Net 1 UEPS Technologies Inc. Reports 2013 Fourth Quarter and Full Year Results

Net 1 UEPS Technologies Inc. Reports 2013 Fourth Quarter and Full Year Results 
- Bulk enrollment substantially completed; 22 million registrations
and 9.5 million cards issued as of June 30, 2013; 
- Revenue of $118 million, increased 25% in constant currency; and 
- Fundamental EPS of $0.28, up 22% in constant currency; includes $9
million of implementation and smart card costs. 
JOHANNESBURG, SOUTH AFRICA -- (Marketwired) -- 08/22/13 -- Net 1 UEPS
Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today announced results for
the fourth quarter and full-year fiscal 2013.  
Summary Financial Metrics 


 
                                      Three months ended June 30,         
                            ----------------------------------------------
                                                      % change    % change
                                  2013        2012      in USD      in ZAR
                            ----------  ----------  ----------  ----------
(All figures in USD '000s                                                 
 except per share data)                                                   
Revenue                        117,882     107,616         10%         25%
                                                                          
GAAP net income (loss)           8,285     (7,977)          nm          nm
                                                                          
Fundamental net income (1)      12,598      12,208          3%         21%
                                                                          
GAAP earnings (loss) per                                                  
 share ($)                        0.18      (0.17)          nm          nm
                                                                          
Fundamental earnings per                                                  
 share ($) (1)                    0.28        0.27          5%         22%
                                                                          
Fully-diluted shares                                                      
 outstanding ('000's)           45,713      45,542          1%            
                                                                          
Average period USD/ ZAR                     
                              
 exchange rate                    9.19        8.03         14%            
                                                                          
                                      Fiscal year ended June 30,          
                            ----------------------------------------------
                                                      % change    % change
                                  2013        2012      in USD      in ZAR
                            ----------  ----------  ----------  ----------
(All figures in USD '000s                                                 
 except per share data)                                                   
Revenue                        452,147     390,264         16%         31%
                                                                          
GAAP net income                 12,977      44,651       (71%)       (67%)
                                                                          
Fundamental net income (1)      34,822      64,094       (46%)       (38%)
                                                                          
GAAP earnings per share ($)       0.28        0.99       (71%)       (67%)
                                                                          
Fundamental earnings per                                                  
 share ($) (1)                    0.76        1.42       (46%)       (39%)
                                                                          
Fully-diluted shares                                                      
 outstanding ('000's)           45,678      45,232          1%            
                                                                          
Average period USD/ ZAR                                                   
 exchange rate                    8.71        7.72         13%            
                                                                          
(1) Fundamental net income and earnings per share are non-GAAP measures and 
are described below under "Use of Non-GAAP Measures-Fundamental net income  
and fundamental earnings per share." See Attachment B for a reconciliation  
of GAAP net income (loss) to fundamental net income and earnings per share. 

 
Factors impacting comparability of our Q4 2013 and Q4 2012 results  


 
--  Unfavorable impact from the strengthening of the US dollar: The US
    dollar appreciated by 14% against the ZAR during Q4 2013 which
    negatively impacted our reported results; 
--  SASSA implementation costs: Our SASSA contract implementation and smart
    card costs of $9.0 million were 15% higher in ZAR when compared to Q4
    2012; 
--  DOJ and SEC investigation-related expenses: We incurred DOJ and SEC
    investigation-related expenses of $1.2 million, pre-tax, during Q4 2013;
--  Fair value charge resulting from issue of equity instrument pursuant to
    BEE transaction: We recorded a fair value charge of $14.2 million
    related to our BEE transaction which negatively impacted our reported
    results during Q4 2012; and 
--  Capital gain paid related to intercompany transaction: We incurred a
    non-recurring capital gains tax of $1.5 million resulting from an
    intercompany capital transaction in South Africa in Q4 2012. 

