Lesaka (LSAK) 8-K Net 1 UEPS Technologies, Inc. Reports Second Quarter 2016 Results

Exhibit 99.1

Net 1 UEPS Technologies, Inc. Reports Second Quarter 2016 Results

JOHANNESBURG, February 4, 2016 – Net 1 UEPS Technologies, Inc. (Nasdaq: UEPS; JSE: NT1) today released results for the second quarter of fiscal 2016.

• Q2 2016 Revenue of $150.3 million, a constant currency increase of 23%;

• Q2 2016 FEPS of $0.42, which includes an adverse impact of $0.09 per share attributable to taxes, andincremental expenses to expand operations and infrastructure;

• Net loan book increased 40% from Q1 2016, and more than 800,000 EPE accounts opened, 800 ATMs deployed and110 branches opened by January 2016;

• Repurchase of 749,213 shares of Net1 common stock for approximately $11.2 million.

Summary Financial Metrics

	Three months ended December 31,
			% change		% change
	2015	2014	in USD		in ZAR
(All figures in USD ‘000s except per share data)
Revenue	150,281	154,131	(2%	)	23%
GAAP net income	16,658	22,374	(26%	)	(6%	)
Fundamental net income (1)	19,619	26,400	(26%	)	(6%	)
GAAP earnings per share ($)	0.35	0.48	(26%	)	(7%	)
Fundamental earnings per share ($) (1)	0.42	0.57	(26%	)	(8%	)
Fully-diluted shares outstanding (‘000’s)	47,400	46,644	2%
Average period USD/ ZAR exchange rate	14.12	11.22	26%

	Six months ended December 31,
			% change		% change
	2015	2014	in USD		in ZAR
(All figures in USD ‘000s except per share data)
Revenue	304,754	310,572	(2%	)	21%
GAAP net income	39,678	46,463	(15%	)	5%
Fundamental net income (1)	46,031	54,522	(16%	)	4%
GAAP earnings per share ($)	0.84	0.99	(15%	)	5%
Fundamental earnings per share ($) (1)	0.98	1.16	(16%	)	4%
Fully-diluted shares outstanding (‘000’s)	47,394	46,990	1%		1%
Average period USD/ ZAR exchange rate	13.49	10.97	23%

(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 2016 and Q2 2015 results

• Unfavorable impact from the strengthening of the U.S. dollar against primary functional currencies:The U.S. dollar appreciated by 26% against the ZAR and 10% against the KRW during Q2 2016, which negatively impacted our reported results;

• Continued growth in financial inclusion services:We continued to grow our financial inclusion services offerings during Q2 2016, which has resulted in higher revenues and operating income, primarily from more sales of low- margin prepaid airtime and an increase in transaction fees. The significant growth in our lending book during December 2015 resulted in a substantial increase in the allowance for doubtful finance loans receivable, in accordance with our policy of providing for doubtful finance loans receivable at the time that a loan is originated;

• Ongoing contributions from EPE and Smart Life and expansion of branch network:Our EPE and Smart Life offerings contributed to an increase in revenue in ZAR, as well as an associated increase in establishment costs for our branch network;

• Increased contribution by KSNET:Our results were positively impacted by growth in our Korean operations; and

• Tax impact of dividends from South African subsidiary:Our income tax expense includes approximately $2.4 million related to the tax impact, including withholding taxes, resulting from distributions from our South African subsidiary during October 2015, which helped reduce the impact of a weakened ZAR on our reported cash balances. The conversion of a significant portion of our ZAR cash reserves to USD negatively impacted our interest income due the material difference between ZAR and USD deposit rates.

Comments and Outlook

“We continue to see tangible gains in the execution of our strategic plan, which includes the scaling up of our newer growth initiatives and the globalization of our business activities,” said Dr. Serge Belamant, Chairman and CEO of Net1. “EasyPay Everywhere, financial services and ZAZOO all delivered in-line or above our expectations, supported by consistent operating contributions from our established and recurring mature businesses, despite the ongoing currency and macroeconomic headwinds. Our pipeline of local and international opportunities for both our card-centric and mobile-centric projects augurs well for the sustained organic growth of our business,” he concluded.

