JOHANNESBURG – Net1 UEPS Technologies' loss of the lucrative contract to distribute billions of rand to social grants recipients and its poor financial reporting on Friday came back to bite the firm, its stock plunging 46 percent.
The share price closed 46.86 percent lower at R50.54 on the JSE.
The group said it was in the process of preparing restated financial statements for the year ended June 2018, due to it erroneously dotting down its purchase of its stake in Cell C as “available-for-sale” equity instrument. The firm said this resulted in fair value adjustments being recorded in other comprehensive income instead of net income.
Herman Kotzé, Net1 chief executive, said on Friday that the mistake was only picked during the preparation of the results for the latest quarter. He said the restatement had no effect on the carrying value of its Cell C investment, but could not be drawn to reveal how its accounting officers did not pick up the error earlier on.
“The company is currently assessing the impact of this restatement on its internal control over financial reporting… The error is being corrected by moving the $25.2 million (R361m) fair value adjustment from other comprehensive income to nett income for fiscal 2018,” Kotzé said.