Serge C.P. Belamant - Chairman of the Board and Chief Executive Officer Herman Gideon Kotze - Chief Financial Officer

Dave Koning - Robert W. Baird Dhruv Chopra - Morgan Stanley

Good afternoon and welcome to the Net1 Third Quarter Earnings. All participants are now in listen-only mode and there will be an opportunity for you to ask questions at the end of today’s presentation. [Operator Instructions] Please also note that this conference is being recorded. I’d now like to turn the conference over to Serge Belamant. Please go ahead, sir. Dr. Serge C. P. Belamant - Chairman of the Board and Chief Executive Officer: Thank you. Good morning to our investors in the US, and good afternoon to our investors in Europe and to those in South Africa. Thank you very much for joining us for our third quarter and fiscal 2008 earnings call. With me today as usual, Herman Kotze, our CFO, and also with me a member of our senior management team. Both our press release and our 10-Q are available on our website at www.net1ueps.com. We will be making forward-looking statements on this call and I call your attention to the cautionary language contained in our press release regarding the risks and uncertainties associated with forward-looking statements. In addition, during this call we’ll be using certain non-GAAP financial measures as defined under SEC rules, where required by these rules we have provided a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and exhibits in the press release dated yesterday. As mentioned on our previous call, it’s become apparent to Herman and I with previous practice of presenting our results in US dollars which is that in South African rand, which is non-GAAP is considered. Therefore, based on request and recommendation of our investors and analysts during this call we will primarily discuss our results in South African rand. We achieved a non-GAAP measure. We analyze our results of operations in annual report on Form 10-K. I would like to thank you and in our press release in South African rand to assist investors in understanding the changes in the real underlying trends of our business. Company’s results are significantly impacted by currency fluctuations between the US dollar and the South African rand. And, therefore, for clarification purposes I would like to reiterate that the use of South African rand is a non-GAAP measure and that the appropriate GAAP presentation is included in our report on Form 10-Q and press release and we advise our investors and analysts to review these results in terms of US GAAP. Finally, it is worthwhile noting that the South African rand was significantly weaker against the US dollar than during the same period they look while yeah. Regardless of the weakness of the rand I am once again delighted to report another set of number that have exceeded our expectation. Operations have continued to deliver solid financial results and cash flows and we remain firmly onset to achieve great feet our targeted growth for the current fiscal year. In analyzing these results we provide additional non-GAAP measurement, namely fundamental net income and fundamental earnings per share, that eliminate among other adjustments, the significant non-cash accounting increase required by GAAP specifically for the Prism acquisition. On this basis we recorded an increase in fundamental net income of 22% from South African rand 139.3 million for the three-months ended March 31, 2007 to South African rand 170.5 million for the three months ended March 31st, 2008, an increase in fundamental earnings per share of 32% to 298 cent South African for the three months ended March 31st, 2008. Our GAAP results in comparison would reflect a 52% increase in net income and 51% increase in EPS. Certainly, our best results for any quarter to-date. I am also pleased to report that the company’s in margin performing above my expectations when measured against the values goal that we set at the beginning of the financial year. These goals of course included certain formals, our EPS growth, our cash conversion ratio, liquidity of our earnings, the selection of sustainable business deals, meaningful market penetration, technological robustness, technological innovation, our new M&A program, our investment in social program, and the structuring and restructuring of the company to meet our worldwide objectives and ambitions. At this point, I would like to take a step back to reiterate to all our shareholders the vision of Net 1 and now we converted vision into strategy and action. And to focus on those deliverables rather than on the financial numbers themselves. These have been set up in detail related in 10Q and Herman will present them in detail later. Our core competitors as a technology group is to provide a multi platform secure payment and transacting processing system for environmental are not suited to technical solutions. We have consciously chosen to follow this route as we believe that we have a huge competitive advantage in this arena for a number of reasons including our experience is operated in this environment, our technological solutions and innovations which are a lot in top country to reproof existing technological platform, the cost effectiveness of our solutions, the equitability of our business model, our broader understanding of the complexities present in this environment. And I accept and support of the specific social economic and social political environment that we target. We also understand that working with and being part of such dramatic change in business, technological and social concepts can on occasion lead to term lines which are longer than anticipated or not inline with this world expectations, hence we are always redistributing projects, repricing initiatives and development to ensure that we are neither too early nor too late to cease a specific market opportunity. Our penetration can be greatly affected by the election program, budget approval, market readiness and many other factors which we have to manage at any one point in time. We never fall in short that we always have a number of opportunities which appear to be in a not ready state and others which are waiting on the wing. It often happens that somebody’s opportunities do not always materialize during the campaign they try. These opportunities do not go away, but extently swap priority with others which are in a more ready state. We continuously monitor in many job platform to ensure that we’ll continue to deliver our projected earnings growth while not entering into short-term