HOME LOGIN SUPPORT CAREERS CONTACT US Net 1 NET1 SHARE INFO About * VALUE OF LAST TRADED SHARE Home AboutFinancial Highlights Overview Strategic Direction: Our Strategy Financial Highlights Management's Discussion Risk Factors Research & Development Employees Leadership Corporate History OUR TECHNOLOGY Find out what NET1 does and who we are. FINANCIAL HIGHLIGHTS The following selected historical consolidated financial data should be read together with Item 7-"Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 8-"Financial Statements and Supplementary Data." The following selected historical financial data as of June 30, 2013 and 2012, and for the three years ended June 30, 2013 have been derived from our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The selected historical consolidated financial data presented below as of June 30, 2011, 2010 and 2009 and for the years ended June 30, 2010 and 2009, have been derived from our consolidated financial statements, which are not included herein. The selected historical financial data as of each date and for each period presented have been prepared in accordance with US GAAP. These historical results are not necessarily indicative of results to be expected in any future period. CONSOLIDATED STATEMENTS OF OPERATIONS DATA (in thousands, except per share data) Year Ended June 30 20131 20121 20112 2010 2009 Revenue $452,147 $390,264 $343,420 $280,364 $246,822 Cost of goods sold, IT processing, servicing and support 196,834 141,000 109,858 72,973 70,091 Selling, general and administrative3 191,552 137,404 119,692 80,854 64,833 Equity instrument granted pursuant to BBBEE transaction4 - 14,211 - - - Depreciation and amortization 40,599 36,499 34,671 19,348 17,082 Profit on sale of microlending business - - - - 455 Impairment losses5 - - 41,771 37,378 1,836 Operating income 23,162 61,150 37,428 69,811 93,435 Foreign exchange gain related to short-term investment6 - - - - 26,657 Interest income 12,083 8,576 7,654 10,116 20,290 Interest expense 7,966 9,345 8,672 1,047 9,462 Income before income taxes 27,279 60,381 36,410 78,880 130,920 Income tax expense7 14,656 15,936 33,525 40,822 42,744 Income from continuing operations 12,977 44,651 2,647 38,990 86,601 Net income attributable to Net1 12,977 44,651 2,647 38,990 86,601 Income from continuing operations per share: Basic $0.28 $0.99 $0.06 $0.84 $1.53 Diluted $0.28 $0.99 $0.06 $0.84 $1.53 1 The economics of our five year SASSA contract that was effective April 1, 2012, is included in fiscal 2013 and for three months in fiscal 2012 and contributed to the increase in revenue, especially in fiscal 2013. We incurred substantial implementation and smart card expenses totaling approximately $66.5 million and $16.3 million during fiscal 2013 and 2012, respectively, which resulted in an increase in cost of goods sold, IT processing, servicing and support an selling, general and administrative expense. The majority of these expenses were deductible for tax purposes. We also incurred significant capital expenditures related to the SASSA contract implementation which resulted in an increase in depreciation expense in fiscal 2013. 2 KSNET was acquired effective November 1, 2010, and our reported results for fiscal 2011 include KSNET revenues of $68.4 million and a net loss of $4.1 million, after acquisition-related intangible assets amortization, deferred taxes related to acquisition-related intangible asset amortization and interest related to financing obtained to partially fund the acquisition. 3 Selling, general and administrative expense includes a charge of $3.9 million (2013), $2.8 million (2012), $1.7 million (2011), $5.5 million (2010) and $4.9 million (2009), respectively, in respect of stock-based compensation. 4 On April 19, 2012, we issued an option to purchase 8,955,000 shares of our common stock to a BEE consortium pursuant to a BEE transaction that we entered into on January 25, 2012. The fair value of the option was determined as approximately $14.2 million and has been expensed in full in fiscal 2012. The option expired unexercised in fiscal 2013. 5 Customer relationships acquired in the acquisition of Net1 UTA were impaired in fiscal 2011. Goodwill related to the hardware, software and related technology sales segment was impaired during fiscal 2010, and goodwill related to the financial services segment was impaired during fiscal 2009. 6 The foreign exchange gain related to a short-term investment in the form of an asset swap arrangement which matured during fiscal 2009. 7 The fully-distributed tax rate for fiscal 2013 and 2012 was 28% and for fiscal 2011, 2010 and 2009 it was 34.55%. Our income tax expense for fiscal 2012 includes the effects of the change in South African tax law to impose a 15% dividends withholding tax (a tax levied and withheld by a company on distributions to its shareholders) to replace the 10% Secondary Taxation on Companies (a tax levied directly on a company on dividend distributions) ("STC"). Our income tax expense for fiscal 2012 also includes a valuation allowance of $8.2 million related to foreign tax credits we believe we may not recover. Our income tax expense for fiscal 2011 includes valuation allowances related to our Net1 UTA business of $8.9 million and a reversal of $10.4 million related to the customer impairment loss. Our income tax expense for fiscal 2009 includes the impact of the change in the fully-distributed rate during that year of approximately $3.5 million. ADDITIONAL OPERATING DATA: (in thousands, except percentages) Year ended June 30, 20131 20121 20111 20101 2009 Cash flows provided by operating activities $55,917 $20,406 $66,223 $68,683 $106,768 Cash flows used in investing activities $447,816 $292,539 $323,685 $90,186 $107,856 Cash flows provided by (used in) financing activities $409,716 $231,907 $183,269 $(48,478) $(40,248) Operating income margin 5% 16% 11% 25% 38% 1 Cash flows used in investing activities include movements in settlement assets and cash flows provided by (used in) financing activities include movement in settlement liabilities. CONSOLIDATED BALANCE SHEET DATA: (in thousands) As of June 30, 2013 20121 20111 2010 2009 Cash and cash equivalents $53,665 $39,123 $95,263 $153,742 $220,786 Total current assets before settlement assets 184,723 175,236 213,421 226,429 290,294 Goodwill 175,806 182,737 209,570 76,346 116,197 Intangible assets 77,257 93,930 119,856 68,347 75,890 Total assets 1,276,322 955,893 781,645 472,090 499,487 Total current liabilities before settlement obligations.. 76,859 73,377 102,406 57,927 77,809 Total long-term debt 66,632 79,760 111,776 4,343 4,185 Total Net1 equity $339,969 $346,811 $328,010 $287,301 $375,756 1 During fiscal 2013, we identified an immaterial balance sheet misclassification related to prior periods that involved an overstatement of other payables and an understatement of additional paid-in capital of $2.0 million, respectively. We corrected these amounts in the current period, effective July 1, 2010. This reclassification has no impact on our previously reported consolidated income, comprehensive income or cash flows. MORE ABOUT FINANCIAL HIGHLIGHTS MANAGEMENT'S DISCUSSION The following discussion and analysis should be read in conjunction with Item 6—"Selected Financial Data" and Item 8— "Financial Statements and Supplementary Data." of the form 10K. Read More RISK FACTORS Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. Read More RESEARCH & DEVELOPMENT During fiscal 2013, 2012 and 2011, we incurred research and development expenditures of $1.3 million, $3.9 million and $5.7 million, respectively. Read More EMPLOYEES As of June 30, 2013, we had 4,307 employees, which included approximately 1,392 temporary employees contracted to assist with the implementation "mop up" and ongoing enrollment of recipient cardholders and beneficiaries related to our SASSA contract. Read More Legal | FAIS Disclosures © 2012 Net1 UEPS Technologies, Inc About Overview Strategic Direction: Our Strategy Financial Highlights Leadership Corporate History Key Products The U.E.P.S. 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