株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
☒
ACT OF 1934
For the fiscal year ended
June 30, 2024
OR
☐
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from
To
Commission file number:
000-31203
LESAKA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Florida
98-0171860
(State or other jurisdiction
(IRS Employer
of incorporation or organization)
Identification No.)
President Place
,
4th Floor
,
Cnr. Jan Smuts Avenue and Bolton Road
Rosebank, Johannesburg
2196
,
South Africa
(Address of principal executive offices, including zip code)
Registrant’s telephone number,
 
including area code:
27
-
11
-
343-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.001 per share
LSAK
NASDAQ
 
Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check
 
mark if the
 
registrant is a
 
well-known seasoned issuer, as
 
defined in Rule
 
405 of the
 
Securities
Act.
 
Yes
☐
 
No
☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)
of the Act.
 
Yes
☐
 
No
☒
Indicate by check mark whether
 
the registrant (1) has filed
 
all reports required to be
 
filed by Section 13 or
 
15(d)
of
 
the
 
Securities
 
Exchange
 
Act
 
of
 
1934
 
during
 
the
 
preceding
 
12
 
months
 
(or
 
for
 
such
 
shorter
 
period
 
that
 
the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required
days.
Yes
☒
 
No
☐
 
to
 
be
 
submitted
 
pursuant
 
to
 
Rule
 
405
 
of
 
Regulation
 
S-T
 
(§232.405
 
of
 
this
 
chapter)
 
during
 
the
 
preceding
 
12
months (or for such shorter period that the registrant was required to submit such files).
Yes
☒
 
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, smaller
 
reporting company
 
or an
 
emerging growth
 
company. See the
 
definitions of
 
“large accelerated
 
filer,”
“accelerated
 
filer,”
 
“smaller
 
reporting
 
company,”
 
and
 
“emerging
 
growth
 
company”
 
in
 
Rule 12b-2
 
of
 
the
Exchange Act (check one):
☐
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☐
Emerging growth company
If an
 
emerging
 
growth company,
 
indicate by
 
check mark
 
if the
 
registrant has
 
elected not
 
to use
 
the extended
transition period
 
for complying
 
with any
 
new or
 
revised financial
 
accounting standards
 
provided pursuant
 
to
Section 13(a) of the Exchange Act.
☐
Indicate
 
by
 
check
 
mark
 
whether
 
the
 
registrant
 
has
 
filed
 
a
 
report
 
on
 
and
 
attestation
 
to
 
its
 
management’s
assessment
 
of
 
the
 
effectiveness
 
of
 
its
 
internal
 
control
 
over
 
financial
 
reporting
 
under
 
Section
 
404(b)
 
of
 
the
Sarbanes-Oxley Act
 
(15
 
U.S.C.
 
7262(b)) by
 
the registered
 
public
 
accounting firm
 
that prepared
 
or
 
issued its
audit report.
☒
If securities
 
are registered
 
pursuant to
 
Section 12(b)
 
of the
 
Act, indicate
 
by check
 
mark whether
 
the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
☐
Indicate by check mark
 
whether any of those
 
error corrections are restatements
 
that required a
 
recovery analysis
of
 
incentive-based
 
compensation
 
received
 
by
 
any
 
of
 
the
 
registrant’s
 
executive
 
officers
 
during
 
the
 
relevant
recovery period pursuant to §240.10D-1(b).
☐
Indicate by
 
check mark
 
whether the
 
registrant is
 
a shell
 
company (as
 
defined in
 
Rule 12b-2
 
of the
 
Exchange
Act). Yes
☐
 
No
☒
The
 
aggregate
 
market
 
value
 
of
 
the
 
registrant’s
 
common
 
stock
 
held
 
by
 
non-affiliates
 
of
 
the
 
registrant
 
as
 
of
December 31,
 
2023
 
(the
 
last
 
business day
 
of
 
the registrant’s
 
most
 
recently completed
 
second fiscal
 
quarter),
based upon the closing price of the common stock as reported by The NASDAQ Global Select Market on such
date, was $
125,426,157
. This calculation
 
does not reflect
 
a determination that
 
persons are affiliates
 
for any other
purposes.
As of September 11, 2024,
63,243,350
 
shares of the registrant’s common stock, par value $0.001 per share, net
of treasury shares, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
 
Certain
 
portions
 
of
 
the
 
definitive
 
Proxy
 
Statement
 
for
 
our
 
2024
 
Annual
 
Meeting
 
of
 
Shareholders
 
are
incorporated by reference into Part III of this Form 10-K.
2
PART
 
I
FORWARD
 
LOOKING STATEMENTS
In addition to historical information,
 
this Annual Report on Form 10-K
 
(“Annual Report”) contains forward-looking
 
statements
that involve risks and uncertainties that could cause our actual results to differ
 
materially from those projected, anticipated or implied
in the
 
forward-looking
 
statements. Factors
 
that might
 
cause or
 
contribute
 
to such
 
differences
 
include,
 
but are
 
not limited
 
to, those
discussed in
 
Item 1A—“Risk
 
Factors.” In
 
some cases,
 
you can
 
identify forward-looking
 
statements by
 
terminology such
 
as “may,”
“will,”
 
“should,”
 
“could,”
 
“would,”
 
“expects,”
 
“plans,”
 
“intends,”
 
“anticipates,”
 
“believes,”
 
“estimates,”
 
“predicts,”
 
“potential”
 
or
“continue” or
 
the negative of
 
such terms and
 
other comparable terminology.
 
You
 
should not place
 
undue reliance on
 
these forward-
looking statements, which reflect
 
our opinions only
 
as of the
 
date of this
 
Annual Report. We undertake no
 
obligation to release
 
publicly
any
 
revisions
 
to the
 
forward-looking
 
statements after
 
the date
 
of this
 
Annual
 
Report.
 
You
 
should
 
carefully
 
review the
 
risk factors
described
 
in other
 
documents we
 
file from
 
time to
 
time with
 
the Securities
 
and
 
Exchange Commission
 
(the “SEC”),
 
including
 
the
Quarterly Reports on Form 10-Q to be filed by us during our 2025
 
fiscal year, which runs from July 1, 2024 to June 30,
 
2025.
All
 
references
 
to
 
“the
 
Company,”
 
“we,”
 
“us,”
 
or
 
“our”
 
are
 
references
 
to
 
Lesaka
 
Technologies,
 
Inc.
 
and
 
its
 
consolidated
subsidiaries, collectively, and all references to “Lesaka” are to Lesaka Technologies, Inc. only, except as otherwise indicated or where
the context indicates otherwise.
ITEM 1.
 
BUSINESS
 
Overview
 
Lesaka is
 
a South
 
African Fintech
 
company that
 
utilizes its
 
proprietary banking
 
and payment
 
technologies to
 
deliver financial
services solutions and software to consumers and merchants in Southern Africa.
 
Our vision is to build and operate the leading full-service fintech platform
 
in Southern Africa.
Our
 
core
 
purpose
 
is
 
to
 
provide
 
financial
 
services
 
to
 
Southern
 
Africa’s
 
underserviced
 
consumers
 
and
 
merchants,
 
improving
people’s lives and increasing financial inclusion in the markets in which we operate. We
 
achieve this through our ability to efficiently
digitalize the last mile
 
of financial inclusion,
 
providing a full-service
 
fintech platform
 
offering both cash
 
and digital, and
 
facilitating
the secular shift from cash to digital that is currently taking place.
We
 
offer a wide
 
range of solutions
 
including transactional
 
accounts (banking), lending,
 
insurance, cash management
 
solutions,
card acceptance, supplier payments, software services
 
and bill payments. By providing
 
a full-service fintech platform in
 
our connected
ecosystem, we facilitate the digitization of commerce in our markets.
 
In May 2024
 
we announced the
 
acquisition of Adumo
 
RF (Pty)
 
Ltd (“Adumo”), an
 
acquisition subject to
 
satisfaction of customary
closing
 
conditions,
 
expected
 
to
 
close
 
in
 
October
 
2024.
 
The
 
acquisition
 
continues
 
Lesaka’s
 
consolidation
 
in
 
the
 
Southern
 
African
fintech sector and enhances Lesaka's strengths in both the consumer and merchant
 
markets.
Reportable Segments
 
We
 
operate through
 
two divisions: Our
 
B2C Consumer Division
 
(“Consumer”) and
 
our B2B Merchant
 
Division (“Merchant”).
Within these two divisions, Lesaka has four
 
broad customer types: consumers, micro-merchants, merchants, and
 
enterprise clients.
While there are mutually
 
reinforcing dynamics and overlap
 
between our verticals,
 
within each vertical, we
 
offer distinct brands
with unique value propositions. Our platform addresses a wide range
 
of customers that are not generally serviced by our competitors,
an advantage that we use
 
to benefit from economies
 
of scale. We
 
believe that we deliver
 
high quality products that
 
provide excellent
value to our customers.
While we
 
operate in
 
competed markets,
 
we believe
 
that we
 
are unique
 
in offering
 
a comprehensive
 
product portfolio,
 
serving
both formal and informal consumers and merchants with omnichannel
 
financial services through physical and digital touchpoints.
 
form10kp5i0 form10kp5i1
3
Consumer (B2C)
 
Customers
Through Consumer we focus
 
on individuals who
 
have historically been excluded
 
from traditional financial services.
 
Our products
are designed for consumers at the lower socioeconomic
 
end of the market within Living Standards Measures
 
(“LSMs”) 1 to 6, which
comprises approximately
 
26 million
 
people as
 
of 2023
 
(according to
 
a report
 
by Genesis
 
Analytics). As
 
of the
 
date of
 
this Annual
Report, we have approximately 1.5 million active consumer customers.
Products
 
We offer
 
consumers transactional accounts (banking),
 
insurance, lending (short-term loans),
 
payments solutions (digital wallet)
and various
 
value-added services
 
to underserved
 
consumers in
 
South Africa.
 
Our value proposition
 
and products
 
are designed
 
to be
simple, relevant and cost effective for our target
 
market.
 
 
form10kp6i0
4
Merchant (B2B)
 
Customers
Through Merchant, we focus on micro-merchants, merchants and enterprises operating
 
in the informal and formal sectors of the
Southern African economy.
 
Micro-merchants, or informal sector merchants,
 
are often sole
 
proprietors, usually with lower
 
revenues, that operate in
 
rural areas
or in informal urban areas and do not always have access to a full-suite of
 
traditional banking products.
Merchants, or
 
formal sector
 
merchants, are
 
generally in
 
urban areas,
 
have higher
 
revenues and
 
have access
 
to multiple
 
service
providers.
Enterprises are large-scale corporate and government
 
organizations, including but not limited
 
to banks, mobile network
 
operators
(“MNOs”) and municipalities.
Including
 
micro-merchants
 
and
 
merchants,
 
there
 
are
 
more
 
than
 
2.7
 
million
 
merchants
 
in
 
South
 
Africa,
 
of
 
which
 
more
 
than
890,000
 
merchants
 
are immediately
 
serviceable
 
merchants
 
for
 
Lesaka.
 