deals which are neither sustainable nor inline with our strategic vision. Let me now take you to some of our initiatives. Firstly, a number of our investors have asked us to give some color on the latest SASSA press release. It must be noted that this tender is a second largest tender ever issued in South Africa. The value of this tender over a period of five years which is the average legal lines of these type of tenders is in a region of $2 billion. The reason of formal doubt that many organizations upfronting for this business. Governments and therefore being prudent by ensuring that the tender process has been followed correctly. These duly durations however point us to the fact that it is their intention to award this tender in a near term. We reiterate -- let me feel that we have a better chance in May waiting this tender as a whole or to be put in a position which is better than an existing one. Our track record, financial proposal, technological solution, and our social development programs is now likely to be matched by anyone of our competitors. Secondly, let me update you on our Ghanaian initiative. The Ghanaian contract was signed on 15th June 2007 for the implementation of the National Switch which is now branded E-ZWICH. Net1 was awarded its entire contract as a end-to-end solution. Over 42 companies actually tendered against us during this tendering process. The initial orders, which were placed to show the size of this tender exceeded 500,000 cards, 5,000 tender sale terminals to structure service which are our largest computer – back-end computer systems, production in call center, hardware and software, our UEPS banking application, our UEPS mobile banking application, debit and credit card switching software, integration to 24 banks, and the additional bank of what they call APEX bank which is responsible for an access of about 120 local community banks. The official launch of E-ZWICH by the President of Ghana took place on Monday the 20th of April 2008 at the state here that in Accra. More than 800 delegates from Ghana attended the launch. Successful one is implementation what performed inside leading banks in Ghana. Zenith Bank, Chuck Bank, Fidelity Bank, Guarantee Trust Bank and Merchant Bank. The central bank pilot play is to monitor these five banks for the period of one month then to allow further soft banks for another month. By July we anticipate participation from all banks which will take place. Each some of banks can then sign up and acquire a maximum of 50 merchants for the first month on a period, and Net 1 teens are all on same buy to assist with its massive rollout. Phase II of implementation is already commenced and here we are talking about integration of the ATM network system, our 12 map which is our one too many search engine power borrow metric search station, offline settlement as well as do offline card registration. New orders have already been placed in excess of the original one. In December and January of 2008 another 2000 point-of-sale devices were purchased and an additional 1.5 million cards were purchased. 810 registration devices and 254 wage payment workstations. Further more, further order we’ve placed in February and April as more banks joining the system, and further 1 million card were ordered, a further 3,500 point-of-sale devices another 528 registration stations and another 76 wage payment stations as well as from personal analyzation equipment. It is clear looking at these results that our Ghanian implementation has been improved the success for and is being completely backed in its entirety by the Central Bank of Ghana as well as the people network in it. Once again this project demonstrates the power of our teams, our sales force and technological solutions. We totally believe that due to this Ghanaian project, we will be able to implement other such large projects in many other African and Middle East countries. If I now turn my attention to another launch that was performed over the last during this quarter and that of course profit includes the launch in Iraq. Our contract in Iraq was signed on 25th of February 2008. The project has commenced and is on target for implementation in the back date during June for large registration in July for the commencement of war victim and martyrdom grant. An initial amount of $100,000 will be utilized for the initial pilot project and allocated for the various projects as stipulated below. If successful a further 900,000 beneficiaries will be paid through VPS totally one million in respect of government rand. The project will include 70,000 war victims and 10,000 martyrdoms and 20,000 employees salary and wages split between our Al Rashid (Ph) and now let’s begin then. : At the moment the Iraqian has committed to putting out in excess of the million cards during the first 6 to 9 months, 3 million cards in year two, and 5 million cards in year three. This is of course cumulative as we could expect to have up to 5 million cards within three years. This project once again demonstrates our ability to be able to enter a new country and to immediately over a very short period of time to provide this country with solutions which we have been searching for many, many years. We would thank at this point in time for the huge effort that have been made by sales, technical and business teams all led by I (Ph), Senior Vice President, Marketing and Sales, Brenda Stewart, present with us today, that have taken huge amount of the time to spend in the different countries. To teach implement, change our views, modify people’s thinking and assure that at the end of the day the UEPS become the payment instrument of choice in the developing economies of this world. If I now focus on a number of other countries in which we are already present, Namibia, Botswana and Nigeria. We are pleased to report that Namibia is a country which is now signing up a deal at the much faster rate with sometimes governments and sometimes the public sector, and is talking to now generate some profits. Our Botswana initiatives, which were a middle slow to kick-off adjust side a Government Deal for 100,000 people to pay a 100,000 gross on a monthly basis and that by itself will make up Botswanian venture profitable. Our Nigerian initiative is also commencing to show a little bit more activity with Diamond Bank that has commenced the implementation of their first project. But because of what has happened in Ghana we are now being approached by similar banks. When we takes banks we brought to in Ghana, the Nigeria banks they are