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DISCLAIMERDISCLAIMER
This document will contain statements about the Company's futureresults call. These statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements represent only the Company's views as of today, based on current expectations in light of the current economic environment. While we may choose to update forward-looking statements in the future, we specifically disclaim any duty to do so; therefore, these forward-looking statements should not be relied upon as representing the Company's views as of any later date. Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies which are beyond the control of Net 1. We caution you that such statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements.
Page 1Page 1
MISSION STATEMENTMISSION STATEMENT
“To provide a secure, universal and affordable transacting system for all, utilizing existing infrastructures, that will enable
the majority of people unqualified access to previously inaccessible goods and services, resulting in the upliftment of their lifestyles, whilst opening up new, low risk and profitable
markets for the suppliers concerned.”
Page 2Page 2
THE WORLDTHE WORLD
Page 3Page 3
THE UNBANKED & UNDERBANKEDTHE UNBANKED & UNDERBANKED
Page 4Page 4
ACCESSING THE BOTTOM OF THE PYRAMID (BOP)ACCESSING THE BOTTOM OF THE PYRAMID (BOP)
Page 5Page 5
SOUTH AFRICATHE UNBANKED & UNDERBANKED BY LSM, 2001
SOUTH AFRICATHE UNBANKED & UNDERBANKED BY LSM, 2001
Page 6Page 6
SOUTH AFRICA - THE UNBANKEDSOUTH AFRICA - THE UNBANKED
• Food • Food
• Clothing
• Food
• Clothing
• Insurance (Burial)
• Loans (Micro)
• Food
• Clothing
• Transport (Taxis)
• Insurance (Burial)
• Utilities
• Accommodation
• Savings(Stockvels)
• Food
• Clothing
• Transport (Taxis & Fuel)
• Insurance (Burial & Short-term)
• Loans (6-12 months)
• Utilities (Water & Electricity)
• Accommodation (Rent/Mortgage)
• Savings (Stockvels)
Page 7Page 7
• Food
• Clothing
• Insurance (Burial)
• Loans (Micro)
• Utilities (Water & Electricity)
• Savings
• Furniture
• Food
• Clothing
• Home Loan
• Transport (Car / Fuel)
• Insurance (Short-term + Life)
• Loans (Bank)
• Utilities (Water & Electricity)
• Savings
• Furniture
• Entertainment
SOUTH AFRICA - THE BANKEDSOUTH AFRICA - THE BANKED
Page 8Page 8
SOUTH AFRICATHE UNBANKED & UNDERBANKED BY LSM, 2001
SOUTH AFRICATHE UNBANKED & UNDERBANKED BY LSM, 2001
36%35%
18% 11%
25%
23%
52%
11%
10%
79%
UnemployedUnemployed
Work part-timeWork part-time
Work full timeWork full time
Living StandardMeasure (8-10)
Living StandardMeasure (8-10)
Living StandardMeasure (6)
Living StandardMeasure (6) Living Standard
Measure (7)
Living StandardMeasure (7)
Living StandardMeasure (1-5)
Living StandardMeasure (1-5)
Work part-timeWork part-time
Unbanked 17.69 millionUnbanked 17.69 million Banked 11.33 millionBanked 11.33 million
1.95 m1.77 m
4.02 m
2.01 m
4.06 m
1.24 m
4.06 m
1.95 m
1.77 m
Work full-timeWork full-time
Living StandardMeasure (1-5)
Living StandardMeasure (1-5)
13.97 m
Page 9Page 9
U.E.P.S. VS TRADITIONAL BANK ACCOUNTSU.E.P.S. VS TRADITIONAL BANK ACCOUNTS
Page 10Page 10
U.E.P.S1) Zero cost to social grant beneficiaries. 2) R8.00 per month to all other card holders for the use of
a secure, portable wallet.
Identification method = Biometric Fingerprint. Reduces risks associated with FRAUD. No fingerprint match results in transaction being denied.
