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Net1 Reports Second Quarter 2012 Results
Feb 09, 2012 (03:02 PM EST)


- Revenue of $92.1 million, an increase of 3% in US dollars and 22% in constant currency

- GAAP earnings per share of $0.56, an increase of 154% in US dollars and 199% in constant currency

- Fundamental earnings per share of $0.39, an increase of 2% in US dollars and 20% in constant currency

JOHANNESBURG, Feb. 9, 2012 /PRNewswire/ -- Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today announced results for the second quarter of fiscal 2012.

Summary Financial Metrics



Three months ended December 31,


2011

2010

% change in USD

% change in ZAR

(All figures in USD '000s except per share data)




Revenue

92,058

89,011

3%

22%






GAAP net income

25,094

9,948

152%

197%






Fundamental net income (1)

17,677

17,511

1%

19%






GAAP earnings per share ($)

0.56

0.22

154%

199%






Fundamental earnings per share ($) (1)

0.39

0.39

2%

20%






Fully-diluted shares outstanding ('000's)

44,967

45,494

(1)%







Average period USD/ ZAR exchange rate

8.18

6.94

18%







Six months ended December 31,


2011

2010

% change in USD

% change in ZAR

(All figures in USD '000s except per share data)




Revenue

191,984

153,294

25%

37%






GAAP net income

44,862

17,377

158%

183%






Fundamental net income (1)

39,309

34,034

15%

25%






GAAP earnings per share ($)

1.00

0.38

162%

186%






Fundamental earnings per share ($) (1)

0.87

0.75

16%

26%






Fully-diluted shares outstanding ('000's)

45,026

45,455

(1)%







Average period USD/ ZAR exchange rate

7.82

7.14

10%





(1) Fundamental net income and earnings per share is a non-GAAP measure and is described below under "Use of Non-GAAP Measures — Fundamental net income and fundamental earnings per share." See Attachment B for a reconciliation of GAAP net income to fundamental net income and earnings per share.

Factors impacting comparability of our 2Q 2012 and 2Q 2011 results

  • Unfavorable impact from the strengthening of the US dollar: The US dollar appreciated by 18% against the ZAR during 2Q 2012 which negatively impacted our reported results;
  • Net taxation benefit related to the replacement of STC with a dividends withholding tax in South Africa: As a result of a recent change in South African tax law that will replace STC with a dividends withholding tax, our tax expense decreased by $11.8 million, as we recorded a $20.0 million deferred tax benefit which was offset by an $8.2 million foreign tax credit valuation allowance;
  • Inclusion of revenue contribution from KSNET at lower operating margin (before acquired intangible asset amortization) than our legacy business: The inclusion of KSNET for a full fiscal quarter contributed to an increase in revenues for the 2Q 2012; however, because KSNET has an operating margin (before acquired intangible asset amortization) that is lower than our legacy businesses, it reduced our overall operating margin. KSNET also contributed to the increase in selling, general and administration and depreciation and amortization expenses;
  • Lower revenues from hardware, software and related technology sales segment: Hardware, software and related technology sales were adversely impacted by lower revenues from all major segment contributors;
  • Lower intangible asset amortization related to acquisition: Additional intangible asset amortization related to the acquisitions of KSNET and Eason was more than offset by the full impairment of Net1 UTA's intangibles in 2011;
  • Lower interest income and increased interest expense resulting from KSNET acquisition: We paid the KSNET purchase price with a combination of cash and long-term debt, which reduced interest income and increased interest expense; and
  • Fiscal 2011 unrealized foreign exchange gain and transaction-related expenses: During the 2Q 2011, we recognized, in selling, general and administration expense, 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

"Our 2Q 2012 results continued the strong momentum of our businesses from the previous quarter," said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. "I am particularly pleased with SASSA's decision to award the social grants tender on a national basis to Net1, as well as the conclusion of our BEE transaction, both of which put us in a strong strategic position to drive long-term growth. We are honored and privileged to provide the highest levels of service and convenience at the lowest cost to the South African government as well as its citizens. Our focus over the next several months will be to execute on the expectations laid upon us by providing a comprehensive, seamless and superior service to this important constituency," he concluded.