“Our underlying business fundamentals and momentum remain strong,” said Herman Kotze, Chief Financial Officer of Net1. “We converted a meaningful portion of our South African cash reserves to USD in order to limit the impact of the sudden and volatile depreciation of the ZAR during Q2 2016. This resulted in withholding and other tax-related adjustments, as well as lower tax-effected interest income due to the differential between ZAR and USD deposit rates, of approximately $2.4 million, for a decrease of approximately $0.06 to our basic and diluted EPS. Additionally, the 40% sequential growth in our lending book during Q2 2016, adversely impacted EPS by $0.02 per share as a result our provisioning policy to provide an allowance on loan origination. We will only recognize the revenue from these new loans from Q3 2016. Finally, EPS was $0.01 per share lower due to the ongoing incremental costs incurred to expand our branch network,” he added.

“Therefore for fiscal 2016, we now expect fundamental earnings per share of at least $2.45, which includes a full year impact of $0.12 per share related to taxes and forgone interest income as a result of the distribution of our South African cash reserves to our U.S. parent. Our fiscal 2016 guidance once again also assumes a constant currency base of ZAR11.43/ $1 and a share count of 46.7 million shares,” he concluded.

Share buybacks and replenishment of repurchase authorization back to $100 million

During Q2 2016, we acquired 749,213 shares of Net1 common stock for approximately $11.2 million. On February 3, 2016, our Board of Directors replenished the authorization to repurchase back to up to $100 million of common stock. The authorization does not have an expiration date. The share repurchase authorization will be used at management’s discretion, subject to limitations imposed by SEC Rule 10b-18 and other legal requirements and subject to price and other internal limitations established by our Board of Directors. Repurchases will be funded from our available cash reserves. Share repurchases may be made through open market purchases, privately negotiated transactions, or both. There can be no assurance that we will purchase any shares or any particular number of shares. The authorization may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, liquidity and other factors that management deems appropriate.

Results of Operations by Segment and Liquidity

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

South African transaction processing

             Segment revenue was $52.8 million in Q2 2016, down 10% compared with Q2 2015 in USD, but 14% higher on a constant currency basis. In ZAR, the increase in segment revenue [and operating income] was due to higher EPE revenue as a result of increased ATM transactions, more low-margin transaction fees generated from card holders using the South African National Payment System and an increase in the number of social welfare grants distributed, offset by fewer inter-segment transaction processing activities. Our operating income margin for Q2 2016 and 2015 was 23% and 22%, respectively, and was higher primarily due to higher EPE revenue as a result of increased ATM transactions, an increase in the number of beneficiaries paid in fiscal 2016 and a modest increase in the margin of transaction fees generated from cardholders using the South African National Payment System, partially offset by annual salary increases granted to our South African employees.

             International transaction processing

Segment revenue was $40.8 million in Q2 2016, up 1% compared with Q2 2015 in USD, and up 27% on a constant currency basis. Operating income during Q2 2016 was lower due to an increase in depreciation expenses at KSNET and ongoing ZAZOO start-up costs in the UK and India, but was partially offset by increase in revenue contribution from KSNET and a positive contribution by XeoHealth. Operating income and margin for Q2 fiscal 2015, was negatively impacted by ad hoc incentives provided to staff due to the strong operating performance of KSNET during calendar 2014. Operating income margin for Q2 fiscal 2016 and 2015 was 10% and 14%, respectively.

            Financial inclusion and applied technologies

Segment revenue was $65.7 million in Q2 2016, down 3% compared with Q2 2015 in USD and up 22% on a constant currency basis. Financial inclusion and applied technologies revenue and operating income increased primarily due to higher prepaid airtime and other value-added services sales, more ad hoc terminal and card sales and, in ZAR, an increase in inter-segment revenues, offset by lower lending service fees. Operating income for the second quarter of fiscal 2016, was adversely impacted by an increase in our allowance for doubtful finance loans receivable resulting from a commensurate increase in our lending book in the last lending cycle of calendar 2015 and establishment costs for Smart Life and expansion of our branch network.

Driven by our expanded branch and ATM infrastructure, we experienced an increase in our lending book towards the end of Q2 2016. We expect this growth in our lending book to translate to higher revenue and operating income during the third quarter of fiscal 2016.

