Net 1 UEPS Technologies Inc. Reports Second Quarter 2014 Results

JOHANNESBURG, SOUTH AFRICA--(Marketwired - Feb. 6, 2014) - Net 1 UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today released results for the second quarter of fiscal 2014.

Summary Financial Metrics
		Three months ended December 31,
						% change		% change
		2013		2012		in USD		in ZAR
(All figures in USD '000s except per share data)
Revenue		137,283		111,442		23%		43%
GAAP net income		12,749		2,629		385%		464%
Fundamental net income (1)		18,399		8,051		129%		166%
GAAP earnings per share ($)		0.28		0.06		382%		461%
Fundamental earnings per share ($) (1)		0.40		0.18		122%		163%
Fully-diluted shares outstanding ('000's)		46,176		45,597		2%
Average period USD/ ZAR exchange rate		10.16		8.74		16%
		Six months ended December 31,
						% change		% change
		2013		2012		in USD		in ZAR
(All figures in USD '000s except per share data)
Revenue		260,777		223,124		17%		39%
GAAP net income		24,345		9,373		160%		210%
Fundamental net income (1)		35,174		19,559		80%		114%
GAAP earnings per share ($)		0.53		0.21		159%		208%
Fundamental earnings per share ($) (1)		0.77		0.43		79%		113%
Fully-diluted shares outstanding ('000's)		45,919		45,593		1%
Average period USD/ ZAR exchange rate		10.08		8.46		19%

(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 Q2 2014 and Q2 2013 results

• Unfavorable impact from the strengthening of the US dollar against the ZAR: The US dollar appreciated by 16% against the ZAR during Q2 2014 which negatively impacted our reported results;
• SASSA implementation complete: Our SASSA contract implementation is complete. We incurred implementation-related expenditure, including smart card costs, of approximately $21.0 million during Q2 2013;
• Higher revenue resulting from an increase in low-margin prepaid airtime sales: Our revenue has increased as a result of the growth of our Umoya Manje prepaid airtime offering during Q2 2014, which has lower margins compared with our other South African businesses;
• National rollout of our financial services offering: We continued the national roll out of our financial services offering during Q2 2014, which resulted in higher revenue from UEPS-based lending. Profitability in the financial services segment however was lower due to rollout costs, including hiring and training of additional staff and infrastructure deployment as well as the creation of an allowance for doubtful finance loans receivable;
• Increased contribution by KSNET: Our results were positively impacted by growth in our Korean operations; and
• Ad hoc hardware sales in fiscal 2014: We sold more terminals and cards during Q2 2014 as a result of ad hoc orders received from our customers.

Comments and Outlook

"I am delighted that Net1 is once again demonstrating that it is a growth business, as illustrated by our second quarter and first half results. The last 15 months have been challenging for the Company and its staff, not because of our abilities, potential or execution, but rather because of the negative press coverage we have received for no justifiable reason. I wanted Net1 to emphatically respond, not with press releases, but through its achievements and financial performance," said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1.

"I am particularly delighted that we have now completed bulk registration as per our SASSA contract, and that our technology is running as smoothly as expected, thereby delivering the highest level of service to all our clients anytime and anywhere in the country. We continue to introduce financial or value-added services to our offerings, which we primarily deliver via mobile phones thus reaching our customers even if they reside in the most rural or underserviced areas of South Africa. I am proud that we have facilitated financial inclusion for so many people who have now access to affordable and relevant products designed to improve their livelihood," he concluded.

"Having completed our significant implementation investments in fiscal 2013, we see continued momentum as a result of the execution of our strategy, in turn driving top and bottom line growth," said Herman Kotzé, Chief Financial Officer of Net1. "Taking into account the anticipated issuance of 4.4 million shares as part of our proposed BEE transaction around March 15, 2014, for fiscal 2014 we expect fundamental earnings per share of at least $1.60 assuming a constant currency base of ZAR 8.71/$1. The share count assumption in our guidance includes a little more than one quarter of the shares related to our proposed BEE transaction," he concluded.

Results of Operations by Segment and Liquidity

Our operating metrics will be updated and posted on our website (www.net1.com).

South African transaction-based activities

Segment revenue was $72.2 million in Q2 2014, up 19% compared with Q2 2013 in USD and up 38% on a constant currency basis. In ZAR, the increases in segment revenue were primarily due to higher volumes from the growth of our Umoya Manje prepaid airtime product and from higher transaction activity through the South African National Payment System, both of which have lower margins than our traditional businesses. Segment operating income margin was 19% and 3%, respectively, and increased primarily due to the absence of SASSA implementation costs in Q2 2014. Excluding amortization of acquisition-related intangibles, Q2 2014 segment operating income margin was 19% compared with 6% in Q2 2013.

