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NET 1 UEPS TECHNOLOGIES INC - Net1 provides update on EPE accounts court process; expects Q2 2019 loss

Release Date: 31/01/2019 16:15
Code(s): NT1     PDF:  
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Net1 provides update on EPE accounts court process; expects Q2 2019 loss

Net 1 UEPS Technologies, Inc.
Registered in the state of Florida, USA
(IRS Employer Identification No. 98-0171860)
Nasdaq share code: UEPS
JSE share code: NT1
ISIN: US64107N2062
(“Net1” or “the Company”)

Net1 provides update on EPE accounts court process; expects Q2 2019 loss

Johannesburg, January 31, 2019 – Net1 today announced that on January 29, 2019, the High Court
of the Republic of South Africa (Gauteng Division, Pretoria) handed down its final judgment in
the Company’s application to direct SASSA to pay social grants into the EPE accounts of
recipients who had previously made biometric elections to receive their grants into their EPE
accounts, but had not submitted a SASSA-prescribed form called an “Annexure C form”. The
High Court reversed a portion of its November 28, 2018 interim order that directed SASSA to pay
grants into the EPE accounts of recipients who made those biometric elections without submitting
the Annexure C form. The effect of the final judgment is that, while SASSA is required to
promptly pay social grants into EPE accounts of those recipients who have submitted the
Annexure C form electing to have their grants paid that way, SASSA is not required to pay grants
into the EPE accounts of those recipients who have not submitted the Annexure C form, despite
having provided their previous biometric consent and may continue to auto-migrate those grants
to SAPO accounts. The High Court did not award costs.

The Company is currently evaluating the options available to it, including an appeal against the
judgment.

“SASSA failed to implement the High Court’s interim order and pay the social grants for the
December, January or February payment cycles into the EPE accounts for those customers who
have previously been auto-migrated without consent. Unfortunately, this has had a material
adverse impact on our financial results, and we expect to report a significant loss for the second
quarter of fiscal 2019. This loss arose primarily from the deployment of our full infrastructure to
service current and new customers during that time, and a substantial increase in our allowance
for doubtful finance loans receivable on loans extended to our EPE account holder base,” said
Herman Kotzé, CEO of Net1. “Our near-term focus is to ensure that we right-size our South
African operations and get them to a break-even level by Q4 2019. We remain in a net-cash
position, and our non-EPE-related businesses remain meaningful positive contributors to the
Group.”

About Net1 (www.net1.com)

Net1 is a leading provider of transaction processing services, financial inclusion products and
services and secure payment technology. Net1 operates market-leading payment processors
in South Africa and the Republic of Korea. Net1 offers debit, credit and prepaid processing and
issuing services for all major payment networks. In South Africa, Net1 provides innovative low-
cost financial inclusion products, including banking, lending and insurance, and is a leading
distributor of mobile subscriber starter packs for Cell C, a South African mobile network operator.
Net1 leverages its strategic equity investments in Finbond and Bank Frick (both regulated banks),
and Cell C to introduce products to new customers and geographies. Net1 has a primary listing on
NASDAQ (NasdaqGS: UEPS) and a secondary listing on the Johannesburg Stock Exchange (JSE:
NT1). Visit www.net1.com for additional information about Net1.

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and
uncertainties. All statements, other than statements of historical fact, included in this press release
regarding strategy, future operations, future financial position, future revenues, projected costs,
prospects, plans and objectives of management are forward-looking statements. The Company
may not actually achieve the plans, intentions or expectations disclosed in its forward-looking
statements. Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements that the Company makes. Factors that
might cause such differences include, but are not limited to: obtaining right to appeal the
judgment and the result of such appeal, if right to appeal is granted; finalization of its second
quarter of fiscal 2019 results, as well as other factors, many of which are beyond the Company’s
control; and other important factors included in the Company’s reports filed with the Securities
and Exchange Commission, particularly in the “Risk Factors” section of the Company’s Annual
Report on Form 10-K for the fiscal year ended June 30, 2018, as such Risk Factors may be
updated from time to time in subsequent reports. The Company does not assume any obligation to
update any forward-looking statements, whether as a result of new information, future events or
otherwise.

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

Media Relations Contact:
Bridget von Holdt
Business Director – BCW
Phone: +27-82-610-0650
Email: bridget.vonholdt@bm-africa.com

Johannesburg
January 31, 2019

Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
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