Net 1 UEPS Technologies, Inc. Announces 2010 Fourth Quarter and Year End Results and New Contract with SASSA
JOHANNESBURG, Aug. 26 /PRNewswire-FirstCall/ — Net 1 UEPS Technologies, Inc. (“Net1″ or the “Company”) (Nasdaq: UEPS; JSE: NT1) today announced results for the three months (“4Q 2010″) and year ended June 30, 2010 (“F2010″). Revenue for 4Q 2010 was $68.7 million, a year over year increase of 11% in US dollars (“USD”) and 2% in constant currency. During 4Q 2010, net loss under US generally accepted accounting principles (“GAAP”) was $17.0 million versus net income of $18.2 million for the three months ended June 30, 2009 (“4Q 2009″) and includes a $37.4 million goodwill impairment charge related to the Company’s Hardware, software and related technology sales segment for 4Q 2010. GAAP loss per share for 4Q 2010 was $0.37 versus GAAP earnings per share of $0.33 a year ago. Fundamental earnings per share for 4Q 2010 was $0.54 compared to $0.38 for 4Q 2009, representing an increase of 42% in USD and 30% in constant currency.
Revenue for F2010 was $280.4 million, a year over year increase of 14% in US dollars and a decline of 3% in constant currency compared to the year ended June 30, 2009 (“F2009″). Earnings per share under GAAP during F2010 was $0.84 versus $1.53 a year ago, a decline of 45% in USD and 53% in constant currency. Fundamental earnings per share for F2010 was $2.01 compared to $1.46 for F2009, representing an increase of 38% in USD and 17% in constant currency.
Summary Financial Metrics
Three months ended June 30,
---------------------------
% change % change
2010 2009 in USD in ZAR
---- ---- --------- ---------
(All figures in USD '000s
except per share data)
Revenue 68,695 61,621 11% 2%
GAAP net income (17,007) 18,216 (193)% (186)%
Fundamental net income (1) 24,683 20,967 18% 8%
GAAP earnings per share ($)
(2) (0.37) 0.33 (212)% (203)%
Fundamental earnings per
share ($) (1) (2) 0.54 0.38 42% 30%
Fully-diluted shares
outstanding ('000's) (2) 45,560 55,592 (18)%
Average period USD/ ZAR
exchange rate 7.56 8.26 (8)%
Year ended June 30,
-------------------
% change % change
2010 2009 in USD in ZAR
---- ---- --------- ---------
(All figures in USD '000s except
per share data)
Revenue 280,364 246,822 14% (3)%
GAAP net income 38,990 86,601 (55)% (62)%
Fundamental net income (1) (2) 92,914 82,504 13% (4)%
GAAP earnings per share ($) (2) 0.84 1.53 (45)% (53)%
Fundamental earnings per share ($)
(1) (2) 2.01 1.46 38% 17%
Fully-diluted shares outstanding
('000's) 46,435 56,738 (18)%
Average period USD/ ZAR exchange
rate 7.61 8.94 (15)%
(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 the periods presented also
excludes, where applicable, transaction-related costs, the effects
of the change in the Company's fully-distributed tax rate from
35.45% to 34.55%, JSE Limited ("JSE") listing costs, a bank facility
fee, goodwill impairments and a foreign exchange gain, net of tax,
related to a short-term investment.
(2) GAAP basic and fundamental earnings per share for 4Q 2009 and
F2009, have been retrospectively adjusted to include participating
securities in the weighted average number of outstanding shares of
common stock.
