Net1 wants AIDC analysis of profits to be withdrawn
NET1 HAS reiterated its call for the Alternative Information and Development Centre (AIDC) to withdraw its analysis suggesting the company might have significantly understated profits earned from a lucrative social grants tender.
Cash Paymaster Services (CPS), a subsidiary of Net1, claimed in a financial statement submitted to the Constitutional Court in May to have made a pretax profit of more than R1 billion from its five-year contract with the SA Social Security Agency (Sassa).
However, the figure might be understated by R730 million, according to IDC’s analysis. It said CPS understated the pretax profits by R214.2m to R614.4m over the five years.
CPS hit back and dismissed AIDC’s analysis as “fundamentally flawed”.
Tender “On January 17, 2012, Sassa awarded us a tender to provide payment services for social grants in all of South Africa’s nine provinces for a period of five years. On February 3, 2012, we entered into a new contract, together with a related service level agreement, with Sassa pursuant to which we pay, on behalf of Sassa, social grants to all persons nationally who are entitled to receive such grants, for a firm price of R16.44 per beneficiary paid, or R14.42 net of VAT,” CPS said.
It added that it provided a service from April 1, 2012, to Sassa under the February 2012 contract, and CPS’s subsidiaries provided a service up until March 31, 2012, “that was outside the contract signed in February 2012”.
Dick Forslund should have excluded the nine months from July 1, 2011, to March 31, 2012, from “his calculation, but did not, and his calculation is for a 69-month period, not the 60 months as required by the court”.
“Should AIDC still dispute this fact, we suggest referring the calculation to an independent audit firm.”
CPS said Forslund, using information available in the 2012 annual report, should have attributed about R400m rather than the R1.2bn included in his calculation attributed to fiscal 2012, “which results in an overstatement in the Forslund calculation of R800m”.
“An error of this magnitude, coupled with Forslund’s acceptance that the R41m bonus payment was in fact not included in the CPS statement as he had originally claimed, clearly demonstrates that the report is fundamentally flawed,” said CPS.
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