Market welcomes Net1’s third quarter results despite a R14.29m loss
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DURBAN - NET1 UEPS TECHNOLOGIES’ share price leapt by more than 12 percent on the JSE on Friday despite the group reporting an operating loss of $14.29 million (about R200.7m) for the third-quarter to end March, slightly up by 1 percent compared to the same quarter last year.
The group is confident about its prospects after a difficult 2020 due to the Covid-19 outbreak. However, the South African focused financial technology company with a presence in Africa and Asia, said the pandemic did not impact its South African operations as severely during the three and nine months to end-March compared to the last four months of the year to end-June 2020.
South Africa was moved by the government to adjusted level 1 of the national lockdown after coming out of the second wave of infections towards the end of February.
Interim chief executive and chief financial officer Alex Smith said the firm had made a lot of operational progress in the past quarter in exiting their loss-making European operations and preparing the South African operations for significant account growth and had appointed a new chief executive for Southern Africa.
“We are making progress in our mission of driving financial inclusion for the underserved market having recently hired a new dynamic, highly accomplished and experienced chief executive of Net1 Southern Africa, Lincoln Mali, who is well respected and experienced in the South African financial services and banking industry.
Our new strategy, mission and leadership has also enabled us to attract some amazing new talent among the senior management ranks,” Smith said.
The group reported a 17 percent decline in revenue to $28.8m during the third quarter while the adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) resulted in a loss of $12.82m, widening further from the $6.42m reported a year earlier.
Net1 also reported a loss of 0.11 cents a share compared to 0.24 cents reported last year. However, its cash and cash equivalents increased by 21.38 percent to $207.8m compared to $171.2m reported in the same quarter last year.
The share price surged to a day-high of R86.99 in the morning, up from Thursday’s closing price of R77.17. It closed the day at R86, up 11.44 percent.
In the processing segment, revenue was down by 13 percent to $18.7m in the quarter, primarily due to fewer prepaid airtime sales and a reduction in volume-driven transaction fees. In the financial services segment, revenue fell by 15 percent to $10.2m, due to lower account fee revenue and a modest reduction in lending revenue.