now wishing to actually drain the Nigerian switch as they believe that Nigeria lucky to follow in the tracks of Ghana. We must also note that the tender, that had been canceled these are National IV System in Nigeria it’s just been reissued and of course it is our intention to follow this and to tender directly for this particular business, reinitiating the potential that we had all seen and perceived to be present in the Nigerian, in the Nigerian continent, in the Nigerian country. When we look at countries like Columbia you will see, you have press releases that our systems are now starting to generate good income but more importantly are starting to actually grab a last chunk of the production market. To believe that in a short while this business will become focusable and we will then be able to expand this activity into a fully-fledged UEPS system. Once again using prepaid cellphones as an entry to generate customer acquisition and to then allow these particular customers to make use of the full UEPS functionality. All in all, our hope let your both will assist you all to understand the little data our modus operandi. I am also exited to add that at last, our wage payment system in South Africa is about to delaunch in effect Monday at 4 p.m. in the region of KwaZulu-Natal. We are now able to utilize our version 14 technology that has been implemented successfully in Ghana. We are able to have a full access to banking last month and we have now picturized a number of financial products, which are going to be loans a staff and parcel of our offering. I am exited at our program and that we continue to be able to deliver the growth that we have managed to achieve for such a long time. Okay, thank you for your attention and would like to hand over to our CFO, Mr. Herman Kotze. Herman, over to you. Herman Gideon Kotze - Chief Financial Officer: Thank you, Serge, and greetings to our investors around the world. I will discuss the key trends of the third quarter of fiscal 2008 compared to the third quarter of fiscal 2007 along with the key trends between the third and the second quarters of fiscal 2008. We have also updated the Frequently Asked Questions section in our press release to provide further clarity on the questions we are asked most often by our investors and the analysts. Again, for clarification purposes, I would like to mention that my following discussion will be based on our results in South African rand as this provides the best indicator of the group’s actual operational performance and this is a non-GAAP measure. In order to review our results in terms of US dollars and US GAAP, please review our quarterly filing on Form 10-Q as well as our press release filed yesterday. For Q3 of 2008, our average rand-dollar exchange rate was 7.41 compared to 7.21 for Q3 of fiscal 2007. But sequentially from the second quarter we saw a significant weakening from the 6 rand 78 to the dollar level for Q2 of fiscal 2008. Looking at the current situation, the rand has strengthened against the US Dollar during the second half of our current quarter Q4 from a tied about 8 rands of a dollar during the last weeks of Q3 and it is currently trailing at around 7 rand 60 to the dollar. Any fluctuation of the rand obviously influences the dollar equivalent as a result of our South African operations, which is why we provide you with constant currency information in our press release and on this call, as the core operational drivers are clearly visible from these numbers. I am very pleased with our third quarter results as we have again achieved record selling and we have met or exceed mighty financial indicators of continued fundamental earnings growth, strong operating margins, and fantastic cash conversion. Before I continue further with the discussion of our results, I would like to discuss two key factors that I believe it will take us to comparability of our results. The first factor is the enactment of the Legislation to change the record secondary tax on companies in South Africa or STC from 12.5% to 10%. This change has resulted in a decrease in our fully distributed tax rates from 35.45 to 10, from the 36.89% during Q3 of 2008. In terms of US debt, we have to adjust our net deferred tax liability to restrict the new rate, which resulted in a reduction of our income tax expense and by implication increased our net income by approximately $5.9 million during this quarter. The adjustments in this quarter resulted in an overall effect of tax rate of 15.9%, which will obviously reverse to the new rate of around 35.45% going forward, excluding any impact. The change in the tax rate does not affect our revenues and operating income numbers. In addition, our fundamental net income and earnings per share excludes this positive impact of the change in the tax rate, as we view this event as non-recurring income direction, which occurs on ad hoc basis. The second factor affecting the comparability of our results is the large settlement payment from SASSA last year during the third quarter of 2007. Last year this payment received contributed to an increase in our net income for approximately $4 million and increased our earnings per share range by 4.4 USD. We discussed this payment as a link on the Q3 2007 earnings call and again I would like reiterate my belief that it would be incorrect to exclude this amount from our comparable fundamental net income and earnings per share on the basis of the loss in frequent nature and payment like these relates to contract cost affecting adjustments at one of our core activities and are not different from any of our many other non-recurring revenues, such as hardware and software sales but are not specifically excluded from the calculation of fundamental earnings per share. We indicated during the earning call last year that the settlement payments we had received constituted of recurring and non-recurring elements in order to facilitate a meaningful comparison and interpretation of the trend in our recurring transaction based activity. In last night’s earnings press release we specifically included the attachments C and D to provide you with a comprehensive analysis and comparison of the recurring and non-recurring items associated with the payments received last year. Accordingly, I believe that my following discussion describing the movement in our revenue and operating income for the Group and our transaction based operating segments, will be most meaningful if we exclude the non-recurring portion of the settlement payment received from SASSA in Q3, 