 
Comments and Outlook  
"I am very pleased to report that we have completed our bulk
enrollment on time despite higher than anticipated volumes. This
incredibly complex and complicated exercise and its undeniable
success, has once again validated SASSA's decision to award this
nationally critical tender to us. It is not surprising that
MasterCard this week declared the implementation as the best
government social grants payment program worldwide," said Dr. Serge
Belamant, Chairman and Chief Executive Officer of Net1. "My
congratulations go out to my entire workforce! Net1 is now ready to
execute on its strategic plans and has commenced with the deployment
of both our financial and mobile services, and the early results look
extremely impressive. We continue to optimize our company so as to
capitalize on the businesses that can leverage our infrastructure and
have the potential to add substantial value to our shareholders," he
concluded.  
"Our one-time implementation costs are now effectively behind us and
we therefore expect to demonstrate a marked improvement in
profitability during fiscal 2014," said Herman Kotze, Chief Financial
Officer of Net1. "For fiscal 2014, we expect fundamental earnings per
share of at least $1.50, assuming a constant currency base of ZAR
8.71/$1 and a share count of approximately 45.7 million shares. Our
guidance also assumes the lost revenue and operating income from the
roughly 370,000 beneficiaries on SASSA's database who have not
re-registered and whose grants will likely be cancelled in September
2013," he concluded.  
Completion of SASSA contract bulk enrollment 
We completed the second phase of bulk enrollment by April 30, 2013,
in accordance with the implementation plan agreed with SASSA. Having
substantially concluded bulk enrollment in fiscal 2013, our temporary
employee headcount, which peaked at approximately 5,500 employees for
most of fiscal 2013, has since declined to 1,39
2 at June 30, 2013.  
As of June 30, 2013, we had enrolled a total of 21.7 million people,
which comprises approximately 9.5 million grant recipient cardholders
and 12.2 million beneficiaries associated with these recipient
cardholders in accordance with our second phase enrollment schedule,
and issued them our UEPS/EMV smart card. During fiscal 2013, we
incurred direct implementation expenses of approximately $56.2
million (ZAR 488.3 million), including staff, travel, temporary
infrastructure hire, fixed premises hire for enrollment and
stationery costs. We are unable to quantify the value of time spent
by our executives and pension and welfare operations managers and
staff that service the five provinces in which we operated under the
previous contract and that have assisted in the implementation of the
national contract. During fiscal 2012, we incurred direct
implementation expenses of approximately $10.9 million (ZAR 83.9
million). We also expensed $10.3 million (ZAR 90.2 million) related
to the cost of the UEPS/EMV smart cards issued during fiscal 2013,
which is not included in the $56.2 million (ZAR 488.3 million) of
direct implementation expenses described above. We did not expense
any smart cards in fiscal 2012. 
We also incurred approximately $6.9 million in capital expenditures
related to the implementation during fiscal 2013. Since inception of
the implementation we have incurred cumulative capital expenditures
of $28.1 million. We have substantially completed the bulk enrollment
of recipient cardholders and beneficiaries and do not expect any
further significant capital expenditures related to this process.  
SASSA has sent termination notices to all cardholder recipients and
beneficiaries who had not presented themselves for enrollment during
May, June and July 2013 in terms of the Promotion of Administrative
Justice Act. As of July 30, 2013, there were an estimated 372,870
former grant recipient cardholders who had not presented themselves
for enrollment. The grants applicable to these grant recipient
cardholders will be suspended with effect from September 2013 and
these beneficiaries will have to re-apply for their grants. Our
revenue for fiscal 2014 will decline to the extent that these
beneficiaries do not re-apply for their grants, but such decline may
be offset by the amount of new grant recipient cardholders approved
by SASSA. 
SASSA tender award litigation 
On March 27, 2013, a full bench of the South African Supreme Court of
Appeal dismissed AllPay Consolidated Investment Holdings (Pty) Ltd's
appeal against the earlier ruling by the North Gauteng High Court
that SASSA's award of the tender to us would not be set aside.
Accordingly, our SASSA contract to distribute social welfare grants
to ten million South Africans every month, for a period of five
years, remains in full force and effect. On April 18, 2013, AllPay
applied for leave to appeal to the South African Constitutional
Court, the highest court in the country, against the judgment of the
Supreme Court. We and SASSA have opposed AllPay's application. The
hearing has been scheduled for September 10, 2013. Both the
application for leave to appeal and appeal itself will be argued on
September 10, 2013. We cannot predict when or how the Constitutional
Court will rule on the matter. 
Results of Operations by Segment and Liquidity 
Our frequently asked questions and operating metrics will be updated
and posted on our website (www.net1.com).  
South African transaction-based activities 
Segment revenue was $59.3 million in Q4 2013, up 1% compared with Q4
2012 in USD and up 16% on a constant currency basis. In ZAR, the
increases in segment revenue were primarily due to higher revenues
earned under our SASSA contract and higher transaction volumes at our
South African transaction processors. Segment operating income margin
was 15% and 9%, respectively, and increased primarily due to increase
in transaction volumes. Excluding amortization of acquisition-related
intangibles, Q4 2013 segment operating income margin was 16% compared
with 12% in Q4 2012.  
International transaction-based activities 
KSNET continues to contribute the majority of our revenues and
operating income in this operating segment. Segment revenue was $35.6
million in Q4 2013, up 15% compared with Q4 2012 in USD and 31% on a
constant currency basis. The increase in segment revenue and
operating income was primarily due to increased transaction-based
revenues in Korea partially offset by start up expenses related to
our VCC and XeoHealth initiatives. NUETS did not contribute as a
result of the non-renewal of its Iraqi customer's contract in Q3
2013. Excluding the amortization of intangibles, Q4 2013 operating
income margin was 13% compared to 10% during Q4 2012. 
Smart card accounts 
Segment revenue was $11.8 million in Q4 2013, up 43% compared with Q4
2012 in USD and 64% on a constant currency basis and increased as a
result of the increase in smart card accounts. Q4 2013 segment
