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Net 1 UEPS Technologies Inc. Reports Second Quarter 2013 Results

- Enrolled more than 9.5 million citizens in total by December 31, 2012;

JOHANNESBURG, SOUTH AFRICA -- (Marketwire) -- 02/07/13 -- Net 1 UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) today announced results for the second quarter fiscal 2013.

Summary Financial Metrics


                                             Three months ended December 31,
                           ------------------------------------------------
                                                    % change in % change in
                                   2012        2011         USD         ZAR
                           ------------------------------------------------
(All figures in USD '000s                                                  
 except per share data)                                                    
Revenue                         111,442      92,058         21%         29%
                                                                           
GAAP net income                   2,629      25,094        (90%)       (89%)
                                                                           
Fundamental net income (1)        8,051      17,677        (54%)       (51%)
                                                                           
GAAP earnings per share ($)        0.06        0.56        (90%)       (89%)
                                                                           
Fundamental earnings per                                                   
 share ($) (1)                     0.18        0.39       (100%)       (52%)
                                                                           
Fully-diluted shares                                                       
 outstanding ('000's)            45,567      44,967          1%            
                                                                           
Average period USD/ ZAR                                                    
 exchange rate                     8.74        8.18          7%            


                                              Six months ended December 31,
                           ------------------------------------------------
                                                    % change in % change in
                                   2012        2011         USD         ZAR
                           ------------------------------------------------
(All figures in USD '000s                                                  
 except per share data)                                                    
Revenue                         223,124     191,984         16%         26%
                                                                           
GAAP net income                   9,373      44,862        (79%)       (77%)
                                                                           
Fundamental net income (1)       19,559      39,309        (50%)       (45%)
                                                                           
GAAP earnings per share ($)        0.21        1.00        (79%)       (78%)
                                                                           
Fundamental earnings per                                                   
 share ($) (1)                     0.43        0.87       (100%)       (46%)
                                                                           
Fully-diluted shares                                                       
 outstanding ('000's)            45,578      45,026          1%            
                                                                           
Average period USD/ ZAR                                                    
 exchange rate                     8.46        7.82          8%            

(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 2013 and Q2 2012 results


--  Unfavorable impact from the strengthening of the US dollar: The US
    dollar appreciated by 7% against the ZAR during Q2 2013 which negatively
    impacted our reported results; 
--  SASSA implementation costs: We continued implementing our SASSA contract
    during Q2 2013 and incurred additional implementation and staff costs;
    and 
--  Fiscal 2012 impacted by change in South African tax law: As a result of
    the change in South African tax law that replaced STC with a dividends
    withholding tax, Q2 2012 tax expense included a net taxation benefit of
    $11.8 million, as we recorded a $20.0 million deferred tax benefit which
    was offset by an $8.2 million foreign tax credit valuation allowance. 

Comments and Outlook

"We enrolled 12 million citizens by the end of January as part of our SASSA implementation and remain on track to complete bulk enrollment by the end of March 2013," said Dr. Serge Belamant, Chairman and Chief Executive Officer of Net1. "We continue to cooperate with the DOJ and SEC on their investigations, but as a result of these investigations, we are experiencing some adverse impact from the damage caused to our reputation, including our ability to execute certain aspects of our strategic plan. The Supreme Court will hear the appeal of the August 2012 High Court judgment on February 15. We believe we have a strong case and look forward to presenting our arguments to the Supreme Court," he concluded.

"The successful implementation for SASSA is a one-off event and integral for the smooth transition and operation of South Africa's social welfare program. Given the critical importance of this roll out, and the higher number of beneficiaries required to be enrolled in the same time frame, our implementation costs are materially but proportionally higher than anticipated," said Herman Kotze, Chief Financial Officer of Net1. "As a result, in fiscal 2013, we expect fundamental earnings per share to be at least $0.95 assuming a constant currency base of ZAR 7.72/$1 and using our fiscal 2012 share count of 45 million shares," he concluded.

