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Net1’s CPS to challenge High Court’s order regarding SASSA 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”)
Net1’s CPS to challenge High Court’s order regarding SASSA implementation cost recovery
Johannesburg, March 23, 2018 – Net1 (NasdaqGS: UEPS; JSE NT1) today announced that the North
Gauteng High Court (“the Court”) has pronounced judgment in the application brought in March 2015 by
Corruption Watch, a South African non-profit civil society organization. Corruption Watch sought an
order that the Court review and set aside the decision of SASSA’s Chief Executive Officer to approve the
payment to the Company’s subsidiary, Cash Paymaster Services (Pty) Ltd (“CPS”), of ZAR 317 million
(approximately ZAR 277 million, excluding VAT) and directing CPS to repay the aforesaid amount with
interest. Corruption Watch claimed that there was no lawful basis for the decision to make the payment to
CPS, and that the decision was unreasonable and irrational and did not comply with SASSA’s Supply
Chain Management Policy.
The Court today ordered that:
- The variation agreement between SASSA and CPS made on June 15, 2012, and the resultant
payment made in the sum of ZAR 317 million be reviewed and set aside;
- CPS is ordered to refund the said amount of ZAR 317 million to SASSA with interest from June
2014 to date of payment;
- The respondents are, jointly and severally, ordered to pay the costs of the application, including the
cost of two counsel.
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
re-registration process in fiscal 2012 and 2013. After the award of the tender, SASSA requested that CPS
biometrically register all social grant beneficiaries (including child grant beneficiaries) and collect
additional information for each child grant recipient. 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 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 Court’s judgment and will immediately seek leave to appeal,” said
Herman Kotzé, CEO of Net1. “The additional registrations we performed at SASSA’s 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 R2 billion per year for the last five
years. 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 processes,” he concluded.
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 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. Through
Masterpayment, Net1 provides payment processing and enables working capital financing in Europe.
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.
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, which include, without limitation, whether the company will be granted leave to appeal the
High Court judgment, and if so, whether any appeal will ultimately be successful. A discussion of various
factors that may 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
Media Relations Contact
Bridget von Holdt
Business Director – Burson-Marstellar South Africa
Phone: +27-82-610-0650
Email: bridget.vonholdt@bm-africa.com
Johannesburg
March 23, 2018
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 23/03/2018 03:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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