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Supreme Court of Appeal rules against SASSA and CPS regarding 2014 implementation cost recovery
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”)
Supreme Court of Appeal rules against SASSA and CPS regarding 2014
implementation cost recovery
Johannesburg, October 1, 2019 – Net1 UEPS Technologies, Inc. (“Net1” or the
“Company”) (NasdaqGS: UEPS; JSE: NT1) today announced that the Supreme Court
of Appeal of South Africa (“SCA”) has dismissed the Cash Paymaster Services (Pty)
Ltd (“CPS”) application. CPS petitioned the SCA to grant it leave to appeal the March
2018 High Court order, which set aside the agreement between CPS and SASSA and
the subsequent payment of ZAR 317 million (R277 million excluding VAT), and
ordered CPS to refund the amount with interest from June 2014 to date of payment.
As previously disclosed by the Company in June 2014, CPS received approximately
ZAR 277 million from SASSA related to the recovery of additional implementation
costs it incurred during the beneficiary bulk re-registration process in fiscal 2012 and
2013. After the award of the tender in January 2012, SASSA requested CPS to
biometrically register all social grant beneficiaries (including child grant beneficiaries)
and collect additional information for each child grant recipient, materially higher than
what was originally cited in the Request For Proposal. CPS agreed to SASSA’s request,
and as a result CPS performed approximately 11 million additional registrations beyond
those that it tendered to register for as part of the quoted service fee. Accordingly, CPS
claimed a cost recovery from SASSA, supported by a factual findings certificate from
an independent auditing firm. SASSA agreed to pay CPS the ZAR 277 million as full
settlement of the additional costs incurred by CPS.
“We are disappointed with the SCA judgment and will study the judgment to determine
our next course of action,” said Herman Kotzé, CEO of Net1. “We reiterate our view
that the additional registrations we performed based on SASSA’s specific request,
resulted in the identification and removal of a significant number of ghost beneficiaries
and duplicate grants, and had the direct result of saving the South African government
more than ZAR 2 billion per year. The cost incurred for the additional registrations was
recovered without any profit component. CPS performed the work requested by SASSA
on a bona-fide basis, and it is unfortunate that it once again finds itself being prejudiced
by apparent shortcomings in SASSA’s procurement processes,” he concluded.
This ruling is expected to temporarily delay the filing of the Company’s Form 10-K for
the year ended June 30, 2019, which was originally scheduled to be filed today, as the
Company has to assess the potential impact, if any, of this ruling on the Company’s
financial statements.
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 through DNI 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.
Investor Relations Contact:
Dhruv Chopra
Group Vice President 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
October 1, 2019
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 01/10/2019 07:05:00
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