Net 1 UEPS Technologies has reported revenue and fundamental EPS for the first quarter of 2014 of $123-million and $0.37, a constant currency increase of 34% and 77%, respectively. In addition, the company has signed a letter of intent to issue 4,4-million shares at ZAR 88.50 as part of a BEE transaction.
Revenue of R123,494-million was 34% higher in rand terms but only 11% higher in US dollars, while fundamental net income was 77% in rands and 46% in dollars.
The company reports that factors impacting comparability of its results included unfavourable impact from the strengthening of the US dollar against the South African rand, with the dollar appreciating by 21%.
In addition, the company’s SASSA implementation is now complete, with Q1 2014 being the first full quarter without any implementation-related expenditure since the tender was awarded in January 2012.
Higher revenue also resulted from an increase in low-margin prepaid airtime sales. The Umoya Manje prepaid airtime offering was deployed during the quarter.
The company commenced the national roll out of its financial services offering during Q1 2014, which resulted in higher revenue from UEPS-based loans. Profitability in the financial services segment, however, was lower due to rollout costs, including hiring and training of additional staff and infrastructure deployment.
It also benefits from ad hoc hardware sales in the form of more terminals and cards.
In terms of expenses, the company incurred DOJ and SEC investigation-related expenses of $2,1-million during Q1 2014.
On 6 November 2013, Net 1 UEPS Technologies signed a letter of intent to issue 4,4-million of common stock at a price of R88.50 per share to Business Venture Investments 1567, a special-purpose entity owned by a BEE consortium, pursuant to a new BEE transaction.
Issuance of the BVI Shares is subject to the conclusion of a Relationship Agreement before 1 December 2013, which will include certain conditions, including obtaining the relevant regulatory approvals. Under certain circumstances the company could call the BVI Shares then owned, in exchange for a minority interest in the wholly-owned subsidiary Cash Paymaster Service.
The lead partner in the BEE consortium is Mosomo Investment Holdings, a black empowerment investment company headed by former Net1 non-executive director Brian Mosehla.