Net1 Reports First Quarter 2014 Results and Signs Letter of Intent for New BEE Transaction

Net1 Reports First Quarter 2014 Results and Signs Letter of Intent for New BEE 
Transaction 
- Revenue and Fundamental EPS of $123 million and $0.37, a constant
currency increase of 34% and 77%, respectively;  
- On November 6, 2013, signed a letter of intent to issue 4.4 million
shares at ZAR 88.50 as part of a BEE transaction. 
JOHANNESBURG, SOUTH AFRICA -- (Marketwired) -- 11/07/13 -- Net 1 UEPS
Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today released results for
the first quarter of fiscal 2014 and announced that it had signed a
letter of intent related to a proposed BEE transaction. 


 
Summary Financial Metrics                                                   
                                                                            
                                           Three months ended September 30, 
                                  ------------------------------------------
                                                        % change   % change 
                                                      ----------------------
                                                      ----------------------
                                        2013      2012    in USD     in ZAR 
                                  ------------------------------------------
                                  ------------------------------------------
(All figures in USD '000s except                                            
 per share data)                                                            
Revenue                              123,494   111,682        11%        34%
GAAP net income                       11,596     6,744        72%       108%
Fundamental net income (1)            16,823    11,498        46%        77%
GAAP earnings per share ($)             0.25      0.15        72%       108%
Fundamental earnings per share ($)                                          
 (1)                                    0.37      0.25        46%        77%
Fully-diluted shares outstanding                                            
 ('000's)                             45,801    45,589         1%           
Average period USD/ ZAR exchange                                            
 rate                                  10.00      8.26        21%           
                                                                            
(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 to fundamental net income and earnings
    per share.                                                              

 
Factors impacting comparability of our Q1 2014 and Q1 2013 results 


 
--  Unfavorable impact from the strengthening of the US dollar against the
    ZAR: The US dollar appreciated by 21% against the ZAR during Q1 2014
    which negatively impacted our reported results; 
--  SASSA implementation complete: Our SASSA contract implementation is
    complete and Q1 2014 was the first full quarter without any
    implementation-related expenditure since the tender was awarded to us in
    January 2012. We incurred implementation-related expenditure, including
    smart card costs, of approximately $15.8 million during Q1 2013; 
--  Higher revenue resulting from an increase in low-margin prepaid airtime
    sales: Our revenue has increased as a result of the deployment of our
    Umoya Manje prepaid airtime offering during the quarter, which has lower
    margins compared with our other South African businesses; 
--  National rollout of our financial services offering: We commenced the
    national roll out of our financial services offering during Q1 2014,
    which resulted in higher revenue from UEPS-based loans. Profitability in
    the financial services segment however was lower due to rollout costs,
    including hiring and training of additional staff and infrastructure
    deployment; 
--  Ad hoc hardware sales in fiscal 2014: We sold more terminals and cards
    during Q1 2014 as a result of ad hoc orders received from our customers;
    and 
--  DOJ and SEC investigation-related expenses: We incurred DOJ and SEC
    investigation-related expenses of $2.1 million during Q1 2014. 