Progress of second phase of our SASSA contract implementation

We commenced the second phase of the enrollment process in early July 2012 and plan to be substantially complete by March 2013, in accordance with the enrollment plan agreed with SASSA. Under our agreement with SASSA, we have to enroll both the grant recipients (those individuals who receive the actual payment and are issued with our UEPS/EMV smart card), as well as the grant beneficiaries (those individuals who have qualified for the social grant, but are not necessarily the recipient of the grant). While the number of grant recipients on a national basis has consistently been quantified by SASSA at 9.4 million individuals, the number of beneficiaries is continually being revised by SASSA on an ongoing basis from an initial estimate of approximately 15.5 million, to the current estimate of approximately 21.6 million. In order to complete the second phase of the implementation on time, and given the significantly higher number of beneficiaries, we increased the number of temporary employees that we hired for the entire second quarter of fiscal 2013from 2,500 to approximately 5,500. The total number of temporary employees is significantly more than the 2,500 we previously expected at the beginning of fiscal 2013 as the actual number of individuals (grant recipients plus grant beneficiaries) that SASSA has asked us to enroll has increased substantially. During Q2 2013, we enrolled a further 2.7 million grant recipients and an additional 3.8 million beneficiaries.

During Q2 2013 we incurred direct implementation expenses of approximately $18.0 million (ZAR 157.1 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. Our implementation expenditure during Q2 2013 was materially higher than we had previously anticipated due to the significant number of grant recipients and beneficiaries that we enrolled during the quarter, especially in the rural and deep rural areas. In order to meet our enrollment obligations in accordance with the timetable agreed with SASSA we incurred higher than anticipated temporary infrastructure hire, travel and staff expenditures. We expect this level of expenditure to reduce slightly during the third quarter of fiscal 2013, as our efforts are now focused primarily on urban areas. We also expensed $3.0 million (ZAR 26.6 million) related to the cost of the UEPS/EMV smart cards issued during the quarter, which is not included in the $18.0 million (ZAR 157.1 million) above.

We also incurred approximately $0.7 million in capital expenditures related to the implementation during Q2 2013. Since inception of the implementation we have incurred cumulative capital expenditures of $25.2 million. We anticipate cumulative capital expenditures related to the ramp of our national contract to be in the $30 million range. We have lowered our expected capital expenditure range related to the implementation of our SASSA contract given the decision to expense the cost of smart cards rather than capitalize those costs.

When we signed our Service Level Agreement with SASSA in February 2012, we anticipated total cash outlays of approximately $68 to $95 million from February 2012 through March 2013, including direct implementation costs of $5-10 million per quarter, as well as capital expenditures of $45-50 million, in order to build our infrastructure, register 15.6 million beneficiaries and roll out our biometrically secure UEPS/EMV technology nationally. With one more quarter of bulk enrollment remaining, our total cash outlay to date has been $74 million for direct implementation expenses, smart card costs and capital expenditures. We therefore would be in-line with the mid-point of our initial total cash outlay range assuming the volume of enrollments had not changed. Having to register the incremental 6 million people and therefore employ our temporary staff for longer, should result in our total cash outlay being between $100 and $105 million by March 2013. We also expect that by the end of the bulk enrollment period, roughly 10-15% of beneficiaries would not have come for re-registration and therefore we would have to rely on SASSA's efforts to encourage those beneficiaries to re-register, which would require us to maintain at least some if not all of our enrollment infrastructure for a couple of months in Q4 2013. Given our enrollment experience to date however, we are unsure of what proportion of un-registered people would ultimately come for re-registration as some of the remainder may be duplicate recipients or recipients that do not exist altogether.

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 $60.8 million in Q2 2013, up 31% compared with Q2 2012 in USD and up 40% on a constant currency basis. In ZAR, the increases in segment revenue were primarily due to higher revenues earned under our new SASSA contract. Segment operating income margin was 3% and 34%, respectively, and declined primarily due to SASSA implementation costs. Excluding amortization of acquisition-related intangibles, Q2 2013 segment operating income margin was 6%, compared to 38% during Q2 2012.

International transaction-based activities

KSNET continues to contribute the majority of our revenues in this operating segment. Segment revenue was $33.1 million in Q2 2013, up 15% compared with Q2 2012 in USD and 23% on a constant currency basis. Operating margin for the segment is lower than most of our South African transaction-based businesses and was negatively impacted by continued competition in the Korean marketplace but was partially offset by increased revenue contributions from KSNET, NUETS' initiative in Iraq and SmartSwitch Botswana and favorable currency movement between the Korean won and the US dollar. Excluding the amortization of intangibles but including the start-up costs referenced above, Q2 2013 operating income margin was 11% compared to 12% during Q2 2012.

