UEPS Net 1 Ueps Technologies Inc

JOHANNESBURG, South Africa, Feb. 7 /PRNewswire-FirstCall/ -- Net 1 UEPS Technologies, Inc. ("Net1" or the "Company") (NASDAQ:UEPS) today announced results for the second quarter of fiscal 2007. Results Three months ended December 31, 2006 and 2005 GAAP and GAAP Fundamental GAAP Fundamental Fundamental Variance Variance Q2 2007 Q2 2007 (1) Q2 2006 % % Net income (US$'000) 12,823 15,393 13,932 (8)% 10 % Earnings per share, basic (US cents) 22.5 27.0 24.6 (9)% 10 % Revenue (US$'000) 49,571 49,571 47,429 5 % 5 % (1) -- Fundamental net income and earnings per share is GAAP net income and earnings per share excluding the effects related to the amortization of acquisition-related intangible assets, net of deferred taxes, non-tax deductible expenses related to the transaction that the Company ultimately decided not to pursue discussed below and stock-based compensation charges) Since the Company's reporting currency is the U.S. dollar ("USD") but its functional currency is the South African rand ("ZAR"), and due to the significant impact of currency fluctuations between the USD and the ZAR on the Company's results of operations, the Company also analyzes its results of operations in ZAR to assist investors in understanding the changes in the underlying trends of its business. During the three and six months ended December 31, 2006, the ZAR was significantly weaker against the USD than during the same periods in the prior year. The impact of these changes on results of operations is shown under the column "Change" in the tables of key metrics included at the end of this press release. In addition, results for the three and six months ended December 31, 2005, were favourably impacted by hardware sales to Nedbank Limited of $3.4 million (ZAR 22.6 million) and $5.6 million (ZAR 36.5 million), respectively. GAAP and GAAP Fundamental GAAP Fundamental Fundamental Variance Variance Q2 2007 Q2 2007 Q2 2006 % % Net income (ZAR'000) 93,852 112,663 91,649 2 % 23 % Earnings per share, basic (ZAR cents) 164.9 197.9 161.8 2 % 22 % Revenue (ZAR'000) 362,800 362,800 312,000 16 % 16 % Six months ended December 31, 2006 and 2005 GAAP and GAAP Fundamental GAAP Fundamental Fundamental Variance Variance YTD 2007 YTD 2007 YTD 2006 % % Net income (US$'000) 27,895 31,388 27,111 3 % 16 % Earnings per share, basic (US cents) 49.0 55.1 48.1 2 % 15 % Revenue (US$'000) 102,497 102,497 93,316 10 % 10 % GAAP and GAAP Fundamental GAAP Fundamental Fundamental Variance Variance YTD 2007 YTD 2007 YTD 2006 % % Net income (ZAR'000) 202,655 228,013 177,313 14 % 29 % Earnings per share, basic (ZAR cents) 356.0 400.5 314.6 13 % 27 % Revenue (ZAR'000) 744,600 744,600 610,300 22 % 22 % Use of Non-GAAP measures On July 3, 2006, the Company acquired Prism Holdings Limited ("Prism") and has combined its results with those of the Company. Effective October 1, 2006, Prism acquired the remaining 25.1% of EasyPay (Pty) Ltd ("EasyPay"). Under United States generally accepted accounting principles ("GAAP"), the Company is required to fair value all intangible assets on the date of acquisition and amortize these intangible assets over their expected useful lives. In addition, under GAAP, the Company is required to measure the fair value of options granted to Prism employees and other employees and recognize a stock- based compensation charge over the requisite service period. The Company's results for the three and six months ended December 31, 2006 also include expenses relating to a potential acquisition that the Company ultimately determined not to pursue. The Company's net income and earnings per common share and linked unit for the three and six months ended December 31, 2006 includes the expenses related to this potential acquisition, amortization of Prism and EasyPay intangibles acquired as well as the stock-based compensation charge related to options granted to Prism employees and other employees. Attachment C presents a reconciliation between GAAP net income and earnings per common share and linked unit and measures of fundamental net income and fundamental earnings per common share and linked unit. Management believes that these adjustments to net income and earnings per common share and linked unit enhance the