Merchant
 
currently
 
has over
 
96,600
 
customers
 
in
 
Southern
Africa, of
 
which more than
 
87,000 are in
 
South Africa (this
 
excludes the
 
impact of the
 
Adumo acquisition,
 
not effective
 
at June 30,
2024 and expected to close in October 2024).
Products
To
 
micro-merchant
 
and
 
merchant
 
customers
 
(B2B),
 
we
 
offer
 
cash
 
management
 
and
 
digitalization
 
solutions
 
through
 
our
proprietary vault
 
technology,
 
card acceptance,
 
supplier payments,
 
software services,
 
lending, prepaid
 
accounts and
 
bill payments
 
to
empower merchants to grow their businesses and transact more efficiently.
 
To
 
larger enterprise
 
customers (B2B), we offer
 
bill and supplier
 
payments and VAS
 
products through
 
our proprietary financial
switch, as well as point of sale device and maintenance, bank and SIM card production
 
and other specialized technology products.
Market Opportunity
Our primary
 
market is
 
currently South
 
Africa with
 
its approximately
 
62 million
 
population and
 
$381 billion
 
economy (GDP,
according to IMF World
 
Economic Outlook Database as
 
of October 2023). With
 
the acquisition of Adumo
 
(an acquisition subject to
regulatory approvals
 
and satisfaction of
 
customary closing conditions,
 
expected to close
 
in October 2024)
 
we augment our
 
presence
in South Africa,
 
Namibia, Botswana and
 
Zambia and expand
 
into Kenya. Together this represents
 
a 140 million
 
population addressable
market, larger than that of Mexico or Japan (GDP according to IMF
 
World Economic
 
Outlook Database as of October 2023).
 
form10kp7i0 form10kp7i1
5
Over
 
the
 
past
 
decade,
 
both
 
financial
 
inclusion
 
and
 
smartphone
 
penetration
 
throughout
 
the
 
region
 
have
 
grown
 
significantly.
According to a report
 
by Genesis Analytics, between 2015
 
and 2023, the proportion
 
of low-income workers in South
 
Africa that had
used a debit
 
card to transact
 
rose from 17%
 
to 50%. According
 
to the same
 
report, between 2015
 
and 2021, the
 
proportion of
 
South
Africans accessing online
 
banking services increased
 
from 31%
 
to 55%, and
 
between 2018 and
 
2024, smartphone penetration
 
increased
from 55% to 76%.
These favorable tailwinds
 
have helped position
 
Africa as the fastest-growing
 
Fintech market globally,
 
according to a
 
report by
Boston Consulting Group that projects growth in the African Fintech revenue pool
 
to grow by 13 times between 2021 and 2030.
Given
 
the
 
significant
 
challenges
 
in
 
delivering
 
financial
 
services
 
in
 
Southern
 
Africa;
 
however,
 
many
 
service
 
providers
 
in
 
our
markets continue to rely on expensive and unreliable legacy systems and focus on narrow customer segments with mono-line (single-
line) products.
We
 
believe that this
 
presents a significant
 
opportunity for Lesaka
 
to build and
 
operate the leading
 
full-service Fintech platform
in Southern Africa, empowering underserviced consumers and merchants by delivering
 
innovative financial services focused on their
specific needs.
 
6
Competition
With our comprehensive offerings to
 
both consumers and merchants, we compete with a wide range of service providers. While
there are
 
competitors for
 
specific products
 
and services,
 
few offer
 
end-to-end solutions,
 
particularly in
 
the lower-income
 
consumer
market and the informal merchant market, where we have a significant footprint
 
and strong penetration.
In our
 
Consumer Division,
 
there are
 
a number
 
of traditional
 
and digital
 
providers of
 
low-cost transactional
 
bank accounts
 
and
micro financial services. These include South African banks such as
 
FNB, Standard Bank, Absa, Nedbank, African Bank and Capitec,
the South African
 
Post Bank, and digital
 
banks such as, Tyme
 
Bank and Bank
 
Zero. In the South
 
African ATM
 
network market, we
compete against the South African banks, ATM
 
Solutions and Spark ATM
 
Systems.
 
In the informal merchant sector, there
 
are no competitors which offer a comprehensive product
 
set of cash, card, payment, VAS
and capital
 
solutions, such
 
as ours.
 
In the
 
formal merchant
 
sector there
 
is significantly
 
more competition,
 
with banks
 
and non-bank
fintech companies targeting these merchants.
 
In card acquiring, competitors include
 
Yoco,
 
iKhokha, Sureswipe and the South African
 
banks; in VAS
 
and bill payments, they
include Flash, Blue Label, Shop2Shop, Pay@ and Ukeshe; in lending, they
 
include Lulalend, Merchant Capital, Retail Capital and the
South African banks; and in cash management, they include Fidelity,
 
G4S, Cashnet and the South African banks.
At an enterprise level, our financial switch and VAS and bill payments business competes with BankservAfrica, Pay@, eCentric
and Transaction Junction.
Human Capital Resources
Over
 
the
 
last
 
two
 
years
 
we
 
have
 
built
 
a
 
diverse
 
team
 
of
 
high-caliber
 
individuals,
 
from
 
different
 
organizations,
 
to
 
form
 
our
leadership group. This
 
leadership group is
 
deeply committed to
 
building a high-performance
 
culture that is
 
based on our core
 
values
and a commitment to the care and development of our people.
Lesaka’s Core Values:
•
Entrepreneurial spirit;
•
Integrity;
•
Collective wisdom;
 
•
Ownership; and
•
A bias to action.
These are our
 
values that underpin
 
our mission
 
to enable
 
Merchants to compete
 
and grow,
 
and Grant
 
Beneficiaries to improve
their lives, by providing innovative financial technology and value
 
-creating solutions.
Employee training and skills development
We strongly believe that learning
 
is an ongoing process and that the majority of learning is in the doing. As such, while we offer
a range of formal
 
programs (as listed further
 
below), more importantly,
 
we continue to encourage
 
a culture of learning
 
in everything
that we do.
Sustainable
 
employee
 
training and
 
development
 
programs impact
 
employee
 
retention,
 
and
 
we believe
 
that our
 
willingness to
invest
 
in
 
employee
 
development
 
contributes
 
to
 
employee
 
satisfaction
 
and
 
belonging.
 
This
 
increases
 
loyalty,
 
which
 
will
 
in
 
turn
contribute
 
to employee retention. We
 
offer the following development programs to enhance employee
 
performance and skills:
•
unemployed and employed learnerships;
•
internships;
•
leadership development programs;
•
training programs;
•
financial assistance to pursue further studies and obtain formal qualifications;
•
other in-house and cross-functional training to aid with career advancement;
 
and
•
succession planning – training interventions to address scarce and critical skills.
Equal opportunity
Having an inclusive
 
and diverse workforce
 
which reflects our
 
economically active population
 
and society in
 
general, is crucial
for helping the organization attract and retain talent and is important for long-term organizational success. Our
 
human resources team
emphasizes recruiting
 
and retaining
 
a talented
 
and diverse
 
workforce with
 
special focus
 
on hiring
 
previously disadvantaged
 
groups
whenever possible. We
 
are committed to hiring qualified candidates without regard
 
to their personal status, while taking into account
the
 
unique
 
circumstances
 
affecting
 
our
 
operations
 
in
 
South
 
Africa
 
and
 
the
 
need
 
to
 
uplift
 
previously
 
disadvantaged
 
groups.
 
This
commitment extends to all levels of our organization,
 
including within senior management and our board of directors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
As of June 30, 2024, the composition of our workforce was:
•
55% female and 45% male;
•
40% between 18 and 34 years old, 55% between 35 and 54 years old, and 5% over
 
55 years old; and
•
69% Black, 11% two or more races, 8% Indian and 12%
 
White.
We have no
 
female named executive officer.
We
 
continue
 
to strive
 
to build
 
a more
 
inclusive workforce
 
and to
 
enhance our
 
pay structures
 
by taking
 
measures to
 
eliminate
potential remuneration discrimination
 
and to help close gender pay gaps
 
to progress towards gender equality
 
at work. We
 
have taken
positive strides towards a rewards philosophy that rewards high performance, is externally benchmarked and focuses on equal pay for
work of equal value.
Employee compensation programs
We
 
are committed
 
to
 
ensuring
 
that
 
all
 
our
 
employees
 
are
 
paid
 
fair
 
and
 
competitive
 
remuneration. To
 
that
 
end,
 
we
 
offer the
following to our employees:
 
•
Access to a comprehensive medical, dental, and vision plan that our employees
 
have the option to join;
•
Access to a defined contribution retirement plan that our employees have
 
the option to join;
•
Paid sick, study, annual
 
and family responsibility leave;
•
Maternity benefits;
•
Life and disability insurance coverage;
•
Financial aid to fund tertiary education for children of employees;
•
Employee assistance programs; and
•
Product discounts.
 
Annual
 
increases
 
and
 
incentive
 
compensation
 
are
 
based
 
on
 
merit,
 
which
 
is
 
communicated
 
to
 
employees
 
at
 
onboarding
 
and
documented as part of our annual remuneration review process.
Our number
 
of employees
 
allocated
 
on a
 
segmental
 
and
 
group
 
basis as
 
of the
 
years ended
 
June 30,
 
2024,
 
2023 and
 
2022,
 
is
presented in the table below:
Number of employees
2024
2023
2022
Consumer
(1)
1,333
1,306
1,826
Merchant
(1)
1,189
990
824
Total segments
2,522
2,296
2,650
Group
(1)
9
7
7
Total
2,531
2,303
2,657
(1) Consumer includes one executive officer for each of fiscal 2024, 2023 and 2022. Merchant includes one executive officer
 
for
each of fiscal 2024, 2023 and 2022. Group includes two executive officers
 
for fiscal 2024 and 2023 and three for fiscal 2022.
On a functional basis, four of our employees are our named
 
executive officers, 1,350 were employed in sales and marketing, 500
were employed in finance and administration, 266 were employed in information
 
technology and 411 were employed in operations.
Health and safety laws and regulations
We
 
are
 
subject
 
to various
 
South
 
African
 
laws and
 
regulations
 
that
 
regulate
 
the health
 
and
 
safety of
 
our
 
South
 
African-based
workforce, including
 
those laws monitored
 
by the
 
South African
 
Department of
 
Employment and
 
Labour which
 
stipulates the
 
legal
framework within
 
which we
 
need to
 
function. This
 
framework comprises
 
the Occupational
 
Health and
 
Safety Act,
 
Act 85
 
of 1993
(“OHSA”),
 
the
 
Compensation
 
for
 
Occupational
 
Injuries
 
and
 
Diseases
 
Act,
 
Act
 
130
 
of
 
1993
 
(“COIDA”),
 
the
 
Basic
 
Conditions
 
of
Employment Act,
 
Act 75
 
of 1997
 
(“BCEA”) and
 
the Labour
 
Relations Act,
 
Act 66
 
of 1995
 
(“LRA”). Compliance
 
with COVID-19
regulations remains
 
regulated by the
 
National Institute of
 
Occupational Health (“NIOH”),
 
and the Occupational
 
Health Surveillance
System
 
(“OHSS”),
 
the
 
Centre
 
for
 
Scientific
 
Industrial
 
Research
 
(“CSIR”)
 
and
 
the
 
National
 
Institute
 
for
 
Communicable
 
Diseases
(“NICD”).
 
