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Johannesburg - Nasdaq and JSE-listed Net1 UEPS Technologies [JSE:Net1] on Wednesday reported first-quarter 2011 earnings per share of $0.16 versus $0.37 a year ago, with a reduction in the value of its contract with the SA government leading to the poor performance.
Net income under accounting principles generally accepted in the US was $7.4m, versus net income of $17.9m for the three months ended September 30 2009.
The company has a contract for the payment of social welfare grants with the South African Social Security Agency (Sassa), but noted on Wednesday that its first quarter of fiscal 2011 was negatively impacted by the reduction in "the economics of our contract with Sassa".
"Following the recent changes in the South African cabinet, we expect to work with the new leadership in the ensuing months to define a long-term solution for the administration of social grants in South Africa," said Net1 chairperson and CEO Serge Belamant.
South Africa reportedly has more social grant recipients than taxpayers, but the government is looking to get cheaper deals around the payment of the grants. Some big banks are vying for the business.
"Our growth initiatives within South Africa and internationally, specifically in Iraq and Ghana, our new technologies such as Virtual Card and EasyPay Kiosks and increasing contributions from our acquisitions of KSNET, MediKredit and FIHRST leave us well positioned to drive long-term revenue, earnings and cash flows.
"We remain committed to achieving long-term sustainable growth for the company and thus for all of our stakeholders,” Belamant said.
Net1 also announced that its subsidiary Netl Universal Electronic Technological solutions has received new orders of $1.3m for an additional 2 000 EFTPOS devices from its Iraqi partners.
Netl expects to deliver 500 devices during the second quarter of fiscal 2011, and the remaining 1 500 devices in the third quarter of fiscal 2011.
In August 2008, the company's UEPS system was implemented in Iraq. It is used for the distribution and payment of government grants to war victims and government pension payments to beneficiaries, as well as salary and wage distribution and payment to employees of the two state-owned banks.