 
Letter of Intent for New Broad-Based Black Economic Empowerment
("BEE") Transaction 
On November 6, 2013, we signed a letter of intent to issue 4,400,000
shares ("BVI Shares"), which will be contractually restricted as to
resale as described below, of our common stock at a price of ZAR
88.50 per share (calculated as 75% of the closing price of our common
stock on the JSE Limited on November 5, 2013) to Business Venture
Investments 1567 (Proprietary) Limited (RF) ("BVI"), a special
purpose entity owned by a BEE consortium, pursuant to a new BEE
transaction. Issuance of the BVI Shares is subject to the conclusion
of a Relationship Agreement before December 1, 2013, which will
include certain conditions, including obtaining the relevant
regulatory approvals. Under certain circumstances we may call the BVI
Shares then owned, in exchange for a minority interest in our
wholly-owned subsidiary Cash Paymaster Service Proprietary Limited. 
Similar to our January 2012 proposed BEE transaction, the lead
partner in the BEE consortium is Mosomo Investment Holdings (Pty)
Ltd, a well-known black empowerment investment company headed by
former Net1 non-executive director Brian Mosehla, with a proven track
record in transformation, and with experience in mining, financial
services and mass banking concepts. Other partners in the BEE
consortium will include community-focused organizations led by black
women and community development enterprises. 
This BEE transaction is part of our efforts to strengthen the
development of our business plan, and is in compliance with South
African regulation and business practice. Our actions in support of
achieving a stronger BEE standing build on our prior efforts, and the
proposed structure is similar to transactions pursued by other
leading South African companies across multiple industries. 
The letter of intent provides that BVI will pay the purchase price of
ZAR 88.50 per share in ZAR. The BVI Shares will be locked-up for a
period of five years from date of issue, with the exception of
periodic sales in order to fund the repayment of the loan and related
interest as described below. 
Our wholly owned subsidiary, Net1 Applied Technologies South Africa
Proprietary Limited, will lend BVI the funds to effect the purchase
of the BVI Shares and these shares will act as the collateral on the
loan. The key terms of the loan are: 


 
--  The loan will bear interest at rate equal to Johannesburg Interbank rate
    ("JIBAR") (currently 550 basis points) plus 300 basis points; 
--  The loan principal is to be repaid as follows; 10% each after the first
    and second years, 15% each after the third and fourth years, and 50%
    after the fifth year. Interest payments on the loan are due semi-
    annually; 
--  After five years, Net1 will have the right, but not the obligation, to
    repurchase all or any portion of any remaining shares; and 
--  The loan will be repaid in full using the proceeds from the sale of a
    sufficient amount of BVI Shares if our share price is or exceeds ZAR
    177.00 per share (200% of ZAR 88.50 per share) on the JSE at any time
    during term of the loan. As of November 5, 2013, our closing price on
    the JSE was ZAR 118.00 per share. 