The following factors had significant impact on the comparability of our 4Q 2010 and 4Q 2009 results:
- Favorable impact from the weakness of the US dollar: The US dollar depreciated by 8% against the ZAR during 4Q 2010 which had a positive impact on the Company’s reported results;
- Goodwill impairment losses: During 4Q 2010, the Company recognized a goodwill impairment loss of $37.4 million (ZAR 284.4 million) related to Net1 UTA which has been allocated to its Hardware, software and related technology sales segment;
- Increased transaction volumes at EasyPay: Reported results were positively impacted by increased transaction volumes at EasyPay resulting primarily from growth in value-added services;
- Increased user adoption in Iraq: Reported results were favorably impacted by increased transaction revenues from the adoption of Net1′s UEPS technology in Iraq;
- Lower revenues and margins from hardware, software and related technology sales segment: Hardware, software and related technology sales segment was adversely impacted, in addition to the goodwill impairment discussed above, by lower revenues and overall margin generated by Net1 UTA, by fewer ad hoc sales to the Bank of Ghana and weaker demand for the Company’s products as well as pricing pressures resulting from the global recession in calendar 2009, all of which was partially offset by hardware sales to Iraq;
- Lower net intangible asset amortization: In ZAR, reported results for 4Q 2010 were positively impacted by lower intangible asset amortization as RMT intangibles assets were fully amortized in 3Q 2010 and the majority of Prism and EasyPay’s acquisition-related intangible assets were fully amortized in F2009. These intangible asset amortization decreases were offset by increases in acquisition-related intangible asset amortization related to the FIHRST and MediKredit acquisitions;
- Lower net interest income: Interest income, net, was adversely impacted by lower average daily ZAR cash balances and a lower average deposit rate during 4Q 2010 compared to 4Q 2009; and
- 2009 profit on sale of traditional microlending business: During 4Q 2009, the Company recognized a profit on the sale of its traditional microlending business of $1.2 million (ZAR 9.9 million).
SASSA Contract Update
On August 24, 2010, the Company entered into a new service level agreement with the South African Social Security Agency (“SASSA”) which replaces its previous SASSA contract that expired on June 30, 2010. The new agreement is retroactively effective from July 1, 2010 and expires on March 31, 2011. Under the new contract, the Company will continue to provide its social welfare grants distribution service to SASSA in five of South Africa’s nine provinces. As was the case with the Company’s previous contract with SASSA, the new contract contains a standard pricing formula for all provinces based on a transaction fee per beneficiary paid, regardless of the number or amount of grants paid per beneficiary, calculated on a guaranteed minimum number of beneficiaries per month. However, the new contract provides for a reduction in both the level of the transaction fee per beneficiary paid and the guaranteed minimum number of beneficiaries. Because the Company continues to derive a substantial percentage of its revenues from the SASSA contract, it expects that the terms of the new contract will materially reduce its revenues, operating income, net income and cash flow for the year ended June 30, 2011.
Comments and Outlook
“This year has been difficult for us due primarily to the uncertainties pertaining to our SASSA contract,” said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. “South Africa has been put under austerity measures that have led to the cancellation of many social benefits which were found to have been granted without proper consideration or approval. In addition, reductions in fees were mandated to all grant distributors to reduce the overall cost of grant administration. We expect personnel and structural changes to be made within SASSA during 2011 which should lead to a more specific governmental direction and to which we can align ourselves in order to continue to play a significant role in this market segment,” he said.
“On a more positive note, I am excited about the continuing success of our technology in Iraq and Ghana as well as the imminent launch of our Virtual Card initiative in the United States. The company continues to grow in strength in many different markets and our diverse product range enables us to participate across multiple transaction processing segments. Looking forward, we will continue to focus our strategic efforts on the diversification of our business, by leading with innovative and relevant technology, strengthening of business development teams, and deploying capital where appropriate toward acquisition opportunities. We remain committed to driving long-term sustainable growth for the company and thus for all of our stakeholders,” he concluded.
“Given the fact that our new service level agreement with SASSA runs through March 31, 2011, to coincide with government’s fiscal year end, it is difficult to provide guidance for the full fiscal year 2011. However, assuming the contract were to run for the duration of fiscal year 2011, we would expect to generate Fundamental EPS of at least $1.50 on a constant currency basis,” 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).
