Net1’s sale of South Korean stake nets cool $237m
DURBAN – JSE-listed Net1 UEPS Technologies share price briefly rose by more than 6 percent on Friday after the financial services and technology group reduced its loss to $6.85 million (R103.02m) for the second quarter to end December, down from $48.90m compared with the second quarter of last year.
The group recently announced the sale of its stake in South Korean payment processor KSNET for $237m and is intending to use the proceeds to beef up its operations in the different countries where it has a footprint.
Chief executive Herman Kotzé said the sale of its 100 percent stake in KSNET marked an important milestone in the reinvention of Net1 as a fintech company focused on the under-banked. “The funds will allow us to inject the appropriate liquidity in our businesses in order to scale our operations in South Africa, Africa and Europe, while also being able to return significant capital to our shareholders,” Kotzé said.
He said Net1 expected to commence their reinvestment into South Africa during the fourth quarter of 2020 and should be able to demonstrate tangible improvements as soon as the first half of fiscal 2021. Net1 reported a 4 percent decline in revenue to $74.1m during the quarter, down from $77.44m compared to last year.
In South Africa, the group reported a segment revenue of $20.4m in the quarter, which was down by 6 percent on a constant currency basis compared to last year, but it was up from $19.4m reported in the first quarter.
The group said the decrease in segment revenue was primarily due to fewer transactions performed at its ATM base and lower fees as a result of fewer EasyPay Everywhere (EPE) and South African Social Security Agency (Sassa) accounts.
“Our South African transaction processing operating segment revenue and operating loss have been adversely impacted by the loss of EPE customers as a result of Sassa’s auto-migration of accounts to South African Post Office. The reduced operating loss in the segment is due to the cost cutting that has occurred in the last 12 months. Our operating loss margin for the second quarter 2020 and 2019 was 14.6 and 53.8 percent, respectively,” the group said.
In its international segment, the group reported $34.4m revenue, down by 8 percent on a constant currency basis. The group has a primary listing on Nasdaq and a secondary listing on the JSE. The share price leapt to R69.51 a share on the JSE in the afternoon, before closing at R63.84.