We
 
have
 
implemented
 
and regularly
 
update human
 
capital-related
 
policies that
 
are designed
 
to ensure compliance
 
with
applicable South African laws and regulations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
Our Executive Officers
The table below presents our executive officers, their
 
ages and their titles:
Name
Age
Title
Ali Mazanderani
42
Executive Chairman and Director
Naeem E. Kola
51
Group Chief Financial Officer and Director
Lincoln C. Mali
56
Chief Executive Officer: Southern Africa and Director
Steven J. Heilbron
59
Executive and Director
Ali Mazanderani
 
has been our Executive
 
Chairman since February
 
1, 2024. He is
 
a fintech investor and
 
entrepreneur. He
 
is the
co-founder
 
and
 
chairman
 
of Teya,
 
a pan-European
 
fintech. He
 
is also
 
a non-executive
 
director
 
on the
 
board of
 
several companies
including Thunes (Singapore based
 
private fintech), Kushki (Latin
 
American payments company) and
 
is the president
 
of The European
Digital Payments Industry Alliance
 
(EDPIA). He was previously
 
on the board of
 
several other leading payments
 
companies globally
including
 
StoneCo
 
(Nasdaq:
 
STNE)
 
in
 
Brazil
 
and
 
Network
 
International
 
Holdings
 
Plc
 
(LSE:NETW)
 
in
 
the
 
Middle
 
East.
 
He
 
was
formerly a Partner at Actis, a London-based emerging market private equity firm, where
 
he led multiple landmark fintech investments
globally. Prior to his career at Actis, Mr.
 
Mazanderani advised private equity and corporate clients for OC&C Strategy Consultants in
London
 
and
 
served
 
as
 
lead
 
strategy
 
consultant
 
for
 
First
 
National
 
Bank
 
based
 
in
 
Johannesburg.
 
He
 
holds
 
postgraduate
 
degrees
 
in
Economics from
 
the University of
 
Pretoria, Oxford University
 
and the London
 
School of Economics,
 
an MBA from
 
INSEAD and a
Masters in Business Law from the University of St Gallen.
Naeem E. Kol
a has been our Group Chief Financial Officer since March 1, 2022. Mr. Kola has progressively held senior finance
roles in
 
Dubai, most
 
notably as
 
Chief Financial
 
Officer of
 
the Emerging
 
Markets Payments
 
Group (“EMP”),
 
a high-growth
 
fintech
business that grew
 
materially and successfully
 
concluded and integrated
 
five acquisitions during
 
Mr. Kola’s
 
six-year tenure as Chief
Financial
 
Officer.
 
Prior
 
to
 
becoming
 
Chief
 
Financial
 
Officer,
 
Mr.
 
Kola
 
was
 
Senior
 
Vice
 
President
 
for
 
Investments,
 
Strategy
 
and
Business Planning at EMP. Since the acquisition of EMP by Network International in 2017, Mr. Kola has been an
 
Operations Director
and Strategic Advisor to the emerging market private
 
equity firm Actis, where he again focused on fintech businesses.
Lincoln
 
C.
 
Mali
 
has
 
been
 
our
 
Chief
 
Executive
 
Officer:
 
Southern
 
Africa
 
since
 
May
 
1,
 
2021.
 
Mr.
 
Mali
 
is
 
a
 
financial
 
services
executive with over 25 years in the
 
industry. Until April 2021, he was the Head of Group
 
Card and Payments at Standard Bank
 
Group,
having
 
served
 
in many
 
different
 
roles within
 
that organization
 
since 2001.
 
Mr.
 
Mali chaired
 
the board
 
of directors
 
of Diners
 
Club
South Africa
 
until April
 
2021, and
 
was a
 
member of
 
the Central
 
and Eastern
 
Europe, Middle
 
East and
 
Africa Business
 
Council for
Visa.
 
Mr.
 
Mali holds
 
Bachelor of
 
Arts (BA)
 
and Bachelor
 
of Laws
 
(LLB) degrees
 
from Rhodes
 
University,
 
an MBA
 
from Henley
Management College, various diplomas and attended an Advanced
 
Management Program at Harvard Business School.
Steven J. Heilbron
 
has been the Chief
 
Executive Officer of the Connect Group since
 
2013 and joined us
 
following the acquisition
of Connect
 
in the
 
same capacity.
 
Mr.
 
Heilbron has
 
two decades
 
of financial
 
services experience,
 
having spent
 
19 years
 
working for
Investec in South Africa
 
and the UK,
 
where he served as
 
Global Head of Private
 
Banking and Joint Chief
 
Executive Officer of Investec
Bank plc. He led a private consortium that acquired Cash Connect Management Solutions (Pty) Ltd (“CCMS”) in 2013. Mr. Heilbron
has presided over significant
 
organic growth in the
 
rebranded Connect Group, as
 
well as spearheading the
 
successful acquisition and
integration of Kazang and EFTpos acquired from the Paycorp Group in February 2020. He is a member of the South African Institute
of Chartered Accountants.
Financial Information about Geographical Areas and Operating
 
Segments
Refer
 
to
 
Note
 
21
 
to
 
our
 
audited
 
consolidated
 
financial
 
statements
 
included
 
in
 
this
 
Annual
 
Report
 
contains
 
detailed
 
financial
information about our operating segments for fiscal 2024, 2023 and 2022. Revenues based on the geographic location from which the
sale originated and geographic location where long-lived assets are held for the years ended June 30, are presented in the table below:
Revenue
(1)
Long lived assets
2024
2023
2022
2024
2023
2022
$'000
$'000
$'000
$'000
$'000
$'000
South Africa
537,594
505,558
215,046
286,700
300,104
359,725
India (MobiKwik)
-
-
-
76,297
76,297
76,297
Rest of the world
26,628
22,413
7,563
2,548
2,197
2,811
Total
564,222
527,971
222,609
365,545
378,598
438,833
(1)
 
Refer to
 
Note 16
 
to our
 
audited consolidated
 
financial statements
 
included
 
in this
 
Annual Report
 
which contains
 
detailed
financial information about our revenue for fiscal 2024, 2023
 
and 2022.
 
9
Corporate history
Lesaka was incorporated
 
in Florida in
 
May 1997 as
 
Net 1
 
UEPS Technologies, Inc. and
 
changed its name
 
to Lesaka Technologies,
Inc. on May 12, 2022. In 2004, Lesaka acquired Net1 Applied Technology
 
Holdings Limited (“Aplitec”), a public company listed on
the Johannesburg
 
Stock Exchange
 
(“JSE”). In
 
2005, Lesaka
 
completed an
 
initial public
 
offering
 
and listed
 
on the
 
NASDAQ Stock
Market. In
 
2008, Lesaka
 
listed on
 
the JSE
 
in a
 
secondary listing,
 
which enabled
 
the former
 
Aplitec shareholders
 
(as well
 
as South
African residents generally) to hold Lesaka common stock directly.
Available information
We maintain a website at www.
 
lesakatech.com. Our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, and amendments to those reports, as well as our proxy statements, are available free of charge through the “SEC filings” portion
of our website,
 
as soon as
 
reasonably practicable after
 
they are filed
 
with the SEC.
 
The information contained
 
on, or accessible
 
through,
our website is not incorporated into this Annual Report.
The SEC
 
maintains a
 
website at
 
www.sec.gov
 
that contains
 
reports, proxy
 
and information
 
statements, and
 
other information
regarding issuers that file electronically with the SEC.
 
10
ITEM 1A. RISK FACTORS
 
OUR OPERATIONS
 
AND FINANCIAL
 
RESULTS
 
ARE SUBJECT
 
TO VARIOUS
 
RISKS AND
 
UNCERTAINTIES,
INCLUDING
 
THOSE
 
DESCRIBED
 
BELOW,
 
THAT
 
COULD
 
ADVERSELY
 
AFFECT
 
OUR
 
BUSINESS,
 
FINANCIAL
CONDITION, RESULTS
 
OF OPERATIONS,
 
CASH FLOWS, AND THE TRADING PRICE OF OUR COMMON STOCK
Risks Relating to Our Business
To achieve our mission, our
 
strategy is to
 
build and operate
 
the leading South
 
African full service
 
fintech
platform offering cash
 
management, payment and
 
financial services. Our
 
future success, and
 
our ability to
return
 
to
 
profitability
 
and
 
positive
 
cash
 
flow
 
is
 
substantially
 
dependent
 
on
 
our
 
ability
 
to
 
complete
 
the
implementation of this strategy successfully.
Our board conducted an extensive
 
review of our business strategy
 
and operations in July 2020,
 
and decided to focus on
 
our South
African
 
operations
 
and
 
other
 
business
 
opportunities
 
in
 
South
 
Africa
 
and,
 
to
 
a
 
lesser
 
extent,
 
the
 
rest
 
of
 
the
 
African
 
continent.
 
The
restructuring
 
of
 
the
 
consumer
 
business
 
and
 
acquisition
 
of
 
Connect
 
were
 
integral
 
parts
 
of
 
the
 
strategy
 
to
 
return
 
the
 
business
 
to
profitability and positive cash flow. We have made significant progress on both of these initiatives however we cannot assure you that
we will be able to complete our strategy successfully and return to profitability and
 
positive cash flow.
Even if we do return to profitability, achieving net income does not necessarily
 
ensure positive cash flows. Future periods of net
losses
 
from
 
operations
 
could
 
result
 
in
 
negative
 
cash
 
flow
 
and
 
may
 
hamper
 
ongoing
 
operations
 
or
 
prevent
 
us
 
from
 
sustaining
 
or
expanding our business. We cannot assure you that we will achieve, sustain or increase profitability in the future and if we do not, our
business will be materially and adversely affected.
In 2017
 
and 2018 we
 
suffered significant
 
reputational damage
 
as a result
 
of irregularities in
 
the awarding of
 
the South African
Social Security Agency (“SASSA”)
 
grant distribution contract in
 
2012 and allegations of abuse
 
of group companies’ access to social
grant recipients.
 