Operating income margin for the Financial inclusion and applied technologies segment was 21% and 26%, respectively, during Q2 2016 and 2015, and has decreased primarily due to the increase in our allowance for doubtful finance loans receivable, the sale of more low-margin prepaid airtime and establishment costs for Smart Life, expansion of our branch network and annual salary increases for our South African employees.

           Corporate/eliminations

In USD, our corporate expenses have decreased primarily due to the impact of the stronger USD on goods and services procured in other currencies, primarily the ZAR, and lower amortization costs, partially offset by modest increases in USD denominated goods and services purchased from third parties and directors’ fees.

           Cash flow and liquidity

At December 31, 2015, we had cash and cash equivalents of $101.4 million, down from $117.6 million at June 30, 2015. The decrease in our cash balances from June 30, 2015, was primarily due to the strengthening of the U.S. dollar against our primary functional currencies, repurchase of shares of our common stock, growth in our lending book, provisional tax payments and capital expenditures, offset by the expansion of all of our core businesses.

Excluding the impact of interest received, interest paid under our Korean debt and taxes, the decrease in cash from operating activities resulted from the expansion of our lending book, offset by cash inflows from improved trading activity during fiscal 2016. Capital expenditures for Q2 2016 and 2015 were $9.9 million and $9.1 million, respectively, and have increased primarily due to the acquisition of more payment processing terminals in South Korea and ATMs in South Africa.

Use of Non-GAAP Measures

US securities laws require that when we publish any non-GAAP measures, we disclose the reason for using the non-GAAP measure and provide reconciliation to the directly comparable GAAP measure. The presentation of fundamental net income and fundamental earnings per share and headline earnings per share are non-GAAP measures.

           Fundamental net income and fundamental earnings per share

Fundamental net income and earnings per share is GAAP net income and earnings per share adjusted for (1) the amortization of acquisition-related intangible assets (net of deferred taxes), (2) stock-based compensation charges and (3) unusual non-recurring items, including the amortization of KSNET debt facility fees and US government investigations-related and US lawsuit expenses. 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. Attachment C presents the reconciliation between our net income used to calculate earnings per share basic and diluted and HEPS basic and diluted and the calculation of the denominator for headline diluted earnings per share.

Conference Call

We will host a conference call to review Q2 2016 results on February 5, 2016, at 8:00 Eastern Time. To participate in the call, dial 1-855-481-5362 (US and Canada), 0808-162-4061 (U.K. only) or 0-800-200-648 (South Africa only) ten minutes prior to the start of the call. Callers should request “Net1 call” upon dial-in. The call will also be webcast on the Net1 homepage, www.net1.com. Please click on the webcast link at least ten minutes prior to the call. A webcast of the call will be available for replay on the Net1 website through February 28, 2016.

About Net1 (www.net1.com)

Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System (“UEPS”) or utilize its proprietary mobile technologies. The Company operates market-leading payment processors in South Africa and the Republic of Korea. Through Transact24, Net1 now offers debit, credit and prepaid processing and issuing services for Visa, MasterCard and ChinaUnionPay in China and other territories across Asia-Pacific, Europe and Africa, and the United States.

UEPS permits the Company to facilitate biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. Net1’s UEPS/EMV solution is interoperable with global EMV standards that seamlessly enable access to all the UEPS functionality in a traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification.

Net1’s mobile technologies include its proprietary mobile payments solution - MVC, which offers secure mobile-based payments, as well as mobile banking and prepaid value-added services in developed and emerging countries. The Company intends to deploy its varied mobile solutions through its ZAZOO business unit, which is an aggregation of innovative technology companies and is based in the United Kingdom.

Net1 has a primary listing on the NASDAQ and a secondary listing on the Johannesburg Stock Exchange.

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.