"The next twelve months will require substantial investment in capital equipment and establishment costs as we implement the new SASSA contract," said Herman Kotze, Chief Financial Officer of Net1. "The substantial increase in the beneficiaries, although at a lower price, should increase our monthly pension and welfare revenue by approximately 45% in ZAR and once we are fully phased in, at the very least maintain our operating income that we generate from our current contract. We currently expect to be fully phased-in by the second quarter of fiscal 2013. We anticipate capital expenditure of $45-$50 million during the next twelve months. The next three quarters are difficult for us to predict at this time, given the timing and magnitude of investments required in any given quarter, however we anticipate still being profitable on a fundamental earnings basis for the second half of fiscal 2012," he concluded.

Results of Operations by Segment and Liquidity

Our frequently asked questions and operating metrics will be updated and posted on our website (www.net1.com).

South African transaction-based activities

Segment revenue was $46.4 million in 2Q 2012, down 1% compared with 2Q 2011 in USD and up 17% on a constant currency basis. In ZAR, the increase in segment revenue was primarily due to modest growth in our pension and welfare business, the acquisition of Eason's prepaid airtime and electricity business and increased transaction volumes in rural merchant acquiring and MediKredit. Segment operating income margin was 34% compared to 40% a year ago and has declined due to the inclusion of increased low-margin prepaid airtime sales and Eason intangible asset amortization. Excluding amortization of acquisition-related intangibles, 2Q 2012 segment operating income margin was 38%, compared to 43% during 2Q 2011.

International transaction-based activities

KSNET continues to be the largest contributor to this segment. XeoHealth generated additional implementation revenue during 2Q 2012 and since December 2011, has begun to generate recurring transaction-based revenues. Revenue was $28.8 million in 2Q 2012, up 66% in USD compared with 2Q 2011 and 95% higher on a constant currency basis, primarily as a result of the inclusion of KSNET for a full quarter as well as contributions from XeoHealth. Segment operating income margin remained consistent at 1%. Excluding the amortization of intangibles but including the start-up costs related to Net1 Virtual Card and XeoHealth in the United States and MVC activities at Net1 UTA, operating income margin was unchanged at 12%.

Smart card accounts

Segment revenue was $7.3 million in 2Q 2012, down 14% compared with 2Q 2011 in USD and up 1% on a constant currency basis. Operating income margin remained consistent at 45%.

Financial services

UEPS-based lending contributes the majority of the revenue and operating income in this operating segment. We continue to incur start-up expenditures related to our SmartLife business and other financial services offerings. Segment revenue was $1.9 million in 2Q 2012, up 18% compared with 2Q 2011 in USD and 39% higher on a constant currency basis, principally due to an increase in lending activities. 2Q 2012 segment operating income margin was 53% compared with 62% during 2Q 2011 and decreased primarily due to start-up expenditures incurred by SmartLife.

Hardware, software and related technology sales

Segment revenue was $7.6 million in 2Q 2012, down 49% compared with 2Q 2011 in USD and 40% lower on a constant currency basis. The decrease in revenue and operating income was due to a lower contribution from all contributors to hardware and software sales. Excluding amortization of all intangibles, segment operating margin was 13% compared to 16% during 2Q 2011.

Cash flow and liquidity

At December 31, 2011, we had cash and cash equivalents of $81 million, down from $95 million at June 30, 2011. The decrease in cash was due to a strengthening in the USD against the ZAR, the repayment of principal under our KSNET debt and the acquisition of SmartLife and the Eason prepaid electricity and airtime business, offset by cash generated from operations and a net settlement received from the former shareholders of KSNET. For 2Q 2012, we utilized net cash of $6.2 million for operating activities, compared to cash flow of $5.0 million in 2Q 2011. Excluding the impact of interest paid under our Korean debt, the decrease in cash provided by operating activities resulted from the timing of receipts of accounts receivable in our South African transaction-based activities operating segment offset by increased profitability. Capital expenditures for 2Q 2012 and 2011 were $5.1 million and $4.0 million, respectively.

Use of Non-GAAP Measures

US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using the non-GAAP measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP measures.

