Dual-listed Net1 UEPS Technologies expects cumulative capital expenditure of between $45 million (R377.6 million) and $50 million (R419.5 million) tied to the rollout of its contract with the South African Social Security Agency (SASSA).
The listed group won a five-year contract, worth about R10 billion, to distribute social grants across SA's nine provinces. The company will provide the solution for payment of about 15 million grants to almost 10 million South Africans.
The win is being challenged by AllPay, a subsidiary of big four bank Absa, which took SASSA and Net1 UEPS Technologies unit Cash Paymaster Services to court. AllPay argues the deal was not properly awarded and does not comply with the necessary regulations and laws.
Net1 says, in its results commentary for the full year and last quarter, it successfully initiated the national grant payment process for about 9.2 million beneficiaries on 2 April, after starting implementation in the third quarter of last year. The implementation is being rolled out in two phases, and the second stage started in July and involved reregistering all 9.2 million recipients.
In the fourth quarter of the year, the group incurred direct implementation expenses of around $9.1 million - R76 million - which included staff, travel, premises hire for enrolment, stationery, delivery and advertising costs, it says in its results announcement for the year to June.
Net1 also incurred implementation-related capital expenditure of about $13.4 million - R112 million - during the last quarter and expects cumulative spending of between $45 million and $50 million.
Positive outlook
The group reported revenue of $390 million for the full year, a gain in dollars of 14% and a 25% improvement when converted to rand. Its net income under generally accepted accounting principles was $44.7 million, compared with the $2.6 million it reported a year ago.
Chairman and CEO Serge Belamant said he is “delighted with our overall performance this quarter as it should demonstrate that the company is now firmly on its way to rekindling its previous appeal, as we overcome the challenges we have faced over the last few years”.
Belamant says “all our business units, specifically those that can have meaningful impact, including CPS, KSNET, VCC, MediKredit and NUETS, have a robust pipeline of new and existing opportunities, which in turn should begin to deliver improving financial contributions in the short- to medium-term”.
Net1, which operates in SA, Republic of Korea, Ghana and Iraq, provides a universal electronic payment system, or UEPS, as an alternative payment system for the unbanked and under-banked populations of developing economies.
“I am bullish on the future prospects of our company and believe we have all the tools required to create long-term value for our shareholders,” Belamant says.
Share