Investor Relations Contact:
Dhruv Chopra
Head of Investor Relations
Phone: +1 917-767-6722
Email:dchopra@net1.com

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

		Three months ended				Six months ended
		December 31,				December 31,
		2015		2014		2015		2014
		(In thousands, except per share data)				(In thousands, except per share data)
REVENUE	$	150,281	$	154,131	$	304,754	$	310,572
EXPENSE
Cost of goods sold, IT processing, servicing and support		78,668		71,774		156,050		146,180
Selling, general and administration		36,248		41,385		72,009		80,121
Depreciation and amortization		10,586		10,157		20,701		20,331
OPERATING INCOME		24,779		30,815		55,994		63,940
INTEREST INCOME		3,664		3,587		7,939		7,677
INTEREST EXPENSE		1,054		1,107		2,028		2,419
INCOME BEFORE INCOME TAX EXPENSE		27,389		33,295		61,905		69,198
INCOME TAX EXPENSE		10,593		10,203		21,490		21,851
NET INCOME BEFORE EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS		16,796		23,092		40,415		47,347
EARNINGS FROM EQUITY-ACCOUNTED INVESTMENTS		388		76		576		168
NET INCOME		17,184		23,168		40,991		47,515
LESS NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST		526		794		1,313		1,052
NET INCOME ATTRIBUTABLE TO NET1	$	16,658 $		22,374	$	39,678 $		46,463
Net income per share, in United States dollars
Basic earnings attributable to Net1 shareholders	$	0.35	$	0.48	$	0.84	$	0.99
Diluted earnings attributable to Net1 shareholders	$	0.35	$	0.48	$	0.84	$	0.99

NET 1 UEPS TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Balance Sheets

		Unaudited			(A)
		December 31,			June 30,
		2015			2015
		(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	101,417		$	117,583
Pre-funded social welfare grants receivable		2,503			2,306
Accounts receivable, net of allowances of – December: $3,407; June: $1,956		149,005			148,768
Finance loans receivable, net of allowances of – December: $4,555; June: $4,227		43,036			40,373
Inventory		10,636			12,979
Deferred income taxes		4,937			7,298
Total current assets before settlement assets		311,534			329,307
Settlement assets		321,812			661,916
Total current assets		633,346			991,223
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of – December: $95,537; June: $94,014		53,216			52,320
EQUITY-ACCOUNTED INVESTMENTS		14,626			14,329
GOODWILL		152,312			166,437
INTANGIBLE ASSETS, net of accumulated amortization of - December: $83,694; June: $84,668		38,686			47,124
OTHER LONG-TERM ASSETS, including reinsurance assets		11,286			14,997
TOTAL ASSETS		903,472			1,286,430
LIABILITIES
CURRENT LIABILITIES
Accounts payable		13,541			21,453
Other payables		43,125			45,595
Current portion of long-term borrowings		8,503			8,863
Income taxes payable		3,092			6,287
Total current liabilities before settlement obligations		68,261			82,198
Settlement obligations		321,812			661,916
Total current liabilities		390,073			744,114
DEFERRED INCOME TAXES		8,483			10,564
LONG-TERM BORROWINGS		50,091			50,762
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities		1,321			2,205
TOTAL LIABILITIES		449,968			807,645
COMMITMENTS AND CONTINGENCIES
EQUITY
COMMON STOCK
Authorized: 200,000,000 with $0.001 par value; Issued and outstanding shares, net of treasury - December: 46,573,489; June: 46,679,565		64			64
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		219,416			213,896
TREASURY SHARES, AT COST: December: 18,806,441; June: 18,057,228		(225,706	)		(214,520	)
ACCUMULATED OTHER COMPREHENSIVE LOSS		(199,324	)		(139,181	)
RETAINED EARNINGS		657,546			617,868
TOTAL NET1 EQUITY		451,996			478,127
NON-CONTROLLING INTEREST		1,508			658
TOTAL EQUITY		453,504			478,785
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	903,472		$	1,286,430