Zero charge to the card holder for the smart card itself. Employer pays a once-off cost of +/- R45.00. (Life-span of the card is 10 years).
Spending at U.E.P.S. merchants is free of charge to the card holder as the transaction is performed OFFLINE (No cost to merchant or Net 1).
OFFLINE Settlement can be performed by merchants with no ONLINE network infrastructure – “Milking Function”. ONLINE Settlement is performed at the end of each day – 1 telephone connection to System Host.
Merchants can choose to dispense their funds at settlement to either a traditional bank account or a Net 1 client smart card which can be used to purchase goods and perform cash withdrawals from retailers and wholesalers.
•
•
•
•
•
Traditional Bank Account1) Current cost to run a bank account is +/- R40 – R50
per month.
2) Current cost to run Mzanzi account 25
• Identification option = PIN (Insecure & Complex to manage)
Annual cost to card holder +/- R60 – R80 per annum which last between one and two years.
Spending at traditional bank merchants is performed online & attracts normal ONLINE Debit Charges i.e. R2.05 per transaction – High network costs involved.
ONLINE Settlement only.
Merchants are required to open up a traditional bank account and are then forced to cash cheques as the trade stores do not accept cheques as payment
+/- R per month.
•
•
•
•
U.E.P.S. VS TRADITIONAL BANK ACCOUNTS (continued)U.E.P.S. VS TRADITIONAL BANK ACCOUNTS (continued)
Page 11Page 11
U.E.P.S.•
•
•
•
•
•
•
•
•
•
•
wages onto the smart card with ONLINE, OFFLINE Automatic & OFFLINE Manual – anytime, anywhere at a U.E.P.S. POS /ATM – no charge for an OFFLINE LOAD.
Unlimited Number of cash withdrawals.
Zero Value limit on cash withdrawals.
Cash Withdrawal transactions are performed OFFLINE. Fees are 50% cheaper than current Saswitch fees. Maximum R5.00 for low income earners.
Merchant profiles maintained on merchant card – enabling sharing of POS devices - Reduced costs.
Hot Card Files maintained on merchant card. (Key for OFFLINE processing).
Multiple Audit Trail - In the event of merchants/ clients losing/misplacing their cards, the system will re-create the transactions using this function.
Net 1 pays interest monthly, calculated on the daily balance.
No charge for wallet to wallet transfers.
Multi Financial institutions facility on a single card.
Health care (HIV/AIDS).
Convenience benefit – Card holders can load their
Traditional Bank Account• Wages are paid into a bank account resulting in
card holder queuing at ATMs. ATM charges apply for “Balance Enquiry” etc.
•
•
•
•
•
•
•
•
•
• Non-existent.
1 to 2 withdrawals per day.
Limit set per card holder.
Cash withdrawals are performed ONLINE. High ATM charges.
Merchant profiles stored & maintained in the POS memory. Sharing of POS devices not possible.
Hot Card Files stored in POS memory but still verified ONLINE by issuing institution.
Not available in existing banking applications.
Interest calculated on the monthly minimum balance.
Bank charge minimum R 2.90.
Non-existent.