International transaction-based activities

KSNET contributes the majority of our revenues and operating income in this segment. Segment revenue was $37.2 million in Q2 2014, up 13% compared with Q2 2013 in USD and 31% on a constant currency basis. The increase in segment revenue was primarily due to growth at KSNET during Q2 2014, and was partially offset by the expiration and non-renewal of NUETS' contract with its Iraqi customer in Q3 2013. Operating income during Q2 2014 was positively impacted by growth at KSNET but partially offset by the loss of the Iraqi contract, continued losses related to our XeoHealth and Net1 Virtual Card launches in the United States, as well as ongoing competition in the Korean marketplace. Excluding the amortization of intangibles, Q2 2014 operating income margin was 13% compared to 11% during Q2 2013.

Smart card accounts

Segment revenue was $11.2 million in Q2 2014, up 37% compared with Q2 2013 in USD and 59% on a constant currency basis driven exclusively by the increase in the number of smart card accounts. Segment operating income margin from providing smart card accounts for Q2 2014 and 2013 was 29% and 28%, respectively.

Financial services

UEPS-based lending contributes the majority of the revenue and operating income in this segment. Segment revenue was $6.2 million in Q2 2014, up 328% compared with Q2 2013 in USD and 398% higher on a constant currency basis, principally due to the increase in the number of loans granted as we rolled out our product nationally. Q2 2014 segment operating income margin was 28% compared with 72% during Q2 2013, lower primarily due to an increase in start-up expenses, establishment of the allowance for doubtful finance loans receivable and the re-allocation of UEPS-based lending corporate and administration overhead expenses to this segment. 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 $10.3 million in Q2 2014, up 31% compared with Q2 2013 in USD and 52% on a constant currency basis. The increase in revenue and operating income resulted from higher ad hoc terminal and smart card sales. Excluding amortization of all intangibles, segment operating income margin was 16% compared to 11% during Q2 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 December 31, 2013, we had cash and cash equivalents of $22.4 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, working capital changes, the repayment of a portion of our Korean debt and acquisition of substantially all of the remaining shares of KSNET that we did not already own. During December 2013, we temporarily increased our short-term South African credit facility to ZAR 650 million (comprising a ZAR 500 million overdraft facility to enable us to fund additional working capital requirements and ZAR 150 million of indirect and overdraft facilities). The overdraft portion of the facility will be reduced to ZAR 400 million on March 31, 2014.

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 January 2014 payment cycle, offset by improved cash generated from operating activities and the substantial elimination of implementation costs related to our SASSA contract in fiscal 2014. Capital expenditures for Q2 2014 and 2013 were $6.8 million and $5.6 million, respectively, and have increased primarily due to the acquisition of more payment processing terminals in Korea.

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 and DOJ and SEC investigations-related expenses, as well as 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 Q2 2014 results on February 7, 2014, at 8:00 Eastern Time. To participate in the call, dial 1-855-481-5362 (US and Canada), 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 March 2, 2014.

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						Six months ended
			December 31,						December 31,
			2013			2012			2013				2012
		(In thousands, except per share data)							(In thousands, except per share data)
REVENUE			$	137,283	$	111,442			$	260,777		$	223,124
EXPENSE
	Cost of goods sold, IT processing, servicing and support			67,883		47,227				124,442			92,328
	Selling, general and administration			40,824		48,756				81,330			96,008
	Depreciation and amortization			9,774		10,487				19,803			20,491
OPERATING INCOME				18,802		4,972				35,202			14,297
INTEREST INCOME				3,236		2,589				6,555			5,680
INTEREST EXPENSE				2,226		2,023				3,978			4,094
INCOME BEFORE INCOME TAXES				19,812		5,538				37,779			15,883
INCOME TAX EXPENSE				7,099		2,971				13,584			6,700
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS				12,713		2,567				24,195			9,183
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS				47		54				150			182
NET INCOME				12,760		2,621				24,345			9,365
LESS (ADD) NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST				11		(8	)			-			(8	)
NET INCOME ATTRIBUTABLE TO NET1			$	12,749	$	2,629			$	24,345		$	9,373
Net income per share, in United States dollars
	Basic earnings attributable to Net1 shareholders		$	0.28	$	0.06			$	0.53		$	0.21
	Diluted earnings attributable to Net1 shareholders		$	0.28	$	0.06			$	0.53		$	0.21

NET 1 UEPS TECHNOLOGIES INC.