Smart card accounts

Segment revenue was $8.2 million in Q2 2013, up 13% compared with Q2 2012 in USD and 21% on a constant currency basis. Q2 2013 segment operating income margin was 29%, compared to 45% during Q2 2012. We have reduced our pricing for smart card accounts after taking into consideration the lower price and higher volumes of the new SASSA contract.

Financial services

UEPS-based lending contributes the majority of the revenue and operating income in this operating segment. Segment revenue was $1.4 million in Q2 2013, down 26% compared with Q2 2012 in USD and 20% lower on a constant currency basis, principally due to a decrease in lending activities. Q2 2013 segment operating income margin was 72% compared with 53% during Q2 2012 primarily as a result of an improved margin in our UEPS-based lending book resulting from a better loss experience, offset by start-up expenditures related to Smart Life and other financial services offerings.

Hardware, software and related technology sales

Segment revenue was $7.9 million in Q2 2013, up 4% compared with Q2 2012 in USD and 12% on a constant currency basis. In constant currency, the increase in revenue and operating income resulted primarily from an increase in royalty fees, offset by a lower contribution from all other contributors to hardware and software sales. Excluding amortization of all intangibles, segment operating income margin was 10% compared to 12% during Q2 2012.

Cash flow and liquidity

At December 31, 2012, we had cash and cash equivalents of $38 million, down from $39 million at June 30, 2012. The decrease in our cash balances from June 30, 2012, was primarily from implementation costs and capital expenditures incurred to implement our SASSA contract, a scheduled repayment of our Korean debt and the acquisition of Pbel and SmartSwitch Botswana. For Q2 2013, net cash utilized by operating activities was $6.9 million compared with $6.2 million in Q2 2012.

Excluding the impact of interest received, interest paid under our Korean debt and taxes paid, the decrease in cash provided by operating activities resulted from significant implementation costs related to our SASSA contract, partially offset by cash generated from operations. Capital expenditures for Q2 2013 and 2012 were $5.6 million and $5.1 million, respectively, and have increased primarily due to acquisition of payment vehicles and other equipment for our new SASSA contract and 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, 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, 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 ("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, 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 used to calculate earnings per share basic and diluted and HEPS basic and diluted.

Conference Call

We will host a conference call to review Q2 2013 results on February 8, 2013, at 8:00 Eastern Time. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-605-3852 (Canada only), 0-800-917-7042 (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 our 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 our website through March 1, 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. 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, Ghana and Iraq. In addition, Net1's proprietary Mobile Virtual Card technology offers secure mobile payments and banking services in developed and emerging countries while its MediKredit and XeoHealth subsidiaries provide its proprietary 5010 and ICD-10 compliant real-time claims adjudication system.

Net1 has a primary listing on the Nasdaq and a secondary listing on the JSE Limited.

Forward-Looking Statements

This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.


NET 1 UEPS TECHNOLOGIES INC.                      
Unaudited Condensed Consolidated Statements of Operations        

                             Three months ended          Six months ended
                    -----------------------------------------------------
                                    December 31,              December 31,
                      -------------------------  ------------------------
                              2012         2011         2012         2011
                      ------------  -----------  -----------  -----------
                      (In thousands, except per (In thousands, except per
                                     share data)               share data)
                                                                         
REVENUE             $      111,442 $     92,058 $    223,124 $    191,984
                                                                         
EXPENSE                                                                  
                                                                         
 Cost of goods sold,                                                     
  IT processing,                                                         
  servicing and                                                          
  support                   47,227       34,168       92,328       67,112
                                                                         
 Selling, general                                                        
  and administration        48,756       28,872       96,008       55,929
                                                                         
 Depreciation and                                                        
  amortization              10,487        8,790       20,491       17,869
                                                                         
                      ------------  -----------  -----------  -----------
OPERATING INCOME             4,972       20,228       14,297       51,074
                                                                         
INTEREST INCOME              2,589        1,820        5,680        3,817
                                                                         
INTEREST EXPENSE             2,023        2,355        4,094        4,971
                      ------------  -----------  -----------  -----------
                                                                         