 
Comments and Outlook 
"I am very pleased with our first quarter 2014 results and the
tangible progress we are making on executing our business strategy
now that our SASSA implementation is complete," said Dr. Serge
Belamant, Chairman and Chief Executive Officer of Net1. "Net1 Mobile
Solutions has demonstrated significant traction with the roll out of
its mobile-based prepaid airtime product, "Umoya Manje" and our
financial services business unit has now commenced its UEPS-based
lending activities nationally. We are also reviewing some of our
underperforming businesses and contracts, and have begun to take
steps to rationalize the same in order to focus on our key growth
areas," he concluded. 
Regarding the new BEE transaction Dr. Belamant added, "We are
delighted to have agreed new terms with our empowerment partners
following the expiration of the previous option transaction. As
before, we remain convinced that it is imperative for us to conclude
a meaningful empowerment transaction to express our commitment to the
principles and objectives of BEE and compliance with the established
codes of good practice and transformation charters, while balancing
the interests of our global shareholders in order to create a
platform for a successful and sustainable South African business. We
believe that we will achieve this goal with the terms we have agreed
for this new BEE transaction, including the provision of financial
assistance to our BEE partners to ensure the implementation of the
transaction," he concluded. 
"With our one-time implementation costs now behind us, we expect to
continue demonstrating a marked improvement in year-over-year
profitability during fiscal 2014," said Herman Kotze, Chief Financial
Officer of Net1. "Taking into account our anticipated issuance of 4.4
million shares as part of our proposed BEE transaction, for fiscal
2014, we continue to expect fundamental earnings per share of at
least $1.50, assuming a constant currency base of ZAR 8.71/$1. The
share count assumption in our guidance represents our fiscal 2013
weighted-average share count of approximately 45.7 million shares
plus approximately 2.5 million weighted-average number of shares
related to the proposed BEE transaction," he concluded. 
SASSA tender award litigation: Constitutional Court has not ruled yet 
On September 10, 2013, the South African Constitutional Court heard
oral arguments on the appeal by AllPay Consolidated Investment
Holdings (Pty) Ltd, or AllPay, against the ruling by the South
African Supreme Court of Appeal upholding the award of the SASSA
tender to us. The Constitutional Court has reserved judgment. We
cannot predict when or how it 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 $63.0 million in Q1 2014, up 3% compared with Q1
2013 in USD and up 24% on a constant currency basis. In ZAR, the
increases in segment revenue were primarily due to more low-margin
transaction fees generated from beneficiaries using the South African
National Payment System, incremental prepaid airtime sales driven by
the rollout of our Umoya Manje product. Segment operating income
margin was 21% and 10%, respectively, and increased primarily due to
the elimination of SASSA implementation costs in Q1 2014. Excluding
amortization of acquisition-related intangibles, Q1 2014 segment
operating income margin was 22% compared with 13% in Q1 2013. 
International transaction-based activities 
KSNET continues to contribute the majority of our revenues and
operating income in this operating segment. Segment revenue was $36.8
million in Q1 2014, up 16% compared with Q1 2013 in USD and 41% on a
constant currency basis. The increase in segment revenue was
primarily due to KSNET's revenue growth during Q1 2014 and was offset
by the expiration and non-renewal of NUETS' contract with its Iraqi
customer in Q3 2013. Operating income during Q1 2014 was negatively
impacted by the loss of this contract as well as ongoing losses
related to our XeoHealth launch in the United States and at Net1
Virtual Card as well as ongoing competition in the Korean
marketplace, but was partially offset by increased revenue
contributions from KSNET. Excluding the amortization of intangibles,
Q1 2014 operating income margin was 14% compared to 9% during Q1
2013. 
Smart card accounts 
Segment revenue was $11.3 million in Q1 2014, up 35% compared with Q1
2013 in USD and 64% on a constant currency basis and increased as a
result of the increase in the number of smart card accounts. Segment
operating income margin from providing smart card accounts for Q1
2014 and 2013 was 28% and 29%, respectively. 
Financial services 
UEPS-based lending contributes the majority of the revenue and
operating income in this segment. Segment revenue was $2.4 million in
Q1 2014, up 75% compared with Q1 2013 in USD and 112% higher on a
constant currency basis, principally due to the substantial increase
in the number of loans granted as we rolled out our product
nationally. Q1 2014 segment operating income margin was 2% compared
with 79% during Q1 2013 primarily due to start-up expenses incurred
to roll the product out nationally and the re-allocation of
UEPS-based lending corporate and administration overhead expenses.
Smart Life did not contribute to operating income in the first
quarter of fiscal 2014 as it is currently unable to issue new
insurance policies as a result of the suspension of its license by
the Financial Services Board in fiscal 2013. 
Hardware, software and related technology sales 
Segment revenue was $9.9 million in Q1 2014, up 11% compared with Q1
2013 in USD and 34% on a constant currency basis. The increase in
revenue and operating income resulted from more ad hoc terminal and
smart card sales. Excluding amortization of all intangibles, segment
operating income margin was 31% compared to 23% during Q1 2013. 
Corporate/eliminations 
The increase in our corporate expenses resulted primarily from legal
fees we incurred in connection with the DOJ and SEC investigations
and other corporate head office-related expenses. 
Cash flow and liquidity 
At September 30, 2013, we had cash and cash equivalents of $47.7
million, down from $53.7 million at June 30, 2013. The decrease in
our cash balances from June 30, 2013, was primarily due to the
expansion of our UEPS-based lending business, offset by cash
generated from operations. For Q1 2014, net cash used in operating
activities was $1.7 million compared with net cash provided by
operating activities of $25.7 million in Q1 2013. 
Excluding the impact of interest received, interest paid under our
Korean debt and taxes, the decrease in cash from operating activities
resulted from the expansion of our UEPS-based lending book and the
timing of prefunding related to the October 2013 payment cycle,
offset by improved cash generated from operating activities and the
elimination of implementation costs related to our SASSA contract in
fiscal 2014. Capital expenditures for Q1 2014 and 2013 were $5.6
million and $6.5 million, respectively, and have decreased primarily
due to lower capital expenditures as our SASSA contract
implementation is now complete. 
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 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 and
earnings 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 2014, DOJ and SEC investigations-related
expenses; and (b) in fiscal 2013, acquisition-related costs.
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 ("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 which has been determined based on GAAP. Accordingly, this may
differ to the headline earnings 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 adjusted for
the profit on sale of property, plant and equipment, net of related
tax effects. Attachment C presents the reconciliation between our net
income used to calculate earnings 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 Q1 2014 results on November
8, 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 November 29, 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. In addition, statements
relating to our proposed BEE transaction are forward-looking
statements. The letter of intent described in this announcement is
non-binding and is subject to the completion of definitive
documentation that will provide for the satisfaction of conditions to
be contained therein before any shares are issued. There can be no
assurance that we will enter into definitive agreements on the terms
set forth herein, if at all. 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
                                                    ------------------------
                                                               September 30,
                                                    ------------------------
                                                          2013          2012
                                                    ----------    ----------
                                                       (In thousands, except
                                                             per share data)
                                                                            