(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,
		2015			2014			2015			2014
		(In thousands)						(In thousands)
Cash flows from operating activities
Net income	$	17,184		$	23,168		$	40,991		$	47,515
Depreciation and amortization		10,586			10,157			20,701			20,331
Earnings from equity-accounted investments		(388	)		(76	)		(576	)		(168	)
Fair value adjustments		1,567			(234	)		3,000			179
Interest payable		645			140			1,354			1,299
Loss (Profit) on disposal of property, plant and equipment		11			(109	)		(84	)		(231	)
Stock-based compensation charge		965			1,035			1,691			1,951
Facility fee amortized		35			52			69			134
(Increase) Decrease in accounts receivable, pre-funded social welfare grants receivable and finance
loans receivable		(13,847	)		(7,315	)		(31,125	)		2,155
Decrease (Increase) in inventory		776			(622	)		(155	)		(2,745	)
Decrease in accounts payable and other payables		(5,418	)		(1,456	)		(2,046	)		(12,389	)
(Decrease) Increase in taxes payable		(8,859	)		(9,963	)		(1,035	)		(3,352	)
Increase (Decrease) in deferred taxes		789			(168	)		(637	)		(558	)
Net cash provided by operating activities		4,046			14,609			32,148			54,121
Cash flows from investing activities
Capital expenditures		(9,947	)		(9,137	)		(20,645	)		(18,515	)
Proceeds from disposal of property, plant and equipment		269			373			617			614
Proceeds from sale of business		-			-			-			1,895
Other investing activities		-			(29	)		-			(29	)
Net change in settlement assets		264,404			241,652			242,829			198,598
Net cash provided by investing activities		254,726			232,859			222,801			182,563
Cash flows from financing activities
Acquisition of treasury stock		(11,186	)		-			(11,186	)		(9,151	)
Proceeds from issue of common stock		-			-			3,762			989
Long-term borrowings utilized		711			1,081			1,431			2,178
Repayment of long-term borrowings		-			(14,128	)		-			(14,128	)
Sale of equity to non-controlling interest		-			-			-			1,407
Net change in settlement obligations		(264,404	)		(241,652	)		(242,829	)		(198,598	)
Net cash used in financing activities		(274,879	)		(254,699	)		(248,822	)		(217,303	)
Effect of exchange rate changes on cash		(8,086	)		(2,973	)		(22,293	)		(7,072	)
Net (decrease) increase in cash and cashequivalents		(24,193	)		(10,204	)		(16,166	)		12,309
Cash and cash equivalents – beginning of period		125,610			81,185			117,583			58,672
Cash and cash equivalents – end of period	$	101,417		$	70,981		$	101,417		$	70,981

Net 1 UEPS Technologies, Inc.

Attachment A

Operating segment revenue, operating income and operating margin:

Three months ended December 31, 2015 and 2014 and September 30, 2015

														Change – constant
										Change - actual				exchange rate(1)
										Q2 ‘16		Q2 ‘16		Q2 ‘16		Q2 ‘16
										vs		vs		vs		vs
Key segmental data, in $ ’000,		Q2 ‘16			Q2 ‘15			Q1 ‘16		Q2‘15		Q1 ‘16		Q2‘15		Q1 ‘16
Revenue:
South African transaction processing	$	52,764		$	58,427		$	55,639		(10%	)	(5%	)	14%		3%
International transaction processing		40,836			40,466			41,229		1%		(1%	)	27%		8%
Financial inclusion and applied technologies		65,686			67,531			67,360		(3%	)	(2%	)	22%		6%
Subtotal: Operating segments		159,286			166,424			164,228		(4%	)	(3%	)	20%		6%
Intersegment eliminations		(9,005	)		(12,293	)		(9,755	)	(27%	)	(8%	)	(8%	)	1%
Consolidated revenue	$	150,281		$	154,131		$	154,473		(2%	)	(3%	)	23%		6%
Operating income (loss):
South African transaction processing	$	12,080		$	12,883		$	13,511		(6%	)	(11%	)	18%		(3%	)
International transaction processing		4,240			5,743			6,543		(26%	)	(35%	)	(7%	)	(29%	)
Financial inclusion and applied technologies		13,519			17,827			16,554		(24%	)	(18%	)	(5%	)	(11%	)
Subtotal: Operating segments		29,839			36,453			36,608		(18%	)	(18%	)	3%		(11%	)
Corporate/Eliminations		(5,060	)		(5,638	)		(5,393	)	(10%	)	(6%	)	13%		2%
Consolidated operating income	$	24,779		$	30,815		$	31,215		(20%	)	(21%	)	1%		(14%	)
Operating income margin (%)
South African transaction processing		23%			22%			24%
International transaction processing		10%			14%			16%
Financial inclusion and applied technologies		21%			26%			25%
Consolidated operating margin		16%			20%			20%

(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 2016 also prevailed during the second quarter of fiscal 2015 and the first quarter of fiscal 2016.