INCOME BEFORE INCOME                                                     
 TAXES                       5,538       19,693       15,883       49,920
                                                                         
INCOME TAX EXPENSE           2,971       (5,378)       6,700        5,174
                      ------------  -----------  -----------  -----------
                                                                         
NET INCOME BEFORE                                                        
 EARNINGS FROM                                                           
 EQUITY-ACCOUNTED                                                        
 INVESTMENTS                 2,567       25,071        9,183       44,746
                                                                         
EARNINGS FROM                                                            
 EQUITY-ACCOUNTED                                                        
 INVESTMENTS                    54           19          182          104
                      ------------  -----------  -----------  -----------
                                                                         
NET INCOME                   2,621       25,090        9,365       44,850
                                                                         
LESS (ADD) NET                                                           
 INCOME (LOSS)                                                           
 ATTRIBUTABLE TO                                                         
 NON-CONTROLLING                                                         
 INTEREST                       (8)          (4)          (8)         (12)
                                                                         
                      ------------  -----------  -----------  -----------
NET INCOME          $                                                    
 ATTRIBUTABLE TO                                                         
 NET1                        2,629 $     25,094 $      9,373 $     44,862
                      ------------  -----------  -----------  -----------
                      ------------  -----------  -----------  -----------
                                                                         
Net income per                                                           
 share, in United                                                        
 States dollars                                                          
 Basic earnings                                                          
  attributable to                                                        
  Net1 shareholders          $0.06        $0.56        $0.21        $1.00
 Diluted earnings                                                        
  attributable to                                                        
  Net1 shareholders          $0.06        $0.56        $0.21        $1.00


                                                                         
NET 1 UEPS TECHNOLOGIES INC.                      
Condensed Consolidated Balance Sheets                  
                                                Unaudited               (A)
                                              December 31,         June 30,
                                                     2012             2012
                                      ------------------------------------
                                      ------------------------------------
                                         (In thousands, except share data)

                                  ASSETS                                  
CURRENT ASSETS                                                            
 Cash and cash equivalents            $            38,116 $         39,123
 Pre-funded social welfare grants                                         
  receivable                                        8,024            9,684
 Accounts receivable, net of                                              
  allowances of - December: $1,027;                                       
  June: $788                                      105,104          101,918
 Finance loans receivable                           6,979            8,141
 Deferred expenditure on smart cards                8,306            4,587
 Inventory                                          9,869            6,192
 Deferred income taxes                              5,976            5,591
                                          ---------------  ---------------
  Total current assets before                                             
   settlement assets                              182,374          175,236
   Settlement assets                              414,621          409,166
                                          ---------------  ---------------
    Total current assets                          596,995          584,402
PROPERTY, PLANT AND EQUIPMENT, NET OF                                     
 ACCUMULATED DEPRECIATION OF -                                            
 December: $85,023; June: $74,242                  55,746           52,616
EQUITY-ACCOUNTED INVESTMENTS                        1,192            1,508
GOODWILL                                          193,133          182,737
INTANGIBLE ASSETS, net                             92,287           93,930
OTHER LONG-TERM ASSETS, including                                         
 reinsurance assets                                41,010           40,700
                                          ---------------  ---------------
 TOTAL ASSETS                                     980,363          955,893
                                          ---------------  ---------------
                                          ---------------  ---------------

                                LIABILITIES                               
CURRENT LIABILITIES                                                       
 Accounts payable                                  12,881           13,172
 Other payables                                    36,960           40,167
 Current portion of long-term                                             
  borrowings                                       15,221           14,019
 Income taxes payable                               5,317            6,019
                                          ---------------  ---------------
  Total current liabilities before                                        
   settlement obligations                          70,379           73,377
   Settlement obligations                         414,621          409,166
                                          ---------------  ---------------
    Total current liabilities                     485,000          482,543
DEFERRED INCOME TAXES                              20,999           20,988
LONG-TERM BORROWINGS                               78,989           79,760
OTHER LONG-TERM LIABILITIES, including                                    
 insurance policy liabilities                      25,107           25,791
                                          ---------------  ---------------
 TOTAL LIABILITIES                                610,095          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 - December: 45,600,471;                                    
   June: 45,548,902                                    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                       159,002          155,350
 TREASURY SHARES, AT COST: December:                                      
  13,455,090; June: 13,455,090                   (175,823)        (175,823)
 ACCUMULATED OTHER COMPREHENSIVE LOSS             (65,282)         (75,722)
 RETAINED EARNINGS                                449,014          439,641
                                          ---------------  ---------------
  TOTAL NET1 EQUITY                               366,970          343,505
  NON-CONTROLLING INTEREST                          3,298            3,306
                                          ---------------  ---------------
   TOTAL EQUITY                                   370,268          346,811
                                          ---------------  ---------------
                                                                          