operating income margin was 29%, compared to 28% during Q4 2012.  
Financial services 
UEPS-based lending contributes the majority of the revenue and
operating income in this operating segment. Segment revenue was $2.1
million in Q4 2013, up 16% compared with Q4 2012 in USD and 33%
higher on a constant currency basis, principally due to an increase
in lending activities. Q4 2013 segment operating income margin was
17% compared with 54% during Q4 2012 primarily due to the allocation
of UEPS-based lending corporate administration and overhead expenses
to this segment from South African transaction-based activities. We
have allocated all fiscal 2013 expenses to this segment in Q4 2013.
We expect to allocate expenses to this operating segment on a
quarterly basis in fiscal 2014 and therefore we expect an improved
margin in Q1 2014 compared with Q4 2013. Smart Life did not
contribute to operating income in the fourth quarter of fiscal 2013
as it continues to be restricted from issuing new insurance policies
as a result of the suspension of its license in Q3 2013. 
Hardware, software and related technology sales 
Segment revenue was $9.2 million in Q4 2013, up 12% compared with Q4
2012 in USD and 28% on a constant currency basis. In constant
currency, the increase in revenue resulted primarily from an increase
in royalty fees and ad hoc hardware sales, offset by a lower
contribution from most other major contributors to this segment.
Excluding amortization of all intangibles, segment operating income
margin was 25% compared to 26% during Q4 2012.  
Corporate/eliminations 
The decrease in our corporate expenses resulted primarily from the
$14.2 million BEE transaction equity instrument charge incurred in Q4
2012, offset by legal fees we incurred in connection with the DOJ and
SEC investigations and higher other corporate head office-related
expenses.  
Cash flow and liquidity 
At June 30, 2013, we had cash and cash equivalents of $53.7 million,
up from $39.0 million at June 30, 2012. The increase in our cash
balances from June 30, 2012 was primarily due to cash generated from
operations, offset by implementation costs and capital expenditures
incurred to implement our SASSA contract, scheduled repayments of our
Korean debt and the acquisitions of Pbel and SmartSwitch Botswana.
For Q4 2013, net cash provided by operating activities was
 $24.9
million compared with net cash used by operating activities was $22.6
million in Q4 2012. 
Excluding the impact of interest received, interest paid under our
Korean debt and taxes paid, the increase in cash provided by
operating activities resulted from improved cash generated from
operations, partially offset, in ZAR, by higher implementation costs
related to our SASSA contract. Capital expenditures for Q4 2013 and
2012 were $6 million and $16 million, respectively, and have
decreased primarily due to lower capital expenditures related to our
SASSA contract implementation in Q4 2013.  
Use of Non-GAAP Measures 
US securities laws require that when we publish any non-GAAP
measures, we 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 (loss) per share are non-GAAP measures. 
Fundamental net income and fundamental earnings per share 
Fundamental net income and earnings per share is GAAP net income
(loss) and earnings (loss) per share adjusted for (1) the
amortization of acquisition-related intangible assets (net of
deferred taxes), (2) stock-based compensation charges and (3) unusual
non-recurring items, including the amortization of KSNET debt
facility fees, as well as (a) in fiscal 2013, DOJ and SEC
investigations-related expenses and acquisition-related costs; and
(b) in fiscal 2012, the effects of a change in South African tax law
and the creation of a valuation allowance related to foreign tax
credits, equity instrument charge related to our BEE transaction,
capital gains taxes paid resulting from an intercompany capital
transaction in South Africa, the profit on liquidation of SmartSwitch
Nigeria and loss on sale of 10% of Smart Life. Management believes
that the fundamental net income and earnings per share metric
enhances its own evaluation, as well as an investor's understanding,
of our financial performance. Attachment B presents the
reconciliation between GAAP and fundamental net income and earnings
per share. 
Headline earnings per share/ headline loss per share ("HEPS") 
The inclusion of HEPS in this press release is a requirement of our
listing on the JSE. HEPS basic and diluted is calculated using net
income (loss) which has been determined based on GAAP. Accordingly,
this may differ to the headline earnings (loss) 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 (loss)
adjusted for the loss (profit) on sale of property, plant and
equipment, net of related tax effects, the loss attributable to the
sale of 10% of Smart Life and the profit on liquidation of
SmartSwitch Nigeria. Attachment C presents the reconciliation between
our net income (loss) used to calculate earnings (loss) per share
basic and diluted and HEPS basic and diluted and the calculation of
the denominator for headline diluted earnings per share. 
Conference Call 
We will host a conference call to review Q4 2013 results on August
23, 2013, at 8:00 Eastern Time. To participate in the call, dial
1-866-652-5200 (U.S. only), 1-855-669-9657 (Canada only),
0808-162-4061 (U.K. only) or 0-800-200-648 (South Africa only) ten
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 ten
minutes prior to the call. A webcast of the call will be available
for replay on the Net1 website through September 22, 2013. 
About Net1 (www.net1.com) 
Net1 is a leading provider of alternative payment systems that
leverage its Universal Electronic Payment System, or UEPS, to
facilitate biometrically secure, real-time electronic transaction
processing to unbanked and under-banked populations of developing
economies around the world in an online or offline environment.
Net1's UEPS/EMV solution is also completely interoperable with global
EMV standards that seamlessly permit access to all the UEPS
functionality in a traditional EMV environment. In addition to
payments, UEPS can be used for banking, healthcare management,
payroll, remittances, voting and identification. 
Net1 operates market-leading payment processors in South Africa,
Republic of Korea, and Ghana. In addition, Net1's proprietary Mobile
Virtual Card technology offers secure mobile payments and banking
services in developed and emerging countries while its MediKredit and
XeoHealth subsidiaries provide its proprietary 5010 and ICD-10
compliant real-time claims adjudication system.  
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 our actual results, levels of activity,
performance or achievements to differ materially from those expressed
in such forward-looking statements are included in our filings with
the Securities and Exchange Commission. We undertake no obligation to
revise any of these statements to reflect future events. 


