Net1 posts first-quarter loss after Sassa grants shake-up
The technology group swung into an operating loss of $2.7m in the first quarter, hit by the loss of its social grants contract
Financial services and technology group Net1 said on Friday the loss of its social grants contract as well as a migration of grants accounts to the SA Post Office had resulted in a 36% decline in revenue for its first-quarter to end-September.
Revenue fell 36% to $80.7m (R1.2bn), with the company reporting an operating loss of $2.7m, as it continues to grapple with the fallout from changes to the grant distribution system at the SA Social Security Agency (Sassa).
The JSE and Nasdaq listed technology group had fought lengthy and costly battles in various courts about the grants system, with its subsidiary Cash Paymaster Services ultimately losing its R1.3bn lawsuit against Sassa in July 2019. It has also been ordered to pay back R317m to the agency.
Net1 also owns just over a quarter of credit-provider Finbond, which has been hit by a card switch at Sassa to the Post Office. The new card does not have the functionality to load electronic fund transfer (EFT) debits or stop orders, with Net1 saying on Friday it had seen a decline in account numbers.
The company’s focus in the near term was to improve liquidity to reduce debt, invest in growth businesses and return capital to shareholders, said CEO Herman Kotzé.