Company's evaluation of its performance. Therefore, the Company excludes these items from GAAP net income and earnings per common share and linked unit in calculating fundamental net income and earnings per common share and linked unit. Financial results excluding Prism The Company's consolidated financial results excluding Prism's consolidated financial results are attached as Attachment B. Second Quarter Highlights -- $185.2 million in transactions were processed through the Company's merchant acquiring system in the second quarter of fiscal 2007, compared to $118.4 million in the second quarter of fiscal 2006. During the three months ended December 31, 2006, 2,788,529 grants were paid through the Company's terminal base, compared to 1,496,384 during the three months ended December 31, 2005; -- 4,145 terminals were in use at 2,443 participating UEPS retail locations as of December 31, 2006, compared with 3,929 terminals in use at 2,366 locations as of December 31, 2005. These numbers were comparable to June 30, 2006. The number of transactions processed per terminal increased from 379 during the three months ended December 31, 2005, to 671 during the three months ended December 31, 2006; -- UEPS transaction-based activities effected 11.3 million payments during the second quarter of fiscal 2007, a 9% increase over the number of payments effected during the second quarter of fiscal 2006; -- A total of 3,790,813 UEPS smart card-based accounts were active at December 31, 2006, compared to 3,497,664 active accounts at December 31, 2005; -- Prism acquired the remaining 25.1% of the issued and outstanding ordinary share capital of EasyPay effective October 1, 2006 for approximately $8.8 million; and -- EasyPay processed 117,626,419 transactions and generated an average fee per transaction of $0.03. Comments and Outlook "I am very pleased with our performance for the second quarter and our recent successes which resulted in the finalization of our banking license, the signing of VTU contracts in Colombia and Vietnam and the 15 month extension of all our pension and welfare contracts," said Dr. Serge Belamant, Chairman and CEO of Net1. "I am especially pleased with the momentum we have gained in our international development with national tender submissions in both Nigeria and Ghana and new initiatives in Iraq and Indonesia. The need for our merchant acquiring system continues to be apparent with more than 20% growth in the number of beneficiaries serviced through this system since the November pay cycle. The refocusing of our Prism activities is starting to show potential in both the SIM and the bill payments markets. I therefore see no reason at this stage to review our earnings guidance for 2007," he concluded. Conference call Net1 will host a conference call to review second quarter results on February 8, 2007 at 9:30 a.m EST. To participate in the call, dial 1-800-860-2442 (U.S. only), 1-866-519-5086 (Canada only), 0-800-917-7042 (U.K. only) or 0-800-200-648 (South Africa only) five minutes prior to the start of the call. The passcode is "Net1". The call will also be webcast on the Net1 homepage, http://www.net1ueps.com/. Please click on the webcast link at least 10 minutes prior to the call. A replay of the call may be accessed through the Net1 website through March 1, 2007. As disclosed in previous press announcements we plan to provide additional information on SmartSwitch Nigeria Limited and the banking license announcement and our wage strategy. About Net1 (http://www.net1ueps.com/) Net1 provides its universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies. The Company believes that it is the first company worldwide to implement a system that can enable the estimated four billion people who generally have limited or no access to a bank account to enter affordably into electronic transactions with each other, government agencies, employers, merchants and other financial service providers. To accomplish this, the Company has developed and deployed the UEPS. This system uses secure smart cards that operate in real-time but offline, unlike traditional payment systems offered by major banking institutions that require immediate access through a communications network to a centralized computer. This