 
                       NET 1 UEPS TECHNOLOGIES INC.                       
         Unaudited Condensed Consolidated Statements of Operations        
                                                                          
                              Three months ended       Fiscal year ended  
                            ----------------------  ----------------------
                                    June 30,                June 30,      
                              --------------------    --------------------
                                   2013       2012         2013       2012
                              ---------  ---------    ---------  ---------
                             (In thousands, except   (In thousands, except
                                   per share data)         per share data)
                                                                          
REVENUE                      $  117,882 $  107,616   $  452,147 $  390,264
                                                                          
EXPENSE                                                                   
                                                                          
 Cost of goods sold, IT                                                   
  processing, servicing and                                               
  support                        53,045     41,395      196,834    141,000
                                                                          
 Selling, general and                                                     
  administration                 41,698     45,107
      191,552    137,404
                                                                          
 Equity instrument issued                                                 
  pursuant to BEE                                                         
  transaction                         -     14,211            -     14,211
                                                                          
 Depreciation and                                                         
  amortization                    9,548      9,305       40,599     36,499
                                                                          
                              ---------  ---------    ---------  ---------
OPERATING INCOME (LOSS)          13,591    (2,402)       23,162     61,150
                                                                          
INTEREST INCOME                   3,888      2,595       12,083      8,576
                                                                          
INTEREST EXPENSE                  1,849      2,130        7,966      9,345
                              ---------  ---------    ---------  ---------
                                                                          
INCOME (LOSS) BEFORE INCOME                                               
 TAX EXPENSE                     15,630    (1,937)       27,279     60,381
                                                                          
INCOME TAX EXPENSE                7,484      6,151       14,656     15,936
                              ---------  ---------    ---------  ---------
                                                                          
NET INCOME (LOSS) BEFORE                                                  
 EARNINGS FROM EQUITY-                                                    
 ACCOUNTED INVESTMENTS            8,146    (8,088)       12,623     44,445
                                                                          
EARNINGS FROM EQUITY-                                                     
 ACCOUNTED INVESTMENTS              147        120          351        220
                              ---------  ---------    ---------  ---------
                                                                          
NET INCOME (LOSS)                 8,293    (7,968)       12,974     44,665
                                                                          
LESS (ADD) NET INCOME (LOSS)                                              
 ATTRIBUTABLE TO NON-                                                     
 CONTROLLING INTEREST                 8          9          (3)         14
                                                                          
                              ---------  ---------    ---------  ---------
NET INCOME (LOSS)                                                         
 ATTRIBUTABLE TO NET1        $    8,285 $  (7,977)   $   12,977 $   44,651
                              ---------  ---------    ---------  ---------
                              ---------  ---------    ---------  ---------
                                                                          
Net income (loss) per share,                                              
 in United States dollars                                                 
 Basic earnings (loss)                                                    
  attributable to Net1                                                    
  shareholders                    $0.18    $(0.17)        $0.28      $0.99
 Diluted earnings (loss)                                                  
  attributable to Net1                                                    
  shareholders                    $0.18    $(0.17)        $0.28      $0.99
                                                                          
                                                                          
                       NET 1 UEPS TECHNOLOGIES INC.                       
                   Condensed Consolidated Balance Sheets                  
                                                                          
                                                 Unaudited             (A)
                                                  June 30,        June 30,
                                                      2013            2012
                                            --------------  --------------
                                            --------------  --------------
                                              (In thousands, except share 
                                                         data)            
                                  ASSETS                                  
CURRENT ASSETS                                                            
 Cash and cash equivalents                   $      53,665   $      39,123
 Pre-funded social welfare grants receivable         2,934           9,684
 Accounts receivable, net of allowances            102,614         101,918
 Finance loans receivable                            8,350           8,141
 Inventory                                          12,222          10,779
 Deferred income taxes                               4,938           5,591
                                              ------------    ------------
  Total current assets before settlement                                  
   assets                                          184,723         175,236
    Settlement assets                              752,476         409,166
                                              ------------    ------------
     Total current assets                          937,199         584,402
PROPERTY, PLANT AND EQUIPMENT, net                  48,301          52,616
EQUITY-ACCOUNTED INVESTMENTS                         1,183           1,508
GOODWILL                                           175,806         182,737
INTANGIBLE ASSETS, net                              77,257          93,930
OTHER LONG-TERM ASSETS, including                                         
 reinsurance assets                                 36,576          40,700
                                              ------------    ------------
 TOTAL ASSETS                                    1,276,322         955,893
                                              ------------    ------------
                                              ------------    ------------
                                                    40,570                
                                LIABILITIES                               
CURRENT LIABILITIES                                                       
 Accounts payable                                   26,567          13,172
 Other payables                                     33,808          40,167
 Current portion of long-term borrowings            14,209          14,019
 Income taxes payable                                2,275           6,019
                                              ------------    ------------
  Total current liabilities before                                        
   settlement obligations                           76,859          73,377
    Settlement obligations                         752,476         409,166
                                              ------------    ------------
     Total current liabilities                     829,335         482,543
DEFERRED INCOME TAXES                               18,727          20,988
LONG-TERM BORROWINGS                                66,632          79,760
OTHER LONG-TERM LIABILITIES, including                                    
 insurance policy liabilities                       21,659          25,791
                                              ------------    ------------
 TOTAL LIABILITIES                                 936,353         609,082
                                              ------------    ------------
COMMITMENTS AND CONTINGENCIES                                             
                                                                          