MARKETING APPROACHMARKETING APPROACH
Page 12Page 12
INTERNATIONAL PAYMENT INTERCHANGE SYSTEM TO THE DEVELOPING WORLD
THE SECOND STEPTHE SECOND STEP
UEPS
FINALNEGOTIATIONS
VTU
CONTRACT SIGNED &ACTIVITIES COMMENCED
• South Africa • CIS Republic• Mozambique • Botswana• Ghana • Burundi• Namibia • Malawi• Rwanda • Nigeria
• Colombia • Iraq• Indonesia• Mozambique• Tanzania• Kenya
UEPS VTU• Vietnam• Mozambique
DISCUSSIONPHASE
CONTRACT SIGNED &ACTIVITIES COMMENCED
• South Africa• Nigeria• Cameroon• Swaziland
VTU MTN
CONTRACTSIGNED
VTU MTN• Rwanda• Ivory Coast
• Indonesia
• United Arab Emirates
VTU
Page 13Page 13
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
S2S Pension & Welfare
Facts and Assumptions
Main Economic Drivers• Government – R 25.56 per social grant beneficiary per month (Changes dependent on agreement with Government)
• Social grant beneficiary – ZERO charge per month for use of card account
Financial Services (Direct or Indirect)
Loans R500 over 6 monthsR500 over 6 months R30,00R30,00
InsuranceInsurance R50 premiumR50 premium R11,00R11,00
Debit OrdersDebit Orders Two (2) per monthTwo (2) per month R4,00R4,00Transactional Services R4.00
Total potential fee from service providers R49,00Government R25,56R25,56Total potential fee per beneficiary card 4.56R7
PRODUCTS DESCRIPTIONDESCRIPTION MAX FEE PER MONTHMAX FEE PER MONTH
Page 14Page 14
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Estimated number of grants per grant type - Year ended June 2006
0
10,000
20,000
30,000
40,000
50,000
60,000
Old
Age
War
Vete
rans
Disa
bility
Gra
nt
Insti
tutio
nal
Uncl
aim
edBe
nefit
s
Foste
r Car
eGr
ant
Car
e-D
epen
denc
yGr
ant
Com
bina
tion
Child
Supp
ort
Gran
t
'000
Estimated value of grants - Year ended June 2006
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Old
Age
Disa
bility
Uncla
imed
Bene
fits
Care
-De
pend
ency
Child
Supp
ort
Gran
t
Valu
e in
$'00
0N
umbe
r of g
rant
s ‘0
00
Page 15Page 15
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Estimated number of grants per Service Provider - Year ended June 2006
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Banks SAPO Institutional Allpay CPS (NET 1) Empilweni
Num
ber
of g
rant
s
Estimated value of grants per Service Provider - Year ended June 2006
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Banks SAPO Institutional Allpay CPS (NET 1) Empilweni
Val
ue in
$'0
00
Page 16Page 16
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Potential increase in value of grants per grant type
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Old
Age
War
Vet
eran
s
Dis
abilit
y
Inst
itutio
nal
Unc
laim
ed B
enef
its
Fost
er C
are
Gra
nt
Car
e-D
epen
denc
y
Com
bina
tion
Chi
ld S
uppo
rt G
rant
Gra
nt in
Aid
Valu
e in
$'0
00
Current value of grantsPotential increase - year 1Potential increase - year 2
Potential increase in value of grants per Service Provider
0
1,000
2,000
3,000
4,000
5,000
6,000
Banks SAPO Institutional Allpay CPS (NET 1) Empilweni
Valu
e in
$'0
00
Current value of grantsPotential increase - year 1Potential increase - year 2
Page 17Page 17
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
CPS (NET 1) number of grants per grant type - Year ended June 2006
0
5,000
10,000
15,000
20,000
25,000
Old
Age
War
Vete
rans
Dis
abili
ty
Unc
laim
edbe
nefit
s
Fost
er C
are
Com
bina
tion
Car
eD
epen
danc
y
Chi
ldS
uppo
rtG
rant
Num
ber o
f gra
nts
'000
CPS (NET 1) value of grants per grant type - Year ended June 2006
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Old
Age
War
Vet
eran
s
Dis
abili
ty
Unc
laim
edbe
nefit
s
Fost
er C
are
Com
bina
tion
Car
eD
epen
danc
y
Chi
ldS
uppo
rtG
rant
Valu
e in
$'0
00
Page 18Page 18
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Pension and Welfare Revenue - Year ended June 2006
73%
4%23%
Transaction-based activities Smart card accounts UEPS based lending
Pension and Welfare Operating Income - Year ended June 2006
20%
6%
74%
Transaction-based activities Smart card accounts UEPS based lending
Page 19Page 19
