22. OPERATING SEGMENTS

The Company discloses segment information as reflected in the management information systems reports that its chief operating decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets or reports material revenues.

The Company has reallocated its EP Kiosk business unit to the South African transaction-based activities segment from the hardware, software and related technology segment, as the unit is no longer in pilot phase and now forms part of EasyPay. Following XeoHealth's first contract signing, the Company has allocated its revenue and costs to the international transaction-based activities segment, which were previously included in the South African transaction-based activities segment. Revenue and administration costs related to the Company's comprehensive financial services offerings are all included in the financial services segment. The effect of these reallocations has not significantly impacted the Company's reported results. Re-casted amounts for the year ended June 30, 2011, also include the effects of reallocating the Company's initiatives in Iraq, Nigeria and Net1 VCC.

The impact of these reallocations on the Company's revenue, operating income (loss) and net income (loss) is presented in the table below:


	Year ended June 30, 2011
	Re-casted			As previously reported			Difference

Revenues to external customers
SA transaction-based activities	$	189,206		$	188,590		$	616
International transaction-based activities		70,382			69,947			435
Smart card accounts		33,315			33,315			-
Financial services		7,350			7,313			37
Hardware, software and related technology sales		43,167			44,255			(1,088	)
Total		343,420			343,420			-
Operating income (loss)
SA transaction-based activities		75,668			74,642			1,026
International transaction-based activities		(220	)		1,707			(1,927	)
Smart card accounts		15,140			15,140			-
Financial services		4,999			5,658			(659	)
Hardware, software and related technology sales		(48,372	)		(49,930	)		1,558
Corporate/Eliminations		(9,787	)		(9,789	)		2
Total		37,428			37,428			-
Net income (loss)
SA transaction-based activities		54,009			52,613			1,396
International transaction-based activities		652			2,700			(2,048	)
Smart card accounts		10,904			10,904			-
Financial services		3,587			4,061			(474	)
Hardware, software and related technology sales		(45,191	)		(46,316	)		1,125
Corporate/Eliminations		(21,314	)		(21,315	)		1
Total	$	2,647		$	2,647		$	-

There were no reallocations between the Company's June 30, 2012 and 2010, operating segments.

The Company currently has five reportable segments: South African transaction-based activities, international transaction-based activities, smart card accounts, financial services and hardware, software and related technology sales. Each segment, other than international transaction-based activities and the hardware, software and related technology sales segments, operates mainly within South Africa. The Company's reportable segments offer different products and services and require different resources and marketing strategies and share the Company's assets.

The South African transaction-based activities segment currently consists mainly of a state pension and welfare benefit distribution service provided to the South African government and transaction processing for retailers, utilities, medical-related claim service customers and banks. Fee income is earned based on the number of beneficiaries paid as well as from merchants and card holders using the Company's merchant acquiring system. Utility providers and banks are charged a fee for transaction processing services performed on their behalf at retailers. In addition, the operating segment includes sales of prepaid products (electricity and airtime). The Company earns a commission for prepaid electricity sales and revenue from the sale of airtime vouchers. This segment has individually significant customers that each provides more than 10% of the total revenue of the Company. For the year ended June 30, 2012, there was one such customer, providing 41% of total revenue (2011: one such customer, providing 47% of total revenue; 2010: one such customer, providing 66% of total revenue).

The international transaction-based activities segment currently consists mainly of KSNET which generates revenue from the provision of payment processing services to merchants and card issuers through its VAN. This segment generates fee revenue from the provision of payment processing services and to a lesser extent from the sale of goods, primarily point of sale terminals, to customers in Korea. The segment also generates transaction fee revenue from transaction processing of UEPS-enabled smartcards through NUETS initiative in Iraq and transaction processing of medical-related claims. The Company allocated its international transaction-based activities to this segment effective July 1, 2010, and the Company's reported results for the year ended June 30, 2011, include all legacy international transaction-processing activities from July 1, 2010 and include KSNET from November 1, 2010. Segment results for the year ended June 30, 2010, have not been re-casted due to the insignificance of the transaction processing activities of Net1 Virtual Card, and NUETS transaction processing activities in Iraq.

The smart card accounts segment derives revenue from the provision of smart card accounts, as a fixed monthly fee per card is charged for the maintenance of these accounts. The financial services segment provides short-term loans as a principal and life insurance products on an agency basis and generates initiation and services fees. As a result of the acquisition of SmartLife, we earn premium income from the sale of life insurance products and investment income.

