Item 2.05. Costs Associated with Exit or Disposal Activities.
Net 1 UEPS Technologies, Inc. (the "Company") has incurred significant losses
since its contract to distribute social grants expired in September 2018. A
strategic imperative for the Company is to return its South African Financial
Services business to breakeven and then profitability as soon as possible. As
part of the cost optimization process that was discussed in its last earnings
call, the Company performed a review of its labor structure and determined that
a number of its defined employee roles would need to be terminated due to
redundancy. The Company therefore determined to embark on a retrenchment process
pursuant to Section 189A of the South African Labour Relations Act ("Labour
Act"). The Section 189A process requires an employer, before retrenching, to
consult with any person affected by the retrenchment process for 60 days. The
Company commenced this process on January 10, 2022. Depending on the nature and
outcome of the retrenchment process, the Company expects to incur between ZAR 85
to ZAR 105 million, or USD 5.5 million to USD 6.7 million at the USD/ ZAR
exchange rate of USD1: ZAR 15.57, in cash costs during the first half of
calendar 2022, principally consisting of severance and related payments. This
process, along with significant other operational cost savings initiatives, are
designed to support the sustainability of the Financial Services business.
Forward-looking statements
Some of the statements in this Form 8-K constitute forward-looking statements.
These statements relate to future events or the Company's future financial
performance and involve known and unknown risks, uncertainties and other factors
that may cause the Company or the industry in which it operates actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed,
implied or inferred by these forward-looking statements. Such factors include,
among other things, those listed under Item 1A.-"Risk Factors" in our Annual
Report on Form 10-K for the year ended June 30, 2021. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "could," "would," "expects," "plans," "intends," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of such terms and other comparable terminology.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it does not know whether it can
achieve positive future results, levels of activity, performance, or goals.
Actual events or results may differ materially. The Company undertakes no
obligation to update any of the forward-looking statements after the date of
this Form 8-K to conform those statements to reflect the occurrence of
unanticipated events, except as required by applicable law.
You should read this Form 8-K with the understanding that the Company's actual
future results, levels of activity, performance and achievements may be
materially different from what it expects. The Company qualifies all of its
forward-looking statements by these cautionary statements.
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