Transaction-based activities
Transaction-based activities revenue was $50.1 million, up 28% compared with 4Q 2009 in USD and 17% higher on a constant currency basis. Revenue increased as a result of higher transaction volumes at EasyPay, the growing utilization of the Company’s UEPS system in Iraq and the acquisition of MediKredit and FIHRST. Operating margin decreased to 51% from 58% during 4Q 2010 primarily due to additional intangible asset amortization related to the acquisition of MediKredit and FIHRST, and lower margin contribution from the Company’s MediKredit and FIHRST operations compared with the Company’s legacy transaction-based activities, which was partially offset by increased transaction fees from the utilization of the Company’s UEPS system in Iraq. Excluding amortization of acquisition-related intangibles, 4Q 2010 segment operating margin was 54% compared with 60% during 4Q 2009.
Smart card accounts
Smart card account revenue was $7.8 million, up 2% compared with 4Q 2009 in USD and 6% lower on a constant currency basis. Operating margin for the segment remained consistent at 45%.
Financial services
Financial services revenue was $1.2 million, up 42% compared with 4Q 2009 in USD and 31% higher on a constant currency basis, principally due to an increase in lending activities. Excluding the impact of the 3Q 2009 profit on sale of the traditional microlending business and the allowance for credit losses related to the sale, operating margin for this segment increased to 79% from 32% in 4Q 2009 largely as a result of the increased lending activities.
Hardware, software and related technology sales
Hardware, software and related technology sales revenue was $9.6 million, down 31% compared with 4Q 2009 in USD and 37% lower on a constant currency basis. The decrease in revenue and operating income for 4Q 2010 was primarily due to lower revenues at Net1 UTA and the goodwill impairment discussed above, as well as lower ad hoc hardware sales in 4Q 2010 as compared with the prior year when the Company recorded revenue from sales under its Ghana contract. These decreases were offset marginally by increased hardware sales to Iraq. Excluding amortization of all intangibles and the impairment of goodwill, segment operating margin was (11%) compared to 3% during 4Q 2009.
For 4Q 2010, the Company recognized an impairment loss of $37.4 million (ZAR 284.4 million) as a result of deteriorating trading conditions in this segment, particularly at Net1 UTA, and uncertainty surrounding contract finalization dates which would impact future cash flows.
Cash flow and liquidity
At June 30, 2010, the Company had cash and equivalents of $154 million, down from $221 million at June 30, 2009. The decrease was primarily attributable to the repurchase of the Company’s common stock from Brait S.A.’s investment affiliates in July 2009. For 4Q 2010, operating cash flow was negative $13.8 million, compared to positive $88.8 million in 4Q 2009. The decrease in operating cash flow resulted mainly from the removal of the requirement to pre-fund social welfare grant payments in 4Q 2009, lower accounts payable and other payables balances, as well as an ad hoc payment of taxation, Secondary Taxation on Companies in South Africa of $12.1 million. Capital expenditures for 4Q 2010 and 2009 were $0.4 million and $1.0 million, respectively. Capital expenditures for each of F2010 and F2009 were approximately $2.7 million and $4.7 million. For F2010, the Company generated operating cash flow of $68.7 million compared to $106.8 million in F2009. During 4Q 2010, the Company did not repurchase any shares under its $100 million authorization.
Use of Non-GAAP Measures
US securities laws require that when Net1 publish any non-GAAP measures, it disclose the reason for using the non-GAAP measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP measures.
Fundamental net income and fundamental earnings per share
Under GAAP, the Company is required to fair value all intangible assets on the date of the acquisition and amortize these intangible assets over their expected useful lives. In addition, under GAAP, the Company is required to measure the fair value of options and other stock-based awards, and recognize a stock-based compensation charge over the requisite service period. The Company’s GAAP net income and earnings per share for the three months and year ended June 30, 2010 and 2009 include amortization of intangibles and stock-based compensation. In addition, in 2010, goodwill impairment and transaction-related costs are included and in 2009, JSE listing costs, a bank facility fee, goodwill impairment and a foreign exchange gain, net of tax, related to a short-term investment are included. Finally, the effect of the change in the fully-distributed tax rate from 35.45% to 34.55% in July 2008 was included in net income and earnings per share for the year ended June 30, 2009. The Company excludes all of the above-mentioned amounts when calculating fundamental net income and earnings per share, because management believes that these adjustments enhance its own evaluation, as well as an investor’s understanding, of the Company’s financial performance. Attachment B presents the reconciliation between GAAP and fundamental net income and earnings per share.
