Net1Q3 results: $0.47 EPS, SASSA tender

Net 1 UEPS Technologies, Inc. reports its third quarter 2014 results, here are some extracts from the SENS report.

Net1 1 year view
Net1 1 year view

Highlights:

  • Revenue and Fundamental EPS of $138 million and $0.47, a constant currency increase of 60% and 1,070% respectively;
  • BEE transactions implemented after quarter-end, and 4.4 million shares issued to BEE partners.

Net1 has held a controversial light in the media of late due to the Constitutional Court of South Africa ruling that the awarding of the SASSA tender to Net1 was in fact invalid, Dr. Serge Belamant, Chairman and CEO of Net1 said the following about the results, “I am delighted with the quality of our third quarter performance,” said Dr. Serge Belamant, Chairman and CEO of Net1.

“Despite the many distractions faced by the Company during the last two years, our staff members have maintained focus and, once again, demonstrated our ability to deliver sterling results under adverse circumstances. I commend all of those Net1 employees who remain loyal and committed to ensure we deliver the highest level of service and continue to expand our business activities in physical and virtual payment technologies, both locally and internationally.”

“We believe that the publication of any new SASSA tender may take some time and we are ready to propose an enhanced version of our current UEPS/EMV solution, which would continue to provide SASSA with the business functionality which they described in detail during the legal processes. We are proud that our technology has already saved the public purse in excess of ZAR 3 billion ($286 million) per annum, with the removal of more than a million invalid grants. In the mean time, we will continue to optimise our cost structures and focus on the marketing of our complementary and supplementary products in order to diversify our business and enhance our profitability,” he concluded.

“We expect the momentum from the execution of our strategy to continue driving top and bottom line growth,” said Herman Kotzé, Chief Financial Officer of Net1. “For fiscal 2014, we now expect fundamental earnings per share of at least $1.90, assuming a constant currency base of ZAR 8.71/$1. The share count assumption in our guidance includes the 4.4 million shares that were issued as part of our BEE transaction on April 16, 2014,” he concluded.

South African Constitutional Court remedy related to SASSA tender

On April 17, 2014, the South African Constitutional Court ruled on the appropriate remedy following its declaration on November 29, 2013, that the tender process followed by the South African Social Security Agency, or SASSA, in awarding a contract to us was constitutionally invalid. The declaration of invalidity of our contract was upheld, but suspended until a new tender is awarded, or for the remainder of the existing contract period if no tender is awarded. SASSA is required to initiate a new tender process within 30 days of the Court’s ruling and any award must be for a period of five years. If a new tender is not awarded, the declaration of invalidity of our current contract will be further suspended until the completion of the five-year period for which the contract was originally awarded.

Implementation of December 2013 BEE transaction

On April 16, 2014 we implemented our Relationship Agreements with our BEE partners, concluded during December 2013, and we have accordingly issued 4,400,000 shares to the BEE partners.

Under the Relationship Agreements, we issued 4,100,000 shares of our common stock to Business Venture Investments 1567 Proprietary Limited (RF) and 300,000 shares to Born Free Investments 272 Proprietary Limited at a price of ZAR 60.00 per share. In order to facilitate the transactions, one of our wholly owned subsidiaries lent the funds to the BEE partners to effect the purchase of the BEE shares.

For the full SENS report, Click Here.

 

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