An entirely new
 
board and management
 
team were appointed
 
to develop and
 
execute the new
 
strategy however we
cannot provide assurance that issues related to those events will not resurface
 
and adversely affect the business.
We
 
have a
 
significant amount
 
of indebtedness that
 
requires us
 
to comply with
 
restrictive and financial
covenants. If we are unable to comply with these
 
covenants, we could default on this debt, which would have
a material adverse effect on our business and financial condition.
As
 
of
 
June
 
30,
 
2024,
 
we
 
had
 
aggregate
 
long-term
 
borrowing
 
outstanding
 
of
 
ZAR
 
2.6
 
billion
 
($143.2
 
million
 
translated
 
at
exchange rates
 
as of June
 
30, 2024). We
 
financed our acquisition
 
of Connect
 
in April 2022
 
through South
 
African bank borrowings
of ZAR 1.1 billion
 
($71.7 million, translated at
 
closing date exchange
 
rate (as defined in the
 
Sale Agreement) of $1:ZAR
 
14.65165).
The borrowings
 
are secured
 
by a
 
pledge of
 
certain of
 
our bank
 
accounts, and
 
the cession
 
of Lesaka’s
 
shareholding
 
in certain
 
of its
subsidiaries. These borrowings contain customary covenants that require Lesaka Technologies
 
(Pty) Ltd (“Lesaka SA”) to maintain a
specified total asset
 
cover ratio and restrict
 
the ability of
 
Lesaka, Lesaka SA,
 
and certain of its
 
subsidiaries to make
 
certain distributions
with respect
 
to their
 
capital stock,
 
prepay other
 
debt, encumber
 
their assets,
 
incur additional
 
indebtedness, make
 
investment above
specified levels, engage in certain business combinations and engage
 
in other corporate activities.
The loan agreements also include a credit enhancement mechanism of ZAR
 
350 million ($23.9 million, translated at closing date
exchange rate), which has been provided by investment
 
funds managed by Lesaka’s
 
largest shareholder, Value
 
Capital Partners (Pty)
Ltd (“VCP”)
 
which includes
 
a contingent
 
subscription for
 
new shares.
 
There can
 
be no
 
assurance that
 
VCP will
 
perform under
 
the
commercially agreed
 
terms and failure
 
by it to
 
fulfil its obligation
 
under the credit
 
enhancement mechanism
 
may put our
 
funding or
future repayments at risk.
We also
 
have borrowings through
 
Connect. Connect’s
 
credit facilities include (i)
 
an overdraft facility (general
 
banking facility)
of ZAR 205.0
 
million (of which
 
ZAR 170.0 million
 
has been utilized);
 
(ii) Facility A
 
of ZAR 705.5
 
million; (iii) Facility
 
B of ZAR
550.0 million (both fully utilized and ZAR 512.5 million outstanding after scheduled repayments); and (iv) an asset-backed facility of
ZAR 200.0 million (of which ZAR
 
152.3 million has been utilized). These borrowings are secured
 
by a pledge of, among other things,
Cash Connect Management Solutions’(“CCMS”)
 
entire equity interests in
 
its subsidiaries and investments
 
and any claims
 
outstanding.
These
 
borrowings
 
contain
 
customary
 
covenants
 
that require
 
CCMS to
 
maintain
 
specified debt
 
service,
 
interest
 
cover and
 
leverage
ratios.
Within our merchant lending
 
operations, we have
 
borrowing arrangements through
 
Cash Connect Capital
 
(Pty) Limited (“CCC”).
CCC has a
 
ZAR 300
 
million revolving
 
credit facility agreement
 
.
 
We
 
have utilized
 
approximately ZAR
 
215.3 million
 
as of June
 
30,
2024.
 
This
 
facility
 
contains
 
customary
 
covenants
 
that
 
require
 
the
 
borrowing
 
parties
 
to
 
collectively
 
maintain
 
a
 
specified
 
capital
adequacy ratio, restrict the ability of the entities to make certain distributions with respect to their capital stock,
 
encumber their assets,
incur additional indebtedness, make investments, engage in certain
 
business combinations and engage in other corporate activities.
 
11
These security arrangements and covenants may
 
reduce our operating flexibility or
 
our ability to engage in
 
other transactions that
may
 
be
 
beneficial
 
to
 
us.
 
If
 
we
 
are
 
unable
 
to
 
comply
 
with
 
the
 
covenants,
 
we
 
could
 
be
 
in
 
default
 
and
 
the
 
indebtedness
 
could
 
be
accelerated. If this were to occur, we might not be able to obtain waivers of default or to refinance the debt with another lender and as
a result, our business, financial condition and stock price would suffer.
We
 
need to
 
significantly grow
 
our consumer
 
operations in
 
order to
 
ensure their
 
profitability and
 
long-
term sustainability.
Following the conclusion of our contract
 
with SASSA, we refocused our resources and technology
 
on the provision of financial
inclusion services
 
to our
 
target market
 
and currently
 
have an
 
established base
 
of approximately
 
1.5 million
 
customers. Our
 
strategy
involves significantly expanding this base over
 
the coming years. While
 
we believe that our financial
 
services offerings are convenient
and cost-effective,
 
the success
 
of our
 
strategy will
 
depend on
 
the extent
 
to which
 
we successfully
 
market our
 
offering
 
to grow
 
the
customer base.
Factors that may prevent us from successfully operating and expanding our
 
Consumer Division include, but are not limited to:
 
•
insufficient adoption and utilization of our products and
 
services;
•
inability to access sufficient funding for our ATM
 
infrastructure;
•
increased
 
competition
 
in
 
the
 
marketplace
 
and
 
restrictions
 
imposed
 
by
 
SASSA
 
or
 
the
 
South
 
African
 
government
 
on
 
the
manner in which grant recipients may transact;
•
political interference and changes in the regulatory environment;
•
failure to comply with laws and regulations related to our Consumer lending
 
business;
•
failure to comply with anti-money laundering and anti-corruption laws and
 
regulations;
•
cyber-attacks, data breaches and data leaks;
•
further civil unrest similar to that experienced in July 2021;
•
loss of key technical and operations staff;
•
expired property leases disrupting business operations; and
•
logistical and communications challenges, including scheduled and unscheduled
 
power supply disruptions.
Failure
 
to
 
complete,
 
or
 
delays
 
in
 
completing,
 
the
 
Adumo
 
acquisition,
 
could
 
materially
 
and
 
adversely
affect our results of operations and stock price.
The completion of
 
the Adumo
 
acquisition is subject
 
to a
 
number of conditions
 
precedent, including receipt
 
of regulatory approvals
and certain third-party consents. Some of these conditions are outside
 
our control.
To
 
complete
 
the
 
acquisition,
 
we
 
must
 
make
 
certain
 
filings
 
with
 
and
 
obtain
 
certain
 
consents
 
and
 
approvals
 
from
 
various
governmental and regulatory authorities.
 
The regulatory approval processes may
 
take a lengthy period of time to complete,
 
and there
can be no assurance
 
as to the outcome
 
of the approval processes,
 
including the undertakings
 
and conditions that
 
may be required for
approval, or whether the regulatory approvals will be obtained at all.
 
In addition,
 
the completion
 
of the
 
acquisition is
 
conditional
 
on, among
 
other things,
 
no action
 
or circumstance
 
occurring that
would result in a material adverse effect on the Adumo’s
 
business operations or financial results.
We cannot
 
provide any assurance regarding if or
 
when all conditions precedent to the acquisition
 
will be satisfied or waived. If,
for any reason, the acquisition is
 
not completed, or its completion is
 
materially delayed and/or the transaction agreement is terminated,
the market price of our common stock may be materially and adversely
 
affected.
In addition, if the acquisition is not completed for any reason, there are risks that (i) the announcement of the acquisition and (ii)
the dedication
 
of management’s
 
attention and other
 
of our resources
 
to the completion
 
thereof, could have
 
a negative impact
 
on our
relationships with our stakeholders
 
and could have a material
 
adverse effect on
 
our current and future operations,
 
financial condition
and prospects.
We may not realize some or all of the anticipated benefits from the Adumo acquisition.
Even if we complete the
 
Adumo acquisition, we may experience
 
unforeseen events, changes or
 
circumstances that may adversely
affect us. For example, we may incur unexpected costs, charges or
 
expenses resulting from the transaction, including charges to future
earnings if Adumo’s business
 
does not perform as expected. Our expectations regarding
 
Adumo’s business and prospects may not
 
be
realized,
 
including
 
as a
 
result
 
of
 
changes
 
in
 
the
 
financial
 
condition
 
of the
 
markets
 
that Adumo
 
serves.
 
In
 
addition,
 
there
 
are
 
risks
associated with
 
Adumo’s
 
product and
 
service offerings
 
or results
 
of operations,
 
including the
 
risk of
 
failing to
 
comply with
 
certain
regulatory rules required to operate its business.
 
12
Further, there are
 
numerous challenges, risks
 
and costs
 
involved with integrating
 
the operations
 
of Adumo
 
with ours.
 
For example,
integrating Adumo into
 
our company will require
 
significant attention from our
 
senior management which
 
may divert their attention
from
 
our
 
day-to-day
 
business.
 
The
 
difficulties
 
of
 
integration
 
may
 
also
 
be
 
increased
 
by
 
cultural
 
differences
 
between
 
our
 
two
organizations and the necessity of retaining and integrating personnel,
 
including Adumo’s key employees.
 
Our Sarbanes-Oxley
 
Act of
 
2002 (“Sarbanes”)
 
management certification
 
and auditor
 
attestation regarding
 
the effectiveness
 
of
our internal
 
control over
 
financial reporting
 
as of
 
June 30,
 
2024, excludes
 
the operations
 
of Adumo,
 
as we
 
only expect
 
to close
 
the
transaction in fiscal 2025.
 
The requirement to evaluate
 
and report on our
 
internal controls also applies
 
to companies that we
 
acquire.
As a group of
 
South African private companies,
 
Adumo is not required
 
to comply with Sarbanes
 
prior to the time
 
we acquire it.
 
