Net1 welcomes end of Sassa contract, even though CPS unit lost 87% as a result
Cash Paymaster Services has been distributing social grants on behalf of Sassa, but the contract was declared invalid by the Constitutional Court
Net1 UEPS Technologies swung to a quarterly loss, as its controversial contract with the South African Social Security Agency (Sassa) ended and strong dollar had a negative effect.
The Nasdaq- and JSE-listed company reported a net loss of $5.1m for the three months to end-September, on Friday, from a profit of $19.72m in the matching period a year ago.
Net1’s subsidiary, Cash Paymaster Services (CPS), reported an 87% decline due to the loss of the Sassa contract.
CPS has been distributing social grants on behalf of Sassa, but the contract was declared by the Constitutional Court as invalid, necessitating the appointment of a new service provider.
The SA Post Office has since taken on the role of distributing social grants to 10.9-million beneficiaries each month.
Net1 UEPS said in a statement that it also incurred costs in handing over the Sassa contract to the new service provider, as ordered by the highest court in the land.
"Our first quarter signalled the end of an era and the advent of an exciting new chapter for Net1 as our Sassa contract finally came to an end after 78 months," CEO Herman Kotzé said.
Group revenue dropped 17% to $126m, from a year-ago period, the results statement show.
The dollar appreciated 13% against the rand in the review period, weighing on the group`'s overall performance.
In a separate statement, Net1 said had restated financial results for the year to end-June due to a revaluation of the classification of its investment in Cell C.