Headline earnings per share (“HEPS”)
The inclusion of HEPS in this press release is a requirement of the Company’s listing on the JSE. HEPS basic and diluted is calculated using net income which has been determined based on GAAP. Accordingly, this may differ to the headline earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards. HEPS basic and diluted is calculated as GAAP net income adjusted for the loss (profit) on sale of property, plant and equipment, net of related tax effects. Attachment C presents the reconciliation between the Company’s net income used to calculate earnings per share basic and diluted and HEPS basic and diluted.
Conference Call
Net1 will host a conference call to review fourth quarter results on August 27, 2010, at 8:00 a.m. Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852 (Canada only), 0-800-917-7042 (U.K. only) or 0-800-200-648 (South Africa only) five minutes prior to the start of the call. Callers should request “Net1 call” upon dial-in. The call will also be webcast on the Net1 homepage, www.net1.com. Please click on the webcast link at least 10 minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through September 17, 2010.
About Net1 (www.net1.com)
Net1 provides its universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies. Net1′s market-leading system enables the estimated four billion people who generally have limited or no access to a bank account, to enter affordably into electronic transactions with each other, government agencies, employers, merchants and other financial service providers. Net1′s universal electronic payment system, or UEPS, uses smart cards that operate in real-time but offline, unlike traditional payment systems offered by major banking institutions that require immediate access through a communications network to a centralized computer. This offline capability means that users of the Net1 system can enter into transactions at any time with other card holders even in the most remote areas so long as a portable offline smart card reader is available. In addition to payments and purchases, UEPS can be used for banking, healthcare management, international money transfers, voting and identification.
Net1 also focuses on the development and provision of secure transaction technology, solutions and services and offers transaction processing, financial and clinical risk management solutions to both funders and providers of healthcare. Its core competencies around secure online transaction processing, cryptography and integrated circuit card (chip/smartcard) technologies are principally applied to electronic commerce transactions in the telecommunications, banking, retail, petroleum and utilities market sectors.
Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE Limited.
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause the Company’s actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events.
NET 1 UEPS TECHNOLOGIES, INC.
Audited Condensed Consolidated Statements of Operations
Three months ended
------------------
June 30,
--------
2010 2009
---- ----
(In thousands, except
per share data)
REVENUE $68,695 $61,621
EXPENSE
Cost of goods
sold, IT
processing,
servicing and
support 17,321 18,455
Selling,
general and
administration 21,867 16,752
