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NET 1 UEPS TECHNOLOGIES INC - Net 1 UEPS Technologies, Inc. Reports 2013 Fourth Quarter and Full Year Results

Release Date: 23/08/2013 08:42
Code(s): NT1     PDF:  
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Net 1 UEPS Technologies, Inc. Reports 2013 Fourth Quarter and Full Year Results

Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
(“Net1” or “the Company”)

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, August 23, 2013 – 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 Kotzé, 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 1,392 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.

Investor Relations Contact:
Dhruv Chopra
Managing Director
Phone: +1-917-767-6722
Email: dchopra@net1.com
                                       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 per share data)   (In thousands, except 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
                                                       LIABILITIES                               40,570
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
                                                                                                 Change - actual     exchange rate(1)
                                                                                                 Q4 ‘13   Q4 ‘13    Q4 ‘13     Q4 ‘13
                                                                                                  vs        vs        vs         vs
Key segmental data, in $ ’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)
                                                                                      F2013       F2013
Key segmental data, in ’000, except                                                     vs           vs
margins                                                        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                                                      (97%)       (97%)
    activities .............................................        34       1,257
       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                                                         85%        109%
    technology sales .................................            6,694      3,619
       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

                                                                              E(L)PS,                              E(L)PS,
                                                       Net income (loss)        basic      Net income (loss)         basic
                                                          (USD’000)            (USD)          (ZAR’000)             (ZAR)
                                                       2013       2012      2013 2012      2013        2012      2013    2012

GAAP................................................     8,285    (7,977)    0.18 (0.17)    76,109    (64,078)    1.67   (1.40)

    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.
Johannesburg

August 23, 2013

Sponsor:
Deutsche Securities (SA) (Proprietary) Limited

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