REVENUE                                            $   123,494   $   111,682
                                                                            
EXPENSE                                                                     
                                                                            
 Cost of goods sold, IT processing, servicing and                           
  support                                               56,559        45,101
                                                                            
 Selling, general and administration                    40,506        47,252
                                                                            
 Depreciation and amortization                          10,029        10,004
                                                    ----------    ----------
                                                                            
OPERATING INCOME                                        16,400         9,325
                                                                            
INTEREST INCOME                                          3,319         3,091
                                                                            
INTEREST EXPENSE                                         1,752         2,071
                                                    ----------    ----------
                                                                            
INCOME BEFORE INCOME TAX EXPENSE                        17,967        10,345
                                                                            
INCOME TAX EXPENSE                                       6,485         3,729
                                                    ----------    ----------
                                                                            
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED                            
INVESTMENTS                                             11,482         6,616
                                                                            
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS                 103           128
                                                    ----------    ----------
                                                                            
NET INCOME                                              11,585         6,744
                                                                            
(ADD) NET (LOSS) ATTRIBUTABLE TO NON-CONTROLLING                            
 INTEREST                                                  (11)            -
                                                    ----------    ----------
                                                                            
NET INCOME ATTRIBUTABLE TO NET1                    $    11,596   $     6,744
                                                    ----------    ----------
                                                    ----------    ----------
                                                                            
Net income per share, in United States dollars                              
 Basic earnings attributable to Net1 shareholders  $      0.25   $      0.15
 Diluted earnings attributable to Net1                                      
  shareholders                                     $      0.25   $      0.15
                                                                            
