Net1 ‘welcomes’ end of its Sassa contract as CPS’s revenue plummets
"It is with great excitement that we are counting down the days to the end of our Sassa [South African Social Security Agency] contract on September 30 2018," Net1 UEPS Technologies CEO Herman Kotzé said in the group’s financial results released on Thursday morning.
Although the group claims to have reduced its dependence on the Sassa contract, its profit halved to $38m in the year to end-June from $74m in its 2017 financial year.
Revenue was flat at $613m.
Comparing the fourth quarter of its 2018 financial year to the matching period in 2017, revenue from its South African transaction processing division declined 6% to $64m while its operating profit plunged 71% to $4m.
Loss of the Sassa contract caused revenue from Net1’s subsidiary Cash Paymaster Services (CPS) to fall 81% in the fourth quarter from the matching period in 2017, the company said in its results statement.
"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 [that] we achieved despite a nearly 80% decline at CPS, " Kotzé said.
"Furthermore, the elimination of the negative impact that this contract has had on our business, management’s time and shareholder value should provide a meaningful lift to product refinement and research and development going forward."
Net1 said its EasyPay Everywhere customer numbers remained stable at 2.5-million.
Outside of SA, Net1 said its South Korean business suffered from a government crackdown on the fees charged on banking card transactions.
Revenue from its international transaction processing division fell 3% to $43.5m while operating profit grew 4% to $2.1m.
The technology group does not pay dividends.
"We are pleased to report another successful quarter and fiscal year as we embark upon our transition to a stable and growing business, no longer dependent on our Sassa contract in SA," Net1 said.