offline capability means that users of Net1's system can enter into transactions at any time with other cardholders in even the most remote areas so long as a portable offline smart card reader is available. In addition to payments and purchases, Net1's system can be used for banking, health care management, international money transfers, voting and identification. The Company also focuses on the development and provision of secure transaction technology, solutions and services. The Company's core competencies around secure online transaction processing, cryptography and integrated circuit card (chip/smart card) technologies are principally applied to electronic commerce transactions in the telecommunications, banking, retail, petroleum and utilities market sectors. These technologies form the cornerstones of the "trusted transactions" environment of Prism, a South African based subsidiary of the Company, and provide the Company with the building blocks for developing secure end-to-end payment solutions. This announcement contains forward-looking statements pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements, such as implementation of the Company's Prism strategy, product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, development difficulties, foreign currency risks, costs of capital, the ability to consummate and integrate acquisitions, and other risks detailed in the Company's SEC filings. The Company undertakes no obligation to revise any of these statements to reflect future circumstances or the occurrence of unanticipated events. NET 1 UEPS TECHNOLOGIES, INC. Unaudited Condensed Consolidated Statements of Operations Three months ended Six months ended December 31, December 31, 2006 2005 2006 2005 (In thousands, (In thousands, except per share data) except per share data) REVENUE $ 49,571 $ 47,429 $ 102,497 $ 93,316 EXPENSE COST OF GOODS SOLD, IT PROCESSING, SERVICING AND SUPPORT 10,926 12,908 24,245 24,727 GENERAL AND ADMINISTRATION 15,690 11,956 29,175 22,612 DEPRECIATION AND AMORTIZATION 2,813 1,365 5,760 2,903 COSTS RELATED TO PUBLIC OFFERING AND NASDAQ LISTING - 27 - 1,504 OPERATING INCOME 20,142 21,173 43,317 41,570 INTEREST INCOME, net 1,186 1,343 2,058 2,246 INCOME BEFORE INCOME TAXES 21,328 22,516 45,375 43,816 INCOME TAX EXPENSE 8,690 8,577 17,530 16,988 NET INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND EARNINGS FROM EQUITY ACCOUNTED INVESTMENTS 12,638 13,939 27,845 26,828 MINORITY INTEREST - - 205 - EARNINGS FROM EQUITY ACCOUNTED INVESTMENTS 185 (7) 255 283 NET INCOME $ 12,823 $ 13,932 $ 27,895 $ 27,111 Net income per share Basic earnings, in cents - common stock and linked units 22.5 24.6 49.0 48.1 Diluted earnings, in cents - common stock and linked units 22.3 24.2 48.5 47.4 NET 1 UEPS TECHNOLOGIES, INC. Condensed Consolidated Balance Sheets Unaudited A December 31, June 30, 2006 2006 (In thousands, except share data) ASSETS CURRENT ASSETS Cash and cash equivalents $ 127,902 $ 189,735 Pre-funded social welfare grants receivable 34,110 17,223 Accounts receivable, net of allowances of - December: $542; June: $159 15,927 21,219 Finance loans receivable, net of allowances of - December: $4,232; June: $3,448 7,596 6,713 Deferred expenditure on smart cards 470 656 Inventory 5,814 1,935 Deferred income taxes 8,335 3,237 Total current assets 200,154 240,718 LONG TERM RECEIVABLE 967 946 PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF - December: $25,754; June: $16,543 8,135 3,757 EQUITY ACCOUNTED INVESTMENTS 5,412 4,986 GOODWILL 86,134 13,923 INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF - December: $10,350; June: $6,549 35,124 5,649 TOTAL ASSETS 335,926 269,979 LIABILITIES CURRENT LIABILITIES Bank overdraft - 20 Accounts payable 3,076 2,073 Other payables 42,411 28,575 Income taxes payable 10,654 12,455 Total current liabilities 56,141 43,123 DEFFERRED INCOME TAXES 32,771 17,846 INTEREST BEARING LIABILITIES 3,586 - TOTAL LIABILITIES 92,498 60,969 SHAREHOLDERS' EQUITY COMMON STOCK Authorized: 83,333,333 with $0.001 par value; Issued and outstanding shares - December: 50,483,228; June: 49,596,879 51 50 SPECIAL CONVERTIBLE PREFERRED STOCK Authorized: 50,000,000 with $0.001 par value; Issued and outstanding shares - December: 6,445,416; June: 