(21,562)
|
18,772
|
(0.47)
|
0.41
|
|
(150,617)
|
141,431
|
(3.31)
|
3.12
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
5,133
|
2,733
|
|
|
|
35,857
|
20,595
|
|
|
|
|
Customer
relationships
|
4,289
|
3,192
|
|
|
|
29,958
|
24,053
|
|
|
|
|
Software and unpatented
technology
|
2,428
|
430
|
|
|
|
16,964
|
3,239
|
|
|
|
|
Trademarks
|
217
|
90
|
|
|
|
1,517
|
679
|
|
|
|
|
Database
|
73
|
67
|
|
|
|
507
|
507
|
|
|
|
|
Deferred tax
benefit
|
(1,874)
|
(1,046)
|
|
|
|
(13,089)
|
(7,883)
|
|
|
|
Stock-based charge(2)
|
1,596
|
1,401
|
|
|
|
11,149
|
10,555
|
|
|
|
Impairment loss, net
|
31,339
|
-
|
|
|
|
218,912
|
-
|
|
|
|
Facility fees for KSNET
debt
|
113
|
-
|
|
|
|
789
|
-
|
|
|
|
Acquisition-related
costs.
|
525
|
283
|
|
|
|
3,666
|
2,135
|
|
|
|
Fundamental
|
17,144
|
23,189
|
0.38
|
0.51
|
|
119,756
|
174,716
|
2.63
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended March 31, 2011 and 2010
|
|
|
|
|
|
Net
(loss)
income
(USD'000)
|
(LPS)
EPS,
basic
(USD)
|
|
Net
(loss)
income
(ZAR'000)
|
(LPS)
EPS,
basic
(ZAR)
|
|
|
2011
|
2010
|
2011
|
2010
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
(4,185)
|
55,997
|
(0.09)
|
1.20
|
|
(29,668)
|
426,961
|
(0.65)
|
9.18
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
12,049
|
7,694
|
|
|
|
85,421
|
58,658
|
|
|
|
|
Customer
relationships
|
10,571
|
9,775
|
|
|
|
74,939
|
74,526
|
|
|
|
|
Software and unpatented
technology
|
5,325
|
425
|
|
|
|
37,745
|
3,239
|
|
|
|
|
Trademarks
|
485
|
267
|
|
|
|
3,440
|
2,036
|
|
|
|
|
Database
|
214
|
66
|
|
|
|
1,520
|
507
|
|
|
|
|
Deferred tax
benefit
|
(4,546)
|
(2,839)
|
|
|
|
(32,223)
|
(21,650)
|
|
|
|
Stock-based
charge(2)
|
4,590
|
4,254
|
|
|
|
32,539
|
32,435
|
|
|
|
Loss on FEC, net of
tax
|
(114)
|
-
|
|
|
|
(808)
|
-
|
|
|
|
Impairment loss, net
|
31,339
|
|
|
|
|
222,165
|
|
|
|
|
Facility fees for KSNET
debt
|
1,841
|
-
|
|
|
|
13,053
|
-
|
|
|
|
Acquisition-related
costs
|
5,656
|
382
|
|
|
|
40,095
|
2,911
|
|
|
|
Fundamental
|
51,176
|
68,327
|
1.13
|
1.47
|
|
362,797
|
520,965
|
7.99
|
11.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 (loss)
income used to calculate earnings per share basic and diluted and
headline earnings per share basic and diluted:
Three months
ended March 31, 2011 and 2010
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Net (loss) income
(USD'000)
|
(21,562)
|
|
18,772
|
|
Adjustments:
|
|
|
|
|
Impairment loss
(USD'000)
|
41,771
|
|
-
|
|
(Profit) Loss on sale of
property, plant and equipment (USD'000)
|
(2)
|
|
29
|
|
Tax effects on above
(USD'000)
|
(10,431)
|
|
(10)
|
|
|
|
|
|
|
Net income used to calculate
headline earnings (USD'000)
|
9,776
|
|
18,791
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
basic earnings and headline
earnings per share basic earnings ('000)
|
45,452
|
|
45,378
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
diluted earnings and headline
earnings per share diluted earnings ('000)
|
45,559
|
|
45,643
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
Basic earnings – common
stock and linked units, in US cents
|
22
|
|
41
|
|
Diluted earnings – common
stock and linked units, in US cents
|
21
|
|
41
|
|
|
|
|
|
|
|
Nine months
ended March 31, 2011 and 2010
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
Net (loss) income
(USD'000)
|
(4,185)
|
|
55,997
|
|
Adjustments:
|
|
|
|
|
Impairment loss (USD'000)
|
41,771
|
|
-
|
|
(Profit) Loss on sale of
property, plant and equipment (USD'000)
|
(10)
|
|
31
|
|
Tax effects on above
(USD'000)
|
(10,429)
|
|
(11)
|
|
|
|
|
|
|
Net income used to calculate
headline earnings (USD'000)
|
27,147
|
|
56,017
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
basic earnings and headline
earnings per share basic earnings ('000)
|
45,423
|
|
46,532
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
diluted earnings and headline
earnings per share diluted earnings ('000)
|
45,489
|
|
46,725
|
|
|
|
|
|
|
Headline earnings per
share:
|
|
|
|
|
Basic earnings – common
stock and linked units, in US cents
|
60
|
|
120
|
|
Diluted earnings – common
stock and linked units, in US cents
|
60
|
|
120
|
|
|
|
|
|
|
|
SOURCE Net 1 UEPS Technologies, Inc.