Net 1 UEPS Technologies reported an $11.2 million (R168m) operating loss in the first quarter of its 2022 financial year, while the adjusted earnings before interest, tax, depreciation and amortisation loss came to $10.1m.
Nevertheless, chief executive Chris Meyer said yesterday at the release of the results for three month to end-September 2021 that the company “continues to execute on plans for its transformation and the long-term commitment to unlock value for shareholders”.
A priority was to return the financial services business to break-even, at least, as soon as possible, he said.
Revenue fell 14 percent in rand primarily due to fewer prepaid airtime and hardware sales and lower transaction fee revenue.
Operating losses reduced by 9 percent in rand due to the closure of IPG and lower legal and consulting fees.
“We continue to experience operating losses because of depressed revenues and have embarked on a plan to reduce operating expenses, including closing our mobile payment infrastructure,” the group said.
The first quarter results were also impacted by foreign exchange movements – the dollar was 13 percent weaker against the rand in the first quarter.
The company announced earlier this month it would acquire Connect Group, a fast-growing fintech company in South Africa.
“This acquisition is a milestone at the beginning of our transformative journey as it much enhances our scale, propels our growth trajectory and positions us well to become a leading South African fintech platform,” said Meyer.
During the first quarter, the growth in EPE (EasyPay Everywhere Card Programme) account openings had continued. As of September 30, the company held unrestricted cash of $188m and no debt. Revenue for the three months fell 2 percent to $34.5m compared with the first quarter of the 2021 year.
Financial services segment revenue came to $10.6m, up 12 percent compared with the first quarter of 2021 and marginally higher than the fourth quarter of 2021.
This was due to higher account fee revenue following an increase in the number of EPE accounts, an increase in lending revenue as a result of improved lending activity, and an increase in insurance revenues from an increase in business written.
An increase in operating loss was ascribed to the increase in insurance-related claims due to the Covid-19 pandemic, as well as higher employee costs.
The board said there was sufficient cash to carry them through the next 12 months, while credit facilities were sufficient to fund the ATM network.
BUSINESS REPORT ONLINE