7,315,099 6 7 B CLASS PREFERENCE SHARES Authorized: 330,000,000 with $0.001 par value; Issued and outstanding shares (net of shares held by the Company) - December: 47,492,563; June: 53,900,752 8 9 ADDITIONAL PAID-IN-CAPITAL 106,339 105,792 TREASURY SHARES ISSUED: December: 147,973; June: 147,973 (3,958) (3,958) ACCUMULATED OTHER COMPREHENSIVE INCOME (3,786) (9,763) RETAINED EARNINGS 144,768 116,873 TOTAL SHAREHOLDERS' EQUITY 243,428 209,010 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 335,926 $ 269,979 (A) -- amounts 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, 2006 2005 2006 2005 (In thousands) (In thousands) Cash flows from operating activities Net income $ 12,823 $ 13,932 $ 27,895 $ 27,111 Depreciation and amortization 2,813 1,365 5,760 2,903 Earnings from equity accounted investments (185) 7 (255) (283) Fair value adjustment related to financial liabilities 153 3 153 6 Fair value of FAS 133 derivative adjustments 75 (94) 77 53 (Profit) Loss on disposal of property, plant and equipment (33) 2 (67) 9 Minority interest - - 205 - Stock compensation charge 524 - 496 - Decrease(Increase) in accounts receivable, pre- funded social welfare grants receivable and finance loans receivable 6,477 23,847 (2,552) 16,194 Decrease in deferred expenditure on smart cards 151 641 194 1,660 Increase in inventory (174) (1,333) (2,753) (1,270) Decrease in accounts payable and other payables (3,655) (6,363) (10,946) (3,237) Decrease in taxes payable (512) (1,599) (3,378) (5,186) (Decrease) Increase in deferred taxes (1,947) 2,593 153 4,264 Net cash provided by operating activities 16,510 33,001 14,982 42,224 Cash flows from investing activities Capital expenditures (860) (346) (1,703) (888) Proceeds from disposal of property, plant and equipment 28 80 146 84 Acquisition of Prism Holdings Limited, net of cash acquired (224) - (82,330) - Acquisition of equity interest in and advance of loans to equity accounted investment - - - (1,851) Net cash used in investing activities (1,056) (266) (83,887) (2,655) Cash flows from financing activities Proceeds from issue of share capital, net of share issue expenses - - 50 32,219 Proceeds from bank overdrafts 43,410 - 61,583 - Repayment of bank overdraft (45,216) - (62,272) - Proceeds from interest bearing liabilities 3,513 - 3,513 - Net cash provided by financing activities 1,707 - 2,874 32,219 Effect of exchange rate changes on cash 8,608 (1,034) 4,198 4,365 Net increase (decrease) in cash and cash equivalents 25,769 31,701 (61,833) 76,153 Cash and cash equivalents - beginning of period 102,133 152,201 189,735 107,749 Cash and cash equivalents - end of period $127,902 $183,902 $127,902 $183,902 Net 1 UEPS Technologies, Inc. Attachment A Key metrics and statistics at and for the three months ended December 31, 2006 and 2005: Three months ended December 31, 2006 and 2005 Three months Year Three months ended ended ended December 31, Change Sep 30, June 30, Constant 2006 2005 Exchange 2006 2006 US$ US$ Actual Rate(1) US$ US$ Key statement of operations data, in '000, except EPS Revenue $49,571 $47,429 5 % 16 % $52,926 $196,098 Operating income 20,142 21,173 (5)% 6 % 23,175 89,613 Income tax expense 8,690 8,577 1 % 13 % 8,840 36,653 Net income $12,823 $13,932 (8)% 2 % $15,072 $59,232 Earnings per share, Basic (cents) 22.5 24.6 (9)% 2 % 26.5 105.8 Diluted (cents) 22.3 24.2 (8)% 3 % 26.2 103.3 Fundamental earnings per share, Basic (cents) 27.0 24.6 10 % 22 % 28.1 105.8 Key segmental data, in '000, except margins Revenue: Transaction-based activities $29,973 $27,255 10 % 22 % $32,237 $117,186 Smart card accounts 8,487 8,744 (3)% 8 % 8,580 36,220 Financial services 2,793 3,982 (30)% (22)% 2,985 16,129 Hardware, software and related technology sales 8,318 7,448 12 % 24 % 9,124 26,563 Total consolidated revenue $49,571 $47,429 5 % 16 % $52,926 $196,098 Consolidated operating income (loss): Transaction-based activities $17,502 $13,517 29 % 44 % $18,428 60,653 Smart card accounts 3,858 3,974 (3)% 8 % 3,900 16,464 Financial services 768 1,828 (58)% (53)% 1,060 6,929 Hardware, software and related technology sales 581 3,874 (85)% (83)% 1,049 16,721 Corporate/ Eliminations (2,567) (2,020) 27 % 41 % (1,262) (11,154) Total operating income $20,142 $21,173 (5)% 6 % $23,175 $89,613 