                                          ---------------  ---------------
    TOTAL LIABILITIES AND             $                                   
     SHAREHOLDERS' EQUITY                         980,363 $        955,893
                                          ---------------  ---------------
                                          ---------------  ---------------
                                                                          
(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,
                         ------------------------  ------------------------
                                2012         2011         2012         2011
                         -----------  -----------  -----------  -----------
                                    (In thousands)            (In thousands)
                                                                           
Cash flows from                                                            
 operating activities                                                      
Net income             $       2,621 $     25,090 $      9,365 $     44,850
Depreciation and                                                           
 amortization                 10,487        8,790       20,491       17,869
(Earnings) Loss from                                                       
 equity-accounted                                                          
 investments                     (54)         (19)        (182)        (104)
Fair value adjustments         1,000         (551)         707         (772)
Interest payable               1,117        2,113        2,309        3,775
Profit on disposal of                                                      
 property, plant and                                                       
 equipment                       (86)         (26)         (86)         (34)
Net loss on sale of 10%                                                    
 of SmartLife                      -           81            -           81
Profit on liquidation                                                      
 of SmartSwitch Nigeria            -            -            -       (3,994)
Realized loss on sale                                                      
 of SmartLife                                                              
 investments                       -            -            -           25
Stock-based                                                                
 compensation charge           1,117          543        2,233        1,039
Facility fee amortized            76           83          164          199
Decrease in accounts                                                       
 receivable, pre-funded                                                    
 social welfare grants                                                     
 receivable and finance                                                    
 loans receivable             (5,061)     (19,044)         831      (15,795)
(Increase) Decrease in                                                     
 deferred expenditure                                                      
 on smart cards               (3,668)         (58)      (3,701)         (14)
Increase in inventory         (2,582)         920       (3,508)         601
(Decrease) Increase in                                                    
 accounts payable and                                                      
 other payables               (4,939)      (2,679)      (6,288)      (2,348)
Increase (Decrease) in                                                     
 taxes payable                (6,032)      (7,355)        (594)     (10,962)
(Decrease) Increase in                                                     
 deferred taxes                 (916)     (14,088)      (2,932)     (13,396)
                         -----------  -----------  -----------  -----------
 Net cash provided by                                                      
  operating activities        (6,920)      (6,200)      18,809       21,020
                         -----------  -----------  -----------  -----------
                                                                           
Cash flows from                                                            
 investing activities                                                      
Capital expenditures          (5,597)      (5,120)     (12,050)      (9,586)
Proceeds from disposal                                                     
 of property, plant and                                                    
 equipment                       251          174          356          268
Acquisition of Pbel,                                                       
 net of cash acquired           (230)           0       (2,143)           0
Acquisition of prepaid                                                     
 business, net of cash                                                     
 acquired                          -       (4,481)           -       (4,481)
Acquisition of Smart                                                       
 Life, net of cash                                                         
 acquired                          -            -            -       (1,673)
Settlement from former                                                     
 shareholders of KSNET             -        4,945            -        4,945
Repayment of loan by                                                       
 equity-accounted                                                          
 investment                        -           30            3           63
Purchase of investments                                                    
 related to insurance                                                      
 business                          -            -            -       (2,320)
Proceeds from maturity                                                     
 of investments related                                                    
 to insurance business             -            -          545        2,321
Net change in                                                              
 settlement assets           (72,835)      30,349      (12,056)      33,796
                         -----------  -----------  -----------  -----------
 Net cash provided by                                                      
  (used in) investing                                                      
  activities                 (78,411)      25,897      (25,345)      23,333
                         -----------  -----------  -----------  -----------
                                                                           
