Controversial JSE-listed Net 1 UEPS Technologies announced on Wednesday it has experienced unexpected delays in the filing of its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018.
Net1, a shareholder in South Africa’s mobile phone firm Cell C, announced on Friday that it will restate its financial earnings for the year ended June 2018 due to an accounting error. For more read: SA’s Net1 Will Restate FY Earnings; Cites Cell C’s Accounting Error
The company said is in the process of preparing restated financial statements for the year ended June 2018, which the company anticipates filing with the SEC (United States Securities and Exchange Commission) on Form 10-K/A for the year ended June 30, 2018, as soon as practicable.
“Net 1 UEPS Technologies, Inc. has experienced unexpected delays in the filing of its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 within the prescribed time period due to the circumstances described below,” Net1 chief financial officer, Alex Smith, on Wednesday informed investors through a filing on the United States Securities and Exchange Commission.
“The delays could not be eliminated without unreasonable effort or expense.”
On August 2, 2017, Net1 through its subsidiary, Net1 Applied Technologies South Africa, bought 75 million shares of Cell C, a private mobile phone operator, for R 2 billion ($151.0 million) in cash.
At the date of purchase, Net1 elected the fair value option for its investment in Cell C in accordance with Accounting Standards Codification (ASC) 825 Financial Instruments.
“The company incorrectly used the guidance in ASC 320 Investments-Debt and Equity Securities regarding available-for-sale equity instruments with readily determinable fair values,” the company informed investors on Friday.
The company said it was currently assessing the impact of this restatement on its internal control over financial reporting.
On Wednesday, Net1 informed investors that it intends to file an amended Annual Report on Form 10-K for the year ended June 30, 2018 to restate its consolidated financial statements as of and for the year ended June 30, 2018, and to revise selected financial data for the year ended June 30, 2018 and the quarterly information for fiscal 2018 to reflect these change, in each case to reflect the correction of this error.
“The company is reassessing the effectiveness of the company’s internal control over financial reporting in light of the errors described above,” said Smith.
He added that the company currently expects that it will be able to conclude the remaining work in time to file the Form 10-Q within the five day extension period.