Operating income margin (%) Transaction-based activities 58 % 50 % 57 % 52 % Smart card accounts 45 % 45 % 45 % 45 % Financial services 27 % 46 % 36 % 43 % Hardware, software and related technology sales 7 % 52 % 11 % 63 % Overall operating margin 41 % 45 % 44 % 46 % Dec 31, Jun 30, 2006 2006 Key balance sheet data, in '000 Cash and cash equivalents $127,902 $189,735 (33)% Total current assets 200,154 240,718 (17)% Total assets 335,926 269,979 24 % Total current liabilities 56,141 43,123 30 % Total shareholders' equity $243,428 $209,010 16 % (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 2007 also prevailed during the second quarter of fiscal 2006. Three months ended December 31, 2006 and 2005 (continued) Three months Three months ended ended Year ended December 31, Change Sep 30, June 30, 2006 2005 2006 2006 Additional information: Transaction-based activities: Total number of grants paid: KwaZulu-Natal 5,022,500 4,444,129 13 % 4,915,405 18,117,676 Limpopo 2,905,861 2,753,537 6 % 2,892,620 11,154,040 North West 827,058 787,009 5 % 820,955 3,181,242 Northern Cape 416,702 396,750 5 % 413,243 1,585,846 Eastern Cape 2,144,919 2,034,904 5 % 2,127,992 8,204,977 11,317,040 10,416,329 9 % 11,170,215 42,243,781 Average revenue ZAR ZAR ZAR ZAR per grant paid: KwaZulu-Natal 20.18 20.67 (2)% 20.35 20.14 Limpopo 15.98 15.59 3 % 16.00 15.59 North West 19.71 17.21 15 % 17.94 18.10 Northern Cape 18.67 18.89 (1)% 18.69 19.30 Eastern Cape 11.81 12.07 (2)% 11.86 12.04 UEPS merchant acquiring system: Terminals installed at period end 4,145 3,929 5 % 4,169 4,038 Number of participating retail locations at period end 2,443 2,366 3 % 2,468 2,381 Value of transactions processed through POS devices during the quarter (in $ '000) 185,190 118,396 56 % 202,299 189,649 Value of transactions processed through POS devices during the completed pay cycles for the quarter (in $ '000) 188,074 127,765 47 % 189,139 187,769 Average number of grants processed per terminal during the quarter 671 379 77 % 725 643 Average number of grants processed per terminal during the completed pay cycles for the quarter 683 470 45 % 678 639 EasyPay transaction fees: Number of transactions processed 117,626,419 100,831,659 Average fee per transaction (in ZAR) 0.21 0.21 Three months ended December 31, 2006 and 2005 (continued) Three Year Three months months ended ended Change ended June December 31, Sep 30, 30, 2006 2005 2006 2006 Smart card accounts: Total number of smart card accounts 3,790,813 3,497,664 8 % 3,738,975 3,653,696 Hardware, software and related technology sales: Ad hoc significant hardware sales (US$ '000) Nedbank POS's, pin pads, smart cards and other hardware - 3,400 nm - 13,300 Smartswitch Namibia hardware and software (before consolidation adjustments) - 1,500 nm - 3,900 Smartswitch Botswana hardware and software (before consolidation adjustments) - - nm 2,000 - Financial services: (US$ '000) Traditional microlending: Finance loans receivable - gross 7,399 8,318 (11)% 6,650 7,169 Allowance for doubtful finance loans receivable (4,232) (3,672) 15 % 3,551 (3,448) Finance loans receivable - net 3,167 4,646 (32)% 3,099 3,721 UEPS-based lending: Finance loans receivable -net and gross (i.e., no provisions) 4,429 5,732 (23)% 2,899 2,992 Earnings (Loss) from equity accounted investments: (US$ '000) SmartSwitch Namibia: Equity owned 50 % 50 % 50 % 50 % Beginning of period (659) - (516) - Equity accounted (loss)(1) (38) - (206) (586) Foreign currency adjustment (67) - 63 70 End of period of period (764) - (659) (516) SmartSwitch Botswana: Equity owned 50 % 50 % 50 % 50 % Beginning of period (495) - - - Equity accounted (loss) (1) (35) - (520) - Foreign currency adjustment (46) - 25 - End of period of period (576) - (495) - nm - Statistic not meaningful (1) - includes the elimination of unrealized net income Key metrics and statistics at and for the six months ended December 31, 2006 and 2005: Six months ended December 31, 2006 and 2005 Year Six months ended ended June December 31, Change 30, Constant 2006 2005 Exchange 2006 US$ US$ Actual Rate(1) US$ Key statement of operations data, in '000, except EPS Revenue $102,497 $93,316 10 % 22 % $196,098 Operating income 43,317 41,570 4 % 16 % 89,613 Income tax expense 17,530 16,988 3 % 15 % 36,653 Net income $27,895 $27,111 3 % 14 % $59,232 Earnings per share, Basic (cents) 49.0 48.1 2 % 13 % 105.8 Diluted (cents) 48.5 47.4 2 % 14 % 103.3 Fundamental earnings per share, Basic (cents) 55.1 48.1 15 % 27 % 105.8 Key segmental data, in '000, except margins Revenue: Transaction-based activities $62,210 $55,073 13 % 25 % $117,186 Smart card accounts 17,067 17,296 (1)% 10 % 36,220 Financial services 5,778 8,256 (30)% -22 % 16,129 Hardware, software and related technology sales 17,442 12,691 37 % 53 % 26,563 Total consolidated revenue $102, 497 $93,316 10 % 22 % $196,098 Consolidated operating income (loss): Transaction-based activities $35,930 $27,649 30 % 44 % 60,653 Smart card accounts 7,758 7,861 (1)% 10 % 16,464 Financial services 1,828 3,672 (50)% (45)% 6,929 Hardware, software and related technology sales 1,630 7,941 (79)% (77)% 16,721 Corporate/ Eliminations (3,829) (5,553) (31)% (23)% (11,154) Total operating income $43,317 $41,570 4 % 16 % $89,613 Operating income margin (%) Transaction-based activities 58 % 50 % 52 % Smart card accounts 45 % 45 % 45 % Financial services 32 % 44 % 43 % Hardware, software and related technology sales 9 % 63 % 63 % Overall operating margin 42 % 45 % 46 % Dec 31, Jun 30, 2006 2006 Key balance sheet data, in '000 Cash and cash equivalents $127,902 $189,735 (33) % Total current assets 200,154 240,718 (17) % Total assets 335,926 269,979 24 % Total current liabilities 56,141 43,123 30 % Total shareholders' equity $243,428 $209,010 16 % (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 2007 also prevailed during the first half of fiscal 2006. Six months ended December 31, 2006 and 2005 (continued) Six months ended Change Year ended December 31, June 30, 2006 2005 2006 Additional information: Transaction-based activities: Total number of grants paid: KwaZulu-Natal 9,937,905 8,752,494 14 % 18,117,676 Limpopo 5,798,481 5,447,705 6 % 11,154,040 North West 1,648,013 1,563,972 5 % 3,181,242 Northern Cape 829,945 786,325 6 % 1,585,846 Eastern Cape 4,272,911 4,005,075 7 % 8,204,977 22,487,255 20,555,571 9 % 42,243,781 Average revenue per grant paid: ZAR ZAR ZAR KwaZulu-Natal 20.29 19.95 2 % 20.14 Limpopo 15.99 15.46 3 % 15.59 North West 18.85 16.9 12 % 18.10 Northern Cape 18.73 18.96 (1)% 19.30 Eastern Cape 11.83 12.13 (2)% 12.04 UEPS merchant acquiring system: Terminals installed 4,038 at period end 4,145 3,929 5 % Number of participating retail locations at period end 2,443 2,366 3 % 2,381 Value of transactions processed through POS devices during the quarter (in $ '000) 185,190 118,396 56 % 189,649 Value of transactions processed through POS devices during the completed pay cycles for the quarter (in $ '000) 188,074 127,765 47 % 187,769 Average number of grants processed per terminal during the quarter 671 379 77 % 643 Average number of grants processed per terminal during the completed pay cycles for the quarter 683 470 45 % 639 EasyPay transaction fees: Number of transactions processed 218,458,078 Average fee per transaction (in ZAR) 0.21 Six months ended December 31, 2006 and 2005 (continued) Six months ended Change Year ended December 31, June 30, 2006 2005 2006 Smart card accounts: Total number of smart card accounts 3,790,813 3,497,664 8 % 3,653,696 Hardware, software and related technology sales: Ad hoc significant hardware sales (US$ '000) Nedbank POS's, pin pads, smart cards and other hardware - 5,600 nm 13,300 Smartswitch Namibia hardware and software (before consolidation adjustments) - 2,700 nm 3,900 Smartswitch Botswana hardware and software (before consolidation adjustments) 2,000 - nm - Financial services: (US$ '000) Traditional microlending: Finance loans receivable - gross 7,399 8,318 (11)% 7,169 Allowance for doubtful finance loans receivable (4,232) (3,672) 15 % (3,448) Finance loans receivable - net 3,167 4,646 (32)% 3,721 UEPS-based lending: Finance loans receivable -net and gross (i.e., no provisions) 4,429 5,732 (23)% 2,992 Earnings (Loss) from equity accounted investments: (US$ '000) SmartSwitch Namibia: Equity owned 50 % 50 % 50 % Beginning of period (516) - - Equity accounted (loss)(1) (244) - (586) Foreign currency adjustment (4) - 70 End of period of period (764) - (516) SmartSwitch Botswana: Equity owned 50 % 50 % 50 % Beginning