Good day, ladies and gentlemen, and welcome to the Net1 Q3 2020 results. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Dhruv Chopra. Please go ahead.

Thank you, Irene. Welcome to our third quarter 2020 earnings call. With me on the call today is our CEO, Herman Kotzé; and our CFO, Alex Smith. Our press release and a supplementary investor presentation are available on our Investor Relations website, ir.net1.com. As a reminder, during this call, we will be making forward-looking statements, and I ask you to look at the cautionary language contained in our press release regarding the risks and uncertainties associated with forward-looking statements. In addition, during this call, we will be using certain non-GAAP financial measures and we have provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. We will discuss our results in South African rand, which is a non-GAAP measure. We analyze our results of operations in our press release in rand to assist investors understanding the underlying trends of our business. As you know, the company’s results can be significantly affected by currency fluctuations between the U.S. dollar and the South African rand. We will have a question-and-answer session following our prepared remarks. And with that, let me turn the call over to Herman. Herman Kotzé: Thank you, Dhruv and good day to everyone. I hope everyone is healthy and safe during these unprecedented times. Just like many of you, most of us have been working from home for the last several weeks as South Africa remains on a national lockdown. Similar to every business around the world, the COVID-19 pandemic has impacted our operations. During this time, though, I’m proud of our ability to ensure we are doing the right things for our employees, our customers and the communities that we serve. Today, I would like to focus on four key things: first, a brief overview of our Q3 results as well as a discussion…

Thank you, Herman, and good day to everybody. Given the structural changes in the business over the past 12 months, the comparison of our third quarter results to Q1 and Q2 is more relevant than the year-over-year comparisons. Adding to that, the effects of COVID-19 have direct bearing on the operations, and therefore I will spend more time than normal discussing quarter-to-date trends for Q4. Though the pandemic is global in nature, given the current mix of our operations, the most relevant and material impacts for Net1 are experienced in South Africa and, therefore, limited parallels can be drawn between trends in the U.S., Europe and many other markets, and those that we see in South Africa. Unsurprisingly, our near-term financial results will depend on the severity of the situation in South Africa, the length of the lockdown and curtailed economic activities, and finally, the trajectory of the recovery once restrictions begin to be lifted. Given our business is largely focused on the un-banked and under-banked, our customer behavior is more dependent on necessities and less so on discretionary spend and habits. We, therefore, do not believe that there will be any systemic shift in the behavior of our target markets that we recognize that actions like social distancing, safety, etcetera, will likely be more pronounced. Following the disposals of the last 2 months, we have a very strong balance sheet, a good handle on our costs, having gone through a substantial cost reduction exercise over the past year and, therefore, have reasonable visibility on our expected cash burn over the next two quarters. Despite the pandemic, we’ve not laid off any employees nor reduced salaries, with the exception of the management team and directors, as discussed by Herman, and our employees are all productive and eager to execute on…

Thank you. [Operator Instructions] Our first question is from Scott Buck of B. Riley.

Hey, good morning guys. I am curious if you could tell us when you became aware of the Investment Company Act issue and what are the options to remedy that? Herman Kotzé: Sure. Hi, Scott. The company has been aware of the investment company issue for a while, and it’s been part of our planning over the last year or so. We had specific plans in place to deal with this issue. But unfortunately, the change in circumstances over the last 3 months has resulted in the current position that we find ourselves in. It is a fairly complicated piece of legislation that one needs to analyze and we don’t have enough time, I think, on this call to go through all of it. But from our perspective, the key matters that had an influence on the current situation obviously revolves around the Bank Frick option, which we did not exercise, that was clearly part of the plan to remedy the situation as well as the significant decline in the South African rand, which had a resultant effect on the relative valuation of our South African assets. So this is an issue that we are aware of and that we plan to deal with. We still intend to deal with it as efficiently and as swiftly as we can. There is a strategic review currently underway to determine the best course of action, which is not going to take a very long amount of time. And if depending on the outcome of this investigation we need to ask for an exemption from the SEC, then that is what we will do, but we hope to certainly deal with this as expeditiously as possible.

What are the ramifications if you are declared an investment company and you can’t get any kind of forbearance from the SEC? Herman Kotzé: So it’s – as I said, it’s a fairly complicated area of the law. But I think the best description of the various impacts or implications that this may have is actually contained in our Q. So you’ll see that there’s a risk factor that we’ve included over there, and I’ll refer you to that for a concise description of what it means.

Alright. And in terms of timeline to gain clarity, I mean, are we talking about 3 months or longer? Herman Kotzé: Yes. So obviously, some of it may not be entirely under our control when – as far as the regulators are concerned. But from our perspective, we certainly intend to complete everything that we need to do within the next 3 months.

Great. Next question for me, in terms of the strategic review, it feels like we went through this exercise about a year ago, and that’s what kind of drove the decisions to sell KSNET and DNI. What’s different this time? And why are we doing this again? Herman Kotzé: I think a couple of things. Obviously, there have been quite a few changes recently in terms of the corporate structure. We have a new number one shareholder in the form of Value Capital that came on board a month ago or so or during the last few weeks. And as part of the cooperation agreement that we’ve signed with them, we agreed to embark on a strategic review of the company. We also have 5 new non-executive directors on the Board, and we believe that it’s important and also fair to them to embark on a further review. Obviously, during these times, Scott, with the world changed as it has and various business activities impacted in different ways, we think that now is a prudent time to actually just – it’s not a brand-new review, I would say. This is a continuation of a plan that we’ve been propagating and that we started communicating about a year ago. So for those very specific reasons, we think it’s opportune for us to complete it now.

Alright guys. I appreciate the answers. Thanks. Herman Kotzé: Thank you.

[Operator Instructions] We have a question from Bill Gordon of Gordon Capital.

I was going to go down the same route as Scott just did, but he did it. And everything’s figured out so I don’t really want to reopen that story. But now that we have cash there, can we get some sort of direction where we’re going to go with the cash when we don’t get a dividend, when you don’t pay a quarterly dividend or anything of that nature? In other words, we got some high-growth areas in this company, whether it’s India, mobile pay doesn’t seem to need it. What can use our money that can be the best investment for us at this particular point? Herman Kotzé: We – so obviously, this will support the level of our review that we’re currently busy with. I – just generally speaking, about the various uses of capital, as I said during my remarks, it is still our intention to return some capital to shareholders as soon as we are in a position to do so. So that hasn’t changed. And it’s – the form of – in terms of what it will take is what we’re currently analyzing. But from our perspective, we still intend to return an amount of capital to our shareholders in the not too long term. But as far as other uses of cash is concerned, when we look at M&A activities, etcetera, we have not identified any, and we – at this stage, don’t intend to do any large-scale M&A activities over the foreseeable future. Those that we are considering or may be considering are very specific smaller bolt-on kind of deals that will add to our strategic intention and focus. And the other part of the capital that we’ve earmarked for the distribution over the next 3 months or so, again as soon as we can start, which we think is as early as next week, is to significantly grow the South African loan book.

Okay, thank you.

We have no further questions. Do you have any closing comments? Herman Kotzé: No, no further comments from our side. Thank you.

Ladies and gentlemen, that concludes this conference. Thank you for joining us. You may now disconnect your lines.