Good day ladies and gentlemen and welcome to the Net1 Q2 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this call is being recorded. I'd like to turn the conference over to Dara Dierks. Please go ahead ma'am.

Thank you operator. Welcome to our second quarter 2021 earnings call. With me today is CFO and Interim CEO, Alex Smith. Our press release and supplementary investor presentation are available on our Investor Relations website at 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 will -- and we have provided the reconciliations of these non-GAAP financial 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 and rand to assist investors in understanding the underlying trends of our business. As you know the company's results can be significantly affected by the currency fluctuations between the US dollar and the South African rand. We will have Q&A session following our prepared remarks. So, with that let me turn the call over to Alex.

Thanks Dara and good day to everyone and thank you all for joining us on our second quarter earnings call. We hope everyone is staying healthy and safe during these difficult times. On today's call, we'll run through the following; first, we will review some of the financial and operational highlights from the quarter, then review our shorter term initiatives, finally, I'll review our longer term initiatives relative to our new strategic focus before opening the call up for questions. To bring everyone up-to-date on the latest COVID-19 situation in South Africa, the President announced a return to Level 3 restrictions on December 28th and these are expected to remain enforced until at least February 15th. This level isn't as severe as we experienced in April and May of 2020 and we are able to fully operate our business, but it does constrain some economic activity and so is likely to have an indirect effect on performance. Sadly, South Africa, like many countries around the world, have seen a higher incidence of cases and deaths recently than during the first wave. Infection rates do seem to be dropping, so there is hope that the restrictions will be eased in the short-term as we eagerly await widespread vaccinations in South Africa. Now, to move on to the financial and operational highlights from the second quarter. The key theme for this quarter has been strong operational progress, which should result in improved financial performance going forward. In South Africa, our consumer Bank accounts, EasyPay Everywhere or EPE increased by about 62,000 gross accounts and 44,000 net accounts during the quarter. This is the first quarter of net positive additions to EPE in eight quarters. Our primary operational focus over the next two quarters is on continuing to rebuild our customer base in…

[Operator Instructions] The first question comes from Raj Sharma from B. Riley. Please go ahead, Raj.

Hi, good morning. I wanted to ask you about how are you progressing on your plan of being at 1.4 million users by the end of this year? You were looking to add 400,000 new customers and you did 44,000. How does the plan look? And are you -- could you talk about that? A – AlexSmith: Sure. Thanks Raj. Look we thought we made good progress in the last quarter. We were targeting net -- gross additions of about 50,000 for the quarter and we came a little bit above that at 62,000. And then in terms of moving forward we're obviously looking to accelerate that rate of sign up through these next two quarters. And there are several reasons why we think that target is achievable. Firstly there's been some recently published draft regulation changes that we expect to be enacted relatively soon that we believe would make it easier for ground recipients to open and designate the bank account in which they receive their monthly grant. The existing process is pretty onerous and involves spinning out a form the recipient then has to go and hand deliver in order to get it processed. And the proposed change really appears to make this process much simpler. And we expect this to have a significant effect on the willingness of the recipients to move to a private sector bank account. And that's obviously a change that will benefit the whole financial services industry. Secondly, we currently interact with a very large group of non-EPE account holders that are utilizing our ATM network. So we're touching those people at least once a month. And we are basically looking at initiatives to offer the EPE product to them. And finally, when we were at our peak probably back in 2018, we had just over three million EPE accounts. Then we certainly felt we had happy customers that know us and our brand. And so we hope that we can really look to that group of the target base to basically attract them back into the EPE fold. And a lot of our marketing efforts are really targeted around those opportunities. So with those initiatives and some of those dynamics we feel -- we remain confident around the guidance of the 1.4 million EPE accounts by the end of June.

Got it. So also, just following up slightly related to that. The SASSA recently, I think, stated the users need to upgrade their cards at some point right? They will not be forced to, but how do you view this development or opportunity -- I mean do you take this as an opportunity of gaining more accounts?

Yes, I think, that's part of the wider opportunity. So as we understand it, the SASSA has put an announcement that the cards will need to be upgraded, but they -- and they will continue to operate past March 31. But, I think, there's maybe a little bit of uncertainty that's created in the market, in terms of those cards and with the provision of any EPE accounts, that uncertainty can be removed. So we'll look at that as an opportunity to attract, in particular, those two sort of target areas back to us with that as one of the catalysts.

Right. And lastly, on the sale of the remaining stake in Bank Frick. Could you talk about the motivation there? Was it just wanting to refocus on South Africa operations, or was it a good price? Or how are you sort of thinking about your private investments in that regard?

Yes. I mean, we've stated that our aim is to devote all our capital and resources and management time to South Africa. So the opportunity came around in discussions with the Frick family, to basically complete the disposal and this takes away the time that's involved in our involvement there. And with the closure of the IPG operations, a lot of the strategic rationale behind the original investment have disappeared. And so, we saw the -- saw it as preferable to realize the capital and devote all of our time and attention to the South African opportunity.

Right. Does this imply that you're also looking to sell the other stakes? I mean, would MobiKwik would be a consideration? Or do you intend on holding that for a while?

We -- like I said, with all the focus on South Africa, we're not actively looking to do anything around the other investments. If an opportunity arises, we would certainly take it seriously. But you've seen from the progress that MobiKwik's made in the last year or so that things are looking very good at MobiKwik. So we're not in any rush to exit out of that one. And I think we'll -- our focus is very much on South Africa and anything we do would be more opportunistic than anything else.

Okay, great. Thank you. I’ll take my questions offline.

Thanks, Raj.

Thank you. [Operator Instructions] The next question comes from Bill Gordon from GC. Please go ahead, Bill.

I’ve got a quick question. We've been concerned with the money that we have in the bank. We had to go and getting liquidation to shareholders, et cetera. If Africa is as exciting as you people seem to suggest, certainly, the economy says that by year 2025 Africa will be bigger than China. If that's the case and we're into fintech, and India has done so well, why not focus purely on Africa. Don't give us back any of the money. Grow Africa, grow the fintech in Africa and take the bull and run with it.

Thanks, Bill. I mean, we see plenty of opportunities in Africa. We always felt there was a bit of balance to be struck between what we're hearing from our shareholders and where we see the opportunities. Obviously, we've had this uncertainty around our status under the Investment Company Act. And once that resolved, I'm sure, we will engage and there'll be a discussion around the capital return. But at the moment that's the current thinking of the Board, is that we have made a commitment in the past around the capital return and we need to honor that, unless the circumstances have fundamentally changed.

Okay.

Thank you. The next question comes from Jeff Yokuty from Capital Uni [ph]. Please go ahead, Jeff.

Hi, Alex. It’s Jeff Yokuty. I was just curious whether the sale of Frick helps at all in clearing up the Investment Company Act, as you remove an equity investment and raise cash? Thanks.

Yes. Thanks, Jeff. Look, we are hopeful there will be another step towards addressing the issue. The [Indiscernible] closed the transaction yesterday and so we haven't really had the opportunity to discuss its impact with our counsel, but we believe it should help with the metrics that you used to assess the situation. However, the -- ironically the increase in the carrying value of our MobiKwik investment in the quarter does work against it slightly. So there are constantly shifting dynamics here. I mean, we see probably the best opportunity is our focus on growing our business in South Africa organically and acquisitively, to strengthen our offerings here. And we think that, if we progress on each or either of those fronts that certainly may also be a fast route to resolving the issue.

Okay. Thank you. We have no further questions in the queue. Alex, do you have anything you want to add? Or can we conclude?

No, I think, we can conclude now, Claudia.

Okay. Thank you very much. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.