2007. Revenue for our current quarter was 467.4 million rands up 17% year-over-year. Our gross margin 74% compared to 75% in the same quarter last year and 71% compared to our preceding quarter. However, in our business gross margin is not the best indicator of the Group’s profitability due to our diverse product offering. We focus on operating income, which increased by 17% year-over-year and by 11% quarter on quarter. The overall operating volume compared to last year was the same at 45%. Sequentially operating margin increased from the 41% in Q2, mainly as a result of the inclusion of more high margin software development revenues and increased margins from all of our operating segments due to improved trading conditions. Let’s now analyze the business in more detail using our reported segment. Our transaction-based activity segments increased revenues year-over-year by 9% and sequentially by 2%. Our operating income was static compared to the previous year but improved by 4% to a 150.8 million rand for this quarter. : This profit margin decreases was partially offset by the increased revenue from annual price increases received for welfare distribution and administration services. The price increases from our welfare payment contracts are regulated by the various service level agreements and are generally a factor of the South African inflation rate. We will continue to receive these inflation adjustments for as long as our current contracts are valid. In other words as long as the new tender order is delayed we will continue to show strong and robust growth from this business through the combination of slight increases mostly in the number of beneficiaries and the continued migration of our beneficiaries to our merchant acquiring network. The total number of payments services to beneficiaries increased from a 11.41 million for Q3 2007 to a 11.89 million during the current quarter, which is an increase of 4%. Sequentially the total number of payments services to beneficiaries does not increase as the guide in new beneficiary terms growth was offset by the much established renewal of beneficiaries following by a lengthy investigation by SASSA facilitated by ourselves into the eligibility of certain grant recipient. On the 29th of January this year, the Minister of Special Development announced that 288,682 beneficiaries had been removed from the Social Welfare system. We will estimate that a 110,000 of these beneficiaries were previously included in the 5,000 from SASSA. Looking forward we believe that the growth raising beneficiaries were reviewed based on the following reasons. One, we expect to complete the transfer of beneficiaries from the both of it’s sales and growth rate province by the end of June which will result in an incremental increase of another 70,000 beneficiaries saved by KwaZulu-Natal province. Two, on the 17th of March, the Minister of Social Development announced that there will be a review of the new states undertaken to ascertain eligibility for social grants. To ensure that to many South Africans who are currently excluded from the Social Welfare System as a result of updated evaluation criteria are included in the future. The Minister mentioned that the efforts to eliminate social grants that we spoke about before has resulted in additional available funds, which should be distributed to those who are most needing. And three, on 5th April, the Minister of Social Development reacted to a court order that requires the granting of social grants to Africans who were previously denied due to the lack of adequate identification document and specifically. The Minister indicated that SASSA would intervene the court order as a matter of urgency and that specific emphasis will be placed on the redesign of the information technology systems at the same time. During Q3 2008, our merchant acquiring system continued its impressive performance as we processed a total of 2.02 billion rand in transactions through our merchant acquiring network, compared to 1.63 billion rand during Q3 of 2007 and 1.87 billion rand during the preceding quarter, all on a completed pay cycle basis. The productivity of our installed terminal base of 4222 terminals increased to 953 transactions processed per terminal during the second quarter completed pay cycles compared to 807 during Q3 of last year and 815 during Q2 of fiscal 2008. This increase throughputs from the comparable period of fiscal 2007 demonstrates the continued rapid expectancy rate of our cardholders as they become familiar with and accustomed to the convenience associated with our merchant acquiring initiatives as they can receive and spend their grants at any time of the month. : During the current quarter EasyPay processed a 129.2 million transactions with an approximate value of 28.1 billion rand compared with a 108.8 million transaction proceeds with an approximate value of 24.3 rand during Q3 of 2007. And 135.3 million transactions processed with an approximate value of 30.3 billion rand during the preceding quarter. Due to the early Easter because we have accommodation for that this year, which typically results in increased consumer spending, we experience an increase in annual transactions versus to retailers during the first quarter of 2008 compared to the third quarter in 2007. Accordingly, due to this year of Easter holidays we expect the number of transactions processed during Q4 2008 to be slightly better than those during Q3 2008. The average fee per transaction during the second and third quarter of 2008 was approximately 20 South African cents. We do not expect a significant fluctuation in South African rand in the average people transaction during our next quarter. EasyPay’s operating margin excluding the effects of intangible amortization was 34% for Q3 of 2008 compared to 45% for Q3 of 2007 and 53% for Q3 of 2008. Our operating income margins and EBITDA has decreased as a result of cost incurred related to the implementation of a new integrated switch and operating platform, which we expect will improve operating efficiencies and reduce cost at EasyPay, once completed we expect the new integrated switch to greatly enhance our offering at EasyPay and enable us to take advantage of new business opportunity. We expect a new integrated switch to be at full operating capacity during the first quarter of 2009. Our Smart Card account segment had revenues of 64.5 million rands for Q3 of 2008, which is an increase of 3% year-over-year. The total number of active Smart Card accounts increased by 4% from 3.8 million