                                  EQUITY                                  
NET1 EQUITY:                                                              
 COMMON STOCK                                                             
  Authorized: 200,000,000 with $0.001 par                                 
   value;                                                                 
  Issued and outstanding shares, net of                                   
   treasury - 2013: 45,592,550; 2012:                                     
   45,548,902                                           59              59
 PREFERRED STOCK                                                          
  Authorized shares: 50,000,000 with $0.001                               
   par value;                                                             
  Issued and outstanding shares, net of                                   
   treasury: March: -; June: -                           -            
   -
 ADDITIONAL PAID-IN-CAPITAL                        160,670         155,350
 TREASURY SHARES, AT COST: 2013: 13,455,090;                              
  2012: 13,455,090                               (175,823)       (175,823)
 ACCUMULATED OTHER COMPREHENSIVE LOSS            (100,858)        (75,722)
 RETAINED EARNINGS                                 452,618         439,641
                                              ------------    ------------
  TOTAL NET1 EQUITY                                336,666         343,505
  NON-CONTROLLING INTEREST                           3,303           3,306
                                              ------------    ------------
   TOTAL EQUITY                                    339,969         346,811
                                              ------------    ------------
                                                                          
                                              ------------    ------------
    TOTAL LIABILITIES AND SHAREHOLDERS'                                   
     EQUITY                                  $   1,276,322   $     955,893
                                              ------------    ------------
                                              ------------    ------------
(A) - Derived from audited financial statements                             
                                                                            
                                                                          
                       NET 1 UEPS TECHNOLOGIES INC.                       
         Unaudited Condensed Consolidated Statements of Cash Flows        
                                                                          
                               Three months ended      Fiscal year ended  
                             ---------------------- ----------------------
                                     June 30,               June 30,      
                               --------------------   --------------------
                                    2013       2012        2013       2012
                               ---------  ---------   ---------  ---------
                                 (In thousands)         (In thousands)    
                                                                          
Cash flows from operating                                                 
 activities                                                               
Net income (loss)             $    8,293 $  (7,968)  $   12,974 $   44,665
Adjustments to reconcile net                                              
 income (loss) to net cash                                                
 provided by (used in)                                                    
 operating activities:                                                    
Depreciation and amortization      9,548      9,305      40,599     36,499
Loss from equity-accounted                                                
 investments                       (147)      (120)       (351)      (220)
Fair value adjustments               223    (1,392)         631    (3,375)
Interest payable                     950      4,354       4,313      8,823
Profit on disposal of                                                     
 property, plant and                                                      
 equipment                           193        (7)         110       (64)
Net loss on sale of 10% of                                                
 Smart Life                            -          -           -         81
Profit on liquidation of                                                  
 Smartswitch Nigeria                   -          -           -    (3,994)
Realized loss on sale of                                                  
 investments related to                                                   
 insurance business                    -          -           -         25
Stock-based compensation                                                  
 charge                              582        893       3,907      2,775
Fair value of BBEE equity                                                 
 instrument                            -     14,211           -     14,211
Facility fee amortized                67      (126)         302        389
Decrease in accounts                                                      
 receivable, pre-funded                                                   
 social welfare grants                                                    
 receivable and finance loans                                             
 receivable                      (1,739)   (16,653)     (5,726)   (31,974)
Increase in inventory              (630)    (4,940)     (2,890)    (5,271)
Increase in accounts payable                                              
 and other payables                9,868   (16,731)       8,113   (18,496)
(Decrease) Increase in taxes                                              
 payable                         (3,102)    (2,147)     (2,748)    (7,483)
Increase (Decrease) in                                                    
 deferred taxes                      816    (1,257)     (3,317)   (16,185)
                               ---------  ---------   ---------  ---------
Net cash provided by (used                                                
 in) operating activities         24,922   (22,578)      55,917     20,406
                               ---------  ---------   ---------  ---------
                                                                          
Cash flows from investing                                                 
 activities                                                               
Capital expenditures             (5,644)   (15,702)    (22,747)   (39,167)
Proceeds from disposal of                                                 
 property, plant and                                                      
 equipment                           123        379         510        764
Acquisitions, net of cash                                                 
 acquired                              -          -     (2,143)    (6,154)
Repayment of loan by equity-                                              
 accounted investment                  -          -           3        122
Settlement from former                                                    
 shareholders of KSNET                 -          -           -      4,945
Acquisition of available for                                              
 sale securities                       -         29           -      (948)
Purchase of investments                                                   
 related to insurance                                                     
 business                              -          -           -    (2,320)
Proceeds from maturity of                                                 
 investments related to                                                   
 insurance business                    -          -           -      2,321
Other investing activity Net           -          -         545        (1)
Net change in settlement                                                  
 assets                        (255,565)  (381,062)   (423,984)  (252,101)
                               ---------  ---------   ---------  ---------
Net cash used in investing                                                
 activities                    (261,086)  (396,356)   (447,816)  (292,539)
                               ---------  ---------   ---------  ---------
                                                                          
