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 $1.46 for F2009, representing an increase of 38%
in USD and 17% in constant currency.
Summary Financial Metrics
|
|
|
Three months ended June
30,
|
|
|
2010
|
2009
|
% change in USD
|
% change in ZAR
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
Revenue
|
68,695
|
61,621
|
11%
|
2%
|
|
|
|
|
|
|
|
GAAP net income
|
(17,007)
|
18,216
|
(193)%
|
(186)%
|
|
|
|
|
|
|
|
Fundamental net income
(1)
|
24,683
|
20,967
|
18%
|
8%
|
|
|
|
|
|
|
|
GAAP earnings per share ($)
(2)
|
(0.37)
|
0.33
|
(212)%
|
(203)%
|
|
|
|
|
|
|
|
Fundamental earnings per share
($) (1) (2)
|
0.54
|
0.38
|
42%
|
30%
|
|
|
|
|
|
|
|
Fully-diluted shares outstanding
('000's) (2)
|
45,560
|
55,592
|
(18)%
|
|
|
|
|
|
|
|
|
Average period USD/ ZAR exchange
rate
|
7.56
|
8.26
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June
30,
|
|
|
2010
|
2009
|
% change in USD
|
% change in ZAR
|
|
(All figures in USD '000s except
per share data)
|
|
|
|
|
Revenue
|
280,364
|
246,822
|
14%
|
(3)%
|
|
|
|
|
|
|
|
GAAP net income
|
38,990
|
86,601
|
(55)%
|
(62)%
|
|
|
|
|
|
|
|
Fundamental net income (1)
(2)
|
92,914
|
82,504
|
13%
|
(4)%
|
|
|
|
|
|
|
|
GAAP earnings per share ($)
(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
|
|
Year ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2010
|
|
2009
|
|
|
2010
|
|
2009
|
|
|
|
(In thousands, except per share
data)
|
|
(In thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
$
|
68,695
|
$
|
61,621
|
|
$
|
280,364
|
$
|
246,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold, IT
processing, servicing and support
|
|
17,321
|
|
18,455
|
|
|
72,973
|
|
70,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration
|
|
21,867
|
|
16,752
|
|
|
80,854
|
|
64,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
4,964
|
|
5,132
|
|
|
19,348
|
|
17,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT ON SALE OF MICROLENDING
BUSINESS
|
|
-
|
|
(1,197)
|
|
|
-
|
|
(455)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IMPAIRMENT OF
GOODWILL
|
|
37,378
|
|
|
|
|
37,378
|
|
1,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
(12,835)
|
|
22,479
|
|
|
69,811
|
|
93,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOREIGN EXCHANGE GAIN RELATED
TO
SHORT-TERM INVESTMENT
|
|
-
|
|
-
|
|
|
-
|
|
26,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME, net
|
|
2,599
|
|
3,238
|
|
|
9,069
|
|
10,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
(10,236)
|
|
25,717
|
|
|
78,880
|
|
130,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
7,858
|
|
7,300
|
|
|
40,822
|
|
42,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING
OPERATIONS
BEFORE LOSS FROM
EQUITY-ACCOUNTED
INVESTMENTS
|
|
(18,094)
|
|
18,417
|
|
|
38,058
|
|
88,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
EQUITY-ACCOUNTED
INVESTMENTS
|
|
518
|
|
(77)
|
|
|
93
|
|
(874)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
(17,576)
|
|
18,340
|
|
|
38,151
|
|
87,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ADD) LESS: NET (LOSS)
INCOME
ATTRIBUTABLE TO
NON-CONTROLLING
INTEREST
|
|
(569)
|
|
124
|
|
|
(839)
|
|
701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE TO
NET1
|
$
|
(17,007)
|
$
|
18,216
|
|
$
|
38,990
|
$
|
86,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share, in
cents
|
|
|
|
|
|
|
|
|
|
|
Basic earnings attributable to
Net1 shareholders
|
|
(37.5)
|
|
32.9
|
|
|
84.3
|
|
153.1
|
|
Diluted earnings attributable to
Net1 shareholders
|
|
(37.3)
|
|
32.8
|
|
|
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;
2009: 54,506,487
|
|
59
|
|
|
59
|
|
|
|
|
|
|
|
|
|
PREFERRED STOCK
|
|
|
|
|
|
|
|
Authorized shares: 50,000,000
with $0.001 par value;
|
|
|
|
|
|
|
|
Issued and outstanding shares,
net of treasury: 2010: -; 2009:
-
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
ADDITIONAL PAID-IN
CAPITAL
|
|
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
grants receivable
and finance loans
receivable
|
|
4,666
|
|
|
14,639
|
|
|
(9,983)
|
|
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
|
|
|
|
|
|
|
|
Change - actual
|
Change – constant
exchange
rate(1)
|
|
Key segmental data, in '000,
except margins
|
Q4 '10
|
|
Q4 '09
|
|
Q3 '10
|
Q4 '10
vs
Q4 '09
|
Q4 '10
vs
Q3 '10
|
Q4 '10
vs
Q4 '09
|
Q4 '10
vs
Q3 '10
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$50,115
|
|
$39,240
