Net 1 UEPS Technologies, Inc. Announces First Quarter Results for Fiscal 2006

Johannesburg, South Africa (November 3, 2005) – Net 1 UEPS Technologies, Inc. (“Net1” or the “Company”) (Nasdaq: UEPS) today announced results for the first quarter of fiscal 2006.

Results

The Company reported an increase in net income of 29% to $13.2 million for first quarter 2006, from $10.2 million for first quarter 2005. Earnings per common share and linked unit increased 27% to $0.238 for first quarter 2006, compared to $0.187 for first quarter 2005. Revenue increased 6% from $43.2 million for the first quarter of 2005 to $45.9 million for the first quarter of 2006.

First Quarter Highlights

• $118.6 million in transactions were processed through our merchant acquiring business in the first quarter of fiscal 2006, compared to $3.6 million in the first quarter of fiscal 2005 and $147.3 million during the entire fiscal 2005 year. During September 2005, 566,000 beneficiaries transacted at merchant locations, compared to 450,000 in June 2005 and only 17,000 a year ago, during September 2004;
• During the first quarter fiscal 2006, 724 POS terminals were installed at 423 retail locations, compared with 340 POS terminals installed at 265 retail locations during the first quarter of fiscal 2005;
• UEPS transaction-based activities effected 10.1 million payments during the first quarter of fiscal 2006, a 6.3% increase over the number of payments effected during the first quarter of fiscal 2005;
• A total of 3,398,516 UEPS smart card-based accounts were active at September 30, 2005, compared to 3,372,665 active accounts at September 30, 2004;
• In September, the Company made a 50% investment in equity and loans, totalling $1.9 million in SmartSwitch Namibia, a Namibian company. The Company expects to sell hardware and software to this company totalling approximately $4.6 million over the first three quarters of fiscal 2006;
• In September, the Company received an order to provide Nedbank Limited with an additional 7,280 POS terminals and 9,080 pin-pads. Delivery is expected to commence in the second quarter of fiscal 2006 and be completed in the third quarter of fiscal 2006;
• International initiatives are progressing according to our expectations;
• Paul Edwards and Florian P. Wendelstadt were appointed as two additional independent directors; and
• In August, we completed our public offering and listing on the Nasdaq National Market. In the offering, the selling shareholders sold 10,258,625 shares of the Company’s common stock at a public offering price of $22.00 per share and the underwriters exercised their over-allotment option which resulted in net proceeds to the Company of $31.5 million.

The impact of changes in the exchange rate between the U.S. dollar and the South Africa rand (“ZAR”) on results of operations is shown under the column "Change" in the table of key metrics included at the end of this press release. In addition, during the first quarter, the Company incurred approximately $1,477,000 in expenses related to the public offering and Nasdaq listing.

Comment and Outlook

Serge Belamant, Net1's Chairman and Chief Executive Officer, stated, “The first quarter of fiscal 2006 has set a solid foundation for the rest of the year. With our successful listing on Nasdaq complete, we can now focus on growing our current business and take full advantage of the new opportunities that we have been presented with. The signing of the Namibia contract during the quarter further expands our footprint within the African market place. Based on our results, we are well-positioned to achieve our previously announced earnings per share expectations for the full fiscal year of $0.93 to $0.98 per share, assuming an exchange rate of ZAR6.5: $1”

Conference call

Net1 will host a conference call to review first quarter results on November 4, 2005 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, 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 November 18, 2005.

About Net1 (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 card holders 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.

This announcement may contain 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 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.

Contact William Espley at Net1 Investor Relations at:
Telephone:	(604) 484-8750
Toll Free:	(866) 412-NET1 (6381)

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

		Three months ended
		September 30,
		2005		2004
		(In thousands, except share data)
REVENUE	$	45,887	$	43,223
EXPENSE
COST OF GOODS SOLD, IT PROCESSING, SERVICING AND SUPPORT		11,819		14,801
GENERAL AND ADMINISTRATION		10,656		10,276
DEPRECIATION AND AMORTIZATION		1,538		1,575
COSTS RELATED TO PUBLIC OFFERING AND NASDAQ LISTING		1,477		-
OPERATING INCOME		20,397		16,571
INTEREST INCOME, net		903		655
INCOME BEFORE INCOME TAXES		21,300		17,226
INCOME TAX EXPENSE		8,411		7,208
NET INCOME FROM CONTINUING OPERATIONS BEFORE EARNINGS FROM
EQUITY ACCOUNTED INVESTMENT		12,889		10,018
EARNINGS FROM EQUITY ACCOUNTED INVESTMENT		290		209
NET INCOME	$	13,179	$	10,227
Net income per share
Basic earnings, in cents – common stock and linked units		23.8		18.7
Diluted earnings, in cents – common stock and linked units		23.5		18.4