Unaudited Condensed Consolidated Balance Sheets

							Unaudited			(A)
						December 31,				June 30,
							2013			2013
					(In thousands, except share data)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents					$	22,362			$	53,665
	Pre-funded social welfare grants receivable						7,971				2,934
	Accounts receivable, net of allowances of - December: $1,326; June: $4,701						125,062				102,614
	Finance loans receivable, net of allowances of - December: $1,813; June: $-						42,847				8,350
	Inventory						13,537				12,222
	Deferred income taxes						5,001				4,938
		Total current assets before settlement assets					216,780				184,723
			Settlement assets				466,599				752,476
				Total current assets			683,379				937,199
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF - December: $87,536; June: $84,808							47,619				48,301
EQUITY-ACCOUNTED INVESTMENTS							1,290				1,183
GOODWILL							181,111				175,806
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF - December: $72,696; June: $63,767							73,874				77,257
OTHER LONG-TERM ASSETS, including reinsurance assets							34,271				36,576
		TOTAL ASSETS					1,021,544				1,276,322
LIABILITIES
CURRENT LIABILITIES
	Bank Overdraft						24,256				-
	Accounts payable						13,689				26,567
	Other payables						34,386				33,808
	Current portion of long-term borrowings						14,108				14,209
	Income taxes payable						3,479				2,275
		Total current liabilities before settlement obligations					89,918				76,859
			Settlement obligations				466,599				752,476
				Total current liabilities			556,517				829,335
DEFERRED INCOME TAXES							18,261				18,727
LONG-TERM BORROWINGS							57,452				66,632
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities							20,131				21,659
		TOTAL LIABILITIES					652,361				936,353
COMMITMENTS AND CONTINGENCIES
EQUITY
	COMMON STOCK
		Authorized: 200,000,000 with $0.001 par value;
		Issued and outstanding shares, net of treasury - December: 45,773,342; 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: December: -; June: -					-				-
	ADDITIONAL PAID-IN-CAPITAL						164,060				160,670
	TREASURY SHARES, AT COST: December: 13,455,090; June: 13,455,090						(175,823	)			(175,823	)
	ACCUMULATED OTHER COMPREHENSIVE LOSS						(96,103	)			(100,858	)
	RETAINED EARNINGS						476,963				452,618
		TOTAL NET1 EQUITY					369,156				336,666
		NON-CONTROLLING INTEREST					27				3,303
			TOTAL EQUITY				369,183				339,969
				TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,021,544			$	1,276,322

(A) - Derived from audited financial statements

NET 1 UEPS TECHNOLOGIES INC.

Unaudited Condensed Consolidated Statements of Cash Flows

			Three months ended						Six months ended
			December 31,						December 31,
			2013			2012			2013			2012
			(In thousands)						(In thousands)
Cash flows from operating activities
Net income		$	12,760		$	2,621		$	24,345		$	9,365
Depreciation and amortization			9,774			10,487			19,803			20,491
Earnings from equity-accounted investments			(47	)		(54	)		(150	)		(182	)
Fair value adjustments			72			1,000			(61	)		707
Interest payable			694			1,117			1,666			2,309
Profit on disposal of property, plant and equipment			(15	)		(86	)		(16	)		(86	)
Stock-based compensation charge			968			1,117			1,898			2,233
Facility fee amortized			509			76			578			164
(Increase) Decrease in accounts receivable, pre-funded social welfare grants receivable and finance loans receivable			(37,977	)		(5,061	)		(61,078	)		831
Increase in inventory			(2,853	)		(6,250	)		(1,842	)		(7,209	)
Decrease in accounts payable and other payables			(4,883	)		(4,939	)		(13,551	)		(6,288	)
(Decrease) increase in taxes payable			(5,559	)		(6,032	)		1,362			(594	)
Decrease in deferred taxes			(691	)		(916	)		(1,878	)		(2,932	)
	Net cash (used in) provided by operating activities		(27,248	)		(6,920	)		(28,924	)		18,809
Cash flows from investing activities
Capital expenditures			(6,845	)		(5,597	)		(12,461	)		(12,050	)
Proceeds from disposal of property, plant and equipment			1,953			251			2,001			356
Acquisitions, net of cash acquired			-			(230	)		-			(2,143	)
Repayment of loan by equity-accounted investment			-			-			-			3
Proceeds from maturity of investments related to insurance business			-			-			-			545
Other investing activities			-			-			(1	)		-
Net change in settlement assets			204,730			(72,835	)		256,503			(12,056	)
	Net cash provided by (used in) investing activities		199,838			(78,411	)		246,042			(25,345	)
Cash flows from financing activities
Long-term borrowings obtained			71,605			-			71,605			-
Repayment of long-term borrowings			(87,008	)		(7,307	)		(87,008	)		(7,307	)
Payment of facility fee			(872	)		-			(872	)		-
Proceeds from bank overdraft			24,580			-			24,580			-
Acquisition of interests in KSNET			(1,968	)		-			(1,968	)		-
Proceeds from issue of common stock			-			-			-			240
Net change in settlement obligations			(204,730	)		72,835			(256,503	)		12,056
	Net cash (used in) provided by financing activities		(198,393	)		65,528			(250,166	)		4,989
Effect of exchange rate changes on cash			495			375			1,745			540
Net decrease in cash and cash equivalents			(25,308	)		(19,428	)		(31,303	)		(1,007	)
Cash and cash equivalents - beginning of period			47,670			57,544			53,665			39,123
Cash and cash equivalents - end of period		$	22,362		$	38,116		$	22,362		$	38,116