                        NET 1 UEPS TECHNOLOGIES INC.                        
              Unaudited Condensed Consolidated Balance Sheets               
                                              Unaudited                     
                                          September 30,        (A) June 30, 
                                                   2013                2013 
                                    ----------------------------------------
                                    ----------------------------------------
                                           (In thousands, except share data)
               ASSETS                                                       
CURRENT ASSETS                                                              
 Cash and cash equivalents            $          47,670   $          53,665 
 Pre-funded social welfare grants                                           
  receivable                                      4,263               2,934 
 Accounts receivable, net of                                                
  allowances of - September: $935;                                          
  June: $4,701                                  118,025             102,614 
 Finance loans receivable, net of                                           
  allowances of - September: $701;                                          
  June: $-                                       17,338               8,350 
 Inventory                                       11,063              12,222 
 Deferred income taxes                            5,125               4,938 
                                    ----------------------------------------
  Total current assets before                                               
   settlement assets                            203,484             184,723 
   Settlement assets                            685,305             752,476 
                                    ----------------------------------------
                                    ----------------------------------------
    Total current assets                        888,789             937,199 
PROPERTY, PLANT AND EQUIPMENT, NET                                          
 OF ACCUMULATED DEPRECIATION OF -                                           
 September: $92,099; June: $84,808               48,716              48,301 
EQUITY-ACCOUNTED INVESTMENTS                      1,270               1,183 
GOODWILL                                        180,950             175,806 
INTANGIBLE ASSETS, NET OF                                                   
 ACCUMULATED AMORTIZATION OF                                                
 -September: $145,909; June:                                                
 $141,024                                        76,915              77,257 
OTHER LONG-TERM ASSETS, including                                           
 reinsurance assets                              36,150              36,576 
 TOTAL ASSETS                                 1,232,790           1,276,322 
                                    ----------------------------------------
                                    ----------------------------------------
           LIABILITIES                                                      
CURRENT LIABILITIES                                                         
 Accounts payable                                14,036              26,567 
 Other payables                                  38,802              33,808 
 Current portion of long-term                                               
  borrowings                                     15,007              14,209 
 Income taxes payable                             9,261               2,275 
                                    ----------------------------------------
  Total current liabilities before                                          
   settlement obligations                        77,106              76,859 
   Settlement obligations                       685,305             752,476 
                                    ----------------------------------------
                                    ----------------------------------------
    Total current liabilities                   762,411             829,335 
DEFERRED INCOME TAXES                            18,703              18,727 
LONG-TERM BORROWINGS                             70,374              66,632 
OTHER LONG-TERM LIABILITIES,                                                
 including insurance policy                                                 
 liabilities                                     21,499              21,659 
                                    ----------------------------------------
                                    ----------------------------------------
 TOTAL LIABILITIES                              872,987             936,353 
                                    ----------------------------------------
                                    ----------------------------------------
COMMITMENTS AND CONTINGENCIES                                               
             EQUITY                                                         
 COMMON STOCK                                                               
  Authorized: 200,000,000 with                                              
   $0.001 par value; Issued and                                             
   outstanding shares, net of                                               
   treasury - September: 45,780,513;                                        
   June: 45,592,550                                  59                  59 
 PREFERRED STOCK                                                            
  Authorized shares: 50,000,000 with                                        
   $0.001 par value;                                                        
  Issued and outstanding shares, net                                        
   of treasury: September: -; June:                                         
   -                                                  -                   - 
 ADDITIONAL PAID-IN-CAPITAL                     161,605             160,670 
 TREASURY SHARES, AT COST:                                                  
  September: 13,455,090; June:                                              
  13,455,090                                   (175,823)           (175,823)
 ACCUMULATED OTHER COMPREHENSIVE                                            
  LOSS                                          (93,544)           (100,858)
 RETAINED EARNINGS                              464,214             452,618 
                                    ----------------------------------------
                                    ----------------------------------------
  TOTAL NET1 EQUITY                             356,511             336,666 
  NON-CONTROLLING INTEREST                        3,292               3,303 
                                    ----------------------------------------
                                    ----------------------------------------
   TOTAL EQUITY                                 359,803             339,969 
                                    ----------------------------------------
                                    ----------------------------------------
    TOTAL LIABILITIES AND                                                   
     SHAREHOLDERS' EQUITY             $       1,232,790   $       1,276,322 
                                    ----------------------------------------
                                    ----------------------------------------
                                                                            