Depreciation
and
amortization 4,964 5,132
PROFIT ON SALE
OF
MICROLENDING
BUSINESS - (1,197)
IMPAIRMENT OF
GOODWILL 37,378
OPERATING
INCOME (12,835) 22,479
FOREIGN
EXCHANGE GAIN
RELATED TO - -
SHORT-TERM
INVESTMENT
INTEREST
INCOME, net 2,599 3,238
INCOME BEFORE
INCOME TAXES (10,236) 25,717
INCOME TAX
EXPENSE 7,858 7,300
NET INCOME
FROM
CONTINUING
OPERATIONS (18,094) 18,417
BEFORE LOSS
FROM EQUITY-
ACCOUNTED
INVESTMENTS
LOSS FROM
EQUITY-
ACCOUNTED 518 (77)
INVESTMENTS
NET INCOME (17,576) 18,340
(ADD) LESS:
NET (LOSS)
INCOME (569) 124
ATTRIBUTABLE
TO NON-
CONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE
TO NET1 $(17,007) $18,216
-------- -------
Net income per
share, in
cents
Basic earnings
attributable
to Net1
shareholders (37.5) 32.9
Diluted
earnings
attributable
to Net1
shareholders (37.3) 32.8
Year ended
----------
June 30,
--------
2010 2009
---- ----
(In thousands, except
per share data)
REVENUE $280,364 $246,822
EXPENSE
Cost of goods
sold, IT
processing,
servicing and
support 72,973 70,091
Selling,
general and
administration 80,854 64,833
Depreciation
and
amortization 19,348 17,082
PROFIT ON SALE
OF
MICROLENDING
BUSINESS - (455)
IMPAIRMENT OF
GOODWILL 37,378 1,836
OPERATING
INCOME 69,811 93,435
FOREIGN
EXCHANGE GAIN
RELATED TO - 26,657
SHORT-TERM
INVESTMENT
INTEREST
INCOME, net 9,069 10,828
----- ------
INCOME BEFORE
INCOME TAXES 78,880 130,920
INCOME TAX
EXPENSE 40,822 42,744
------ ------
NET INCOME
FROM
CONTINUING
OPERATIONS 38,058 88,176
BEFORE LOSS
FROM EQUITY-
ACCOUNTED
INVESTMENTS
LOSS FROM
EQUITY-
ACCOUNTED 93 (874)
INVESTMENTS --- ----
NET INCOME 38,151 87,302
(ADD) LESS:
NET (LOSS)
INCOME (839) 701
ATTRIBUTABLE
TO NON-
CONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE
TO NET1 $38,990 $86,601
------- -------
Net income per
share, in
cents
Basic earnings
attributable
to Net1
shareholders 84.3 153.1
Diluted
earnings
attributable
to Net1
shareholders 84.0 152.6
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2010 and 2009
2010 2009
---- ----
(In thousands, except share
data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $153,742 $220,786
Pre-funded social
welfare grants
receivable 6,660 4,930
Accounts receivable, net 41,854 42,475
Finance loans receivable,
net 4,221 2,563
Deferred expenditure on
smart cards - 8
Inventory 3,622 7,250
Deferred income taxes 16,330 12,282
------ ------
Total current assets
before funds held for
clients 226,429 290,294
Funds held for clients 83,661 -
Total current assets 310,090 290,294
OTHER LONG-TERM ASSETS,
including available for
sale securities 7,423 7,147
PROPERTY, PLANT AND
EQUIPMENT, net 7,286 7,376
EQUITY-ACCOUNTED
INVESTMENTS 2,598 2,583
GOODWILL 76,346 116,197
INTANGIBLE ASSETS, net 68,347 75,890
TOTAL ASSETS 472,090 499,487
------- -------
LIABILITIES
CURRENT LIABILITIES
Accounts payable 3,596 5,481
Other payables 50,855 61,454
Income taxes payable 3,476 10,874
----- ------
Total current liabilities
before client fund
obligations 57,927 77,809
Client fund obligations 83,661 -
Total current liabilities 141,588 77,809
DEFERRED INCOME TAXES 38,858 41,737
INTEREST BEARING
LIABILITIES - non-
controlling interest
loans 4,343 4,185
COMMITMENTS AND
CONTINGENCIES - -
--- ---
TOTAL LIABILITIES 184,789 123,731
------- -------
EQUITY
COMMON STOCK
Authorized shares:
200,000,000 with $0.001
par value;
Issued and outstanding
shares, net of treasury:
2010: 45,378,397; 59 59
2009: 54,506,487
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 133,543 126,914
TREASURY SHARES, AT COST:
2010: 13,149,042; 2009:
3,927,516 (173,671) (48,637)
ACCUMULATED OTHER
COMPREHENSIVE LOSS (66,396) (58,472)
RETAINED EARNINGS 392,343 353,353
------- -------
TOTAL NET1 EQUITY 285,878 373,217
NON-CONTROLLING INTEREST 1,423 2,539
----- -----
TOTAL EQUITY 287,301 375,756
------- -------
TOTAL LIABILITIES AND
EQUITY $472,090 $499,487
-------- --------
NET 1 UEPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended June 30, 2010, 2009 and 2008
2010 2009 2008
---- ---- ----
(In thousands)
Cash flows from operating
activities
Net income $38,151 $87,302 $85,880
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 19,348 17,082 10,822
(Earnings) Loss from equity-
accounted investments (93) 874 1,036
Fair value adjustment 78 (4,402) (269)
Interest payable 301 425 434
Facility fee amortized - 1,100 -
Loss (Profit) on disposal of
property, plant and
equipment 69 85 (110)
Profit on disposal of
business - (455) -
Stock compensation charge,
net of forfeitures 5,670 5,026 3,971
Impairment of goodwill 37,378 1,836 -
Decrease (Increase) in
accounts receivable, pre-
funded social welfare 4,666 14,639 (9,983)
grants receivable and
finance loans receivable
Decrease in deferred
expenditure on smart cards 8 50 416
Decrease (Increase) in
inventory 3,867 (81) (1,138)
(Decrease) Increase in
accounts payable and other
payables (27,138) (8,788) 24,353
(Decrease) Increase in taxes
payable (7,582) (3,339) 1,369
(Decrease) Increase in
deferred taxes (6,040) (4,586) 1,979
------ ------ -----
Net cash provided by
operating activities 68,683 106,768 118,760
------ ------- -------
Cash flows from investing
activities
Capital expenditures (2,730) (4,770) (3,563)
Proceeds from disposal of
property, plant and
equipment 106 159 160
Acquisition of available for
sale securities - (3,422) -
Acquisition of MediKredit
and FIHRST, net of cash
acquired (10,319) - -
Acquisition of Net1 UTA, net
of cash acquired - (97,992) -
Acquisition of RMT, net of
cash acquired - (1,381) -
Acquisition of and advance
of loans to equity-
accounted investments - (450) (500)
Net change in funds held for
clients (77,243) - -
Net cash used in investing
activities (90,186) (107,856) (3,903)
------- -------- ------
Cash flows from financing
activities
Proceeds from issue of
common stock 720 271 2,845
Acquisition of treasury
stock (126,304) (39,412) -
Proceeds from short-term
loan facility - 110,000 -
Repayment of short-term
loan facility - (110,000) -
Payment of facility fee - (1,100) -
Repayment of non-
controlling interest loan - - -
Net change in client funds
obligations 77,243 - -
Proceeds from bank overdraft - 2,843 1,462
Repayment of bank overdraft (137) (2,850) (1,443)
Net cash (used in) provided
by financing activities (48,478) (40,248) 2,864
------- ------- -----
Effect of exchange rate
changes on cash 2,937 (10,353) (16,973)
Net (decrease) increase in
cash and cash equivalents (67,044) (51,689) 100,748
Cash and cash equivalents -
beginning of year 220,786 272,475 171,727
Cash and cash equivalents
at end of year $153,742 $220,786 $272,475
Net 1 UEPS Technologies, Inc.