Cash flows from                                                            
 financing activities                                                      
Repayment of long-term                                                     
 borrowings                   (7,307)      (7,185)      (7,307)      (7,185)
Proceeds from issue of                                                     
 common stock                      -            0          240            0
Proceeds on sale of 10%                                                    
 of SmartLife                      -          107            -          107
Acquisition of treasury                                                    
 stock                             -            0            -       (1,129)
Net change in                                                              
 settlement obligations       72,835      (30,349)      12,056      (33,796)
                         -----------  -----------  -----------  -----------
Net cash used in                                                           
 financing activities         65,528      (37,427)       4,989      (42,003)
                         -----------  -----------  -----------  -----------
                                                                           
Effect of exchange rate                                                    
 changes on cash                 375       (3,389)         540      (16,749)
                         -----------  -----------  -----------  -----------
                                                                           
Net increase in cash                                                       
 and cash equivalents        (19,428)     (21,119)      (1,007)     (14,399)
                                                                           
Cash and cash                                                              
 equivalents -                                                             
 beginning of period          57,544      101,983       39,123       95,263
                         -----------  -----------  -----------  -----------
                                                   
Cash and cash                                                             
 equivalents - end of                                                      
 period                $      38,116 $     80,864 $     38,116 $     80,864
                         -----------  -----------  -----------  -----------
                         -----------  -----------  -----------  -----------
                                                                           

Net 1 UEPS Technologies Inc.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended December 31, 2012 and 2011 and September 30, 2012


                                                                   Change -
                                                                   constant
                                                     Change -      exchange
                                                       actual       rate(1)
                                               ----------------------------
                                                Q2 '13 Q2 '13 Q2 '13 Q2 '13
Key segmental data,                                 vs     vs     vs     vs
 in $ '000,            Q2 '13   Q2 '12   Q1 '13  Q2'12 Q1 '13  Q2'12 Q1 '13
                    -------------------------------------------------------
 Revenue:                                                                  
  SA transaction-                                                          
   based activities   $60,764  $46,448  $61,364    31%    (1%)   40%     5%
  International                                                            
   transaction-based                                                       
   activities          33,113   28,835   31,649    15%     5%    23%    11%
  Smart card                                                               
   accounts             8,219    7,264    8,364    13%    (2%)   21%     4%
  Financial services    1,448    1,944    1,384   (26%)    5%   (20%)   11%
  Hardware, software                                                       
   and related                                                             
   technology sales     7,898    7,567    8,921     4%   (11%)   12%    (6%)
                    ---------------------------                            
   Total                                                                   
    consolidated                                                           
    revenue          $111,442  $92,058 $111,682    21%     0%    29%     6%
                    ---------------------------                            
                                                                           
 Consolidated                                                              
  operating (loss)                                                         
  income:                                                                  
  SA transaction-                                                          
   based activities    $1,933  $15,766   $6,400   (88%)  (70%)  (87%)  (68%)
                    -------------------------------------------------------
  Operating income                                                         
   excluding                                                               
   amortization         3,398   17,463    7,849   (81%)  (57%)  (79%)  (54%)
  Amortization of                                                          
   intangible assets   (1,465)  (1,697)  (1,449)  (14%)    1%    (8%)    7%
                    -------------------------------------------------------
  International                                                            
   transaction-based                                                       
   activities             202      241     (171)  (16%) (218%)  (10%) (225%)
                    -------------------------------------------------------
  Operating income                                                         
   excluding                                                               
   amortization         3,515    3,369    2,981     4%    18%    12%    25%
  Amortization of                                                          
   intangible assets   (3,313)  (3,128)  (3,152)    6%     5%    13%    11%
                    -------------------------------------------------------
  Smart card                                                               
   accounts             2,342    3,302    2,385   (29%)   (2%)  (24%)    4%
  Financial services    1,048    1,026    1,097     2%    (4%)    9%     1%
  Hardware, software                                                       
   and related                                                             
   technology sales       795      909    1,984   (13%)  (60%)   (6%)  (58%)
                    -------------------------------------------------------
  Operating income                                                         
   excluding                                                               
   amortization           878      997    2,072   (12%)  (58%)   (6%)  (55%)
  Amortization of                                                          
   intangible assets      (83)     (88)     (88)   (6%)   (6%)    1%    (0%)
                    -------------------------------------------------------
  Corporate/                                                               
   Eliminations        (1,348)  (1,016)  (2,370)   33%   (43%)   42%   (40%)
                    ---------------------------                            
   Total operating                                                         
    income             $4,972  $20,228   $9,325   (75%)  (47%)  (74%)  (44%)
                    ---------------------------                            
                                                                           
