Dual-listed Net 1 UEPS offset lower social services revenue in SA through improved sales of its other services.
The company on Friday reported revenue for the first half of the year of $153.3 million, a 10% increase in US dollars and a 2% increase in constant currency. Earnings per share, however, declined to $0.38, compared with last year's $0.79.
Transaction-based revenue from its South African operations was $46.6 million, a 3% year-on-year improvement when measured in US dollars, but 5% lower in rands, due to exchange rate movements.
In rands, the decrease in revenue was due to lower earnings as a result of a change in terms of a contract with the South African Social Security Agency (SASSA). Net 1 entered into a new deal with the agency at the end of August last year, to provide its social welfare grants distribution service to SASSA in five of SA's nine provinces. The contact was extended last month to September.
The new deal allows for a fee-per-transaction and a minimum amount of beneficiaries; however, the amount to be paid and the number of guaranteed beneficiaries are lower than in the previous contract.
However, lower revenue from the contract was partially offset by increased transaction volumes at EasyPay and the inclusion of its recent acquisitions of MediKredit and FIHRST, a third-party payment provider.
“In January, we extended our contract with SASSA for a period of six months to September under the same terms and conditions of the existing contract,” says CEO and chairman Serge Belamant.
He adds: “We expect SASSA to commence a new tender process for the distribution of social grants in SA in the near future, and remain well positioned to capitalise on our market-leading solution, distribution and position.”
The dual-listed company provides a universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies. Its system enables about four billion people, who usually have no access to the formal banking system, to enter into electronic transactions.
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