Attachment A
Operating segment revenue, operating income and operating margin:
Three months ended June 30, 2010 and 2009 and March 31, 2010
Key segmental data, in '000,
except margins Q4 '10 Q4 '09 Q3 '10
------ ------ ------
Revenue:
Transaction-based activities $50,115 $39,240 $50,854
Smart card accounts 7,804 7,619 7,956
Financial services 1,224 859 1,149
Hardware, software and related
technology sales 9,552 13,903
----- ------
12,332
------
Total consolidated revenue $68,695 $61,621 $72,291
---- ---- -------
Consolidated operating income
(loss):
Transaction-based activities $25,798 $22,580 $26,837
Smart card accounts 3,547 3,463 3,616
Financial services 973 1,470 831
Hardware, software and related
technology sales (40,673) (2,731)
(1,798)
Corporate/ Eliminations (2,480) (2,303) (2,627)
------ ------ ------
Total operating income $(12,835) $22,479 $26,859
-------- ---- -------
Operating income margin (%)
Transaction-based activities 51% 58% 53%
Smart card accounts 45% 45% 45%
Financial services 79% 171% 72%
Hardware, software and related
technology sales (426)% (20)% (15)%
Overall operating margin (19)% 36% 37%
Change -
Change - actual constant
exchange
--------------- rate(1)
---------
Key segmental data, in '000,
except margins Q4 '10 Q4 '10 Q4 '10 Q4 '10
vs vs vs vs
Q4 '09 Q3 '10 Q4 '09 Q3 '10
------ ------ ------ ------
Revenue:
Transaction-based activities 28% (1)% 17% (1)%
Smart card accounts 2% (2)% (6)% (2)%
Financial services 42% 7% 31% 7%
Hardware, software and related
technology sales (31)% (23)% (37)% (22)%
Total consolidated revenue 11% (5)% 2% (5)%
Consolidated operating income
(loss):
Transaction-based activities 14% (4)% 5% (3)%
Smart card accounts 2% (2)% (6)% (2)%
Financial services (34)% 17% (39)% 18%
Hardware, software and related
technology sales nm nm nm nm
Corporate/ Eliminations 8% (6)% (1)% (5)%
Total operating income nm nm nm nm
Operating income margin (%)
Transaction-based activities
Smart card accounts
Financial services
Hardware, software and related
technology sales
Overall operating margin
(1) - This information shows what the change in these items would
have been if the USD/ ZAR exchange rate that prevailed during 4Q
2010 also prevailed during 4Q 2009 and 3Q 2010.
Year ended June 30, 2010 and 2009
Change - Change -
actual constant
------ exchange
rate(1)
-------
Key segmental data, in '000,
except margins 2010 2009 2010 2010
---- ---- vs vs
2009 2009
---- ----
Revenue:
Transaction-based activities $191,362 $148,399 29% 10%
Smart card accounts 31,971 29,576 8% (8)%
Financial services 4,023 5,430 (26)% (37)%
Hardware, software and related
technology sales 63,417 (16)% (29)%
------
53,008
------
Total consolidated revenue $280,364 $246,822 14% (3)%
-------- --------
Consolidated operating income
(loss):
Transaction-based activities $106,036 $83,509 27% 8%
Smart card accounts 14,532 13,442 8% (8)%
Financial services 2,881 (34) nm nm
Hardware, software and related
technology sales (42,524) 5,498 nm nm
Corporate/ Eliminations (11,114) (8,980) 24% 5%
------- ------
Total operating income $69,811 $93,435 (25)% (36)%
------- -------
Operating income margin (%)
Transaction-based activities 55% 56%
Smart card accounts 45% 45%
Financial services 72% (1)%
Hardware, software and related
technology sales
(80)% 9%
Overall operating margin 25% 38%
(1) - This information shows what the change in these items would
have been if the USD/ ZAR exchange rate that prevailed during F2010
also prevailed during F2009.
Net 1 UEPS Technologies, Inc.
Attachment B
Reconciliation of GAAP net income to fundamental net income:
Three months ended June 30, 2010 and 2009
Net Income EPS, basic
(USD'000) (USD cents)
--------- -----------
2010 2009 2010 2009
---- ---- ---- ----
GAAP (17,007) 18,216 (37) 33
Amortization of
intangible assets(1) 2,569 2,857
----- -----
Customer
relationships 2,520 3,089
Software and
unpatented
technology
932 804
Trademarks 89 82
Database 67
Deferred tax benefit (1,039) (1,118)
------ ------
Stock-based charge(2) 1,416 1,158
Impairment of
goodwill 37,378
Change in tax rate - (67)
Profit on sale of
Moneyline. (1,197)
Acquisition-related
costs. 327 -
--- ---
Fundamental 24,683 20,967 54 38
------ ------
Net income EPS, basic
(ZAR'000) (ZAR cents)
--------- -----------
2010 2009 2010 2009
---- ---- ---- ----
GAAP (128,631) 150,414 (283) 272
Amortization of
intangible assets(1) 19,433 23,592
------ ------
Customer
relationships 19,060 25,506
Software and
unpatented
technology
7,046 6,642
Trademarks 679 679
Database 507
Deferred tax benefit (7,859) (9,235)
------ ------
Stock-based charge(2) 10,710 9,562
Impairment of
goodwill 282,709
Change in tax rate - (553)
Profit on sale of
Moneyline. - (9,884)
Acquisition-related
costs. 2,473 -
----- ---
Fundamental 186,694 173,131 411 313
------- -------
(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.
