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Net1 saved the govt R10bn

Business Report
Payment solutions firm, Net1, saved the South African government more than R10 billion within five years. This is according to Herman Kotze, who was addressing journalists attending a media tour to Kokstad, KwaZulu-Natal, and Bizana, Eastern Cape, last week, during his first few days as the firm’s new chief executive.

Net1 is the parent firm of social grant payment provider Cash Paymaster Services (CPS), who provide a payment service to about 10 000 recipients across the country.

Kotze replaces Net1’s former chief executive Serge Belamant, who is reported to have received a remuneration package of more than R200million in total.

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Net1 originally won the tender to distribute South African Social Security Agency welfare in South Africa in 2012.Photo: David Ritchie

Kotze said the tour was aimed at rectifying the negative perceptions portrayed in media reports recently.

ALSO READ: Belamant get R104m after quiting Net1

He said that the pay point in Bizana was a fair representation of the other pay points, mainly in rural locations, and what the grant recipients go through when receiving their payment each month.

He said there were a number of recent announcements that were made in the last few days including that the firm filed CPS’ financial performance statement for the last five years for the constitutional court, which reflected that Net1 made a profit of over R700m in total.

“As a public listed company we endeavour to run our operations at a profit.

"The reported profit of R700m is actually a lot less than what was originally projected in our tender document which was submitted estimated that we would make a profit of roughly R1.1bn. So the R700m was significantly less.”

Kotze said this was because fewer beneficiaries were paid over the last five years than was originally projected and also included significantly higher legal and investigation fees as this tender became a highly controversial subject during the period.

“It is also important to note that we invested more than R1.3bn in the creation of this system for this tender, our fingerprint biometric verification system, and for us the highlight of what we’ve managed to achieve in our view is that we've actually saved the government in excess of R2bn a year.

"That is according to their own calculations in terms of the removal of duplicates with fraudulent grants being paid, so the total savings in the past five years is in excess of R10bn.”

Opportunity

He said the second thing that was announced recently was the firm’s participation in the Cell C recapitalisation transaction, a transaction that is ongoing and will take another couple of weeks to close and will give the firm an opportunity to expand its product base and demonstrate the many mobile payment options it developed.

Kotze also touched on the exit package of Belamant, he said there were a number of reports in the media, all huge numbers.

“We acknowledge that and we understand that, but I think we need to put it in context.”

He said a number of factors were taken into account with regards to Belamant’s package, such as the amount of shares he held with the company, that he was the founder of Net1, his 30 years of service with the firm, the income that he forfeited as he retired before the time, accelerated stock options, the strength of trade as well as the ownership of intellectual property issues.

Kotze said with all of this taken into account the firm’s remuneration committee were of the opinion that the package was in line with industry practice for a listed company and was not extravagant.

He said there was also a lot of reference in the media that the firm’s current contract with the South African Social Security Agency (Sassa) was illegal which was untrue.

“We are operating under a valid contract with Sassa or otherwise we would not be able to do what are doing.”

BUSINESS REPORT

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