Six months ended December 31, 2015 and 2014

								Change –
								constant
						Change -		exchange
						actual		rate(1)
						F2016		F2016
						vs		vs
Key segmental data, in ’000, except margins		F2016		F2015		F2015		F2015
Revenue:
South African transaction processing	$	108,403		118,679		(9%	)	12%
International transaction processing		82,065		83,670		(2%	)	21%
Financial inclusion and applied technologies		133,046		132,728		0%		23%
Subtotal: Operating segments		323,514		335,077		(3%	)	19%
Intersegment eliminations		(18,760	)	(24,505	)	(23%	)	(6%	)
Consolidated revenue	$	304,754		310,572		(2%	)	21%
Operating income:
South African transaction processing	$	25,591		26,522		(4%	)	19%
International transaction processing		10,783		13,092		(18%	)	1%
Financial inclusion and applied technologies		30,073		35,434		(15%	)	4%
Subtotal: Operating segments		66,447		75,048		(11%	)	9%
Corporate/Eliminations		(10,453	)	(11,108	)	(6%	)	16%
Consolidated operating income	$	55,994		63,940		(12%	)	8%
Operating income margin (%)
South African transaction processing		24%		22%
International transaction processing		13%		16%
Financial inclusion and applied technologies		23%		27%
Overall operating margin		18%		21%

(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 2016 also prevailed during the first half of fiscal 2015.

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, 2015 and 2014

			EPS,				EPS,
	Net income		basic		Net income		basic
	(USD’000)		(USD)		(ZAR’000)		(ZAR)
	2015	2014	2015	2014	2015	2014	2015	2014
GAAP	16,658	22,374	0.35	0.48	235,204	250,737	5.00	5.39
Intangible asset amortization, net .	1,952	2,930			27,572	32,827
Stock-based compensation charge	965	1,035			13,625	11,616
Facility fees for KSNET debt	35	52			494	584
US government investigations-related and US lawsuit expenses	9	9			127	101
Fundamental	19,619	26,400	0.42	0.57	277,022	295,865	5.88	6.36

Six months ended December 31, 2015 and 2014

			EPS,				EPS,
	Net income		basic		Net income		basic
	(USD’000)		(USD)		(ZAR’000v)		(ZAR)
	2015	2014	2015	2014	2015	2014	2015	2014
GAAP	39,678	46,463	0.84	0.99	535,281	509,644	11.39	10.87
Intangible asset amortization, net .	4,460	5,838			60,164	64,036
Stock-based compensation charge	1,691	1,951			22,813	21,400
Facility fees for KSNET debt	69	134			931	1,470
US government investigations- related and US lawsuit expenses	133	136			1,794	1,492
Fundamental
	46,031	54,522	0.98	1.16	620,983	598,042	13.21	12.76

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, 2015 and 2014

	2015		2014
Net income (USD’000)	16,658		22,374
Adjustments:
Loss (Profit) on sale of property, plant and equipment	11		(109	)
Tax effects on above	(3	)	31
Net income used to calculate headline earnings (USD’000)	16,666		22,296
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings (‘000)	47,086		46,519
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings (‘000)	47,400		46,644
Headline earnings per share:
Basic, in USD	0.35		0.48
Diluted, in USD	0.35		0.48

Six months ended December 31, 2015 and 2014

	2015		2014
Net income (USD’000)	39,678		46,463
Adjustments:
Profit on sale of property, plant and equipment	(84	)	(231	)
Tax effects on above	24		65
Net income used to calculate headline earnings (USD’000)	39,618		46,297
Weighted average number of shares used to calculate net income per share basic earnings and headline earnings per share basic earnings (‘000)	47,007		46,873
Weighted average number of shares used to calculate net income per share diluted earnings and headline earnings per share diluted earnings (‘000)	47,394		46,990
Headline earnings per share:
Basic, in USD	0.84		0.99
Diluted, in USD	0.84		0.99

Calculation of the denominator for headline diluted earnings per share

	Q2 ‘16	Q2 ‘15	F2016	F2015
Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP	47,086	46,519	47,007	46,873
Effect of dilutive securities under GAAP	314	125	387	117
Denominator for headline diluted earnings per share	47,400	46,644	47,394	46,990

Weighted average number of shares used to calculate headline earnings per share diluted represent the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully-diluted shares outstanding to calculate headline earnings per share diluted because we do not use the two-class method to calculate headline earnings per share diluted.