(A) - Derived from audited financial statements                             
                                                                            
                        NET 1 UEPS TECHNOLOGIES INC.                        
         Unaudited Condensed Consolidated Statements of Cash Flows          
                                                         Three months ended 
                                              ------------------------------
                                                              September 30, 
                                              ------------------------------
                                                        2013           2012 
                                              ------------------------------
                                                              (In thousands)
Cash flows from operating activities                                        
Net income                                      $     11,585   $      6,744 
Depreciation and amortization                         10,029         10,004 
Earnings from equity-accounted investments              (103)          (128)
Fair value adjustments                                  (133)          (293)
Interest payable                                         972          1,192 
Profit on disposal of plant and equipment                 (1)             - 
Stock-based compensation charge                          930          1,116 
Facility fee amortized                                    69             88 
(Increase) Decrease in accounts receivable,                                 
 pre-funded social welfare grants receivable                                
 and finance loans receivable                        (23,101)         5,892 
Decrease (Increase) in inventory                       1,011           (959)
Decrease in accounts payable and other                                      
 payables                                             (8,668)        (1,349)
Increase in taxes payable                              6,921          5,438 
Decrease in deferred taxes                            (1,187)        (2,016)
                                              ------------------------------
  Net cash (used in) provided by operating                                  
   activities                                         (1,676)        25,729 
                                              ------------------------------
Cash flows from investing activities                                        
Capital expenditures                                  (5,616)        (6,453)
Proceeds from disposal of property, plant and                               
 equipment                                                48            105 
Acquisitions, net of cash acquired                         -         (1,913)
Repayment of loan by equity-accounted                                       
 investment                                                -              3 
Other investing activities, net                           (1)             - 
Proceeds from maturity of investments related                               
 to insurance business                                     -            545 
Net change in settlement assets                       51,773         60,779 
                                              ------------------------------
  Net cash provided by investing activities           46,204         53,066 
                                              ------------------------------
Cash flows from financing activities                                        
Proceeds from issue of common stock                        -            240 
Net change in settlement obligations                 (51,773)       (60,779)
                                              ------------------------------
  Net cash used in financing activities              (51,773)       (60,539)
                                              ------------------------------
Effect of exchange rate changes on cash                1,250            165 
                                              ------------------------------
Net (decrease) increase in cash and cash                                    
 equivalents                                          (5,995)        18,421 
Cash and cash equivalents - beginning of                                    
 period                                               53,665         39,123 
                                              ------------------------------
Cash and cash equivalents - end of period       $     47,670   $     57,544 
                                              ------------------------------
                                              ------------------------------
                                                                            
See Notes to Unaudited Condensed Consolidated Financial Statements          
                                                                            
Net 1 UEPS Technologies Inc.                                        
                                                                    
Attachment A                                                        
                                                                    
Operating segment revenue, operating income and operating margin:   
                                                                    
Three months ended September 30, 2013 and 2012 and June 30, 2013    
                                                            
                                                            
                                                            
Key segmental data,                                         
 in $ '000,              Q1 '14        Q1 '13        Q4 '13 
                   -----------------------------------------
                   -----------------------------------------
 Revenue:                                                   
  SA transaction-                                           
   based activities$     63,032  $     61,364  $     59,268 
  International                                             
   transaction-                                             
   based activities      36,817        31,649        35,600 
  Smart card                                                
   accounts              11,329         8,364        11,750 
  Financial                                                 
   services               2,427         1,384         2,062 
  Hardware,                                                 
   software and                                             
   related                                                  
   technology sales       9,889         8,921         9,202 
                   -----------------------------------------
   Total                                                    
    consolidated                                            
    revenue        $    123,494  $    111,682  $    117,882 
                   -----------------------------------------
                                                            
 Consolidated                                               
  operating income                                          
  (loss):                                                   
  SA transaction-                                           
   based activities$     13,282  $      6,400  $      9,060 
                   -----------------------------------------
   Operating income                                         
    (loss)                                                  
    excluding                                               
    amortization         13,808         7,849         9,632 
   Amortization of                                          
    intangible                                              
    assets                 (526)       (1,449)         (572)
                   -----------------------------------------
  International                                             
   transaction-                                             
   based activities       2,051          (171)        1,365 
                   -----------------------------------------
   Operating income                                         
    excluding                                               
    amortization          5,200         2,981         4,536 
   Amortization of                                          
    intangible                                              
    assets               (3,149)       (3,152)       (3,171)
                   -----------------------------------------
  Smart card                                                
   accounts               3,228         2,385         3,349 
  Financial                                                 
   services                  56         1,097           354 
  Hardware,                                                 
   software and                                             
   related                                                  
   technology sales       2,948         1,984         2,216 
                   -----------------------------------------
   Operating income                                         
    (loss)                                                  
    excluding                                               
    amortization          3,021         2,072         2,295 
   Amortization of                                          
    intangible                                              
    assets                  (73)          (88)          (79)
                   -----------------------------------------
  Corporate/                                                
   Eliminations          (5,165)       (2,370)       (2,753)
                   -----------------------------------------
   Total operating                                          
    income (loss)  $     16,400  $      9,325  $     13,591 
                   -----------------------------------------
                                                            