Fundamental net income and fundamental earnings per share

Fundamental net income and earnings per share is GAAP net income and earnings per share to adjusted for (1) the amortization of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3) unusual non-recurring items, including the effects of a change in South African tax law and the creation of a valuation allowance related to foreign tax credits, amortization of KSNET debt facility fees, transaction-related costs and an unrealized foreign exchange movements. Management believes that the fundamental net income and earnings per share metric enhances its own evaluation, as well as an investor's understanding, of our financial performance. Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share.

Headline earnings per share ("HEPS")

The inclusion of HEPS in this press release is a requirement of our listing on the JSE. HEPS basic and diluted is calculated using net income which has been determined based on GAAP. Accordingly, this may differ to the headline earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards.

HEPS basic and diluted is calculated as GAAP net income adjusted for the loss (profit) on sale of property, plant and equipment, net of related tax effects, the loss attributable to the sale of 10% of SmartLife and the profit on liquidation of SmartSwitch Nigeria. Attachment C presents the reconciliation between our net income used to calculate earnings per share basic and diluted and HEPS basic and diluted.

Conference Call

We will host a conference call to review 2Q 2012 results on February 10, 2012, at 8:00 Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852 (Canada only), 0-800-917-7042 (U.K. only) or 0-800-200-648 (South Africa only) ten minutes prior to the start of the call. Callers should request "Net1 call" upon dial-in. The call will also be webcast on our homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for replay on our website through March 2, 2012.

About Net1 (www.net1.com)

Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System, or UEPS, to facilitate biometrically secure real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification.

Net1 operates market-leading payment processors in South Africa, Republic of Korea, Ghana and Iraq. In addition, Net1's proprietary Mobile Virtual Card technology offers secure mobile payments and banking services in developed and emerging countries while its MediKredit and XeoHealth subsidiaries provide its proprietary 5010 and ICD-10 compliant real-time claims adjudication system.

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

Forward-Looking Statements

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


NET 1 UEPS TECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Operations














Three months ended


Six months ended




December 31,



December 31,




2011


2010



2011


2010



(In thousands, except per share data)


(In thousands, except per share data)












REVENUE

$

92,058

$

89,011


$

191,984

$

153,294












EXPENSE






















Cost of goods sold, IT processing, servicing and support


34,168


29,182



67,112


47,249













Selling, general and administration


28,872


28,763



55,929


59,089













Depreciation and amortization


8,790


9,092



17,869


13,996












OPERATING INCOME


20,228


21,974



51,074


32,960












INTEREST INCOME


1,820


1,350



3,817


4,434











INTEREST EXPENSE


2,355


3,430



4,971


3,678












INCOME BEFORE INCOME TAXES


19,693


19,894



49,920


33,716












INCOME TAX EXPENSE


(5,378)


9,836



5,174


16,043












NET INCOME FROM CONTINUING OPERATIONS BEFORE EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS


25,071


10,058



44,746


17,673












EARNINGS (LOSS) FROM EQUITY-ACCOUNTED INVESTMENTS


19


(166)



104


(382)












NET INCOME


25,090


9,892



44,850


17,291












ADD NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST


(4)


(56)



(12)


(86)












NET INCOME ATTRIBUTABLE TO NET1

$

25,094

$

9,948


$

44,862

$

17,377












Net income per share, in United States dollars










Basic earnings attributable to Net1 shareholders


$0.56


$0.22



$1.00


$0.38

Diluted earnings attributable to Net1 shareholders


$0.56


$0.22



$1.00


$0. 38
















NET 1 UEPS TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets



Unaudited


(A)



December 31,


June 30,



2011


2011



(In thousands, except share data)


ASSETS






CURRENT ASSETS







Cash and cash equivalents

$

80,864


$

95,263


Pre-funded social welfare grants receivable


3,532



4,579


Accounts receivable, net of allowances of – December: $798; June: $728


93,197



82,780


Finance loans receivable


9,474



8,141


Deferred expenditure on smart cards


56



51


Inventory


5,082



6,725


Deferred income taxes


6,610



15,882


  Total current assets before settlement assets


198,815



213,421


     Settlement assets


125,582



186,668


        Total current assets


324,397



400,089

PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF – December: $70,892; June: $50,007