of period - - - Equity accounted - - (loss) (1) (555) - - Foreign currency adjustment (21) - - End of period of - - period (576) - - nm - Statistic not meaningful (1) - includes the elimination of unrealized net income Net 1 UEPS Technologies, Inc. Attachment B Key metrics and statistics for the three months ended December 31, 2006 and 2005 excluding the results of Prism Holdings Limited: Three months ended December 31, 2006 and 2005 Three Year Three months months ended ended ended June December 31, Change Sep 30, 30, Constant 2006(1) 2005 Exchange 2006 2006 US$ US$ Actual Rate(2) US$ US$ Key statement of operations data, in '000, except EPS Revenue $40,435 $45,887 (12)% (2)% $45,126 $196,098 Operating income 19,431 20,397 (5)% 6 % 24,017 89,613 Net income(3) $12,802 $13,179 (3)% 8 % $16,295 $59,232 Earnings per share, Basic(3) 22.50 24.6 (9)% 2 % 28.6 105.8 Key segmental data, in'000, except margins Revenue: Transaction-based activities $26,506 $27,818 (5)% 6 % $29,214 $117,186 Smart card accounts 8,487 8,552 (1)% 10 % 8,580 36,220 Financial services 2,793 4,274 (35)% (27)% 2,985 16,129 Hardware, software and related technology sales 2,649 5,243 (49)% (44)% 4,347 26,563 Total consolidated revenue $40,435 $45,887 (12)% (2)% $45,126 $196,098 Consolidated operating income (loss): Transaction-based activities $16,153 $14,132 14 % 27 % $17,629 60,653 Smart card accounts 3,858 3,887 (1)% 10 % 3,901 16,464 Financial services 768 1,844 (58)% (54)% 1,060 6,929 Hardware, software and related technology sales 902 4,067 (78)% (75)% 2,387 16,721 Corporate/ Eliminations (2,250) (3,533) (36)% (29)% (960) (11,154) Total operating income $19,431 $20,397 (5)% 6 %$24,017 $89,613 Operating income margin (%) Transaction-based activities 61 % 51 % 60 % 52 % Smart card accounts 45 % 45 % 45 % 45 % Financial services 27 % 43 % 36 % 43 % Hardware, software and related technology sales 34 % 78 % 55 % 63 % Overall operating margin 48 % 44 % 53 % 46 % (1) -- Amounts and percentages in this column exclude the consolidated results of Prism Holdings Limited. (2) -- 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 2007 also prevailed during the second quarter of fiscal 2006. Three months ended December 31, 2006 and 2005 (continued) (3) -- Net income and earnings per share - basic for the three months ended December 31, 2006 are non-GAAP measures as they exclude the results of Prism for the three months ended December 31, 2006, the expense related to the amortization of intangible assets acquired in the Prism acquisition and the stock-based compensation charge related to options granted to Prism employees. Accordingly, Prism's net income of $1,183, or 2.0 cents is required to be added to the non-GAAP net income and earnings per shares - basic measures and the amortization expense of $858, or 1.5 cents, and the stock-based compensation charge of $304, or 0.5 cents, must be subtracted from the non-GAAP net income and earnings per share - basic measures provided in order to arrive at GAAP net income of $12,823, or 22.5 cents. The Company believes it meaningful to present this information until the Prism integration is complete and the Company's shareholders are able to better understand the implications of the Prism acquisition on the Company's results. Key metrics and statistics for the six months ended December 31, 2006 and 2005 excluding the results of Prism Holdings Limited: Six months ended December 31, 2006 and 2005 Six months ended Year ended December 31, Change June 30, Constant 2006(1) 2005 Exchange 2006 US$ US$ Actual Rate(2) US$ Key statement of operations data, in '000, except EPS Revenue $85,561 $93,316 (8)% 2 % $196,098 Operating income 43,570 41,570 5 % 16 % 89,613 Net income(3) $29,219 $27,111 8 % 20 % $59,232 Earnings per share, Basic(3) 51.3 48.1 7 % 18 % 105.8 Key segmental data, in'000, except margins Revenue: Transaction-based activities $55,72 $55,073 1 % 12 % $117,186 Smart card accounts 17,067 17,296 (1)% 10 % 36,220 Financial services 5,778 8,256 (30)% (22)% 16,129 Hardware, software and related technology sales 6,996 12,691 (45)% (39)% 26,563 Total consolidated revenue $85,561 $93,316 (8)% 2 % $196,098 Consolidated operating income (loss): Transaction-based activities $33,782 $27,649 22 % 36 % 60,653 