Net1 wins govt tender, stock surges 37%

Net 1 UEPS Technologies, through its wholly owned subsidiary, Cash Paymaster Services, has won a contract from the South African Social Security Agency (Sassa) to provide payment services in all provinces.

The agency said 21 companies submitted bids for one or more of the provinces, resulting in 128 bids for evaluation.

Sassa aims to achieve its objective of standardising the services while allowing beneficiaries flexibility to be paid anywhere in the country.

"In the main, the bid outcome will achieve a realisable saving for Sassa. Over the past five years the unit costs for pension payment increased from approximately R26 in 2006/2007 to R34 in 2010/2011.

Saving will be achieved

In this contract, the unit cost has been capped to R16.50 for the duration of the contract. This would bring saving of R3bn over a contract period of five years," the agency said.

This is the first time that Sassa has awarded a payment contract as previously it was extended based on the provincial contracts. The body is located within the Social Development Department.

"Our biometric UEPS/EMV technology has enabled us to provide SASSA with a comprehensive, cost effective solution for the payment of approximately 15 million monthly grants to 10 million recipients in rural and urban areas and we are committed to provide the grant recipients and the South African government with the highest level of service and security," said Dr Serge Belamant, chairman and CEO of Net1.

Net1 chief financial officer Herman Kotze said: "Given the magnitude of the SASSA tender award, we expect a significant impact on the group's financial affairs when the contract period commences as a result of new volume and pricing, additional costs, capital expenditure and additional contractual obligations."

At 13.54, the shares leapt R21.50 or 37.07% to R79.50.