 Operating income                                                          
  margin (%)                                                               
  SA transaction-                                                          
   based activities        3%      34%      10%                            
  International                                                            
   transaction-based                                                       
   activities              1%       1%      (1%)                            
  International                                                            
   transaction-based                                                       
   activities                                                              
   excluding                                                               
   amortization           11%      12%       9%                            
  Smart card                                                               
   accounts               29%      45%      29%                            
  Financial services      72%      53%      79%                            
  Hardware, software                                                       
   and related                                                             
   technology sales       10%      12%      22%                            
  Overall operating                                                        
   margin                  4%      22%       8%                            
                                                                           
(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 2013 also prevailed during the second quarter of fiscal 2012 and   
 the first quarter of fiscal 2013.                                         



Six months ended December 31, 2012 and 2011



                                                                   Change -
                                                                   constant
                                                       Change -    exchange
                                                         actual     rate(1)
                                                   ------------------------
                                                          F2013       F2013
Key segmental data, in                                       vs          vs
 '000, except margins             F2013       F2012       F2012       F2012
                           ------------------------------------------------
 Revenue:                                                                  
  SA transaction-based                                                     
   activities                  $122,128     $96,350         27%         37%
  International                                                            
   transaction-based                                                       
   activities                    64,762      59,090         10%         19%
  Smart card accounts            16,583      15,516          7%         16%
  Financial services              2,832       4,055        (30%)       (24%)
  Hardware, software and                                                   
   related technology sales      16,819      16,973         (1%)         7%
                           ------------------------                        
   Total consolidated                                                      
    revenue                    $223,124    $191,984         16%         26%
                           ------------------------                        
                                                                           
 Consolidated operating                                                    
  income (loss):                                                           
  SA transaction-based                                                     
   activities                    $8,333     $35,949        (77%)       (75%)
  International                                                            
   transaction-based                                                       
   activities                        31         925        (97%)       (96%)
                           ------------------------------------------------
   Operating income                                                        
    excluding amortization        6,499       7,355        (12%)        (4%)
   Amortization of                                                         
    intangible assets            (6,468)     (6,430)         1%          9%
                           ------------------------------------------------
  Smart card accounts             4,727       7,052        (33%)       (28%)
  Financial services              2,145       2,437        (12%)        (5%)
  Hardware, software and                                                   
   related technology sales       2,779       2,846         (2%)         6%
  Corporate/ Eliminations        (3,718)      1,865       (299%)      (316%)
                           ------------------------                        
   Total operating income        14,297     $51,074        (72%)       (70%)
                           ------------------------                        
                                                                           
 Operating income margin (%)                                               
  SA transaction-based                                                     
   activities                        7%         37%                        
  International                                                            
   transaction-based                                                       
   activities                        0%          2%                        
  International                                                            
   transaction-based                                                       
   activities excluding                                                    
   amortization                     10%         12%                        
  Smart card accounts               29%         45%                        
  Financial services                76%         60%                        
  Hardware, software and                                                   
   related technology sales         17%         17%                        
  Overall operating margin           6%         27%                        
                                                                           
(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 2013 also prevailed during the first half of fiscal 2012.          

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, 2012 and 2011

                                            EPS,                        EPS,
                           Net income     basic        Net income     basic
                             (USD'000)     (USD)         (ZAR'000)     (ZAR)
                   --------------------------------------------------------
                        2012     2011 2012 2011     2012     2011 2012 2011
                   --------------------------------------------------------
                                                                           