33,776



35,807

EQUITY-ACCOUNTED INVESTMENTS


1,545



1,860

GOODWILL


183,827



209,570

INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF –

December: $42,017; June: $37,118


103,408



119,856

OTHER LONG-TERM ASSETS, including reinsurance assets


38,288



14,463

TOTAL ASSETS


685,241



781,645









LIABILITIES






CURRENT LIABILITIES







Accounts payable


9,535



11,360


Other payables


60,311



71,265


Current portion of long-term borrowings


18,791



15,062


Income taxes payable


3,067



6,709


  Total current liabilities before settlement obligations


91,704



104,396


     Settlement obligations


125,582



186,668


        Total current liabilities


217,286



291,064

DEFERRED INCOME TAXES


24,748



52,785

LONG-TERM BORROWINGS


86,708



110,504

OTHER LONG-TERM LIABILITIES, including insurance policy liabilities


25,519



1,272

TOTAL LIABILITIES


354,261



455,625








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: 45,002,304; June: 45,152,805


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


137,446



136,430

TREASURY SHARES, AT COST: December: 13,455,090; June: 13,274,434


(175,823)



(174,694)

ACCUMULATED OTHER COMPREHENSIVE LOSS


(73,834)



(33,779)

RETAINED EARNINGS


439,852



394,990

TOTAL NET1 EQUITY


327,700



323,006

NON-CONTROLLING INTEREST


3,280



3,014

TOTAL EQUITY


330,980



326,020








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

685,241


$

781,645









(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,



2011


2010



2011


2010


(In thousands)


(In thousands)











Cash flows from operating activities










Net income

$

25,090

$

9,892


$

44,850

$

17,291

Depreciation and amortization


8,790


9,092



17,869


13,996

(Earnings) Loss from equity-accounted investments


(19)


166



(104)


382

Fair value adjustments


(551)


3,344



(772)


238

Interest payable


2,113


67



3,775


140

Profit on disposal of property, plant and equipment


(26)


(3)



(34)


(8)

Net loss on sale of 10% of SmartLife


81


-



81


-

Profit on liquidation of subsidiary


-


-



(3,994)


-

Realized loss on sale of SmartLife investments


-


-



25


-

Stock-based compensation charge


543


1,558



1,039


2,996

Facility fee amortized


83


1,728



199


1,728

(Increase) Decrease in accounts receivable, pre-funded social welfare grants receivable and finance loans receivable


(19,044)


(12,203)



(15,795)


(1,248)

Increase in deferred expenditure on smart cards


(58)


-



(14)


-

Decrease in inventory


920


2,168



601


66

Decrease in accounts payable and other payables


(2,679)


(2,248)



(2,348)


3,777

Decrease in taxes payable


(7,355)


(6,364)



(10,962)


(1,230)

Decrease in deferred taxes


(14,088)


(12,165)



(13,396)


(12,938)

Net cash (used in) provided by operating activities


(6,200)


(4,968)



21,020


25,190











Cash flows from investing activities










Capital expenditures


(5,120)


(4,011)



(9,586)


(4,779)

Proceeds from disposal of property, plant and equipment


174


11



268


18

Acquisition of SmartLife, net of cash acquired


-


-



(1,673)


-

Acquisition of prepaid business


(4,481)


-



(4,481)


-

Settlement from former shareholders of KSNET (Acquisition of KSNET, net of cash acquired)


4,945


(230,225)



4,945


(230,225)

Advance of loans to equity-accounted investment


-


-



-


(375)

Repayment of loan by equity-accounted investment


30


34



63


407

Purchase of investments related to SmartLife


-


-



(2,320)


-

Proceeds from maturity of investments related to SmartLife


-


-



2,321


-

Net change in settlement assets


30,349


(31,641)



33,796


(47,185)

Net cash generated from (used in) investing activities


25,897


(265,832)



23,333


(282,139)











Cash flows from financing activities










Loan portion related to options


-


-



-


20

Long-term borrowings obtained


-


116,353



-


116,353

Repayment of long-term borrowings


(7,185)


-



(7,185)


-

Payment of facility fee


-


(3,088)