NET 1 UEPS TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets

		Unaudited		Audited
		September 30,		June 30,
		2005		2005
		(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	152,201	$	107,749
Pre-funded social welfare grants receivable		13,115		11,567
Accounts receivable		21,982		15,293
Finance loans receivable, net of allowances of – September: $4,053; June: $3,636		8,465		7,760
Deferred expenditure on smart cards		2,118		3,014
Inventory		1,987		1,927
Deferred income taxes		4,328		3,354
Total current assets		204,196		150,664
LONG TERM RECEIVABLE		1,100		969
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF – September: $22,520; June: $20,624		6,037		6,216
EQUITY ACCOUNTED INVESTMENTS		3,528		1,325
GOODWILL		15,078		14,636
INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF –
September: $5,666; June: $4,919		7,608		7,944
TOTAL ASSETS		237,547		181,754
LIABILITIES
CURRENT LIABILITIES
Accounts payable		24,610		20,315
Income taxes payable		11,052		14,038
Total current liabilities		35,662		34,353
DEFFERRED INCOME TAXES		13,357		10,399
TOTAL LIABILITIES		49,019		44,752
SHAREHOLDERS’ EQUITY
COMMON STOCK
Authorized: 83,333,333 with $0.001 par value;
Issued and outstanding shares - September: 41,429,199; June: 28,548,269		42		29
SPECIAL CONVERTIBLE PREFERRED STOCK
Authorized: 50,000,000 with $0.001 par value;
Issued and outstanding shares - September: 15,241,381; June: 26,733,521		15		27
B CLASS PREFERENCE SHARES
Authorized: 330,000,000 with $0.001 par value;
Issued and outstanding shares (net of shares held by the Company) - September:
112,304,927; June: 196,983,841		18		31
ADDITIONAL PAID-IN-CAPITAL		104,191		71,960
ACCUMULATED OTHER COMPREHENSIVE INCOME		13,442		7,314
RETAINED EARNINGS		70,820		57,641
TOTAL SHAREHOLDERS’ EQUITY		188,528		137,002
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	237,547	$	181,754

NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows

		Three months ended
		September 30,
		2005			2004
		(In thousands)
Cash flows from operating activities
Cash received from customers	$	38,229		$	28,627
Cash paid to suppliers and employees		(20,778	)		(22,785	)
Cash generated by operations		17,451			5,842
Interest received		2,815			3,584
Finance costs paid		(1,891	)		(2,933	)
Income taxes paid		(9,152	)		(6,181	)
Net cash provided by operating activities		9,223			312
Cash flows from investing activities
Capital expenditures		(542	)		(943	)
Proceeds from disposal of property, plant and equipment		4			16
Acquisition of equity interest in and advance of loans to equity accounted investment		(1,851	)		-
Net cash used in investing activities		(2,389	)		(927	)
Cash flows from financing activities
Proceeds from issue of share capital, net of share issue expenses		32,219			-
Repayment of bank overdrafts		-			(19	)
Net cash provided by (used in) financing activities		32,219			(19	)
Effect of exchange rate changes on cash		5,399			(2,046	)
Net increase (decrease) in cash and cash equivalents		44,452			(2,680	)
Cash and cash equivalents – beginning of period		107,749			80,282
Cash and cash equivalents at end of period	$	152,201		$	77,602

Net 1 UEPS Technologies, Inc.
Key metrics and statistics at and for the three months ended September 30, 2005 and 2004:

										Three
										months
		Three months ended								ended		Year ended
		September 30,					Change			June 30		June 30
								Constant
		2005			2004			Exchange		2005			2005
		US$			US$		Actual	Rate (1)		US$			US$
Key statement of operations data, in ‘000,
except EPS
Revenue	$	45,887		$	43,223		6%	8%	$	41,405		$	176,290
Operating income		20,397			16,571		23%	25%		16,326			71,303
Income tax expense		8,411			7,208		17%	19%		7,132			29,666
Net income	$	13,179		$	10,227		29%	31%	$	10,142		$	44,562
Earnings per share, in cents
Basic		23.8			18.7		27%	29%		18.5			81.4
Diluted		23.5			18.4		28%	30%		18.3			79.6
Key segmental data, in ‘000, except margins
Revenue:
Transaction-based activities	$	27,818		$	24,429		14%	16%	$	26,115		$	103,653
Smart card accounts		8,552			8,221		4%	6%		8,569			34,931
Financial services		4,274			5,080		(16)%	(14)%		4,573			20,215
Hardware, software and related technology
sales		5,243			5,493		(5)%	(3)%		2,148			17,491
Total consolidated revenue	$	45,887		$	43,223		6%	8%	$	41,405		$	176,290
Consolidated operating income (loss):
Transaction-based activities	$	14,132		$	9,682		46%	49%	$	12,604		$	44,233
Smart card accounts		3,887			3,737		4%	6%		3,895			15,878
Financial services		1,844			2,402		(23)%	(22)%		1,737			9,316
Hardware, software and related technology													5,689
sales		4,067			2,035		100%	104%		(114	)
Corporate/ Eliminations		(3,533	)		(1,285	)	175%	180%		(1,796	)		(3,813	)
Total operating income (loss)	$	20,397		$	16,571		23%	25%	$	16,326		$	71,303
Operating income margin (%)
Transaction-based activities		51%			40%					48%			43%
Smart card accounts		45%			45%					45%			45%
Financial services		43%			47%					38%			46%
Hardware, software and related technology
sales		78%			37%					(5	)%		33%
Overall operating margin		44%			38%					39%			40%
		Sept. 30,			June 30,
		2005			2005
Key balance sheet data, in ‘000
Cash and cash equivalents	$	152,201		$	107,749		41%
Total current assets		204,196			150,664		36%
Total assets		237,547			181,754		31%
Total current liabilities		35,662			34,353		4%
Total shareholders’ equity	$	188,528		$	137,002		38%

(1) – This information shows what the change in these items would have been if the U.S. dollar/ ZAR exchange rate that prevailed during the first quarter of fiscal 2006 also prevailed during the first quarter of fiscal 2005.

						Three
						months
	Three months ended					ended		Year ended
	September 30,				Change	June 30		June 30
	2005		2004			2005		2005
Additional information:
Transaction based activities:
Total number of grants paid:
KwaZulu-Natal	4,308,365		4,009,441		7%	4,280,023		16,774,940
Limpopo	2,694,168		2,618,226		3%	2,622,807		10,635,232
North West	776,963		798,887		(3)%	787,567		3,153,868
Northern Cape	389,575		369,639		5%	377,845		1,459,264
Eastern Cape	1,970,171		1,739,493		13%	1,929,356		7,410,272
	10,139,242		9,535,686		6%	9,997,598		39,433,576
Average revenue per grant paid:	ZAR		ZAR			ZAR		ZAR
KwaZulu-Natal	19.21		18.51		4%	18.09		17.85
Limpopo	15.33		15.24		1%	15.62		15.34
North West	18.13		16.65		9%	16.29		16.43
Northern Cape	19.02		19.39		(2)%	19.18		19.41
Eastern Cape	12.19		12.49		(2)%	12.30		12.35
UEPS merchant acquiring system:
Terminals installed during the quarter	724		340		113%	829		3,235
New participating retail locations	423		265		60%	439		1,880
Value of transactions processed through our
merchant acquiring system (US$ ‘000)	118,585		3,563		nm	87, 643		147,331
Smart card accounts:
Total number of smart card accounts	3,398,516		3,372,665		1%	3,353,603		3,353,603
Hardware, software and related technology
sales:
Ad hoc significant hardware sales (US$ ‘000)
Nedbank POS’s, pin pads, smart cards and
other hardware	2,000		4,100		(51)%	-		10,400
Smartswitch Namibia hardware and software
(before consolidation adjustments)	1,200		-		nm	-		-
Financial services: (US$ ‘000)
Traditional based lending:
Finance loans receivable – gross	8,039		12,129		(34)%	7,212		7,212
Allowance for doubtful finance loans
receivable	(4,053	)	(8,259	)	(51)%	(3,636	)	(3,636	)
Finance loans receivable – net	3,986		3,870		3%	3,576		3,576
UEPS based lending:
Finance loans receivable –net and gross (i.e.,
no provisions)	4,479		5,149		(13)%	4,184		4,184

nm – Statistic not meaningful