The hardware, software and related technology sales segment markets, sells and implements the UEPS as well as develops and provides Prism secure transaction technology, solutions and services. The segment also includes the operations of Net1 UTA, which comprise mainly hardware sales and licenses of the DUET system. The segment undertakes smart card system implementation projects, delivering hardware, software and business solutions in the form of customized systems. Sales of hardware, SIM cards, cryptography services, SIM card licenses and other software licenses are recorded within this segment. This segment also generates rental income from hardware provided to merchants enrolled in the Company's merchant retail application. The impairment losses incurred during the years ended June 30, 2011 and 2010, of approximately $41.8 million and $37.4 million, respectively, discussed in Note 9 are included in the results of this operating segment.

Corporate/eliminations includes the Company's head office cost centers in addition to the elimination of inter-segment transactions. The profit related to the liquidation of SmartSwitch Nigeria discussed in Note 16 has been allocated to corporate/eliminations.

The Company evaluates segment performance based on operating income. The following tables summarize segment information which is prepared in accordance with GAAP:


	June 30,
	2012		2011		2010

Revenues to external customers
South African transaction-based activities	$	201,207	$	189,206	$	191,362
International transaction-based activities		118,281		70,382		-
Smart card accounts		31,263		33,315		31,971
Financial services		8,121		7,350		4,023
Hardware, software and related technology sales		31,392		43,167		53,008
Total		390,264		343,420		280,364
Inter-company revenues
South African transaction-based activities		5,452		4,015		3,837
International transaction-based activities		-		-		-
Smart card accounts		1,065		-		-
Financial services		-		-		-
Hardware, software and related technology sales		1,784		2,281		1,892
Total	$	8,301	$	6,296	$	5,729


	June 30,
	2012			2011			2010

Operating income
South African transaction-based activities	$	49,824		$	75,668		$	106,036
International transaction-based activities		1,257			(220	)		-
Smart card accounts		12,820			15,140			14,532
Financial services		4,636			4,999			2,881
Hardware, software and related technology sales		3,619			(48,372	)		(42,524	)
Corporate/ Eliminations		(11,006	)		(9,787	)		(11,114	)
Total		61,150			37,428			69,811
Interest earned
South African transaction-based activities		-			-			-
International transaction-based activities		-			-			-
Smart card accounts		-			-			-
Financial services		-			-			-
Hardware, software and related technology sales		-			-			-
Corporate/ Eliminations		8,576			7,654			10,116
Total		8,576			7,654			10,116
Interest expense
South African transaction-based activities		463			652			981
International transaction-based activities		44			526			-
Smart card accounts		-			-			-
Financial services		2			15			1
Hardware, software and related technology sales		109			59			5
Corporate/ Eliminations		8,727			7,420			60
Total		9,345			8,672			1,047
Depreciation and amortization
South African transaction-based activities		9,370			8,997			6,714
International transaction-based activities		26,206			16,584			-
Smart card accounts		-			-			-
Financial services		345			539			510
Hardware, software and related technology sales		624			7,846			10,978
Corporate/ Eliminations		(46	)		705			1,146
Total		36,499			34,671			19,348
Income taxation expense
South African transaction-based activities		13,948			21,003			29,713
International transaction-based activities		(449	)		(1,003	)		-
Smart card accounts		3,590			4,238			4,068
Financial services		1,286			1,394			806
Hardware, software and related technology sales		894			(3,111	)		684
Corporate/ Eliminations		(3,333	)		11,004			5,551
Total		15,936			33,525			40,822
Net income attributable to Net1
South African transaction-based activities		35,414			54,009			75,536
International transaction-based activities		2,190			652			-
Smart card accounts		9,230			10,904			10,465
Financial services		3,309			3,587			2,073
Hardware, software and related technology sales		2,616			(45,191	)		(43,405	)
Corporate/ Eliminations		(8,108	)		(21,314	)		(5,679	)
Total	$	44,651		$	2,647		$	38,990


	June 30,
	2012		2011		2010

Expenditures for long-lived assets
South African transaction-based activities	$	23,408	$	2,423	$	2,177
International transaction-based activities		14,978		12,113		-
Smart card accounts		-		-		-
Financial services		620		400		302
Hardware, software and related technology sales		161		117		251
Corporate/ Eliminations		-		-		-
Total	$	39,167	$	15,053	$	2,730

The segment information as reviewed by the chief operating decision maker does not include a measure of segment assets per segment as all of the significant assets are used in the operations of all, rather than any one, of the segments. The Company does not have dedicated assets assigned to a particular operating segment. Accordingly, it is not meaningful to attempt an arbitrary allocation and segment asset allocation is therefore not presented.

It is impractical to disclose revenues from external customers for each product and service or each group of similar products and services.

Geographic Information

Revenues based on the geographic location from which the sale originated for the years ended June 30, are presented in the table below:


	2012		2011		2010

South Africa	$	272,063	$	264,485	$	267,478
Korea		114,096		68,392		-
Europe		2,413		10,465		12,301
Rest of world		1,692		78		585
Total	$	390,264	$	343,420	$	280,364