Well, the news is out, and while not as bad as I had feared, the free cash flow news at Net 1 UEPS (NASDAQ:UEPS) still fell somewhat short of good.

The company reported its full-year fiscal 2007 numbers last week, revealing that free cash flow for the entire year amounted to $61.7 million. A far sight better than where the firm stood at the end of the fiscal third quarter, but still down 16% from last year's $74 million. (On the plus side, the dramatic close to the year showed the firm nearly doubling its free cash flow in the fourth quarter alone.)

In more GAAP-centric news, Net 1 grew its U.S. dollar-denominated revenues 14% for the year in comparison to fiscal 2006, and its U.S. dollar-denominated profits per share 7.7%. In response to these results, CEO Serge Belamant expressed pleasure with the "quality of our earnings, our growth, and our cash conversion rate."

But what about the future?
I'm glad you asked, because it gives me a chance to discuss one of the most important factors in Net 1's future success, which Foolish colleague Bill Mann pointed out to me just a couple of days ago. Specifically, the fact that the South African government has put the contracts for distribution of social assistance grants throughout its nine provinces up for rebid. While a decision on the contract awards was to have been issued by July 13, Belamant advised last week that he is still "awaiting the outcome of the [South African Social Security Agency] SASSA tender evaluation with cautious optimism."

Why optimism? Because Net 1 currently holds the majority of these SASSA contracts and, as the incumbent, should logically have a leg up in the rebid process.

Why cautious? Perhaps because the SASSA money makes up such a large part of Net 1's business. In fiscal 2006, I calculated the firm's SASSA-derived revenue at approximately $102 million, or 52% of revenues. By fiscal 2007, SASSA-derived revenues had risen to $130 million, which equates to 58% of total revenues. Perhaps more importantly, these revenues grew 27% year over year, or nearly twice as fast as the firm's rate of total revenue growth.

Belamant may believe that "The future success of Net1 will ... be directly proportional to our international market penetration." But from where I sit, the firm's immediate success depends on its ability to hold on to, and, with any luck, expand, its role in the distribution of South African government largesse.

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.