during Q3 in 2007 to 4 million during Q3 of 2008. Sequentially, there was no significant movement in the number of active Smart Card. Our financial services business had revenues of 14.8 million rands for the third quarter of 2008, which is a decrease of 28% compared to Q3 of 2007 and a sequential increase of 2% compared to Q2 of 2008. Revenues from our traditional microlending business decreased during the quarter due to increased competition, our strategic decision not to grow this business and an overall lower return on traditional microlending loans as a result of compliance with the National Credit Act. Revenues from UEPS-based lending decreased during Q3 2008 compared to Q3 2007 primarily due to the lower number of loans granted. In addition, on average, the return on these UEPS-based loans was lower during Q3 2008 compared to Q3 2007. The final operating segment is our hardware, software and related technology sales segment. This segment traditionally includes revenues that occur on an irregular or once-off basis and it can be difficult to predict sales from year-to-year. This segment includes the sales of UEPS-related hardware and software as well as the sales of the Subscriber Identity Modules, SIM cards, cryptography services and SIM card licenses. The segment had revenues of 112 million rand for Q3 of 2008, which is an increase of 77% year-over-year, mainly as a result of the delivery of hardware and customization and development activities performed during the quarter related to the tender to provide Ghana with a National Switch and Smart Card system from which we generated revenues of approximately $4.3 million during Q3. To-date, we have recognized revenue amounting to $10.8 million relating to the Ghana contract. As mentioned by Serge earlier the e-zwich was officially launched in Ghana in April and we expect to complete the initial installation and customization of this system during Q4. We anticipate that the initial contract phase will have an overall value of $17.4 million. The operating margin of this segment increased from 11% for Q3, 2007 to 36% in Q3, 2008 mainly as a result of the high margin software deliveries to Ghana, terminal sales to our bank customers in Africa and improved trading conditions in Western Africa. As discussed previously, the reduction in the STC rate was in excess during Q3 of 2008 which resulted in an effective tax rate for Q3 of 2008 of 15.9% compared to 38.2% for the third quarter of 2007 and 36.7% for the second quarter of 2008. As previously announced on February 20 of 2008 the Finance Minister of South Africa announced another decrease in the sector created from [inaudible] and domicile companies from 29% to 8% for the fiscal year ended in the month of April the 5th 2008. Once enacted, our fully distributed sector (Ph) will be further reduced from the current rates of 35.4% to 34.55% by some African domicile subsidiary. Of course when ATC is abolished as expected next year, our effective tax rate for the South African operations will decrease to 28%. We have illustrated our interpretation of the potentially effects of the abolishment of ATC in question 21 of the frequently asked question section vide attachment E of our press release. I’m very happy with the progress made by equity accounted investments in Namibia, the former Columbia and Vietnam. These fledgling businesses continued to grow and as certain indicators they all have exciting prospects in terms of business development. And I guess, I said our positive net income of a 199.9 million rand net of interest increased to 52% year-over-year and GAAP earnings per share increased by 51% on a constant currency basis. On the same basis, fundamental earnings per share for Q3 of 2008 increased by 21% compared to Q3 of 2007. Before turning to our balance sheet, I would again like to mention that our tax provided for operating activities can and does fluctuate significantly as a result of the timing for the commencement of our commencement of our monthly welfare payment activity, specifically through merchant stores. As a general rule however, we expect a 100% or more cash conversion ratio over any completed pay cycle period. Now turning to our balance sheet, as of March 31, 2008 we had $235.6 million of cash and cash equivalents. The business remains very cash generative and I will remain comfortable that we have sufficient liquidity between our cash and cash equivalents and our current credit facilities to fund our working capital requirements through the next four quarters. As I have cited before, I will give the balance sheet item called pre-funded social royalty grants receivable highly liquid, very short-term receivable, best described as a near cash equivalent. We had $24.3 million of pre-funding outstanding at the end of March. The decrease in our accounts receivable compared to June 15, 2007 is largely due to all provincial governments paying us the amounts outstanding before March 31, 2008. Our other payable, we’ll not be diligent. The increase is primarily due to merchants receiving settlement of the grant facilities in the last day of Q3, 2008 during the first days of Q4, 2008. Our VISA income tax liability did decrease significantly mainly as a result of the reduction in our previous years tax rate during the third quarter. As discussed in question 20 of the frequently asked question section of our press release, we believe it’s most appropriate at this point in time to retain our cash reserves to finance the expansion of the business, to reduce the significant costs of our current and possible future pre-funding of welfare grant obligations and to execute relevant acquisition opportunities. Overall, the quality of our earnings and financial strength as reflected by our balance sheet is testimony to the group’s activity and our ongoing achievements. Based on the assumption that our current business activities and initiatives will continue as usual, we expect to comfortably meet our fundamental earnings per share target on a constant currency basis for fiscal 2008. I want to reiterate that regardless of prevailing market conditions, market sentiments and inherent or implied activity, we will continue to focus on those activities and opportunities that will result in the profitable expansion of our brand business and products. We believe that our tangible earnings track record and operational successes show us the way in the intangible consumed about the future success of our Group. With that, we will be happy to take your questions. Operator, please proceed with Q&A now.