 Operating income                                           
  margin (%)                                                
  SA transaction-                                           
   based activities          21%           10%           15%
  International                                             
   transaction-                                             
   based activities           6%           (1%)           4%
  International                                             
   transaction-                                             
   based activities                                         
   excluding                                                
   amortization              14%            9%           13%
  Smart card                                                
   accounts                  28%           29%           29%
  Financial                                                 
   services                   2%           79%           17%
  Hardware,                                                 
   software and                                             
   related                                                  
   technology sales          30%           22%           24%
  Overall operating                                         
   margin                    13%            8%           12%
                                                            
 
                                                                            
                                                          Change - constant 
                              Change - actual               exchange rate(1)
                   ---------------------------------------------------------
                       Q1 '14          Q1 '14             Q1 '14     Q1 '14 
Key segmental data,        vs              vs                 vs         vs 
 in $ '000,             Q1'13          Q4 '13              Q1'13     Q4 '13 
                   ---------------------------------------------------------
                   ---------------------------------------------------------
 Revenue:                                                     
  SA transaction-                                             
   based activities         3%              6%                24%        16%
  International                                                             
   transaction-                                                             
   based activities        16%              3%                41%        13%
  Smart card                                                                
   accounts                35%             (4%)               64%         5%
  Financial                                                                 
   services                75%             18%               112%        28%
  Hardware,                                                                 
   software and                                                             
   related                                                                  
   technology sales        11%              7%                34%        17%
                                                              
   Total                                                                    
    consolidated                                                            
    revenue                11%              5%                34%        14%
                                                              
                                                                            
 Consolidated                                                               
  operating income                                                          
  (loss):                                                                   
  SA transaction-                                                           
   based activities       108%             47%               151%        60%
                   ---------------------------------------------------------
   Operating income                                                         
    (loss)                                                                  
    excluding                                                               
    amortization           76%             43%               113%        56%
   Amortization of                                                          
    intangible                                                            
    assets                (64%)            (8%)              (56%)        0%
                   ---------------------------------------------------------
  International                                                             
   transaction-                                                             
   based activities        nm              50%                nm         64%
                   ---------------------------------------------------------
   Operating income                                                         
    excluding                                                               
    amortization           74%             15%               111%        25%
   Amortization of                                                          
    intangible                                                             
    assets                 (0%)            (1%)               21%         8%
                   ---------------------------------------------------------
  Smart card                                                                
   accounts                35%             (4%)               64%         5%
  Financial                                                                 
   services               (95%)           (84%)              (94%)     (83%)
  Hardware,                                                                  
   software and                                                             
   related                                                                  
   technology sales        49%             33%                80%        45%
                   ---------------------------------------------------------
   Operating income                                                         
    (loss)                                                                  
    excluding                                                               
    amortization           46%             32%                77%        43%
   Amortization of                                                          
    intangible                                                              
    assets                (17%)            (8%)                0%         1%
                   ---------------------------------------------------------
  Corporate/                                                                
   Eliminations           118%             88%               164%       104%
                                                              
   Total operating                                                          
    income (loss)          76%             21%               113%        31%
                                                              