The
integration of
 
Adumo into
 
our internal
 
control over
 
financial reporting would
 
be expected
 
to require
 
significant time
 
and resources
from our
 
management and
 
other personnel
 
and is expected
 
to increase
 
our compliance
 
costs. If
 
we fail
 
to successfully
 
integrate the
operations of Adumo into our
 
internal control over financial reporting for
 
fiscal 2025, our internal
 
control over financial reporting may
not be effective.
If some or all
 
of the aforementioned or
 
other risks materialize, our
 
ability to realize the
 
anticipated benefits of Adumo
 
could be
materially impaired, and as a result, our financial condition, results of operations,
 
cash flows and stock price could suffer.
We may undertake acquisitions
 
that could
 
increase our
 
costs or
 
liabilities or
 
be disruptive
 
to our
 
business.
Acquisitions are
 
an integral part
 
of our new
 
growth strategy
 
as we seek
 
to expand our
 
business and deploy
 
our technologies
 
in
new markets
 
in Southern
 
Africa. However,
 
we may
 
not be
 
able to
 
locate suitable
 
acquisition
 
candidates at
 
prices that
 
we consider
appropriate.
 
If
 
we
 
do
 
identify an
 
appropriate
 
acquisition
 
candidate,
 
we
 
may
 
not be
 
able to
 
successfully
 
negotiate
 
the
 
terms
 
of
 
the
transaction, finance it
 
or, if the
 
transaction occurs, integrate the
 
new business into
 
our existing business.
 
These transactions may
 
require
debt financing or additional equity financing, resulting in additional leverage
 
or dilution of ownership.
Acquisitions of businesses
 
or other material
 
operations and the
 
integration of these
 
acquisitions or their
 
businesses will require
significant attention
 
from members
 
of our senior
 
management team,
 
which may
 
divert their
 
attention from
 
our day-to-day
 
business.
The difficulties
 
of integration
 
may be
 
increased by
 
the necessity
 
of integrating
 
personnel with
 
disparate business
 
backgrounds
 
and
combining
 
different
 
corporate cultures.
 
We
 
also may
 
not be
 
able to
 
retain key
 
employees or
 
customers
 
of an
 
acquired business
 
or
realize
 
cost
 
efficiencies
 
or
 
synergies
 
or
 
other
 
benefits
 
that
 
we
 
anticipated
 
when
 
selecting
 
our
 
acquisition
 
candidates.
 
Acquisition
candidates may have liabilities or adverse operating issues that we fail to
 
discover through due diligence prior to the acquisition.
We
 
may
 
need
 
to record
 
write-downs
 
from future
 
impairments of
 
goodwill or
 
other intangible
 
assets, which
 
could reduce
 
our
future reported earnings.
Geopolitical conflicts,
 
including the
 
conflict between
 
Russia and
 
Ukraine and
 
between Israel
 
and Hamas,
may adversely affect our business and results of operations.
The current
 
conflict between
 
Russia and
 
Ukraine and
 
between Israel
 
and Hamas
 
are creating
 
substantial uncertainty
 
about the
future of the
 
global economy.
 
Countries across the
 
globe are instituting
 
sanctions and other
 
penalties against
 
Russia. The retaliatory
measures that have been taken, and could be taken
 
in the future, by the U.S., NATO,
 
and other countries have created global security
concerns that could result in broader European military and political conflicts and otherwise have a substantial impact on regional and
global economies, any or all of which could adversely affect our business.
While the broader consequences are uncertain at this time, the continuation
 
and/or escalation of the Russian and Ukraine and Israel-
Hamas conflicts, along with any expansion of the conflict to surrounding areas,
 
create a number of risks that could adversely impact
our business, including:
•
increased inflation and significant volatility in the macroeconomic
 
environment;
•
disruptions to our technology infrastructure, including through cyberattacks,
 
ransom attacks or cyber-intrusion;
•
adverse changes in international trade policies and relations;
•
disruptions in global supply chains; and
•
constraints, volatility or disruption in the credit and capital markets.
All of these risks could materially
 
and adversely affect our business
 
and results of operations. We
 
are continuing to monitor the
situation in Ukraine and the Middle East and globally and assessing the potential
 
impact on our business.
 
13
A prolonged economic
 
slowdown or lengthy
 
or severe recession
 
in South Africa
 
or elsewhere could
 
harm
our operations.
A prolonged economic
 
downturn or recession
 
in South Africa
 
could materially
 
impact our results
 
from operations, particularly
in light of
 
on-going electricity disruptions
 
during calendar 2022
 
and 2023, a
 
significantly weak USD/
 
ZAR exchange rate
 
compared
with previous periods, and our strategic decision to focus on our South African operations. Economic confidence in South Africa, our
main operating
 
environment, is
 
currently low
 
and, as
 
a result, the
 
risk of
 
a prolonged
 
economic downturn
 
is increased, which
 
could
have a negative impact on merchants and retailers; mobile phone operators; our account holders; the
 
level of transactions we process;
the take-up of
 
the financial services
 
we offer and
 
the ability of our
 
customers to repay
 
our loans or to
 
pay their insurance
 
premiums.
If
 
financial
 
institutions
 
and
 
retailers experience
 
decreased
 
demand
 
for
 
their products
 
and services,
 
our
 
hardware,
 
software,
 
related
technology sales and processing revenue could decrease.
Our investment in MobiKwik
 
subjects us to certain
 
risks, including the possibility
 
of fluctuations in the
carrying value based on readily determinable fair values. In addition, our ability to dispose of our interest in
MobiKwik on acceptable terms, or at all, may be limited under certain circumstances.
We
 
have elected to
 
account for our
 
investment in MobiKwik
 
at cost minus impairment,
 
if any,
 
plus or minus changes
 
resulting
from observable
 
price changes
 
in orderly
 
transactions for
 
the identical
 
or similar
 
instrument of
 
the same
 
issuer because
 
it does
 
not
have a readily determinable fair value. The determination of the fair value of an investment requires us to make significant judgments
and estimates and we are required to
 
base our estimates on assumptions which
 
we believe to be reasonable, but
 
these assumptions may
be unpredictable and inherently uncertain. The value of our investment in MobiKwik as of
 
June 30, 2024 and 2023, was $76.3 million
and was determined
 
based on a
 
share issuance concluded
 
by MobiKwik in
 
June 2021, implying
 
a fair
 
value per equity
 
share of $12.275.
We did not identify any observable price changes during either of fiscal 2024, 2023 and 2022 and therefore did not adjust the value of
our investment during the years ended June 30, 2024, 2023
 
and 2022, respectively.
MobiKwik originally intended to complete its initial public offering
 
in November 2021. However, MobiKwik
 
delayed its initial
public
 
offering
 
given
 
prevailing
 
market
 
conditions
 
at
 
the
 
time
 
and
 
has
 
indicated
 
its
 
intention
 
to
 
pursue
 
an
 
initial
 
public
 
listing
 
in
calendar 2024. MobiKwik filed its draft red herring prospectus in January 2024.
We
 
may
 
need to
 
record a
 
write-down of
 
the carrying
 
value of
 
our investment
 
in MobiKwik
 
in the
 
future (i)
 
if it
 
is unable
 
to
successfully complete its contemplated initial public offering, (ii) due to fluctuations in its market price upon listing, including during
the lock up
 
period after its
 
initial public
 
offering, or
 
(iii) if it
 
has not listed,
 
there is an
 
observable transaction
 
indicating a
 
fair value
per share
 
which is
 
lower than
 
our
 
June 30,
 
2024 price
 
per share.
 
Furthermore,
 
it may
 
be difficult
 
to dispose
 
of some
 
or all
 
of our
investment on acceptable terms, if at all, if MobiKwik fails to list.
Our
 
ability
 
to
 
fund
 
our
 
ATM
 
network
 
requires
 
that
 
we
 
continue
 
to
 
have
 
access
 
to
 
sufficient
 
lending
facilities, which requires compliance with restrictive and financial covenants.
The operational
 
maintenance
 
of our
 
ATM
 
network,
 
along with
 
an increase
 
in our
 
consumer
 
banking
 
client base,
 
necessitates
access to large
 
amounts of cash
 
to stock the
 
ATMs
 
and maintain uninterrupted
 
service levels. We
 
have credit facilities
 
from a South
African
 
bank
 
which
 
includes
 
security
 
arrangements
 
as
 
well
 
as
 
restrictive
 
and
 
financial
 
covenants.
 
The
 
security
 
arrangements
 
and
covenants included in our lending facilities may reduce our operating flexibility or our ability to engage in other transactions that may
be beneficial to us. If we are unable to comply
 
with the covenants in South Africa, we could be in default
 
and the indebtedness could
be accelerated. If this were to occur, we might not be able to obtain waivers of default or to refinance the debt with another lender and
as a result, our business and financial condition would suffer.
We may not be able to extend the terms
 
of these debt facilities or
 
refinance them, in each case, on
 
commercially reasonable terms
or at all. Our
 
ability to continue the
 
uninterrupted operation of
 
our ATM
 
network will be adversely
 
impacted by our failure
 
to renew
our debt facilities, any adverse change to the terms
 
of our credit facilities, or a
 
significant reduction in the amounts available under our
credit facilities,
 
or our
 
failure to
 
increase our
 
facilities if
 
required. We
 
may also
 
suffer reputational
 
damage if
 
our service
 
levels are
negatively impacted due to the unavailability of cash.
Our
 
consumer
 
microlending
 
loan
 
book
 
and
 
merchant
 
lending
 
book
 
expose
 
us
 
to
 
credit
 
risk
 
and
 
our
allowance for doubtful finance loans receivable may not be sufficient to absorb future write-offs.
All of our microfinance loans made are for a period of six months or less and all of our merchant lending through Connect is for
a period
 
of less
 
than 12
 
months. We
 
have created
 
an allowance
 
for doubtful
 
finance loans
 
receivable related
 
to these
 
books. When
creating the allowance,
 
management considered
 
factors including the
 
period of the
 
finance loan outstanding,
 
creditworthiness of
 
the
customers and the past payment history of the borrower. We consider this policy to be appropriate as it takes into account factors such
as historical bad debts, current
 
economic trends and changes in our
 
customer payment patterns. However,
 
additional allowances may
be required should the ability
 
of our customers to
 
make payments when due
 
deteriorate in the future.
 
A significant amount of judgment
is required to assess the ultimate recoverability of these microfinance
 
loan receivables.
14
We may face competition from other
 
companies that offer innovative
 
payment technologies and payment
processing,
 
which
 
could
 
result
 
in
 
the
 
loss
 
of
 
our
 
existing
 
business
 
and
 
adversely
 
impact
 
our
 
ability
 
to
successfully market additional products and services.
Our primary competitors in
 
the payment processing
 
market include other independent
 
processors, as well
 
as financial institutions,
independent
 
sales
 
organizations,
 
new
 
digital
 
and
 
fintech
 
entrants
 
and,
 
potentially
 
card
 
networks.
 