Year ended June 30, 2010 and 2009
Net Income EPS, basic
(USD'000) (USD cents)
--------- -----------
2010 2009 2010 2009
---- ---- ---- ----
GAAP 38,990 86,601 84 153
Amortization of
intangible assets(1)
10,261 8,871
------ -----
Customer
relationships 12,297 9,110
Software and
unpatented
technology
1,351 2,972
Trademarks 357 304
Database 133
Deferred tax benefit (3,877) (3,515)
------ ------
Stock-based charge(2) 5,670 5,026
JSE listing costs 495
Facility fee - 1,100
Foreign exchange gain
related to a short-
term investment, net
of tax of $7,110 (17,447)
Impairment of
goodwill 37,378 1,836
Change in tax rate - (3,523)
Profit on sale of
Moneyline. - (455)
Acquisition-related
costs. 615 -
--- ---
Fundamental 92,914 82,504 201 146
------ ------
Net income EPS, basic
(ZAR'000) (ZAR cents)
--------- -----------
2010 2009 2010 2009
---- ---- ---- ----
GAAP 296,686 774,187 642 1,369
Amortization of
intangible assets(1)
78,082 79,314
------ ------
Customer
relationships 93,575 81,450
Software and
unpatented
technology
10,284 26,569
Trademarks 2,716 2,715
Database 1,013
Deferred tax benefit (29,506) (31,420)
------- -------
Stock-based charge(2) 43,145 44,931
JSE listing costs 4,425
Facility fee - 9,834
Foreign exchange gain
related to a short-
term investment, net
of tax of $7,110 (155,971)
Impairment of
goodwill 284,420 16,413
Change in tax rate - (31,493)
Profit on sale of
Moneyline. - (4,068)
Acquisition-related
costs. 4,680 -
----- ---
Fundamental 707,013 737,572 1,529 1,304
------- -------
(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 June 30, 2010 and 2009
2010 2009
---- ----
Net income (USD'000) (17,007) 18,216
Adjustments:
Impairment of goodwill 37,378 -
Profit on sale of Moneyline (1,197)
Loss on sale of property, plant and equipment
(USD'000) 63 76
Tax effects on above (USD'000) (22) (26)
Net income used to calculate headline earnings
(USD'000) 20,412 17,069
------ ------
Weighted average number of shares used to calculate
net income per share 45,378 55,398
basic earnings and headline earnings per share
basic earnings ('000)
Weighted average number of shares used to calculate
net income per share 45,560 55,592
diluted earnings and headline earnings per share
diluted earnings ('000)
Headline earnings per share:
Basic earnings - common stock and linked units, in
US cents 45 31
Diluted earnings - common stock and linked units,
in US cents 45 31
Year ended June 30, 2010 and 2009
2010 2009
---- ----
Net income (USD'000) 38,990 86,601
Adjustments:
Impairment of goodwill 37,378 1,836
Profit on sale of Moneyline - (455)
Loss on sale of property, plant and equipment
(USD'000) 69 85
Tax effects on above (USD'000) (24) (29)
Net income used to calculate headline earnings
(USD'000) 76,413 88,038
------ ------
Weighted average number of shares used to calculate
net income per share 46,245 56,552
basic earnings and headline earnings per share
basic earnings ('000)
Weighted average number of shares used to calculate
net income per share 46,435 56,738
diluted earnings and headline earnings per share
diluted earnings ('000)
Headline earnings per share:
Basic earnings - common stock and linked units, in
US cents 165 156
Diluted earnings - common stock and linked units,
in US cents 165 155
SOURCE Net 1 UEPS Technologies, Inc.