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Estimated revenue - no increase in market share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transaction-basedactivities
Smart card accounts UEPS based lending
Price increase - year 2
Increase in number of beneficiaries - year 2
Price increase - year 1
Increase in number of beneficiaries - year 1
Year ended June 2006
Estimated operating income - no increase in market share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transaction-basedactivities
Smart card accounts UEPS based lending
Price increase - year 2
Increase in number of beneficiaries - year 2
Price increase - year 1
Increase in number of beneficiaries - year 1
Year ended June 2006
Page 20Page 20
U.E.P.S. PRODUCTS – S2S PENSION & WELFAREU.E.P.S. PRODUCTS – S2S PENSION & WELFARE
Estimated revenue - increase in market share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transaction-basedactivities
Smart card accounts UEPS based lending
Potential increase in market share - year 2
Price increase - year 2
Increase in number of beneficiaries - year 2
Potential increase in market share - year 1
Price increase - year 1
Increase in number of beneficiaries - year 1
Year ended June 2006
Estimated operating income - increase in market share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Transaction-basedactivities
Smart card accounts UEPS based lending
Potential increase in market share - year 2
Price increase - year 2
Increase in number of beneficiaries - year 2
Potential increase in market share - year 1
Price increase - year 1
Increase in number of beneficiaries - year 1
Year ended June 2006
Page 21Page 21
S2S Wage Payment System
Facts and Assumptions
Main Economic Drivers• Employers – R 5,00 per wage per month (Changes dependent on frequency of payments)• Employee – R 8,00 per month for use of card account• Financial Services (Direct or Indirect)
Potential Revenue South Africa
National Potential Customer Base 7,78 Million
Total anticipated revenue per client (R34.58) calculated at 52% of maximum revenue (R66.50)
U.E.P.S. PRODUCTS – S2S WAGEU.E.P.S. PRODUCTS – S2S WAGE
Loans R500 over 6 monthsR500 over 6 months R30,00R30,00
InsuranceInsurance R50 premiumR50 premium R11,00R11,00Debit Orders R8,00R ,00Transactional Services
Savings
R4.00
PRODUCTS DESCRIPTIONDESCRIPTION MAX FEE PER MONTHMAX FEE PER MONTH
R 0,50
R53,50R13,00
R66,50
R 0,50
R53,50R13,00
R66,50
Four (4) per month
0.5% of Average spend (R800.00)
(3% on a balance of R200) R 0,50R 0,50
R53,50R ,50R13,00R13,00
R66,50R66,50Employers and employees
Page 22Page 22
U.E.P.S. PRODUCTS – S2S WAGEU.E.P.S. PRODUCTS – S2S WAGE
Anticipated Growth and Revenue
Existing Base Growth Customer Base Revenue
Year 1 0 500,000 500,000 103,125,000
Year 2 500,000 750,000 1,250,000 360,937,500
Year 3 1,250,000 500,000 1,750,000 618,750,000
Year 4 1,750,000 350,000 2,100,000 794,062,500
Year 5 2,100,000 300,000 2,400,000 928,125,000
Market Penetration
S2S Wage Payment System (continued)
Page 23Page 23
U.E.P.S. PRODUCTSS2S VIRTUAL TOP UP SYSTEM (VTU)
U.E.P.S. PRODUCTSS2S VIRTUAL TOP UP SYSTEM (VTU)
S2S Virtual Top Up System
Facts and Assumptions
Main Economic Drivers• Approximately 90% of the market in South Africa is prepaid.• Potential to grow subscriber base by 5 million to 35 million over the next two to three years
Year 1 Year 2 Year 3
Total number of pre-paid subscribers 26,600,000 27,930,000 29,326,500
Estimated number of VTU subscribers 1,800,000 4,500,000 4,500,000
Estimated revenue R10,671,750 R70,341,750 R82,620,000
Estimated operating income R1,222,982 R34,080,577 R43,920,792
Number of pre-paid subscribers - South Africa
7,400,000
2,400,000
16,800,000Vodacom
MTN
Cell C
Page 24Page 24
U.E.P.S. PRODUCTSS2S VIRTUAL TOP UP SYSTEM (VTU)
U.E.P.S. PRODUCTSS2S VIRTUAL TOP UP SYSTEM (VTU)
S2S Virtual Top Up System (continued)
COLOMBIA
• Commercial agreements concluded & signed.• Customisation, systems integration and testing for first Colombian mobile operator completed• Installation & commissioning scheduled for mid January. Pilot scheduled for February.