Many
 
of
 
our
 
competitors
 
are
companies who
 
are larger
 
than we
 
are and
 
have greater
 
financial and
 
operational resources
 
than we
 
have. These
 
factors may
 
allow
them to offer better pricing
 
terms or incentives to customers, which
 
could result in a loss of our potential
 
or current customers and/or
force us to lower our prices. Either of these actions could have a significant effect
 
on our revenues and earnings.
Our
 
future
 
success
 
will
 
depend
 
in
 
part
 
on
 
our
 
ability
 
to
 
attract,
 
integrate,
 
retain
 
and
 
incentivize
 
key
personnel
 
and
 
a
 
sufficient
 
number
 
of
 
skilled
 
employees,
 
particularly
 
in
 
the
 
technical,
 
sales
 
and
 
senior
management areas.
We believe our management team has the right experience
 
and skills to execute on our strategy. However,
 
in order to succeed in
our product
 
development and
 
marketing efforts,
 
we may
 
need to identify
 
and attract new
 
qualified technical
 
and sales personne
 
l, as
well as motivate and retain our
 
existing employees. As a result, an
 
inability to hire and retain such
 
employees would adversely affect
our ability to
 
achieve our strategic
 
goals and maintain
 
our technological relevance.
 
We may face difficulty in
 
assimilating, transitioning
and integrating
 
newly-hired
 
personnel or
 
management of
 
any future
 
acquisitions into
 
our existing
 
management team,
 
and this
 
may
adversely affect
 
our business. Competitors
 
may attempt
 
to recruit
 
our top
 
management and
 
employees. In
 
order to attract
 
and retain
personnel in
 
a competitive
 
marketplace, we
 
must provide
 
competitive pay
 
packages, including
 
cash and equity
 
-based compensation
and
 
the
 
volatility
 
in
 
our
 
stock
 
price
 
may
 
from
 
time
 
to
 
time
 
adversely
 
affect
 
our
 
ability
 
to
 
recruit
 
or retain
 
employees.
 
We
 
do
 
not
maintain
 
any
 
“key
 
person”
 
life
 
insurance
 
policies.
 
If
 
we
 
fail
 
to
 
attract,
 
integrate,
 
retain
 
and
 
incentivize
 
key
 
personnel
 
and
 
skilled
employees, our ability to manage and grow our
 
business could be harmed and our product
 
development and marketing activities could
be negatively affected.
 
System failures, including breaches in the security of our system, could harm our business.
We
 
may experience
 
system failures
 
from time
 
to time,
 
and any
 
lengthy interruption
 
in the availability
 
of our
 
back-end system
computers could harm our business and severely affect our customer relationships. Frequent or persistent interruptions in our services
could cause current or potential
 
customers and users to
 
believe that our systems are
 
unreliable, leading them to
 
avoid our technology
altogether, and could permanently harm our reputation and brands. These interruptions would increase the burden on our staff, which,
in turn, could delay our
 
introduction of new applications and
 
services. Finally, because our customers may use our products
 
for critical
transactions,
 
any
 
system
 
failures
 
could
 
result
 
in
 
damage
 
to
 
our
 
customers’
 
businesses.
 
These
 
customers
 
could
 
seek
 
significant
compensation from us for their losses. Even if unsuccessful, this type of
 
claim could be time-consuming and costly for us to address.
Although certain of our systems
 
have been designed to reduce
 
downtime in the event of
 
outages or catastrophic occurrences, they
remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication
 
failures, terrorist attacks,
computer viruses, computer denial-of-service attacks and similar events. Some of
 
our systems are not fully
 
redundant, and our disaster
recovery planning may not be sufficient for all eventualities.
 
Protection against fraud is of key
 
importance to the purchasers and end
 
users of our solutions. We
 
incorporate security features,
including encryption
 
software, biometric
 
identification and
 
secure hardware,
 
into our solutions
 
to protect
 
against fraud in
 
electronic
transactions and
 
to provide for
 
the privacy and
 
integrity of cardholder
 
data. Our solutions
 
may be vulnerable
 
to breaches in
 
security
due
 
to
 
defects
 
in
 
the
 
security
 
mechanisms,
 
the
 
operating
 
system,
 
applications
 
or
 
the
 
hardware
 
platform
 
as
 
well
 
as
 
through
 
risk
introduced
 
into
 
our
 
environment
 
through
 
third
 
party
 
supplies,
 
which
 
the
 
group
 
relies
 
heavily
 
on.
 
Security
 
vulnerabilities
 
could
jeopardize the security of
 
information transmitted using our solutions.
 
If the security of our
 
solutions is compromised, our
 
reputation
and marketplace acceptance of
 
our solutions may be
 
adversely affected, which would cause
 
our business to
 
suffer, and we may become
subject to damage claims. We
 
have not yet experienced any significant security breaches affecting
 
our business.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems with our
 
system could
result in lengthy interruptions
 
to our services. Our current
 
business interruption insurance may
 
not be sufficient to
 
compensate us for
losses that may result from interruptions in our service as a result of system failures.
Cash
 
Paymaster
 
Services,
 
or
 
CPS,
 
has
 
been
 
placed
 
into
 
liquidation.
 
While
 
no
 
claim
 
has
 
been
 
made
against Lesaka for CPS’ obligations, we cannot provide assurance that no such claim will be made.
CPS has significant obligations and ongoing litigation related to its SASSA contract and has been placed into liquidation. While
no claim has been made against Lesaka to be held liable for CPS’ current
 
obligations or any future obligations under any future court
judgments, and while we do not believe that there would be a legitimate legal basis for any such claims, we cannot assure you that no
such claim
 
will be
 
made against
 
us. If
 
SASSA or
 
another
 
third party
 
were to
 
seek and
 
ultimately succeed
 
in obtaining
 
a judgment
against us in respect of CPS’ liabilities, any such judgment would have a material
 
adverse effect on our financial condition, results of
operations and cash flows.
15
Defending
 
our
 
intellectual
 
property
 
rights
 
or
 
defending
 
ourselves
 
in
 
infringement
 
suits
 
that
 
may
 
be
brought against us is expensive and time-consuming and may not be successful.
Litigation to
 
enforce our
 
patents, trademarks
 
or other
 
intellectual property
 
rights or
 
to protect
 
our trade
 
secrets could
 
result in
substantial costs and may not be successful. Any loss of, or inability to protect, intellectual property in our technology could diminish
our competitive advantage and also seriously harm our business. In addition, the laws of certain foreign countries may not protect our
intellectual property
 
rights to
 
the same
 
extent as
 
do the
 
laws in
 
countries where
 
we currently
 
have patent
 
protection. Our
 
means of
protecting our intellectual property rights in countries where we currently have patent or trademark protection, or any other country in
which we operate, may not be
 
adequate to fully protect our intellectual
 
property rights. Similarly, if third parties claim that we infringe
their intellectual property rights, we may be required to incur significant costs and
 
devote substantial resources to the defense of such
claims,
 
to
 
discontinue
 
using
 
and
 
selling
 
any
 
infringing
 
technology
 
and
 
services,
 
to
 
expend
 
resources
 
to
 
develop
 
non-infringing
technology or
 
to purchase
 
licenses or
 
pay royalties
 
for other
 
technology.
 
In addition,
 
if we
 
are unsuccessful
 
in defending
 
any such
third-party
 
claims, we
 
could
 
suffer
 
costly judgments
 
and
 
injunctions
 
that could
 
materially
 
adversely
 
affect
 
our business,
 
results of
operations or financial condition.
We
 
may incur
 
material losses
 
in connection
 
with our
 
movement of
 
cash through
 
our infrastructure
 
in
South Africa.
In our merchant
 
business we collect
 
and process large
 
volumes of cash
 
from our customers,
 
assuming the
 
risk of loss
 
from the
moment that cash is
 
deposited into our vaults.
 
We are then responsible for its
 
collection and transportation to
 
processing centers, which
we outsource to various cash in transit service providers. These services extend
 
across all areas of South Africa.
South Africa
 
suffers from
 
high levels of
 
crime and in
 
particular cash in
 
transit heists. We
 
cannot insure
 
against certain risks
 
of
loss or
 
theft of
 
cash from
 
our delivery
 
and collection
 
vehicles and
 
we will
 
therefore bear
 
the full
 
cost of
 
certain uninsured
 
losses or
theft in connection with the cash handling process, and such losses could materially and adversely affect our financial condition, cash
flows and results of operations. We
 
have not incurred any material losses
 
resulting from cash distribution in
 
recent years, but there is
no assurance that we will not incur any such material losses in the future.
We depend upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations,
which could harm our business.
We obtain
 
our smart cards, ATMs,
 
POS devices, components for our
 
safe assets, and the other hardware
 
we use in our business
from a limited number of
 
suppliers, and do not
 
manufacture this equipment ourselves. We generally do not have long-term
 
agreements
with our manufacturers
 
or component suppliers.
 
If our suppliers become
 
unwilling or unable to
 
provide us with adequate
 
supplies of
parts or products when we need
 
them, or if they increase their
 
prices, we may not be
 
able to find alternative sources in
 
a timely manner
and could be faced
 
with a critical shortage.
 
This could harm our
 
ability to meet customer
 
demand and cause our
 
revenues to decline.
Even
 
if we
 
are able
 
to secure
 
alternative
 
sources in
 
a timely
 
manner,
 
our costs
 
could increase
 
as a
 
result of
 
supply or
 
geopolitical
shocks, which may lead to an increase in the prices of goods and
 
services from third parties. A supply interruption, such as the recent
global shortage of semiconductors, or an increase in
 
demand beyond current suppliers’ capabilities could harm our ability
 
to distribute
our equipment and thus
 
to acquire new customers
 
who use our technology.
 
Any interruption in the supply
 
of the hardware necessary
to operate
 
our technology,
 
or our
 
inability to
 
obtain substitute
 
equipment at
 
acceptable prices
 
in a
 
timely manner,
 
could impair
 
our
ability to meet the demand of our customers, which would have an adverse
 
effect on our business.
Our EasyPay Insurance business exposes us to risks typically experienced by life assurance companies.
EasyPay Insurance is a life insurance company and exposes us to risks typically experienced by life assurance companies. Some
of these risks include the extent
 
to which we are able to continue
 
to reinsure our risks at acceptable costs,
 
reinsurer counterparty risk,
maintaining regulatory capital adequacy, solvency and
 
liquidity requirements, our ability
 
to price our
 
insurance products appropriately,
the risk
 
that actual
 
claims experience
 
may exceed
 
our estimates, the
 
ability to
 
recover policy
 
premiums from
 
our customers
 
and the
competitiveness of the South African insurance market. If we are unable to maintain our desired level of reinsurance
 
at prices that we
consider acceptable, we would have to either
 
accept an increase in our risk exposure
 
or reduce our insurance writings. If our reinsurers
are unable
 
to meet
 
their commitments
 
to us
 
in a
 
timely manner,
 
or at
 
all, we may
 
be unable
 
to discharge
 
our obligations
 
under our
insurance contracts. As such, we are exposed to counterparty risk, including
 
credit risk, of these reinsurers.
Our
 
product
 
pricing
 
includes
 
long-term
 
assumptions
 
regarding
 
investment
 
returns,
 
mortality,
 
morbidity,
 
persistency
 
and
operating
 
costs
 
and
 
expenses
 
of
 
the
 
business.
 