GAAP                   2,629   25,094 0.06 0.56   22,979  205,148 0.50 4.57
                                                                           
 Intangible asset                                                          
  amortization, net    3,640    3,656             31,817   29,893          
 Stock-based                                                               
  compensation                                                             
  charge               1,117      543              9,763    4,439          
 Facility fees for                                                         
  KSNET debt              76      110                664      899          
 DOJ and SEC                                                               
  investigations-                                                          
  related expenses       561        -              4,903        -          
 Acquisition-                                                              
  related costs           28        -                245        -          
 Change in tax law         -  (20,031)                 - (163,760)         
 Create FTC                                                                
  valuation                                                                
  allowance                -    8,232                  -   67,298          
 Loss on sale of                                                           
  10% of Smart Life        -       73                  -      597          
                   ------------------          ------------------          
  Fundamental          8,051   17,677 0.18 0.39   70,371  144,514 1.55 3.22
                   ------------------          ------------------          
                   ------------------          ------------------          


Six months ended December 31, 2012 and 2011

                                            EPS,                        EPS,
                           Net income     basic        Net income     basic
                             (USD'000)     (USD)         (ZAR'000)     (ZAR)
                   --------------------------------------------------------
                        2012     2011 2012 2011     2012     2011 2012 2011
                   --------------------------------------------------------
                                                                           
GAAP                   9,373   44,862 0.21 1.00   79,268  350,808 1.74 7.80
                                                                           
 Intangible asset                                                          
  amortization, net    7,155    7,196             60,518   56,268          
 Stock-based                                                               
  compensation                                                             
  charge               2,233    1,040             18,885    8,132          
 Facility fees for                                                         
  KSNET debt             164      211              1,387    1,650          
 DOJ and SEC                                                               
  investigations-                                                          
  related expenses       561        -              4,744        -          
 Acquisition-                                                              
  related costs           73        -                617        -          
 Change in tax law         -  (18,315)                 - (150,373)         
 Create FTC                                                                
  valuation                                                                
  allowance                -    8,232                  -   67,588          
 Profit on                                                                 
  liquidation of                                                           
  subsidiary               -   (3,994)                 -  (31,232)         
 Loss on sale of                                                           
  10% of Smart Life        -       77                  -      602          
                   ------------------          ------------------          
  Fundamental         19,559   39,309 0.43 0.87  165,419  303,443 3.63 6.74
                   ------------------          ------------------          
                   ------------------          ------------------          

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, 2012 and 2011


                                                          2012        2011
                                                  ------------------------
                                                                          
Net income (USD'000)                                     2,629      25,094
Adjustments:                                                              
 Loss on sale of 10% of Smart Life                           -          73
 Profit on sale of property, plant and equipment           (86)        (26)
 Tax effects on above                                       24           7
                                                                          
                                                  ------------------------
Net income used to calculate headline earnings                            
 (USD'000)                                               2,567      25,148
                                                  ------------------------
                                                  ------------------------
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share basic earnings and                        
 headline earnings per share basic earnings ('000)      45,545      44,935
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share diluted earnings                          
 and headline earnings per share diluted earnings                         
 ('000)                                                 45,567      44,967
                                                                          
Headline earnings per share:                                              
 Basic, in USD                                            0.06        0.56
 Diluted, in USD                                          0.06        0.56


Six months ended December 31, 2012 and 2011

                                                          2012        2011
                                                  ------------------------
                                                                          
Net income (USD'000)                                     9,373      44,862
Adjustments:                                                              
 Profit on liquidation of SmartSwitch Nigeria                -      (3,994)
 Loss on sale of 10% of Smart Life                           -          77
 Profit on sale of property, plant and equipment           (86)        (34)
 Tax effects on above                                       24          10
                                                                          
                                                  ------------------------
Net income used to calculate headline earnings                            
 (USD'000)                                               9,311      40,921
                                                  ------------------------
                                                  ------------------------
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share basic earnings and                        
 headline earnings per share basic earnings ('000)      45,530      44,995
                                                                          
Weighted average number of shares used to                                 
 calculate net income per share diluted earnings                          
 and headline earnings per share diluted earnings                         
 ('000)                                                 45,578      45,026
                                                                          
Headline earnings per share:                                              
 Basic, in USD                                            0.20        0.91
 Diluted, in USD                                          0.20        0.91

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There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how these devices generate enough data to learn our behaviors and simplify/improve our lives. What if we could connect everything to everything? I'm not only talking about connecting things to things but also systems, cloud services, and people. Add in a little machine learning and artificial intelligence and now we have something interesting...
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