Smart card accounts 7,759 7,861 (1)% 10 % 16,464 Financial services 1,828 3,672 (50)% (45)% 6,929 Hardware, software and related technology sales 3,289 7,941 (59)% (54)% 16,721 Corporate/ Eliminations (3,088) (5,553) (44)% (38)% (11,154) Total operating income $43,570 $41,570 5% 16% $89,613 Operating income margin (%) Transaction-based activities 61 % 50 % 52 % Smart card accounts 45 % 45 % 45 % Financial services 32 % 44 % 43 % Hardware, software and related technology sales 47 % 63 % 63 % Overall operating margin 51 % 45 % 46 % (1) - Amounts and percentages in this column exclude the consolidated results of Prism Holdings Limited. (2) - 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 2007 also prevailed during the first half of fiscal 2006. Six months ended December 31, 2006 and 2005 (continued) (3) - Net income and earnings per share - basic for the six months ended December 31, 2006 are non-GAAP measures as they exclude the results of Prism for the six months ended December 31, 2006, the expense related to the amortization of intangible assets acquired in the Prism acquisition and the stock-based compensation charge related to options granted to Prism employees. Accordingly, Prism's net income of $761, or 1.3 cents is required to be added to the non-GAAP net income and earnings per shares - basic measures and the amortization expense of $1,659, or 2.9 cents, and the stock-based compensation charge of $426, or 0.7 cents, must be subtracted from the non-GAAP net income and earnings per share - basic measures provided in order to arrive at GAAP net income of $27,895, or 49.0 cents. The Company believes it meaningful to present this information until the Prism integration is complete and the Company's shareholders are able to better understand the implications of the Prism acquisition on the Company's results. Net 1 UEPS Technologies, Inc. Attachment C Reconciliation of GAAP results to fundamental results: Three months ended December 31, 2006 and 2005 Three months ended December 31, Expenses Amortization associated of Prism and Stock- with EasyPay based acquisition 2006 2006 intangible charge not Funda- 2005 GAAP assets(1) (2) pursued(3) mental GAAP Net income (US$'000) 12,823 858 524 1,188 15,393 13,932 Earnings per share, basic (US$ cents) 22.5 27.0 24.6 Net income (ZAR'000) 93,852 6,280 3,835 8,696 112,663 91,649 Earnings per share, basic (ZAR cents) 164.9 197.9 161.8 (1) Amortization of Prism and EasyPay Intangibles, net of deferred tax benefit: $'000 ZAR '000 Customer relationships 359 2,630 Software and unpatented technology 93 679 Trademarks 908 6,642 Deferred tax benefit (502) (3,671) 858 6,280 (2) Includes stock-based compensation charge related to options granted to employees of Prism and under the Net 1 UEPS Technologies, Inc. 2004 Stock Incentive Plan. (3) Represents expenses associated with a potential acquisition that Net1 ultimately decided not to pursue during the three months ended December 31, 2006. Six months ended December 31, 2006 and 2005 Six months ended December 31, Expenses Amortization associated of Prism and Stock- with EasyPay based acquisition 2006 2006 intangible charge not Funda- 2005 GAAP assets(1) (2) pursued(3) mental GAAP Net income (US$'000) 27,895 1,659 646 1,188 31,388 27,111 Earnings per share, basic (US$ cents) 49.0 55.1 48.1 Net income (ZAR'000) 202,654 12,044 4,690 8,625 228,013 177,313 Earnings per share, basic (ZAR cents) 356.0 400.5 314.6 (1) Amortization of Prism and EasyPay Intangibles, net of deferred tax benefit: $'000 ZAR '000 Customer relationships 658 4,780 Software and unpatented technology 178 1,294 Trademarks 1,792 13,018 Deferred tax benefit (969) (7,043) 1,659 12,049 (2) Includes stock-based compensation charge related to options granted to employees of Prism and under the Net 1 UEPS Technologies, Inc. 2004 Stock Incentive Plan. (3) Represents expenses associated with a potential acquisition that Net1 ultimately decided not to pursue during the three months ended December 31, 2006. DATASOURCE: Net 1 UEPS Technologies, Inc. CONTACT: William Espley, Investor Relations of Net 1 UEPS Technologies, Inc., +1-604-484-8750, Toll Free: +1-866-412-NET1 (6381) Web site: http://www.net1ueps.com/

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