DURBAN – Payments company Net1 UEPS Technologies swung to a loss of $248million (R3.74billion) in the year to June, hurt by losing the controversial South African Social Security Agency (Sassa) contract and impairments at troubled mobile operator Cell C.
Net1 recently delayed its annual results to wait for more clarity on Cell C and then said it had written down to zero the value of its stake of the embattled mobile network, which last week reported a R8bn loss in the year to June, hit by impairments.
Net1 reported a $19.75m impairment loss and a further impairment loss of $12.79m on Cedar Cell.
Chief executive Herman Kotzé said on Friday that the company had stabilised the business in South Africa and was focused on returning to growth and profitability in fiscal 2020.
“Going forward, we are returning to our roots of providing innovative and affordable financial technology and services offerings to the unbanked and underbanked as well as leveraging our deep expertise in cryptography and secure transactions to introduce new and relevant products,” Kotzé said.
Its revenue declined by 30percent to $380.7m and a diluted loss a share of $4.82 a share.
The group also reported a negative adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of $12.62m compared with a positive Ebitda of $127.16m last year.
However, its South African operations achieved Ebitda breakeven in July, just after the end of the fourth quarter in June.
The South African segment revenue declined by 63percent to $18.9m compared to the same quarter last year, with the group attributing the decline to the substantial decrease in the number of Sassa grant recipients paid under its Sassa contract, which ended at the end of the first quarter.
Kotzé said Net1 would continue to review their portfolio of investments to find those that did not fit their strategic focus, or give them a path to control and will accordingly be evaluated for monetisation.
“Building on our disposal of DNI which started in the third quarter, the company has now received multiple indicative offers for KSNET in Korea, and we have engaged FT Partners to assist the board to determine the appropriate course of action. With the challenges of the last year and the required repositioning behind us, we are well positioned to unlock shareholder value and improve capital allocation going forward,” Kotzé said.
Chief financial officer Alex Smith said the firm was working closely with Cell C and its stakeholders to improve its short-term liquidity challenges, conclude its recapitalisation and, as a result, create a long-term sustainable business.
“Our other equity investments continued to perform in line, or ahead of expectations during the quarter,” Smith said.
Net1 UEPS shares closed unchanged at R51 on Friday.