20. EARNINGS PER SHARE

The Company has issued redeemable common stock (refer to Note 15) which is redeemable at an amount other than fair value. Redemption of a class of common stock at other than fair value increases or decreases the carrying amount of the redeemable common stock and is reflected in basic earnings per share using the two-class method. There were no redemptions of common stock, or adjustments to the carrying value of the redeemable common stock during the years ended June 30, 2018, 2017 or 2016. Accordingly the two-class method presented below does not include the impact of any redemption.

Basic earnings per share include shares of restricted stock that meet the definition of a participating security because these shares are eligible to receive non-forfeitable dividend equivalents at the same rate as common stock. Basic earnings per share have been calculated using the two-class method and basic earnings per share for the years ended June 30, 2018, 2017 and 2016, reflects only undistributed earnings. The computation below of basic earnings per share excludes the net income attributable to shares of unvested restricted stock (participating non-vested restricted stock) from the numerator and excludes the dilutive impact of these unvested shares of restricted stock from the denominator.

Diluted earnings per share has been calculated to give effect to the number of shares of additional common stock that would have been outstanding if the potential dilutive instruments had been issued in each period. Stock options are included in the calculation of diluted earnings per share utilizing the treasury stock method and are not considered to be participating securities as the stock options do not contain non-forfeitable dividend rights. The calculation of diluted earnings per share includes the dilutive effect of a portion of the restricted stock granted to employees in August and November 2014, August 2015, August 2016, August 2017 and March 2018 as these shares of restricted stock are considered contingently returnable shares for the purposes of the diluted earnings per share calculation and the vesting conditions in respect of a portion of the restricted stock had been satisfied. The vesting conditions are discussed in Note 18.

The following table presents net income attributable to Net1 (income from continuing operations) and the share data used in the basic and diluted earnings per share computations using the two-class method for the years ended June 30, 2018, 2017 and 2016:

		2018			2017			2016
		(in thousands except percent and
					per share data)
Numerator:
Net income attributable to Net1	$	39,150		$	72,954		$	82,454
Undistributed earnings		39,150			72,954			82,454
Percent allocated to common shareholders (Calculation 1)		98	%		99	%		99	%
Numerator for earnings per share: basic and diluted	$	38,497		$	72,188		$	81,370

Denominator:
Denominator for basic earnings per share: weighted-average common
shares outstanding		55,860			53,966			47,234
Effect of dilutive securities:
Stock options		51			109			242
Denominator for diluted earnings per share: adjusted weighted
average common shares outstanding and assumed conversion		55,911			54,075			47,476

Earnings per share:
Basic	$	0.69		$	1.34		$	1.72
Diluted	$	0.69		$	1.33		$	1.71

(Calculation 1)
Basic weighted-average common shares outstanding (A)		55,860			53,966			47,234
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest (B)		56,807			54,539			47,863
Percent allocated to common shareholders (A) / (B)		98	%		99	%		99	%

Options to purchase 660,698 shares of the Company's common stock at prices ranging from $10.59 to $24.46 per share were outstanding during the year ended June 30, 2018, but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the Company's common shares. The options, which expire at various dates through August 27, 2024, were still outstanding as of June 30, 2018.