Net1’s vision for SA remains on track despite operational loss, Newsline

DURBAN – NET1 UEPS Technologies’ shares shed nearly 3 percent on the JSE on Friday after the financial technology group reported that its operating loss widened by 90 percent for the first quarter to the end of September, hurt by the Covid-19 outbreak and a 14 percent weakening of the rand against the dollar.

The share closed 12.73 percent lower at R41.90 on Friday.

The South African-focused financial technology company said on Friday that its operating loss increased to $10.78 million (about R168m) in the first quarter compared with an operating loss of $6.44m reported in the first quarter of last year.

The loss was mainly attributed to the fixed cost nature of the costs base, depressed revenue and adverse foreign exchange movements, as the dollar was 14 percent stronger against the rand during the first quarter.

However, the operating loss improved, compared with a loss of $13.18m reported in the fourth quarter to the end of June.

Net1 said the Covid-19 pandemic did not impact its South African operations as severely in the first quarter as it did in the fourth quarter to end June.

“Nevertheless, South Africa currently remains under various lockdown restrictions which continue to affect the broader economy, and these restrictions affect us to the extent they affect economic activity levels in South Africa,” the group said.

Group revenue fell by 12 percent to $37.11m during the quarter, due to fewer prepaid airtime sales and lower account fee revenue, which was partially offset by higher transaction fees. However, the first quarter revenue improved by 39 percent compared with $25.98m in the fourth quarter to end June.

Its loss a share widened by 625 percent to a loss of 0.51 US cents a share in the first quarter, compared with a loss of 0.08 US cents in the first quarter last year.

Interim chief executive and chief financial officer Alex Smith said Net1 was pleased to see some encouraging signs in their operational and financial results this quarter.

“With the return to full operations, we have seen increased transaction processing volumes, loan originations, and a significant increase in the utilisation of our ATM infrastructure over the fourth quarter …,” Smith said.

The group has a presence in Africa, Europe and Asia and it operates in financial services, processing and technology segments.

Smith said Net1’s long-term initiatives remained unchanged, to be the leading financial technology company in South Africa focused on under-serviced customers.

“We believe that we have the capabilities, technology and infrastructure to make this strategic vision a reality,” he said.