Thank you very much sir. (Operator Instructions). Our first question comes from Dave Koning of Robert W. Baird. Please go ahead.

Yeah, hi guys. And thanks for all the detail on the call.

Hi Dave.

Yeah, I guess first of all in Ghana, you sort of talked about this year 17 million or so of hardware, software implementation type revenues, and then you kind of talked about for the first time another 5 million of revenue coming on to fiscal ’09, but I am wondering in addition to that you talked about some of the cards, the 2.5 million cards et cetera. I mean are we in a situation in fiscal ’09, where we actually could get up to the same amount of revenue in fiscal ’09 as we did in fiscal ’08 based on some of the cards et cetera coming on?

Yeah, it’s Serge yeah, you know I’ve got when that will be and obviously we’ve been discussing this. There are two aspects if we got to try to understand I think, at the moment if you look at the total amount of cards that had been purchased, its already in excess of 3 million. The Ghanaian population is 22 million. So, we believe that at the moment that the rate that the banks are actually coming on board, the chances are that we are going to see in my view the number of cards growing to perhaps around the 6 million mark before the market will reach a stage which I wouldn’t call it saturation, but it will reach a mature stage. So we can, we believe that as long as the project continues to go on track as it is going now. We don’t see any reason why the next 12 months should not see the similar sort of those amount of cards being bought as what’s been bought to date.

David, so if I can add to that. Of course the initial customization and software related to invoicing is not going to be repeated in the next quarter over the higher margin invoices, so…

Of course.

But if we talk about hardware then this validates your drive.

Then of course you also got the terminal base, now they are really on - around 15,000 terminal and again we believe that with that number of terminals if you look at the cost to terminal ratio, there is absolutely no doubt that there is a still potential in a country like Ghana to grow from 15,000 to around in my view 45 to 60,000 terminals. So, it certainly is a huge amount of potential for more terminals to be implemented now what I think is a little bit more exciting is I think that we tend to forget that we also get a certain amount of royalties or license fees that are payable on a yearly basis based on the number of cards that are actually implemented and that those royalties do bring us basically 100% margin business I had marked it will be $1 million or a $1.5 million per annum but at the end of the day it’s a pure margin that simply makes up for some of the stuff that Tom is talking about that’s one off.