Cash flows from financing                                                 
 activities                                                               
Repayment of long-term                                                    
 borrowings                      (7,201)    (7,145)    (14,508)   (19,172)
Proceeds from issue of common                     
                        
 stock                                 -          -         240          -
Acquisition of treasury stock          -          -           -    (1,129)
Proceeds on sale of 10% of                                                
 Smart Life                            -          -           -        107
Net change in settlement                                                  
 obligations                     255,565    381,062     423,984    252,101
                               ---------  ---------   ---------  ---------
Net cash provided by                                                      
 financing activities            248,364    373,917     409,716    231,907
                               ---------  ---------   ---------  ---------
                                                                          
Effect of exchange rate                                                   
 changes on cash                 (1,151)    (4,109)     (3,275)   (15,914)
                               ---------  ---------   ---------  ---------
Net increase (decrease) in                                                
 cash and cash equivalents        11,049   (49,126)      14,542   (56,140)
Cash and cash equivalents -                                               
 beginning of period              42,616     88,250      39,123     95,263
                               ---------  ---------   ---------  ---------
Cash and cash equivalents -                                               
 end of period                $   53,665 $   39,124  $   53,665 $   39,123
                               ---------  ---------   ---------  ---------
                               ---------  ---------   ---------  ---------

 
Net 1 UEPS Technologies Inc. 
Attachment A 
Operating segment revenue, operating income and operating margin: 
Three months ended June 30, 2013 and 2012 and March 31, 2013 


 
                                                               Change -   
                                                               constant   
                                                               exchange   
                                           Change - actual     rate(1)    
                                          ---------------- ---------------
Key segmental                               Q4 '13  Q4 '13  Q4 '13  Q4 '13
 data, in $                                     vs      vs      vs      vs
 '000,            Q4 '13   Q4 '12   Q3 '13   Q4'12  Q3 '13   Q4'12  Q3 '13
                -------- -------- -------- ------- ------- ------- -------
 Revenue:                                                                 
  SA                                                                      
   transaction-                                                           
   based                                                                  
   activities    $59,268  $58,434  $59,009      1%      0%     16%      9%
  International                                                           
   transaction-                                                           
   based                                                                  
   activities     35,600   31,003   33,119     15%      7%     31%     17%
  Smart card                                                              
   accounts       11,750    8,189    8,657     43%     36%     64%     47%
  Financial                                                               
   services        2,062    1,777    1,651     16%     25%     33%     36%
  Hardware,                                                               
   software and                                                           
   related                                                                
   technology                                                             
   sales           9,202    8,213    8,705     12%      6%     28%     15%
                -------- -------- --------                                
   Total                                                                  
    consolidated                                                          
    revenue     $117,882 $107,616 $111,141     10%      6%     25%     15%
                -------- -------- --------                                
                                                                          
 Consolidated                                                             
  operating                                                               
  income (loss):                                                          
  SA                                                                      
   transaction-                                                           
   based                                                                  
   activities     $9,060   $5,181 ($4,197)     75%      nm    100%      nm
                -------- -------- ----------------------------------------
   Operating                                                              
    income                                                                
    (loss)                                                                
    excluding                                                             
    amortization   9,632    6,809  (3,127)     41%      nm     62%      nm
   Amortization                                                           
    of                                                                    
    intangible                                                            
    assets         (572)  (1,628)  (1,070)   (65%)   (47%)   (60%)   (42%)
                -------- -------- ----------------------------------------
  International                                                           
   transaction-                                                           
   based                                                                  
   activities      1,365      137  (1,362)    896%      nm  1,039%      nm
                -------- -------- ----------------------------------------
   Operating                                                              
    income                                                                
    excluding                                                             
    amortization   4,536    3,130    1,866     45%    143%     66%    164%
   Amortization                                                           
    of                                                                    
    intangible                                                            
    assets       (3,171)  (2,993)  (3,228)      6%    (2%)     21%      7%
                -------- -------- ----------------------------------------
  Smart card                                                              
   accounts        3,349    2,333    2,467     44%     36%     64%     47%
  Financial                                                               
   services          354      951    1,147   (63%)   (69%)   (57%)   (67%)
  Hardware,                                                               
   software and                                                           
   related                                                                
   technology                                                             
   sales           2,216    2,074    1,699      7%     30%     22%     42%
                -------- -------- ----------------------------------------
   Operating                                                              
    income                                                                
    (loss)                                                                
    excluding                                                             
    amortization   2,295    2,164    1,785      6%     29%     21%     40%
   Amortization                                                           
    of                                                             
       
    intangible                                                            
    assets          (79)     (90)     (86)   (12%)    (8%)      0%    (0%)
                ----------------- ----------------------------------------
  Corporate/                                                              
   Eliminations  (2,753) (13,078)  (4,480)   (79%)   (39%)   (76%)   (33%)
                -------- -------- --------                                
   Total                                                                  
    operating                                                             
    income                                                                
    (loss)       $13,591 ($2,402) ($4,726)      nm      nm      nm      nm
                -------- -------- --------                                
                                                                          