Using
 
the
 
wrong
 
assumptions
 
to
 
price
 
our
 
insurance
 
products
 
could
 
materially
 
and
adversely affect our financial
 
position, results of
 
operations and cash flows.
 
If our actual
 
claims experience is
 
higher than our
 
estimates,
our financial position, results of
 
operations and cash flows could be
 
adversely affected. Finally,
 
the South African insurance industry
is
 
highly
 
competitive.
 
Many
 
of
 
our
 
competitors
 
are
 
well-established,
 
represented
 
nationally
 
and
 
market
 
similar
 
products
 
and
 
we
therefore may not be able to effectively penetrate the South
 
African insurance market.
 
 
16
Risks Relating to Operating in South Africa and Other Foreign Markets
Operating in Southern Africa,
 
an emerging market, subjects
 
us to greater risks
 
than those we would
 
face
if we operated in more developed markets.
Emerging markets such as
 
Southern Africa are subject
 
to greater risks
 
than more developed markets.
 
While we focus
 
our business
primarily
 
on
 
emerging
 
markets
 
because
 
that
 
is
 
where
 
we
 
perceive
 
the
 
greatest
 
opportunities
 
to
 
market
 
our
 
products
 
and
 
services
successfully, the
 
political, economic and market conditions
 
in these markets present risks that
 
could make it more difficult
 
to operate
our business successfully.
Some of these risks include:
•
political, legal and economic instability,
 
including higher rates of inflation and currency fluctuations;
•
high levels of corruption, including bribery of public officials;
•
loss due to civil strife, acts of war or terrorism, guerrilla activities and insurrection;
•
a
 
lack
 
of
 
well-developed
 
legal
 
systems
 
which
 
could
 
make
 
it
 
difficult
 
for
 
us
 
to
 
enforce
 
our
 
intellectual
 
property
 
and
contractual rights;
•
logistical, utilities (including electricity and water supply) and communications
 
challenges;
•
potential
 
adverse
 
changes
 
in
 
laws
 
and
 
regulatory
 
practices,
 
including
 
import
 
and
 
export
 
license
 
requirements
 
and
restrictions, tariffs, legal structures and tax laws;
•
difficulties in staffing and managing operations
 
and ensuring the safety of our employees;
•
restrictions on the right to convert or repatriate currency or export assets;
•
greater risk of uncollectible accounts and longer collection cycles;
•
indigenization and empowerment programs;
 
•
exposure to liability under the UK Bribery Act; and
•
exposure to
 
liability under
 
U.S. securities
 
and foreign
 
trade laws,
 
including the
 
Foreign Corrupt
 
Practices Act,
 
or FCPA,
and regulations established by the U.S. Department of Treasury’s
 
Office of Foreign Assets Control, or OFAC.
If
 
we
 
do
 
not
 
achieve
 
applicable
 
Broad-Based
 
Black
 
Economic
 
Empowerment
 
objectives in
 
our
 
South
African businesses, we
 
may be subject
 
to fines and
 
we risk losing
 
our government and/or
 
private contracts.
In addition,
 
it is
 
possible that
 
we may
 
be required
 
to increase
 
the Black
 
shareholding of
 
our company
 
in a
manner that
 
could dilute
 
your ownership
 
and/or change
 
the companies
 
from which
 
we purchase
 
goods or
procure services (to companies with a better BEE Status Level).
The legislative framework for the promotion of Broad-Based Black Economic Empowerment (“BEE”), in South Africa
 
has been
established through
 
the Broad-Based
 
Black Economic
 
Empowerment
 
Act, No.
 
53 of
 
2003, as
 
amended from
 
time to
 
time, and
 
the
Amended
 
BEE
 
Codes
 
of
 
Good
 
Practice,
 
2013,
 
or
 
BEE
 
Codes,
 
and
 
any
 
sector-specific
 
codes
 
of
 
good
 
practice,
 
or
 
Sector
 
Codes,
published pursuant
 
thereto. Sector
 
Codes are
 
fully binding
 
between and
 
among businesses
 
operating in
 
a sector
 
for which
 
a Sector
Code has been
 
published. Achievement
 
of BEE objectives
 
is measured by
 
a scorecard which
 
establishes a weighting
 
for the various
elements. Scorecards
 
are independently
 
reviewed by
 
accredited BEE
 
verification agencies
 
which issue
 
a verification
 
certificate that
presents an
 
entity’s
 
BEE Status
 
Level. This
 
BEE verification
 
process must
 
be conducted
 
on an
 
annual basis,
 
and the
 
resultant BEE
verification certificate is only
 
valid for a period
 
of 12 months from the
 
date of issue of the verification
 
certificate.
 
We currently
 
have
a level 4 BEE rating for our South African business.
Certain of our South African
 
businesses are subject to either
 
the Amended Information and
 
Communication Technology
 
Sector
Code, or ICT Sector Code, or the
 
Amended Financial Services Sector Code,
 
or the FS Sector Code. The ICT
 
Sector Code and the FS
Sector Code have been amended and aligned with the new
 
BEE Codes and were promulgated in November 2016 and December
 
2017,
respectively.
 
Licensing
 
and/
 
or
 
regulation
 
authorities
 
overseeing
 
these
 
South
 
African
 
businesses
 
may
 
set
 
minimum
 
adherence
requirements to BEE standards as a condition for an operating license to
 
trade.
The BEE scorecard includes
 
a component relating to management
 
control, which serves to determine
 
the participation of Black
people
 
within
 
the
 
board,
 
as
 
well
 
as
 
at
 
various
 
levels
 
of
 
management
 
within
 
a
 
measured
 
entity
 
(including,
inter
 
alia
,
 
Executive
Management, Senior
 
Management, Middle
 
Management and
 
Junior Management).
 
The BEE
 
Codes and/or
 
Sector Codes
 
define the
terms
 
"
Senior
 
Management
",
 
"
Middle
 
Management
"
 
and
 
"
Junior
 
Management
"
 
as
 
those
 
occupational
 
categories
 
as
 
determined
 
in
accordance
 
with
 
the
 
Employment
 
Equity
 
Regulations,
 
with
 
specific
 
emphasis
 
on
 
improving
 
participation
 
in
 
proportion
 
to
 
the
demographics
 
of the
 
Economically Active
 
Population
 
of South
 
Africa,
 
as published
 
by Statistics
 
South
 
Africa,
 
from time
 
to time.
Employment Equity legislation
 
seeks to drive the
 
alignment of the workforce
 
with the racial composition
 
of the economically active
population
 
of
 
South
 
Africa
 
and
 
accelerate
 
the
 
achievement
 
of
 
employment
 
equity
 
targets,
 
introducing
 
monetary
 
fines
 
for
 
non-
compliance
 
with
 
the Employment
 
Equity
 
legislation
 
and misrepresented
 
submissions.
 
Annexure
 
EEA9
 
to the
 
Employment
 
Equity
Regulations sets out the various occupational levels which are determined in accordance with the relevant grading systems applied by
the measured entity and referred to in said Annexure.
 
17
We
 
have taken a
 
number of actions
 
as a company
 
to increase empowerment
 
of Black (as
 
defined under applicable
 
regulations)
South Africans.
 
For instance,
 
the South
 
African competition
 
authorities approved
 
the Connect
 
transaction subject
 
to certain
 
public
interest conditions
 
relating to
 
employment, increasing
 
the spread
 
of ownership
 
by historically
 
disadvantaged people
 
(“HDPs”), and
investing
 
in both
 
enterprise and
 
supplier development.
 
Further to
 
increasing the
 
spread of
 
ownership
 
by HDPs,
 
we are
 
required
 
to
establish
 
an
 
Employee
 
Share
 
Ownership
 
Plan
 
scheme
 
(“ESOP”)
 
within
 
36
 
months
 
of
 
the
 
implementation
 
of
 
the
 
transaction
 
that
complies with certain design principles. This will benefit the workers of the merged entity and result in them receiving a shareholding
in our
 
company equal
 
in value
 
to at
 
least 3%
 
of the
 
issued shares
 
in our
 
company as
 
of April
 
14, 2022.
 
If within
 
24 months
 
of the
implementation date of the transaction, we generate a positive net profit for three consecutive quarters, the ESOP shall increase to 5%
of the issued
 
shares in our company
 
as of April 14,
 
2022. The final structure
 
of the ESOP is
 
contingent on shareholder
 
approval and
relevant regulatory and governance approvals. The ESOP had not been
 
established as of the date of this Annual Report.
During fiscal 2024, we made cash contributions to 31 community-based organizations and enterprises to enable them to
 
promote
growth
 
and
 
strengthen
 
their
 
capacity
 
to
 
develop
 
innovative
 
platforms
 
or
 
provide
 
services
 
to
 
the
 
markets
 
they
 
serve.
 
We
 
provided
funding
 
to build
 
necessary
 
infrastructure
 
to a
 
high
 
school
 
based
 
in
 
a rural
 
community
 
and
 
also
 
contributed
 
800 mobile
 
devices
 
to
disadvantages South
 
African scholars.
 
We
 
have also
 
established a
 
fund to
 
aid vulnerable
 
communities affected
 
by fires
 
and floods.
Our donations to
 
this fund included
 
food, blankets, and
 
replacements for personal
 
belongings and household
 
goods, helping community
members recover and regain economic stability. However,
 
it is possible that these and other actions may not be sufficient to enable us
to achieve the
 
applicable BEE objectives
 
set out for
 
specific financial years.
 
In that event, in
 
order to maintain
 
competitiveness with
both government and private sector clients, we may have to seek to increase
 
compliance through other means, including by selling or
placing additional
 
shares of Lesaka
 
or of our
 
South African subsidiaries
 
to Black
 
South Africans
 
(either directly
 
or indirectly),
 
over
and above what
 
has already been
 
approved. Such sales
 
or placements of
 
shares could have
 
a dilutive impact
 
on your ownership
 
interest,
which could cause the market price of our stock to decline.
We
 
expect that our
 
BEE Status Level
 
will be important
 
in order for
 
us to remain
 
competitive in the
 
South African marketplace
and we continually
 
seek ways to
 
improve our BEE
 
Status Level, especially
 
the ownership element
 
(so-called “equity element”)
 
thereof.
 
