14. Earnings per share

Diluted earnings per share have 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 2016, August 2017, March 2018, May 2018 and September 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 for awards made in September 2018, March 2018, August 2017 and August 2016 are discussed in Note 13 and the vesting conditions for all other awards are discussed in Note 18 to the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2018.

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:


		Three months ended
		September 30,
		2018			2017
		(in thousands except
		percent and
		per share data)
Numerator:
Net (loss) income attributable to Net1	($	5,199	)	$	19,483
Undistributed (loss) earnings		(5,199	)		19,483
Percent allocated to common shareholders (Calculation 1)		99	%		99	%
Numerator for earnings per share: basic and diluted	($	5,128	)	$	19,267

Denominator:
Denominator for basic (loss) earnings per share: weighted-average common shares
outstanding		55,951			56,562
Effect of dilutive securities:
Stock options		50			47
Denominator for diluted (loss) earnings per share: adjusted weighted average
common shares outstanding and assumed conversion		56,001			56,609

(Loss) Earnings per share:
Basic	($	0.09	)	$	0.34
Diluted	($	0.09	)	$	0.34

(Calculation 1)
Basic weighted-average common shares outstanding (A)		55,951			56,562
Basic weighted-average common shares outstanding and unvested restricted shares
expected to vest (B)		56,723			57,196
Percent allocated to common shareholders (A) / (B)		99	%		99	%

Options to purchase 503,698 shares of the Company's common stock at prices ranging from $8.75 to $13.16 per share were outstanding during the three months ended September 30, 2018, but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the Company's common stock. The options, which expire at various dates through August 27, 2024, were still outstanding as of September 30, 2018.