-


(3,088)

Utilization of short-term borrowings


-


419



-


419

Proceeds on sale of 10% of SmartLife


107


-



107


-

Acquisition of remaining 19.9% of Net1 UTA


-


(594)



-


(594)

Acquisition of treasury stock


-


-



(1,129)


-

Net change in settlement obligations


(30,349)


31,641



(33,796)


47,185

Net cash (used in) generated from financing activities


(37,427)


144,731



(42,003)


160,295





-





-

Effect of exchange rate changes on cash


(3,389)


(2,709)



(16,749)


14,295

Net decrease in cash and cash equivalents


(21,119)


(128,778)



(14,399)


(82,359)

Cash and cash equivalents – beginning of period


101,983


200,161



95,263


153,742

Cash and cash equivalents – end of period

$

80,864

$

71,383


$

80,864

$

71,383














Net 1 UEPS Technologies, Inc.


Attachment A


Operating segment revenue, operating income (loss) and operating margin:


Three months ended December 31, 2011 and 2010 and September 30, 2011








Change - actual

Change – constant exchange rate(1)

Key segmental data, in '000, except margins

Q2 '12


Q2 '11


Q1 '12

Q2 '12

vs

Q2'11

Q2 '12

vs

Q1 '12

Q2 '12

vs

Q2 '11

Q2 '12

vs

Q1 '12

Revenue:










SA transaction-based activities

$46,448


$46,737


$49,902

(1)%

(7)%

17%

7%

International transaction-based activities

28,835


17,385


30,255

66%

(5)%

95%

10%

Smart card accounts

7,264


8,434


8,252

(14)%

(12)%

1%

1%

Financial services

1,944


1,651


2,111

18%

(8)%

39%

6%

Hardware, software and related technology sales

7,567


14,804


9,406

(49)%

(20)%

(40)%

(7)%

Total consolidated revenue

$92,058


$89,011


$99,926

3%

(8)%

22%

6%











Consolidated operating income (loss):










SA transaction-based activities

$15,766


$18,578


$20,183

(15)%

(22)%

0%

(10)%

International transaction-based activities

241


139


684

73%

(65)%

104%

(59)%

Operating income excluding amortization

3,369


2,171


3,991

55%

(16)%

83%

(3)%

Amortization of intangible assets

(3,128)


(2,032)


(3,307)

54%

(5)%

81%

9%

Smart card accounts

3,302


3,832


3,750

(14)%

(12)%

2%

1%

Financial services

1,026


1,028


1,411

0%

(27)%

18%

(16)%

Hardware, software and related technology sales

909


(49)


1,937

nm

(53)%

nm

(46)%

Corporate/ Eliminations

(1,016)


(1,554)


2,881

(35)%

(135)%

(23)%

(141)%

Total operating income

$20,228


$21,974


$30,846

(8)%

(34)%

8%

(24)%











Operating income margin (%)










SA transaction-based activities

34%


40%


40%





International transaction-based activities

1%


1%


2%





International transaction-based activities excluding amortization

12%


12%


13%





Smart card accounts

45%


45%


45%





Financial services

53%


62%


67%





Hardware, software and related technology sales

12%


0%


21%





Overall operating margin

22%


25%


31%















(1) – This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during 2Q 2012 also prevailed during 2Q 2011 and 1Q 2012.




Six months ended December 31, 2012 and 2011







Change - actual

Change – constant exchange rate(1)

Key segmental data, in '000, except margins

F2012


F2011


F2012

vs

F2011

F2012

vs

F2011

Revenue:







SA transaction-based activities

$96,350


$91,626


5%

15%

International transaction-based activities

59,090


17,855


100%

100%

Smart card accounts

15,516


16,404


(5)%

4%

Financial services

4,055


2,901


40%

53%

Hardware, software and related technology sales

16,973


24,508


(31)%

(24)%

Total consolidated revenue

$191,984


$153,294


25%

37%








Consolidated operating income (loss):







SA transaction-based activities

$35,949


$36,326


(1)%

8%

International transaction-based activities

925


(569)


(263)%

(278)%

Operating income excluding amortization

7,355


1,463


403%

451%

Amortization of intangible assets

(6,430)


