Net1 UEPS Technologies’ share price was unchanged on Friday morning, despite the embattled provider saying basic earnings per share was expected to decline 16% in rand terms in its first quarter, from the year-earlier period.
Revenue in rand terms had declined 8% over the same period to $153m, with basic earnings per share of 43 US cents reflecting the adverse effect of a higher share count, taxes and interest expenses, the company said in a statement.
Higher interest expenses resulted from its South African lending facility, obtained in August 2017, to partially fund a 15% investment in Cell C.
The company expected basic earning per share to remain at least $1.61, despite the dilutive effects of the funding of Cell C and DNI investments. This would be offset by DNI’s earnings, Net1 said.
"Our guidance assumes no significant disruption in any of our key business units, a constant currency base of R13.62/$, a share count of 56.6-million shares and a tax rate of between 34% and 36%," Net1 CEO Herman Kotze said.
On August 7‚ Net1 announced it had concluded its acquisition of 15% of Cell C for R2bn and 45% of DNI for R945m. DNI was described as the largest wholesaler of Cell C starter packs.
At 10.12am Net 1’s share price was unchanged at R130. The company has lost 19.61% so far this year.
The company did not mention social grants in its statement, but has said previously it believes it will continue issuing them until June 2018. This was a despite a ruling from the Constitutional Court that Net1 was to relinquish its South African Social Security Agency (Sassa) contract by the end of March 2017.
Sassa has failed to oversee a tender process to appoint a new grant distributor, with the courts granting an indefinite extension of the contract.
Speculation over how Net1’s subsidiary Cash Paymaster Services (CPS) will continue to distribute grants lingers, amid a push by the South African Post Office to take up distribution. Net1 has also faced allegations of unethical and unlawful practices related to the system.