Listed group Net1 is refocusing its efforts in SA, targeting the company’s areas of core competency in a bid to cement itself as the leading fintech player.
The company, which is chaired by former Telkom chairman Jabu Mabuza, says this is in line with its strategy presented in September last year.
Announcing the sale of Net1’s remaining interest in the Switzerland Bank Frick & Co on Friday, Alex Smith, Net1 CFO and interim CEO, said the company is scaling down its international exposure to focus on the local market.
"The sale of our interest in Frick is a milestone in the execution of the corporate strategy that we announced in September 2020. The sale of this interest and the previously announced closure of the International Payments Group (IPG) will significantly reduce the cash burn and operating losses from Net1’s non-core operations. Furthermore, the sale will release capital and management bandwidth to increase our focus on the significant market opportunity in Net1’s areas of core competency in South Africa.
“We are fully focused on executing our strategy to grow Net1 into the leading fintech business in South Africa."
Net1 offloaded its stake in Frick & Co for $30 million and received $15 million payment at closing. The remaining proceeds are payable in two instalments over the next 18 months.
Presenting the company’s second quarter results last week, Smith said: “We have made strong operational progress this quarter, which should result in improved financial performance going forward. In South Africa, our consumer bank account offering, EasyPay Everywhere, added approximately 44 000 net accounts during the quarter − the first quarterly increase in eight quarters.
"In addition, we saw another sequential increase in the utilisation of our ATM infrastructure. Internationally, we made significant progress on the exit from IPG. While once-off closure costs from IPG have impacted this quarter’s results, the operational losses and cash burn should reduce materially going forward due to the decisive actions taken this quarter. We are actively working to resolve our Investment Company Act status in order for us to effect a partial return of capital as soon as we are able to do so.”
In the quarter, Net1 UEPS Technologies posted lower revenue.
At 31 December 2020, the company recorded unrestricted cash of $206 million and no debt.
Revenue stood at $32.3 million, a constant currency decrease of 12% from Q2 2020, and a decrease of 15% from Q1 2021, with an operating loss of $15.2 million.
GAAP EPS was $(0.08) and fundamental EPS at $(0.24). An adjusted EBITDA loss of $12.8 million was recorded, a sequential increase from a loss of $10.8 million in Q1 2021.
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