(2,032)


216%

247%

Smart card accounts

7,052


7,454


(5)%

4%

Financial services

2,437


1,825


34%

46%

Hardware, software and related technology sales

2,846


(2,388)


(219)%

(231)%

Corporate/ Eliminations

1,865


(9,688)


(119)%

(121)%

Total operating income

$51,074


$32,960


55%

70%








Operating income margin (%)







SA transaction-based activities

37%


40%




International transaction-based activities

2%


(3)%




International transaction-based activities excluding amortization

12%


8%




Smart card accounts

45%


45%




Financial services

60%


63%




Hardware, software and related technology sales

17%


(10)%




Overall operating margin

27%


22%











(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 2012 also prevailed during year to date fiscal 2011.




Net 1 UEPS Technologies, Inc.


Attachment B


Reconciliation of GAAP net income and earnings per share, basic, to fundamental net income and earnings per share, basic:


Three months ended December 31, 2011 and 2010




Net

Income  

(USD'000)

EPS,

basic

(USD)


Net

Income

(ZAR'000)

EPS,

basic

(ZAR)


2011

2010

2011

2010


2011

2010

2011

2010











GAAP

25,094

9,948

56

22


205,148

69,040

457

152











Amortization of intangible assets, net of tax

3,656

4,302




29,893

29,857



Stock-based compensation charge

543

1,558




4,439

10,813



Facility fees for KSNET debt

110

1,728




899

11,993



Change in tax law

(20,031)

-




(163,760)

-



Create FTC valuation allowance

8,232

-




67,298

-



Loss on sale of 10% of SmartLife

73

-




597

-



Gain on FEC, net of tax

-

(1,799)




-

(12,485)



Acquisition-related costs

-

1,774




-

12,313



Fundamental

17,677

17,511

39

39


144,514

121,531

322

267















Six months ended December 31, 2011 and 2010




Net

Income  

(USD'000)

EPS,

basic

(USD)


Net

Income

(ZAR'000)

EPS,

basic

(ZAR)


2011

2010

2011

2010


2011

2010

2011

2010











GAAP

44,862

17,377

100

38


350,808

124,088

780

273











Amortization of intangible assets, net of tax

7,196

6,916




56,268

49,393



Stock-based compensation charge

1,040

2,996




8,132

21,394



Change in tax law

(18,315)

-




(150,373)

-



Create FTC valuation allowance

8,232

-




67,588

-



Profit on liquidation of subsidiary

(3,994)

-




(31,232)

-



Loss on sale of 10% of SmartLife

77

-




602

-



Facility fees for KSNET debt

211

1,728




1,650

12,340



Gain on FEC, net of tax

-

(114)




-

(813)



Acquisition-related costs

-

5,131




-

36,640



Fundamental

39,309

34,034

87

75


303,443

243,042

674

535















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, 2011 and 2010



2011


2010





Net income (USD'000)

25,094


9,948

Adjustments:




Loss on sale of 10% of SmartLife (USD'000)

73


-

Profit on sale of property, plant and equipment (USD'000)

(26)


(3)

Tax effects on above (USD'000)

7


1





Net income used to calculate headline earnings (USD'000)

25,148


9,946





Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)

44,935


45,433





Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)

44,967


45,494





Headline earnings per share:




Basic earnings – common stock and linked units, in US cents

56


22

Diluted earnings – common stock and linked units, in US cents

56


22




Six months ended December 31, 2011 and 2010



2011


2010





Net income (USD'000)

44,862


17,377

Adjustments:




Profit on liquidation of subsidiary (USD'000)

(3,994)


-

Loss on sale of 10% of SmartLife (USD'000)

77


-

Profit on sale of property, plant and equipment (USD'000)

(34)


(8)

Tax effects on above (USD'000)

10


3





Net income used to calculate headline earnings (USD'000)

40,921


17,372





Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)

44,995


45,409





Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)

45,026


45,455





Headline earnings per share:




Basic earnings – common stock and linked units, in US cents

91


38

Diluted earnings – common stock and linked units, in US cents

91


38




SOURCE Net 1 UEPS Technologies, Inc.