Net 1 UEPS ready for business after Sassa Energies freed for other callings
NET 1 UEPS Technologies is preparing for business without the SA Social Security Agency (Sassa) contract, which will expire at the end of September.
Sassa entered the contract to distribute social grants to more than 9 million beneficiaries in the country with Cash Paymaster Services (CPS), a unit of Net 1 UEPS.
Herman Kotzé, the chief executive of Net 1, said CPS remained profitable without the Sassa contract.
“It is with great excitement that we are counting down the days to the end of our Sassa contract on September 30.
“While many investors have been concerned that the end of this relationship would severely impact our other South African businesses, I can happily point to our solid fourth quarter, despite a nearly 80 percent decline at CPS, as well as our guidance for fiscal 2019,” Kotzé said.
However, for the year to end June, the group reported a 46 percent decline in net income to $39.2 million (R561.68m), down from $73m compared to last year, while revenue was flat at $613m. Headline earnings per share in the period have declined to 113 US cents a share, down from 133c.
Kotzé added that CPS had done a wonderful job in the past six-and-a-half years, helping beneficiaries receive their money on time.
“Now that the contract is coming to an end, management will be able to channel their energies to the other business as the court cases have taken a lot of management’s time and shareholder value,” he said.
The group said it saw many opportunities going forward.
“We expect to demonstrate our capabilities as a strong financial technology and services business with the proven ability to be the last-mile provider of transacting, value added and financial services to the under-served individuals and businesses in our markets, regardless of their location,” Kotzé said.
The group has investments in countries like Botswana, Namibia and Nigeria in Africa. It also operates in Asia and Europe.
Net 1 is a leading provider of transaction processing services, financial inclusion products and services and secure payment technology.
The group said it had received pricing pressure in South Korea as a result of the government’s crackdown on the fees charged on banking card transactions.
At the end of June, the group said its cash and cash equivalents were $90.1m.
The decrease in its cash balances was primarily due to its investments in DNI, Bank Frick, Cell C and a $9m listed note totalling $291.5m.
Net 1’s share price retreated 18.16 percent on the JSE yesterday to close at R102.82.