                                                                            
 Operating income                                                           
  margin (%)                                                                
  SA transaction-                                                           
   based activities                                           
  International                                                             
   transaction-                                                             
   based activities                                           
  International                                                             
   transaction-                                                             
   based activities                                                         
   excluding                                                                
   amortization                                               
  Smart card                                                                
   accounts                                                   
  Financial                                                                 
   services                                                   
  Hardware,                                                                 
   software and                                                             
   related                                                                  
   technology sales                                           
  Overall operating                                                         
   margin                                                     
                                                                            
(1) This information shows what the change in these items would have been if
    the USD/ ZAR exchange rate that prevailed during the first quarter of   
    fiscal 2014 also prevailed during the first quarter of fiscal 2013 and  
    the fourth quarter of fiscal 2013.                                      
                                                                            
Net 1 UEPS Technologies Inc.                                                
                                                                            
Attachment B                                                                
                                                                            
Reconciliation of GAAP net income and earnings per share, basic, to         
 fundamental net income and earnings per share, basic:                      
                                                                            
Three months ended September 30, 2013 and 2012                              
                      Net income    EPS, basic      Net income    EPS, basic
                       (USD'000)         (USD)       (ZAR'000)         (ZAR)
                  ----------------------------------------------------------
                  ----------------------------------------------------------
                     2013   2012   2013   2012    2013    2012   2013   2012
                  ----------------------------------------------------------
                                                                            
GAAP               11,596  6,744   0.25   0.15 115,959  55,709   2.54   1.22
                                                                            
 Intangible asset                                                           
  amortization,                                                             
  net.              2,832  3,501                28,317  28,917              
 Stock-based                                                                
  compensation                                                              
  charge              930  1,116                 9,300   9,219              
 Facility fees for                                                          
  KSNET debt           69     89                   690     735              
 DOJ and SEC                                                                
  investigations-                                                           
  related expenses  1,396      -                13,960       -              
 Acquisition-                                                               
  related costs         -     48                     -     397              
                  --------------               ---------------              
  Fundamental      16,823 11,498   0.37   0.25 168,226  94,977   3.69   2.09
                  --------------               ---------------              
                  --------------               ---------------              
                                                                            
Net 1 UEPS Technologies Inc.                                                
                                                                            
Attachment C                                                                
                                                                            
Reconciliation of net income used to calculate earnings per share basic and 
 diluted and headline earnings per share basic and diluted:                 
Three months ended September 30, 2013 and 2012                              
                                                                            
                                                             2013       2012
                                                       ---------------------
                                                       ---------------------
Net income (USD'000)                                       11,596      6,744
Adjustments:                                                                
 Profit on sale of property, plant and equipment               (1)         -
 Tax effects on above                                           -          -
                                                       ---------------------
Net income used to calculate headline earnings                              
 (USD'000)                                                 11,595      6,744
                                                       ---------------------
                                                       ---------------------
Weighted average number of shares used to calculate net                     
 income per share basic earnings and headline earnings                      
 per share basic earnings ('000)                           45,613     45,515
Weighted average number of shares used to calculate net                     
 income per share diluted earnings and headline                             
 earnings per share diluted earnings ('000)                45,801     45,589
Headline earnings per share:                                                
 Basic, in USD                                               0.25       0.15
 Diluted, in USD                                             0.25       0.15
                                                                            
Calculation of the denominator for headline diluted earnings per share      
                                                                            
Three months ended September 30, 2013 and 2012                              
                                                                            
                                                           Q1 '14     Q1 '13
                                                       ---------------------
                                                                            
 Basic weighted-average common shares outstanding and                       
  unvested restricted shares expected to vest under                         
  GAAP                                                     45,613     45,515
  Effect of dilutive securities under GAAP                    188         74
                                                       ---------------------
   Denominator for headline diluted earnings per share     45,801     45,589
                                                       ---------------------
                                                       ---------------------

 
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 per share diluted because we do not use
the two-class method to calculate headline earnings per share
diluted. 
Contacts:
Net 1 UEPS Technologies Inc.
Dhruv Chopra
Managing Director
+1 917-767-6722
dchopra@net1.com
www.net1.com