 Operating                                                                
  income margin                                                           
  (%)                                                                     
  SA                                                                      
   transaction-                                                           
   based                                                                  
   activities        15%       9%     (7%)                                
  International                                                           
   transaction-                                                           
   based                                                                  
   activities         4%       0%     (4%)                                
  International                                                           
   transaction-                                                           
   based                                                                  
   activities                                                             
   excluding                                                              
   amortization      13%      10%       6%                                
  Smart card                                                              
   accounts          29%      28%      28%                                
  Financial                                                               
   services          17%      54%      69%                                
  Hardware,                                                               
   software and                                                           
   related                                                                
   technology                                                             
   sales             24%      25%      20%                                
  Overall                                                                 
   operating                                                              
   margin            12%     (2%)     (4%)                                
                                                                          
(1) - This information shows what the change in these items would have    
 been if the USD/ZAR exchange rate that prevailed during the fourth       
 quarter of fiscal 2013 also prevailed during the fourth quarter of fiscal
 2012 and the third quarter of fiscal 2013.                               

 
Fiscal year ended June 30, 2013 and 2012 


 
                                                                  Change -
                                                                  constant
                                                       Change -   exchange
                                                         actual    rate(1)
                                                     ---------- ----------
Key segmental data, in '000,                              F2013      F2013
 except margins                                              vs         vs
                                  F2013       F2012       F2012      F2012
                             ----------  ----------  ---------- ----------
 Revenue:                                                                 
  SA transaction-based                                                    
   activities                  $240,405    $201,207         19%        35%
  International transaction-                                              
   based activities             133,481     118,281         13%        27%
  Smart card accounts            36,990      31,263         18%        34%
  Financial services              6,545       8,121       (19%)       (9%)
  Hardware, software and                                                  
   related technology sales      34,726      31,392         11%        25%
                             ----------  ----------                       
   Total consolidated revenue  $452,147    $390,264         16%        31%
                             ----------  ----------                       
                                                                          
 Consolidated operating                                                   
  income (loss):                                                          
  SA transaction-based                                                    
   activities                   $13,196     $49,824       (74%)      (70%)
                             ----------  ----------  ---------------------
   Operating income excluding                                             
    amortization                 17,687      55,995       (68%)      (64%)
   Amortization of intangible                                             
    assets                      (4,491)     (6,171)       (27%)      (18%)
                             ----------  ----------  ---------------------
  International transaction-                                              
   based activities                  34       1,257       (97%)      (97%)
                             ----------  ----------  ---------------------
   Operating income excluding                                             
    amortization                 13,436      14,272        (6%)         6%
   Amortization of intangible                                             
    assets                     (13,402)    (13,015)          3%        16%
                             ----------  ----------  ---------------------
  Smart card accounts            10,543      12,820       (18%)       (7%)
  Financial services              3,646       4,636       (21%)      (11%)
  Hardware, software and                                                  
   related technology sales       6,694       3,619         85%       109%
                             ----------  ----------  ---------------------
   Operating income excluding                                             
    amortization                  7,023       3,990         76%        99%
   Amortization of intangible                                             
    assets                        (329)       (371)       (11%)         0%
                             ----------  ----------  ---------------------
  Corporate/ Eliminations      (10,951)    (11,006)        (0%)        12%
                             ----------  ----------                       
   Total operating income       $23,162     $61,150       (62%)      (57%)
                             ----------  ----------                       
                                                                          
  Operating income margin (%)                                             
  SA transaction-based                                                    
   activities                        5%         25%                       
  International transaction-                                              
   based activities                  0%          1%                       
  International transaction-                                              
   based activities excluding                                             
   amortization                     10%         12%                       
  Smart card accounts               29%         41%                       
  Financial services                56%         57%                       
  Hardware, software and                                                  
   related technology sales         19%         12%                       
  Overall operating margin           5%         16%                       
                                                                          
(1) - This information shows what the change in these items would have    
 been if the USD/ ZAR exchange rate that prevailed during fiscal 2013 also
 prevailed during fiscal 2012.                                            

 
Net 1 UEPS Technologies Inc. 
Attachment B 
Reconciliation of GAAP net income (loss) and earnings (loss) per
share, basic, to fundamental net income and earnings per share,
basic: 
Three months ended June 30, 2013 and 2012 


 
                   Net income       E(L)PS,                       E(L)PS,  
                     (loss)          basic    Net income (loss)     basic  
                    (USD'000)        (USD)        (ZAR'000)        (ZAR)   
                ---------------- ------------ ----------------- -----------
                  2013      2012  2013   2012    2013      2012  2013  2012
                ------ --------- ----- ------ ------- --------- ----- -----
                                                                           
GAAP                                                                  (1.40
                 8,285   (7,977)  0.18 (0.17)  76,109  (64,078)  1.67     )
                                                                           
Intangible asset                                                           
 amortization,                                                             
 net             2,888     3,532               26,520    28,381            
Stock-based                                                                
 compensation                                                              
 charge            582       893                5,346     7,173            
Facility fees                                                              
 for KSNET debt     67        84                  615       675            
DOJ and SEC                                                                
 investigations-                                                           
 related                                                                   
 expenses          776         -                7,129         -            
BEE charge           -    14,211                    -   112,066            
Capital taxes                                                              
 paid                -     1,465                    -    11,768            
                ----------------              -----------------            
Fundamental     12,598    12,208  0.28   0.27 115,719    95,985  2.54  2.09
                ----------------              -----------------            
                ----------------              -----------------            