|
|
$50,854
|
28%
|
(1)%
|
17%
|
(1)%
|
|
Smart card accounts
|
7,804
|
|
7,619
|
|
7,956
|
2%
|
(2)%
|
(6)%
|
(2)%
|
|
Financial services
|
1,224
|
|
859
|
|
1,149
|
42%
|
7%
|
31%
|
7%
|
|
Hardware, software and related
technology sales
|
9,552
|
|
13,903
|
|
12,332
|
(31)%
|
(23)%
|
(37)%
|
(22)%
|
|
Total consolidated
revenue
|
$68,695
|
|
$61,621
|
|
$72,291
|
11%
|
(5)%
|
2%
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
Transaction-based
activities
|
$25,798
|
|
$22,580
|
|
$26,837
|
14%
|
(4)%
|
5%
|
(3)%
|
|
Smart card accounts
|
3,547
|
|
3,463
|
|
3,616
|
2%
|
(2)%
|
(6)%
|
(2)%
|
|
Financial services
|
973
|
|
1,470
|
|
831
|
(34)%
|
17%
|
(39)%
|
18%
|
|
Hardware, software and related
technology sales
|
(40,673)
|
|
(2,731)
|
|
(1,798)
|
nm
|
nm
|
nm
|
nm
|
|
Corporate/ Eliminations
|
(2,480)
|
|
(2,303)
|
|
(2,627)
|
8%
|
(6)%
|
(1)%
|
(5)%
|
|
Total operating
income
|
$(12,835)
|
|
$22,479
|
|
$26,859
|
nm
|
nm
|
nm
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 -
actual
|
Change –
constant
exchange
rate(1)
|
|
Key segmental data, in '000,
except margins
|
2010
|
|
2009
|
|
2010
vs
2009
|
2010
vs
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
|
53,008
|
|
63,417
|
|
(16)%
|
(29)%
|
|
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
(USD'000)
|
EPS, basic
(USD cents)
|
|
Net income
(ZAR'000)
|
EPS, basic
(ZAR cents)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
(17,007)
|
18,216
|
(37)
|
33
|
|
(128,631)
|
150,414
|
(283)
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
2,569
|
2,857
|
|
|
|
19,433
|
23,592
|
|
|
|
|
Customer relationships
|
2,520
|
3,089
|
|
|
|
19,060
|
25,506
|
|
|
|
|
Software and unpatented
technology
|
932
|
804
|
|
|
|
7,046
|
6,642
|
|
|
|
|
Trademarks
|
89
|
82
|
|
|
|
679
|
679
|
|
|
|
|
Database
|
67
|
-
|
|
|
|
507
|
-
|
|
|
|
|
Deferred tax benefit
|
(1,039)
|
(1,118)
|
|
|
|
(7,859)
|
(9,235)
|
|
|
|
Stock-based charge(2)
|
1,416
|
1,158
|
|
|
|
10,710
|
9,562
|
|
|
|
Impairment of goodwill
|
37,378
|
-
|
|
|
|
282,709
|
-
|
|
|
|
Change in tax rate
|
-
|
(67)
|
|
|
|
-
|
(553)
|
|
|
|
Profit on sale of
Moneyline.
|
|
(1,197)
|
|
|
|
-
|
(9,884)
|
|
|
|
Acquisition-related
costs.
|
327
|
-
|
|
|
|
2,473
|
-
|
|
|
|
Fundamental
|
24,683
|
20,967
|
54
|
38
|
|
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
(USD'000)
|
EPS, basic
(USD cents)
|
|
Net income
(ZAR'000)
|
EPS, basic
(ZAR cents)
|
|
|
2010
|
2009
|
2010
|
2009
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
38,990
|
86,601
|
84
|
153
|
|
296,686
|
774,187
|
642
|
1,369
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible
assets(1)
|
10,261
|
8,871
|
|
|
|
78,082
|
79,314
|
|
|
|
|
Customer relationships
|
12,297
|
9,110
|
|
|
|
93,575
|
81,450
|
|
|
|
|
Software and unpatented
technology
|
1,351
|
2,972
|
|
|
|
10,284
|
26,569
|
|
|
|
|
Trademarks
|
357
|
304
|
|
|
|
2,716
|
2,715
|
|
|
|
|
Database
|
133
|
-
|
|
|
|
1,013
|
-
|
|
|
|
|
Deferred tax benefit
|
(3,877)
|
(3,515)
|
|
|
|
(29,506)
|
(31,420)
|
|
|
|
Stock-based charge(2)
|
5,670
|
5,026
|
|
|
|
43,145
|
44,931
|
|
|
|
JSE listing costs
|
-
|
495
|
|
|
|
-
|
4,425
|
|
|
|
Facility fee
|
-
|
1,100
|
|
|
|
-
|
9,834
|
|
|
|
Foreign exchange gain related to
a short-term investment, net of tax of $7,110
|
-
|
(17,447)
|
|
|
|
-
|
(155,971)
|
|
|
|
Impairment of
goodwill
|
37,378
|
1,836
|
|
|
|
284,420
|
16,413
|
|
|
|
Change in tax rate
|
-
|
(3,523)
|
|
|
|
-
|
(31,493)
|
|
|
|
Profit on sale of
Moneyline.
|
-
|
(455)
|
|
|
|
-
|
(4,068)
|
|
|
|
Acquisition-related
costs.
|
615
|
-
|
|
|
|
4,680
|
-
|
|
|
|
Fundamental
|
92,914
|
82,504
|
201
|
146
|
|
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
basic earnings and headline
earnings per share basic earnings ('000)
|
45,378
|
|
55,398
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
diluted earnings and headline
earnings per share diluted earnings ('000)
|
45,560
|
|
55,592
|
|
|
|
|
|
|
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
basic earnings and headline
earnings per share basic earnings ('000)
|
46,245
|
|
56,552
|
|
|
|
|
|
|
Weighted average number of
shares used to calculate net income per share
diluted earnings and headline
earnings per share diluted earnings ('000)
|
46,435
|
|
56,738
|
|
|
|
|
|
|
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.
Copyright . 26 PR Newswire