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Net1 signs three-year service agreements with current KSNET President
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”)
Net1 signs three-year service agreements with current KSNET President
On June 30, 2014, each of KSNET, Inc. and Net1 Applied Technologies Korea (“Net1 Korea”)
entered into a three-year service agreement with Mr. Phil-Hyun Oh, President of KSNET. The
service agreements replace the employment agreement between KSNET and Mr. Oh that
expired on June 30, 2014.
As of June 30, 2014, the USD/KRW exchange rate was $1: KRW 1,014.
KSNET service agreement
Under the KSNET service agreement, Mr. Oh is entitled to receive: (i) an annual base salary of
KRW 405 million and (ii) an annual bonus of up to KRW 440 million, which comprises a
quantitative and qualitative portion.
The quantitative portion of the annual bonus is capped at a maximum of KRW 338 million and
will be based on the achievement of specified levels of KSNET’s free cash flow and profit
before interest and tax (defined as profit before interest and tax and any bonus under the service
agreement) (“PBIT”) during any calendar year during the term of the service agreement, as
described below.
Mr. Oh is entitled to receive KRW 2 million for every KRW 1 billion of free cash flow (defined
as operating cash flow, minus tax and capital expenditures) during the year. The maximum
payable in respect of the free cash flow metric is KRW 50 million.
If PBIT is at least 90% but less than 100% of the previous year’s PBIT, then Mr. Oh is entitled
to receive (i) KRW 208 million, minus (ii) KRW 10 million for each 1% by which current PBIT
is less than the previous year’s PBIT. If PBIT is equal to or greater than the previous year’s
PBIT, then Mr. Oh is entitled to receive KRW 208 million, plus KRW 3,333,333 for each 1%
increase in PBIT when compared to the previous year (up to a maximum of KRW 80 million in
respect of the excess), for a total maximum of KRW 288 million.
The qualitative portion of the annual bonus is capped at a maximum of KRW 102 million and is
based on the achievement of certain key objectives to be determined annually by our chairman.
Each item comprising the qualitative portion is based on performance during our fiscal year
ending June 30. Achievement of the qualitative targets will be determined by our Remuneration
Committee each year. The qualitative targets for the 2015 fiscal year are:
(i) If KSNET maintains or improves its market position in the Korean Card VAN market, or if
KSNET internally improves the relative contribution of the Banking VAN, PG, and Purchase
business units compared to the core VAN business unit (i.e. if Banking VAN, PG, and Purchase
contribute more than the current 14% of gross profit) then Mr. Oh is entitled to receive KRW 50
million; and
(ii) If KSNET is not the subject of any adverse regulatory findings, fines, or penalties during the
relevant period then Mr. Oh is entitled to receive KRW 52 million.
Mr. Oh will continue to be eligible for participation in our Amended and Restated Stock
Incentive Plan during the term of the service agreement.
In addition, under the terms of the KSNET service agreement, Mr. Oh is entitled to participate
in national health insurance and the national pension plan provided under the laws of Korea, to
receive reimbursement for annual physical examinations for him and his spouse, and to make
use of KSNET provided car and driver for business and reasonable personal use.
The KSNET service agreement also includes a restraint of trade clause which provides that
upon the termination of Mr. Oh’s services with KSNET, he is restricted, for a period of 36
months, from soliciting business from certain customers, working for or holding interests in
KSNET’s competitors or participating in a competitive activity within the territories where
KSNET does business.
Mr. Oh may be terminated with or without “justifiable cause” (as defined in the service
agreement). In the case of termination without justifiable cause, he will be entitled to receive his
base salary and the bonus (if any) that he would have otherwise received for the remainder of
the then-current fiscal year.
Net1 Korea service agreement
Under the Net1 Korea service agreement, Mr. Oh is entitled to receive the following cash
compensation: (i) an annual base salary of KRW 10 million and (ii) an annual bonus of up to
KRW 80 million, based on the achievement of qualitative targets determined by our chairman.
The qualitative targets for the 2015 fiscal year are the successful launch in Korea during the
year of any of our products, that are not currently marketed by Net1 Korea in the Korean market
(for example Virtual Credit Card, Variable PIN, Money transfers, and bill payments).
The other terms of the Net1 Korea service agreement are substantially similar to the terms of
the KSNET service agreement.
The foregoing summary of the service agreements is qualified in its entirety by the terms and
conditions of the service agreements, a copy of which were filed as exhibits to a Form 8-K with
the United States Securities and Exchange Commission on July 2, 2014.
About Net1 (www.net1.com)
Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic
Payment System (“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 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 MVC technology offers secure mobile payments and
banking services in developed and emerging countries.
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.
Net1 Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1-917-767-6722
Email: dchopra@net1.com
Johannesburg
July 3, 2014
Sponsor:
Deutsche Securities (SA) Proprietary Limited
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