Net1 to focus on unbanked after CPS contract with Sassa expires
NET1 UEPS Technologies is preparing for life without the SA Social Security Agency (Sassa) contract, which comes to an end in September.
Based on recent public statements by the social development minister, the SA Post Office (Sapo) and Sassa, it was looking forward to being released from the social grants payment contract, the group said on Friday.
The group planned to refocus on delivering commercially compelling services to the country’s unbanked population and in other emerging countries.
Chief executive Herman Kotzé said the company had planned for this eventuality and the strides they had made and traction they had already gained gave them increased confidence that Net1 had never been better positioned to return to being a sustainable and profitable growth company on an international scale.
“After years of uncertainty and litigation relating to the social services contract held by our subsidiary, Cash Paymaster Services (CPS), we now have more clarity and are likely to be relieved of our constitutional obligations by September.
“This will allow us to dedicate all our energies, resources, products and distribution towards our strategy of providing financial inclusion services in South Africa and internationally,” Kotzé said.
Net 1 released its third quarter results for 2018, reporting a 10 percent increase in revenue to $162.7 million (R1.99 billion) – up from $147.9m – compared to the third quarter of 2017.
The group also reported earnings per share of $0.95, including $0.52 fair value adjustment related to Cell C investment. Net1 acquired a 15 percent stake in Cell C for R2bn. It also reported a cash flow from operations of $85.2m in the quarter.
Its chief financial officer Alex Smith said for fiscal 2018, the company anticipated their fundamental earnings per share to remain at least $1.61 a share, excluding any fair value adjustments and in excess of $2 a share, including fair value adjustments.
“Our guidance assumes a constant currency base of R13.62/$1, a share count of 56.6 million shares, and a tax rate of between 34 to 36 percent.
“For clarity, our guidance as always is on a constant currency basis,” he said.
Going forward, the group is confident that their organic growth developments along with new opportunities will enhance the group’s future prospects as they close out on the social grants contract that has become a burden on the group’s management and financial resources.
“We believe that we are already the market leaders in terms of cost, scale and distribution in the provision of bank accounts, credit and insurance products in the market segments we serve, and we intend to further improve our product offering and our unmatched ability as the “last mile” service provider,” the group said.