Net 1 UEPS Technologies Inc.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended December 31, 2013 and 2012 and September 30, 2013

																Change - actual						Change - constant exchange rate(1)
																Q2 '14			Q2 '14			Q2 '14			Q2 '14
																vs			vs			vs			vs
Key segmental data, in $ '000,					Q2 '14					Q2 '13			Q1 '14			Q2'13			Q1 '14			Q2'13			Q1 '14
	Revenue:
		SA transaction-based activities			$	72,237		$		60,764			$	63,032		19	%		15	%		38	%		16	%
		International transaction-based activities				37,288				33,113				36,817		13	%		1	%		31	%		3	%
		Smart card accounts				11,237				8,219				11,329		37	%		(1	%)		59	%		1	%
		Financial services				6,199				1,448				2,427		328	%		155	%		398	%		159	%
		Hardware, software and related technology sales				10,322				7,898				9,889		31	%		4	%		52	%		6	%
				Total consolidated revenue	$	137,283			$	111,442			$	123,494		23	%		11	%		43	%		13	%
Consolidated operating income (loss):
		SA transaction-based activities			$	13,398			$	1,933			$	13,282		593	%		1	%		706	%		2	%
			Operating income (loss) excluding amortization			13,916				3,398				13,808		310	%		1	%		376	%		2	%
			Amortization of intangible assets			(518	)			(1,465	)			(526	)	(65	%)		(2	%)		(59	%)		0	%
		International transaction-based activities				1,365				202				2,051		576	%		(33	%)		685	%		(32	%)
			Operating income excluding amortization			4,883				3,515				5,200		39	%		(6	%)		61	%		(5	%)
			Amortization of intangible assets			(3,518	)			(3,313	)			(3,149	)	6	%		12	%		23	%		13	%
		Smart card accounts				3,203				2,342				3,228		37	%		(1	%)		59	%		1%
		Financial services				1,727				1,048				56		65	%		nm			92	%		nm
		Hardware, software and related technology sales				1,592				795				2,948		100	%		(46	%)		133	%		(45	%)
			Operating income (loss) excluding amortization			1,663				878				3,021		89	%		(45	%)		120	%		(44	%)
			Amortization of intangible assets			(71	)			(83	)			(73	)	(14	%)		(3	%)		(1	%)		(1	%)
		Corporate/ Eliminations				(2,483	)			(1,348	)			(5,165	)	84	%		(52	%)		114	%		(51	%)
			Total operating income (loss)		$	18,802			$	4,972			$	16,400		278	%		15	%		340	%		16	%
Operating income margin (%)
		SA transaction-based activities				19	%			3	%			21	%
		International transaction-based activities				4	%			1	%			6	%
		International transaction-based activities excluding amortization				13	%			11	%			14	%
		Smart card accounts				29	%			28	%			28	%
		Financial services				28	%			72	%			2	%
		Hardware, software and related technology sales				15	%			10	%			30	%
		Overall operating margin				14	%			4	%			13	%

(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the second quarter of fiscal 2014 also prevailed during the second quarter of fiscal 2013 and the first quarter of fiscal 2014.