Okay

On top of it, you’ve also got some very, very nice maintenance contracts which if our technology is as robust as what we believe it is can bring us anything between 12.5 to 6% of the value of the hardware but can bring us anything up to about 8 to 10% of the value of the software on an annual basis as well. So its another lovely income stream that will be coming in and outside of all of this we’ve still got the other projects which each bank individual, the central bank are working on, well they might actually decide and I don’t know if you remember but I did mention that we have sold them. There are a number of other project which include per example e-government application. That has not been included, now can it be wise to go for a IE government application for voting or e--government for ID cards, we would be talking about substantial amount of money, in fact more expensive than our banking products that we really believe the Ghanaian government at this point in time might also go for. Now, apart from all of this, we have still brought out with two initiatives that I think I had mentioned in one of my previous discussions. We are now working closely with the central bank to actually see where net one can participate. It is no longer simply the provision of technology but also utilizing the technology ourselves as a barred sales or in conjunctions with local partners to actually making money out of V-technology rather than out of PD selling or maintaining the technology. So I feel very comfortable but I will be surprised that Ghana continues to grow at a rate that its going. I will be very surprised if we do not generate at least equivalent numbers over the next 12 months or in fact in the next financial year as we have this year.

Okay that’s very helpful. Is the main incremental revenue stream really have on a per card basis so that you know the 3 million currency is already assigned, is that something like you know just to throw out the numbers the $2/$3 a year per card or how should we think about that?

We’ll be looking -- the 2 of $3 per card was something is a very good number. You got to look at that that for every card that is issued there should be $2 or $3 per months for the revenue that is generated by the people that you too will have the card to run a business. Okay so lets realize that one should really start to looking this and it could be 3, it could be 4, it could be 5. Now obviously we want to participate in those businesses if we can. We are already looking at one or two businesses that we have discussed with them which involved for example the fitting up of a pre-paid Eton (Ph) switching facility which as you know we do in South Africa pre-paid electricity, bill payments. Now there is no doubt that over top of products that we are in fact offering is through EasyPay. So this is where the second waves comes in with the outside of what we’ve made so far which otherwise can be replicated for at least another year, the chances are by then we will be in a position to generate in my view even bigger profits. After the second wave initiatives once the technology has become ubiquitous and is in fact in the hands of all Ghanians.

Great, thanks and just a final question, just when we look at Iraq, which is a nice job kind of laying out, kind of where you get the economics from Iraq. It looks like the biggest potential revenue stream could be that 10% of any transaction of a huge interchange type figure. You know how big can that be? How are you thinking about the size of transactions in Iraq and what the revenue stream from that piece of the pie will be?

:

Wow that’s great to hear thank you.

Hey Jack.

(Operator Instructions). Our next question comes from Dhruv Chopra of Morgan Stanley. Please go ahead.

Hello gentlemen.

Hello Dhruv.

I just wanted to catch a little bit on the beneficiary issue again and you know I know you provided some color that there’s been some eliminations that has taken for you people are, first of all could you give us a sense on what the gross additions were for you guys if you have that data available net of whoever came off, and then secondly as the welfare net is expanding with the child support grant age going up the pension age coming down, and the higher grant amounts, when should we start to see some of those things impact your numbers?

Dhruv, on the first question, I don’t have the exact information available, but assuming that the beneficiary will always remain flat from Q2 to Q3, and we know that about 110,000 beneficiaries remove off the ones that they’d been identified as fraudulent, I would say that the increase in new beneficiaries is probably more or less the same amount so 100 to 110,000 people over the quarter. On the second part there are you know some nuances in terms of what was announced by the Minster and now that the detail has been set out for us. The reduction in the old age grant qualifying age for male applicant from 65 to 60 is a process that will be phased in and the way that they will do it is in this current financial, government financial year. The age will be reduced from 65 to 63. a year thereafter it will be reduced from 63 to 61, and then it will be reduced in the third year to 60. So, they are following a phased approach, current estimation of that is probably 500,000 additional men in the country who would today qualify for this additional grant based on the age difference. We will think, I think we will start to see the impact of that as it was implemented in April when government’s new policy is sorted so I think that we will slowly start to see those numbers also coming in specifically in Q4, I think, there are obviously a few administration processes and treasury to do that. But I think it will start gathering momentum towards the end of this current calendar year. and the Child Support growth grants and reducing the age by one year, the government has indicated that that will commence on the 1st of January 2009. So we will not see any impact of the reduction in the qualifying age for Child Support Grants for the remainder of this calendar year and we will start to see the impact really I think in Q3 and certainly in Q4 of the following -- of fiscal 2009 for us.