VIETNAM
• Commercial: Terms agreed & signed (implementation agreement signed), shareholder & licensing agreements currently being finalised. Commercial finalisation scheduled for mid January
MOZAMBIQUE
• Commercial agreements finalised and awaiting signature, licensing agreement currently being finalised.• Customisation, systems integration & testing for mobile operator completed.• Installation & commissioning scheduled for end January. Pilot scheduled for February.
Year 1 Year 2 Year 3
Total number of pre-paid users 22,396,563 23,994,201 25,229,069
Potential margin earned $3,596,056 $9,194,302 $11,470,119
Page 25Page 25
EasyPay
Facts and Assumptions
Main Economic DriversTotal number of transactions per month 40,0 millionTotal value of transactions per month R8,6 billion
Key merchantsPick ‘n Pay Shoprite CheckersEdcon CaltexBP TotalHIFI Corporation ABSANuPay
Recipients of bill payments200 municipalities TelkomESKOM SABCVodacom Metropolitan LifeTeba Bank AVON
Number of Point of Service devices 50,000
Type of service Number of transactions per month‘000
Value of transactions per monthR’000
Electronic Funds Transfer 28,250 7,122,188
Pre-paid Cellular 5,788 183,294
Pre-paid Electricity 824 26,740
Bill Payments 1,231 964,785
Other 267 23,931
PRODUCTS - EASYPAYPRODUCTS - EASYPAY
Page 26Page 26
S2S Insurance System
Facts and Assumptions
Main Economic Drivers• Insurance Underwriter/Broker – Transaction Processing Fee of R 1,50 per insurance policy per month
(External Insurance Merchant)– Collection Fee of R 2,00 per debit order instruction per month
Potential Revenue South Africa
National Potential Customer Base 7,78 Million
U.E.P.S. PRODUCTS – S2S INSURANCE SYSTEMU.E.P.S. PRODUCTS – S2S INSURANCE SYSTEM
Page 27Page 27
U.E.P.S. PRODUCTS – S2S INSURANCE SYSTEMU.E.P.S. PRODUCTS – S2S INSURANCE SYSTEM
R 0
R 5,000,000
R 10,000,000
R 15,000,000
R 20,000,000
R 25,000,000
R 30,000,000
R 35,000,000
R 40,000,000
R 45,000,000
R 50,000,000
0 1 2 3 4 5
Years
S2S Insurance System (continued)
Anticipated Growth and Revenue
Market Penetration Existing Base Growth Customer Base Revenue
Year 1 0 100,000 100,000 5,400,000
Year 2 100,000 150,000 250,000 13,500,000
Year 3 250,000 200,000 450,000 24,300,000
Year 4 450,000 200,000 650,000 35,100,000
Year 5 650,000 200,000 850,000 45,900,000
Yearly Customer Base Anticipated Revenue
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
0 1 2 3 4 5
Years
Num
ber o
f cus
tom
ers
Page 28Page 28
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
NAMIBIA
NEW APPROVALS
1) 27th Oct 2006 – Approval From Bank of Namibia approving NAMPOST smart card as a payment instrument in Namibia.