 
Fiscal year ended June 30, 2013 and 2012 


 
                                                                    EPS,   
                   Net income     EPS, basic      Net income        basic  
                    (USD'000)        (USD)        (ZAR'000)        (ZAR)   
                ---------------- ------------ ----------------- -----------
                  2013      2012  2013   2012    2013      2012  2013  2012
                ------ --------------- ------ ------- --------- ----- -----
                                                                           
GAAP            12,977    44,651  0.28   0.99 113,035   344,643  2.48  7.63
                                                                           
Intangible asset                                                           
 amortization,                                                             
 net            13,679    14,602              119,155   112,719            
Stock-based                                                                
 compensation                                                              
 charge          3,907     2,775               34,032    21,419            
Facility fees                                                              
 for KSNET debt    302       389                2,631     3,003            
DOJ and SEC                                                                
 investigations-                                                           
 related                                                                   
 expenses        3,888         -               33,866         -            
Acquisition-                                                               
 related costs      69         -                  601         -            
Change in tax                                                              
 law                 -  (18,315)                    - (150,373)            
BEE charge           -    14,211                    -   112,066            
Create FTC                                                                 
 valuation                                                                 
 allowance           -     8,232                    -    67,588            
Capital taxes                                                              
 paid                -   (3,994)                    -  (30,828)            
Profit on                                                                  
 liquidation of                                                            
 subsidiary          -     1,465                    -    11,308            
Loss on sale of                                                            
 10% of Smart                                                              
 Life                -        78                    -       602            
                ----------------              -----------------            
Fundamental     34,822    64,094  0.76   1.42 303,320   492,147  6.66 10.89
                ----------------              -----------------            
                ----------------              -----------------            

 
Net 1 UEPS Technologies Inc. 
Attachment C 
Reconciliation of net income (loss) used to calculate earnings (loss)
per share basic and diluted and headline earnings (loss) per share
basic and diluted: 
Three months ended June 30, 2013 and 2012 


 
                                                      2013            2012
                                              ------------    ------------
                                                                          
Net income (loss) (USD'000)                          8,285         (7,977)
Adjustments:                                                              
 Loss (Profit) on sale of property, plant and                             
  equipment                                            193             (7)
 Tax effects on above                                 (54)               2
                                                                          
                                              ------------    ------------
Net income (loss) used to calculate headline                              
 earnings (USD'000)                                  8,424         (7,982)
                                              ------------    ------------
                                              ------------    ------------
                                                                          
Weighted average number of shares used to                                 
 calculate net income (loss) per share basic                              
 earnings (loss) and headline earnings (loss)                             
 per share basic 
earnings (loss) ('000)             45,593          45,498
                                                                          
Weighted average number of shares used to                                 
 calculate net income (loss) per share diluted                            
 earnings (loss) and headline earnings (loss)                             
 per share diluted earnings (loss) ('000)           45,713          45,542
                                                                          
Headline earnings (loss) per share:                                       
 Basic, in USD                                        0.18          (0.17)
 Diluted, in USD                                      0.18          (0.17)

 
Fiscal year ended June 30, 2013 and 2012 


 
                                                      2013            2012
                                              ------------    ------------
                                                                          
Net income (USD'000)                                12,977          44,651
Adjustments:                                                              
 Profit on liquidation of SmartSwitch Nigeria            -         (3,994)
 Loss on sale of 10% of Smart Life                       -              78
 Loss (Profit) on sale of property, plant and                             
  equipment                                            110            (64)
 Tax effects on above                                 (31)              18
                                                                          
                                              ------------    ------------
Net income used to calculate headline earnings                            
 (USD'000)                                          13,056          40,689
                                              ------------    ------------
                                              ------------    ------------
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share basic earnings                            
 and headline earnings per share basic                                    
 earnings ('000)                                    45,553          45,187
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share diluted                                   
 earnings and headline earnings per share                                 
 diluted earnings ('000)                            45,678          45,232
                                                                          
Headline earnings per share:                                              
 Basic, in USD                                        0.28            0.90
 Diluted, in USD                                      0.28            0.90

 
Calculation of the denominator for headline diluted earnings per
share 


 
                                      Q4 '13    Q4 '12     F2013     F2012
                                    --------  --------  --------  --------
                                                                          
Basic weighted-average common shares                                      
 outstanding and unvested restricted                                      
 shares expected to vest under GAAP   45,593    45,498    45,553    45,187
Effect of dilutive securities under                                       
 GAAP                                    120        44       125        45
                                    --------  --------  --------  --------
Denominator for headline diluted                                          
 earnings per share                   45,713    45,542    45,678    45,232
                                    --------  --------  --------  --------
                                    --------  --------  --------  --------

 
Weighted average number of shares used to calculate headline earnings
per share diluted represent the denominator for basic
weighted-average common shares outstanding and unvested restricted
shares expected to vest plus the effect of dilutive securities under
GAAP. We use this number of fully-diluted shares outstanding to
calculate headline earnings (loss) per share diluted because we do
not use the two-class method to calculate headline earnings (loss)
per share diluted. 
Contacts:
Net 1 UEPS Technologies Inc.
Dhruv Chopra
Managing Director
+1-917-767-6722
dchopra@net1.com
www.net1.com