Six months ended December 31, 2013 and 2012
															Change -
															constant
													Change -		exchange
													actual		rate(1)
													F2014		F2014
													vs		vs
Key segmental data, in '000, except margins					F2014				F2013				F2013		F2013
	Revenue:
		SA transaction-based activities			$	135,269			$	122,128			11	%	32	%
		International transaction-based activities				74,105				64,762			14	%	36	%
		Smart card accounts				22,566				16,583			36	%	62	%
		Financial services				8,626				2,832			205	%	263	%
		Hardware, software and related technology sales				20,211				16,819			20	%	43	%
			Total consolidated revenue		$	260,777			$	223,124			17	%	39	%
	Consolidated operating income (loss):
		SA transaction-based activities			$	26,680			$	8,333			220	%	282	%
			Operating income excluding amortization			27,724				11,264			146	%	193	%
			Amortization of intangible assets			(1,044	)			(2,931	)		(64	%)	(58	%)
		International transaction-based activities				3,416				31			nm		nm
			Operating income excluding amortization			10,024				6,499			54	%	84	%
			Amortization of intangible assets			(6,608	)			(6,468	)		2	%	22	%
		Smart card accounts				6,431				4,727			36	%	62	%
		Financial services				1,783				2,145			(17	%)	(1	%)
		Hardware, software and related technology sales				4,540				2,779			63	%	95	%
			Operating income excluding amortization			4,683				2,948			59	%	89	%
			Amortization of intangible assets			(143	)			(169	)		(15	%)	1	%
		Corporate/ Eliminations				(7,648	)			(3,718	)		106	%	145	%
			Total operating income		$	35,202			$	14,297			146	%	193	%
	Operating income margin (%)
		SA transaction-based activities				20	%			7	%
		International transaction-based activities				5	%			0	%
		International transaction-based activities excluding amortization				14	%			10	%
		Smart card accounts				28	%			29	%
		Financial services				21	%			76	%
		Hardware, software and related technology sales				22	%			17	%
		Overall operating margin				13	%			6	%

(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during the first half of fiscal 2014 also prevailed during the first half 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 December 31, 2013 and 2012

							EPS,									EPS,
			Net income				basic					Net income				basic
			(USD'000)				(USD)					(ZAR'000)				(ZAR)
			2013		2012		2013		2012			2013		2012		2013		2012
GAAP			12,749		2,629		0.28		0.06			129,519		22,979		2.83		0.50
	Intangible asset amortization, net.		3,104		3,640							31,530		31,817
	Stock-based compensation charge		968		1,117							9,834		9,763
	Facility fees for KSNET debt		509		76							5,171		664
	DOJ and SEC investigations- related expenses		1,068		561							10,850		4,903
	Acquisition-related costs		-		28							-		245
		Fundamental	18,398		8,051		0.40		0.18			186,904		70,371		4.08		1.55
Six months ended December 31, 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			24,345		9,373		0.53		0.21			245,417		79,268		5.37		1.74
	Intangible asset amortization, net.		5,889		7,155							59,367		60,518
	Stock-based compensation charge		1,898		2,233							19,134		18,885
	Facility fees for KSNET debt		578		164							5,827		1,387
	DOJ and SEC investigations-
	related expenses		2,464		561							24,839		4,744
	Acquisition-related costs		-		73							-		617
		Fundamental	35,174		19,559		0.77		0.43			354,584		165,419		7.75		3.63

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 December 31, 2013 and 2012
			2013			2012
Net income (USD'000)			12,749			2,629
Adjustments:
	Profit on sale of property, plant and equipment		(15	)		(86	)
	Tax effects on above		4			24
Net income used to calculate headline earnings (USD'000)			12,738			2,567
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)			45,776			45,545
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)			46,176			45,597
Headline earnings per share:
	Basic, in USD		0.28			0.06
	Diluted, in USD		0.28			0.06

Six months ended December 31, 2013 and 2012
			2013			2012
Net income (USD'000)			24,345			9,373
Adjustments:
	Profit on sale of property, plant and equipment		(16	)		(86	)
	Tax effects on above		4			24
Net income used to calculate headline earnings (USD'000)			24,333			9,311
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings ('000)			45,725			45,530
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings ('000)			45,919			45,593
Headline earnings per share:
	Basic, in USD		0.53			0.20
	Diluted, in USD		0.52			0.20

Calculation of the denominator for headline diluted earnings per share
					Q2 '14		Q2 '13		F2014		F2013
	Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP				45,776		45,545		45,725		45,530
		Effect of dilutive securities under GAAP			400		52		194		63
			Denominator for headline diluted earnings per share		46,176		45,597		45,919		45,593

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.

Investor Relations Contact:
Net 1 UEPS Technologies, Inc.
Dhruv Chopra
Managing Director
[phone]
[e-mail]