2) SLA signed with PAYZONE – Pre-paid ESC and airtimePilot rollout in December 2006Thereafter national rollout – anticipated electricity sales of 210,000 transactions per month – Windhoek areaTenders submitted for rural areas – awaiting outcome.
GROWTH IN EXISTING PROJECT
Nampost – Total cards issued 158,000
MERCHANT ACQUIRING ROLL OUT
128 Merchants Registered
Page 29Page 29
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
BOTSWANA
APPROVALS
1) 17th May 2006 – Approval from Bank Of Botswana to perform clearing and settlement via Bank Gaborone.
2) SLA signed between Government & our Union Partners LITS 12th Dec 2006SLA signed between SmartSwitch and LITS (Union) – product wages & loan deductions +- 60,000 cards
Marketing Launch Commenced in November 2007System ‘Live’ Date – End March 2007
POTENTIAL CUSTOMERSBotswana Building Society & Botswana Savings Bank +- 400,000 accounts (old passbooks) BANKINGBotswana Post Office – BANKINGBotswana Life – INSURANCE DEDUCTIONS +- 180,000 deductions per monthDebswana – WAGES & DEDUCTIONS +- 20,000 employeesBOPMAS & PULA Medical Aid – Medical Solution (Member Identification, Premium Checks, Authorisation of Benefits & Claim Payment Distribution +- 120,000 members + 60,000 dependantsBOMaid Medical Aid +- 30,000 membersBarisma +- 30,000 wage payment employees (town councils)
MERCHANT ACQUIRING & EMPLOYEESMarketing and awareness has commenced with retailers & employers in Botswana.
Page 30Page 30
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
NIGERIA
1) Final stages with the Central Bank of Nigeria for SmartSwitch to operate the scheme in Nigeria.Clearing & settlement will be managed via Diamond Bank
2) Negotiations to participate as a customer of the Switch with :-• Ecobank • Uba• Skye • Oceanic• First Inland • Unity bank• First Bank
3) Marketing launch commenced in December 2006Premises completed in February 2007
4) Diamond bank
Phase 1 Teller training commences in March 2007‘Live’ to customers – 1st April 2007LAUNCHING:
• Banking • Wholesale to retail distribution• Cash advances • Loyalty scheme• Personal loans• Money transfers• 3rd party bill payments
Page 31Page 31
NIGERIA (continued)
Phase 2 Student cardPension contribution & distributionTransportation
TENDERSNigerian Government Multi-Purpose Card
Finalists:1) CHAMS Consortium (bidding with the Net 1 solution)2) SONDA S.A./ Interswitch (could use the Net 1 solution if asked by Government)
Comprising :-• National Identity Authentication/Verification• Government Financial Payments For Services• Affordable Banking• Consumer Credit Rating System
Anticipated Card Volumes 65 million over 5 years
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
Page 32Page 32
IRAQ
1) Finalising numbers for Business Model with partners FUBI LLC2) Presentations and negotiations in place with potential equity partners
• Al Rafideen Bank• Al Rashid Bank• Post Office• Government Pension Department
INITIAL PRODUCTSBankingRetailGovernment wages in respect of Iraqi military, coalition forces. (anticipated volumes +- 2 million)Government pension payments (anticipated volumes 1.5 million)
GHANA
TENDERS
• Ghana national switch & smart card payment system• SmartSwitch is one of two companies selected in the final round
The other entity is:• High Payments Systems
• Bid presentation took place on 26 February 2007• Ownership of the National Switch involving the Central Bank, all the banks in Ghana and the selected technology partner
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
Page 33Page 33
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
INDONESIA
STATUS – IN ADVANCED DISCUSSIONSPartners Identified :ALITA (Infocom Network Solution)BRI (Indonesian People Bank)TelkomselFinnet – 40% owned by Central Bank
