Net 1 UEPS Technologies has reported revenue of $118-million for the 2013 financial year, a 25% increase from the previous year.
This translates into a fundamental EPS of $0.28, up 22% in constant currency; and includes $9-million of implementation and smart card costs.
During the year, the company substantially completed its bulk enrolment, with 22-million registrations and 9,5-million cards issued as of 30 June 2013.
“I am very pleased to report that we have completed our bulk enrolment on time despite higher than anticipated volumes.
“This incredibly complex and complicated exercise and its undeniable success, has once again validated Sassa’s decision to award this nationally critical tender to us. It is not surprising that MasterCard this week declared the implementation as the best government social grants payment program worldwide,” says Dr Serge Belamant, chairman and CEO of Net1.
“Net1 is now ready to execute on its strategic plans and has commenced with the deployment of both our financial and mobile services, and the early results look extremely impressive. We continue to optimize our company so as to capitalize on the businesses that can leverage our infrastructure and have the potential to add substantial value to our shareholders,” he adds.
“Our one-time implementation costs are now effectively behind us and we therefore expect to demonstrate a marked improvement in profitability during fiscal 2014,” says Herman Kotzé, chief financial officer of Net1. “For fiscal 2014, we expect fundamental earnings per share of at least $1.50, assuming a constant currency base of ZAR8.71/$1 and a share count of approximately 45,7-million shares.
“Our guidance also assumes the lost revenue and operating income from the roughly 370,000 beneficiaries on SASSA’s database who have not re-registered and whose grants will likely be cancelled in September 2013.”
As of June 30, 2013, Net1 had enrolled a total of 21,7-million people, which comprises approximately 9,5-million grant recipient cardholders and 12,2-million beneficiaries associated with these recipient cardholders.
During fiscal 2013, the company incurred direct implementation expenses of approximately $56,2-million, including staff, travel, temporary infrastructure hire, fixed premises hire for enrolment and stationery costs.
During fiscal 2012, it incurred direct implementation expenses of approximately $10,9-million. It also expensed $10,3-million (ZAR 90,2-million) related to the cost of the UEPS/EMV smart cards issued during fiscal 2013, which is not included in the $56,2-million (ZAR 488,3-million) of direct implementation expenses.
The company also incurred approximately $6,9-million in capital expenditures related to the implementation during fiscal 2013. Since inception of the implementation we have incurred cumulative capital expenditures of $28,1-million.
On 27 March 2013, a full bench of the South African Supreme Court of Appeal dismissed AllPay Consolidated Investment Holdings’s appeal against the earlier ruling by the North Gauteng High Court that Sassa’s award of the tender to us would not be set aside. Accordingly, the SASSA contract to distribute social welfare grants to ten-million South Africans every month, for a period of five years, remains in force.
On 18 April 2013, AllPay applied for leave to appeal to the Constitutional Court against the judgment of the Supreme Court. Net1 and SASSA have opposed AllPay’s application. The hearing has been scheduled for 10 September 2013. Both the application for leave to appeal and appeal itself will be argued at that time.