Okay. Great. And, then, on the wage payment launch for next week -- I mean, can you share with us sort of generally what the strategy is, how you’re going to go about acquiring the customers, are we talking about a few thousand people here, are we talking tens of thousands, hundreds of thousands? How are you going to reach these employers and employees?

I think Dhruv nothing has changed from the previous thing. I think Monday’s launch is really the official launching of the…

Ribbon cutting.

It’s ribbon cutting. We obviously have numerous potential plans which are more from -- not so much working people, but obviously employers that are attending the launch and obviously we have invited all of the different structures that we have identified and that are willing to go out and to actually start marketing and selling the account as a product to their own customer base. So, Monday -- after Monday, we’ll be in a position to actually come back in a very, very short while after that to be able to see where we have got four or five mainstream organizations that that all represent like I mentioned before many, many hundreds of thousands, some of them millions of people that are presenting their own plans to us to actually say to us this is the way that they are going to go that and to actually touch their own customers utilizing our own product base. So, I think give us the week of next week to be able to do the launch, to consolidate all of the different people that are going to be there. We will obviously target ourselves our own customer base directly because we want to make sure that obviously it happens. But, we are not going to be able to hit 2 million people by going door to door or by signing up one or two employers. The intention of the year is to certainly utilize those four organizations to actually go out and market the product to their own customer base. They already have methodologies to do this because they touch them and see them on a weekly (technical difficulty). So, that’s really the plan Bruce (Ph) and we will be able to contractualize that some time during the next week or two.

Okay. Great. And, then, just final question if I may? Serge, in your prepared remarks, you touched on very briefly something about a new M&A program. You guys are sitting now on 4.5 bucks a share in net cash. Can you sort of just walk us through what your thought process is on the M&A side and where you potentially maybe looking?

Well, if you think about the money we have in the bank and the fact that we unless mark-up relation, (inaudible) incorrect we lack on a full (Ph) of 8. So, our thinking that the company should buy itself as an M&A program. Now, the jokes apart, Herman has probably told you and – I mean, you know better than us that obviously until this SASSA agenda is finalized after which we will know how much cash do we really need to have in our coffers to do the pre-funding if pre-funding in fact become the requirement there is still a chance that they might actually change their mind and award the tenders and do the pre-funding through treasury which candidly in our view will always make more sense. But, just on the -- we have made a decision at the executive level whereby we are now going to commence a number of haths around the world and that will imply that either we will have to spend some money in setting up ourselves or make some form of acquisition that is going to give us a footprint, the knowledge of the area, some access to some technological people or business develop people. In order to go a little bit faster long-term than at the speed that we are going now and I think that’s the top of M&A acquisition that I am referring to that we firmly believe that this is a good time in in and half of the company to actually perform this acquisition if they are available and they make sense and if they make money in order for us actually implement UEPS at a faster pace.

Great. Thank you very much.

Thank you, Dhruv.

We got time for last question.

Gentlemen, we actually have no further questions. Would you like to make some closing comments?

Well, just so much that well we like to once again to thank very much all of you for taking the time and attending this presentation. I hope that it is clearer in your minds in terms of what we are doing as a company and where we want to go. We are certainly still very, very, very excited about what we have achieved. We are very, very excited about what we have managed to do in Ghana. We still believe that is something that’s has not been achieved at any time by anybody anywhere in the world and certainly in a short space of time. We really believe and we really have some information from a number of other nearby countries that we believe that Ghana will give us the launch pad that you require to sign-up many other countries in Africa in a much – at a much faster rate. And, we really believe that that will step us up to become the organization such as a VISA, MasterCard for the developing economies of the world and we still haven’t sort of -- I know that other people sometimes they will not be a great dream. I think that dream is starting to become more and more like a reality. So, we are very, very excited and very much like to thank our shareholders, all the ones that have been sticking with us through thick and thin and thank you very much as I said to all of you for being with us and making the company and helping us to make the company what it is today. Thank you.

Thank you very much. On behalf of Net 1, that concludes this afternoon’s conference. Thank you for joining us, you may now disconnect your lines.