Business model in final stagesRequest for pilot system – to be negotiated
MOZAMBIQUE
STATUS – IN ADVANCED DISCUSSIONSPartners identified :DIGI TechnologiesCHUMA Bank Equity financing in advanced stagesMarketing campaign & presentations to be held in Mozambique +- 7th/ 8th March 2007 across all market sectorsIncluding Central Bank
Page 34Page 34
CURRENT U.E.P.S. BUSINESS OPPORTUNITIESCURRENT U.E.P.S. BUSINESS OPPORTUNITIES
TANZANIASTATUS
1) Tanzania Postal Bank - Awaiting board decision (in current discussions with Government) anticipated card volumes +-500,000
2) Advanced stages with Reserve Bank of Tanzania3) Advanced stages with PRIDE Tanzania to acquire UEPS transactions via their NCR ATMs and bank branches4) In discussion with De Beers and Government on artisanal Mining Project
PRODUCTS• Banking • Loans• Cash advances • Bill payments• Money transfers • Wages• Retail • Mining
KENYA
STATUS
1) Advanced Stages with KUSSCO & SACCO Members.Service Level Agreement being prepared – 3000 branches and +- 2 million members
2) In negotiation with Postal Bank Kenya
PRODUCTS• Banking • Loans• Cash advances • Lill payments• Money transfers • Wages• Retail
Page 35Page 35
U.E.P.S PRODUCTS – SOUTH AFRICAU.E.P.S PRODUCTS – SOUTH AFRICA
Page 36Page 36
ROADMAPROADMAP
NAMIBIA BOTSWANA NIGERIA MALAWI SOUTH AFRICAGeneral Banking √ √ √ √
Retail √ √ √ √ √Wholesale to Retail Distribution √
Wage √ √ √ √ √Third Party Collections/Deductions √ √ √ √
Money Transfers √ √ √ √Third Party Bill Payments √ √ √ √
Cash Advances √Financial Services √ √
Micro-Finance Loan RegistrationInsurance Registration √
Payment of Social Welfare Grants √Employee Pension Contribution & Distribution
Artisanal MiningMedical Aid System
Medical Management, Patient Monitoring & Distribution System in respect of HIV/AIDS Patients √
National Health Insurance Fund SystemTransportation √
Government Applications (National I.D., Passport, Diver's Licence, Voting)Virtual Top Up √ √
Pre-paid Utilities (Electricity, Water, Airtime) √ √Internet Applications
Loyalty Schemes √
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THE SMART CARD PROJECTTHE SMART CARD PROJECTSECURE MOBILE PAYMENTS & BANKING
Page 38Page 38
THE SMART CARD PROJECTTHE SMART CARD PROJECT
USING THE U.E.P.S. MOBILE SYSTEM TO SECURISE EXISTING DEBIT & CREDIT CARD PAYMENTSPAYMENT CHANNELS (NO MODIFICATIONS ARE REQUIRED TO THESE SYSTEMS)
Internet Credit CardsInternet Debit Cards (New)Merchant Stores (POS Terminals)Phone PaymentsPhone Pre-Authorizations
NO MODIFICATIONS REQUIRED FOR CARD ASSOCIATION PAYMENT STANDARDS
AmountCredit Card NumberExpiry DateCVV (Card Verification Value)
MINOR MODIFICATIONS REQUIRED ON ATM SOFTWARE TO ALLOW FOR “CARD NOT PRESENT” FUNCTIONALITY
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• One external factor has a profound impact on the reported numbers:
– The ZAR : US$ exchange rate
6.27506.68407.27916.34587.0551Rate at end of period
6.05765.53505.92566.15566.7193Lowest ZAR : US$ rate during period
7.80306.94737.53236.93887.9748Highest ZAR : US$ rate during period
6.90016.22196.42836.53967.2532ZAR : US$ average exchange rate
June2004
June2005
June2006
December 2005
December 2006
For the year endedFor the six months
ended
FINANCIAL HISTORYFINANCIAL HISTORY
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US $: ZAR Exchange Rates
4.5
5
5.5
6
6.5
7
7.5
8
8.5
Jun 30 Jul 31 Aug 31 Sep 30 Oct 31 Nov 30 Dec 31 Jan 31 Feb 29 Mar 31 Apr 30 May 31 Jun 30
US
$: Z
AR
Fiscal 2004 Fiscal 2005 Fiscal 2006 Fiscal 2007
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
Page 41Page 41
-1,8171,529-Costs related to public offering and Nasdaq listing
1.14---Cash dividend per share …...….………..………
0.380.801.030.49Diluted ………..………………………………...
0.400.811.050.49Basic …………………………..………………..
Net income per share attributable to common stockholders:
13,27844,56259,23227,895Net income attributable to common stockholders
13,19144,02658,84927,845Net income before minority interest and earnings from
equity accounted investment……………….
25,92729,66636,65317,530Income tax expense………………………………...
39,11873,69295,50245,375Income before taxes……………………….……….
3,6403,6405,8892,058Interest, net………………………………....……….
35,47871,30389,61343,317Operating income…………………………....……..
11,113---Reorganization costs……………………………….
5,6766,5915,7105,760Depreciation & amortization……………….……....
39,67745,89748,62729,175General and administrative charges.....................
39,13450,68250,61924,245Cost of goods sold, IT processing, servicing and
support………………………………………..
131,098176,290196,098102,497Revenue…………………………………….……
200420052006YTD Q2As reported (US$ ‘000)
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FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
-1,6151,404-Costs related to public offering and Nasdaq listing
1.12---Cash dividend per share …...….………..………
0.370.710.950.51Diluted ………..………………………………...
0.390.720.960.51Basic …………………………..………………..
Net income per share attributable to common stockholders:
13,08939,60954,39428,904Net income attributable to common stockholders
13,00339,13254,04328,852Net income before minority interest and earnings from
equity accounted investment……………….
25,55726,36833,65918,164Income tax expense………………………………...
38,56065,50187,70247,016Income before taxes……………………….……….
3,5883,2355,4082,132Interest, net………………………………....……….
34,97263,37782,29444,884Operating income…………………………....……..
10,954---Reorganization costs……………………………….
5,5955,8585,2445,968Depreciation & amortization……………….……....
39,11140,79544,65630,230General and administrative charges.....................
38,57645,04846,48525,122Cost of goods sold, IT processing, servicing and
support………………………………………..
129,227156,694180,082106,204Revenue…………………………………….……
200420052006YTD Q2Indexed at $1: ZAR7
Page 43Page 43
FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
Revenue comparison
-
50,000
100,000
150,000
200,000
250,000
2002 2003 2004 2005 2006
Year
US$
'000 Reported
Indexed(US$1=ZAR7)
Page 44Page 44
FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
Operating income comparison
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2002 2003 2004 2005 2006
Year
US$
'000 Reported
Indexed(US$1=ZAR7)
Page 45Page 45
FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
Net income comparison
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2002 2003 2004 2005 2006
Year
US$
'000 Reported
Indexed(US$1=ZAR7)
Page 46Page 46
FINANCIAL HISTORY (continued)FINANCIAL HISTORY (continued)
CASH FLOWCASH FLOW
13,855(7,259)(18,009)4,3654,198Forex effect on cash
(24,060)(19)29,72332,2192,874Cash provided by (used in) financing activities
25,96927,46781,98676,153(61,833)(Decrease) Increase in cash
(5,721)(3,397)(5,505)(2,655)(83,887)Cash used in investing activities
41,89538,14275,77742,22414,982Cash provided by operating activities
2005 20042006Q2 2006Q2 2007
US$ ‘000
• The group is highly cash generative with an excellent cash conversion rate.• Cash provided by investing activities in Q2 2007 includes $82.1 million, net of cash
acquired, paid to acquire Prism
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