We
 
may not be
 
able to effectively
 
and efficiently
 
manage the disruption
 
to our operations
 
as a result
 
of
erratic electricity supply in
 
South Africa, which could
 
adversely affect our, financial position, cash flows
 
and
future growth.
Our businesses in
 
South Africa are
 
dependent on electricity
 
generated and supplied
 
by the state-owned
 
utility,
 
Eskom, in order
to operate, and Eskom has been unable to generate and
 
supply the amount of electricity required by the South African economy which
has resulted in significant and
 
often unpredictable electricity supply disruptions. Eskom has
 
implemented a number of short- and
 
long-
term mitigation
 
plans to correct
 
these issues but
 
supply disruptions
 
continued
 
to occur
 
regularly and
 
with no predictability
 
in recent
years,
 
although
 
consistency
 
of
 
electricity
 
supply
 
has
 
improved
 
significantly
 
since
 
April
 
2024.
 
As
 
part
 
of
 
our
 
business
 
continuity
programs, we have
 
installed back-up diesel
 
generators in order
 
for us to continue
 
to operate our core
 
data processing facilities in
 
the
event of intermittent disruptions to our electricity supply. We have to perform regular monitoring and maintenance of these generators
and also source
 
and manage
 
diesel fuel levels.
 
We
 
may also
 
be required
 
to replace these
 
generators on
 
a more frequent
 
basis due
 
to
the additional burden placed on them.
Our results of operations, financial position, cash flows
 
and future growth could be adversely affected if Eskom is
 
unable to raise
sufficient funding to operate
 
and/or commission new electricity-generating
 
power stations in accordance with its
 
plans, or at all, or if
we are unable to effectively and efficiently test, maintain,
 
source fuel for, and replace, our generators.
Fluctuations in
 
the value
 
of the
 
South African
 
rand have
 
had, and
 
will continue
 
to have,
 
a significant
impact
 
on
 
our
 
reported
 
results
 
of
 
operations,
 
which
 
may
 
make
 
it
 
difficult
 
to
 
evaluate
 
our
 
business
performance between reporting periods and may also adversely affect our stock price.
The South
 
African rand,
 
or ZAR,
 
is the
 
primary operating
 
currency for
 
our business
 
operations while
 
our financial
 
results are
reported in U.S. dollars. Therefore, any depreciation in
 
the ZAR against the U.S. dollar, would negatively impact
 
our reported revenue
and net
 
income. The
 
U.S. dollar/ZAR
 
exchange rate
 
has historically
 
been volatile
 
and we
 
expect this
 
volatility to
 
continue (refer
 
to
Item
 
7—“Management’s
 
Discussion
 
and
 
Analysis
 
of
 
Financial
 
Condition
 
and
 
Results
 
of
 
Operations—Currency
 
Exchange
 
Rate
Information.”).
 
Due
 
to
 
the
 
significant
 
fluctuation
 
in
 
the
 
value
 
of
 
the
 
ZAR
 
and
 
its
 
impact
 
on
 
our
 
reported
 
results,
 
you
 
may
 
find
 
it
difficult to
 
compare our results
 
of operations between
 
financial reporting periods
 
even though we
 
provide supplemental information
about our
 
results of
 
operations determined
 
on a
 
ZAR basis.
 
Similarly,
 
depreciation in
 
the ZAR
 
may negatively
 
impact the
 
prices at
which our stock trades.
We generally do not engage in any currency hedging
 
transactions intended to reduce the
 
effect of fluctuations in foreign currency
exchange rates on our results of
 
operations, other than economic hedging
 
using forward contracts relating to
 
our inventory purchases
which are settled in U.S.
 
dollars or euros. We
 
cannot guarantee that we will
 
enter into hedging transactions
 
in the future or,
 
if we do,
that these transactions will successfully protect us against currency fluctuations.
 
 
18
South Africa’s
 
high levels of
 
poverty, unemployment
 
and crime may
 
increase our costs
 
and impair our
ability to maintain a qualified workforce
While South Africa has a highly developed financial and legal infrastructure, it also has high levels of crime and unemployment,
relative to peer
 
countries in Africa
 
and other emerging
 
economies, and there
 
are significant differences
 
in the level
 
of economic and
social development among its people,
 
with large parts of the population,
 
particularly in rural areas, having limited
 
access to adequate
education, healthcare, housing and other
 
basic services, including water
 
and electricity. In addition, South Africa has
 
a high prevalence
of HIV/AIDS and tuberculosis. Government policies aimed at alleviating and redressing the disadvantages suffered by the majority of
citizens
 
under
 
previous
 
governments
 
may
 
increase
 
our
 
costs and
 
reduce
 
our
 
profitability,
 
all of
 
which
 
could
 
negatively
 
affect
 
our
business.
 
These
 
problems
 
may
 
prompt
 
emigration
 
of
 
skilled
 
workers,
 
hinder
 
investment
 
into
 
South
 
Africa
 
and
 
impede
 
economic
growth. As a result, we may have difficulties attracting and retaining
 
qualified employees.
The
 
economy
 
of
 
South
 
Africa
 
is
 
exposed
 
to
 
high
 
rates
 
of
 
inflation,
 
interest
 
and
 
corporate
 
tax,
 
which
could
 
increase
 
our
 
operating
 
costs
 
and
 
thereby
 
reduce
 
our
 
profitability.
 
Furthermore,
 
the
 
South
 
African
government requires additional
 
income to fund
 
future government
 
expenditures and may
 
be required,
 
among
other things, to
 
increase existing income
 
tax rates, including
 
the corporate income tax
 
rate, amend existing
tax legislation or introduce additional taxes.
The economy of
 
South Africa in the
 
past has been, and
 
in the future may
 
continue to be, characterized
 
by rates of inflation
 
and
interest that
 
are substantially
 
higher than
 
those prevailing
 
in the United
 
States and
 
other highly-developed
 
economies. High
 
rates of
inflation could increase our South African-based costs and decrease our operating margins. High interest rates increase the cost of our
debt financing, though conversely, they also
 
increase the amount
 
of income we
 
earn on any
 
cash balances. The
 
South African corporate
income tax rate, of 27%, is higher than the
 
U.S. federal income tax rate, of 21%. Any increase
 
in the effective South African corporate
income tax rate would adversely impact our profitability and cash flow generation.
Risks Relating to Government Regulation
We
 
are required to
 
comply with
 
certain laws
 
and regulations, including
 
economic and trade
 
sanctions,
which could adversely impact our future growth.
We
 
are
 
subject
 
to U.S.
 
and
 
other
 
trade
 
controls,
 
economic sanctions
 
and
 
similar
 
laws and
 
regulations,
 
including
 
those in
 
the
jurisdictions
 
where
 
we
 
operate.
 
Our
 
failure
 
to
 
comply
 
with
 
these
 
laws
 
and
 
regulations
 
could
 
subject
 
us
 
to
 
civil,
 
criminal
 
and
administrative
 
penalties
 
and
 
harm
 
our
 
reputation.
 
These
 
laws and
 
regulations
 
place
 
restrictions
 
on
 
our
 
operations,
 
trade
 
practices,
partners
 
and
 
investment
 
decisions.
 
In particular,
 
our operations
 
are subject
 
to U.S.
 
and
 
foreign
 
trade
 
control laws
 
and
 
regulations,
including various export controls and economic sanctions programs, such as those administered by OFAC. We monitor compliance in
accordance with
 
the 10
 
principles as
 
set out
 
in the
 
United Nations
 
Global Compact
 
Principles, the
 
Organisation
 
for Economic
 
Co-
operation and
 
Development recommendations
 
relating to
 
corruption, and
 
the International
 
Labor Organization
 
Protocol in
 
terms of
certain of the items to be
 
monitored. As a result of doing business
 
in foreign countries and with foreign
 
partners, we are exposed to a
heightened risk of violating trade control laws as well as sanctions regulations.
Violations
 
of
 
trade
 
control
 
laws and
 
sanctions
 
regulations
 
are
 
punishable
 
by civil
 
penalties,
 
including
 
fines,
 
denial
 
of export
privileges,
 
injunctions,
 
asset seizures,
 
debarment
 
from
 
government
 
contracts
 
and revocations
 
or restrictions
 
of licenses,
 
as
 
well
 
as
criminal fines and imprisonment.
 
We have
 
developed policies and procedures as
 
part of a company-wide compliance
 
program that is
designed to
 
assist our compliance
 
with applicable
 
U.S. and international
 
trade control laws
 
and regulations,
 
including trade controls
and sanctions programs administered
 
by OFAC,
 
and provide regular training
 
to our employees to create awareness
 
about the risks of
violations of trade
 
control laws and
 
sanctions regulations and
 
to ensure compliance
 
with these laws
 
and regulations.
 
However, there
can be no assurance that all of our employees, consultants,
 
partners, agents or other associated persons will not act in violation
 
of our
policies and these laws and regulations, or that our policies and
 
procedures will effectively prevent us from violating these regulations
in every transaction
 
in which we
 
may engage, or
 
provide a defense
 
to any alleged
 
violation. In particular,
 
we may be
 
held liable for
the actions that our
 
local, strategic or joint venture
 
partners take inside or outside
 
of the United States, even
 
though our partners may
not be
 
subject to
 
these laws.
 
Such a
 
violation, even
 
if our
 
policies prohibit
 
it, could
 
materially and
 
adversely affect
 
our reputation,
business,
 
results
 
of
 
operations
 
and
 
financial
 
condition.
 
Any
 
expansion
 
into
 
developing
 
countries,
 
and
 
our
 
development
 
of
 
new
partnerships and joint venture relationships, could increase the risk
 
of OFAC violations in the
 
future.
In addition,
 
our payment
 
processing and
 
financial services
 
activities are
 
subject to
 
extensive regulation.
 
Compliance with
 
the
requirements under the various
 
regulatory regimes may cause
 
us to incur significant
 
additional costs and failure
 
to comply with such
requirements could result in the shutdown of
 
the non-complying facility, the imposition of liens, fines and/or civil or
 
criminal liability.
19
We
 
are
 
required
 
to
 
comply
 
with
 
anti-corruption
 
laws
 
and
 
regulations,
 
including
 
the
 
FCPA
 
and
 
UK
Bribery Act, in the
 
jurisdictions in which we
 
operate our business, which could
 
adversely impact our future
growth.
The FCPA prohibits
 
us from providing anything of value to foreign
 
officials for the purposes of obtaining or retaining business,
or
 
securing
 
any
 
improper
 
business
 
advantage,
 
and
 
requires
 
us
 
to
 
keep
 
books
 
and
 
records
 
that
 
accurately
 
and
 
fairly
 
reflect
 
our
transactions.
 
As part
 
of
 
our
 
business,
 
we
 
may
 
deal
 
with
 
state-owned
 
business
 
enterprises,
 
the
 
employees
 
of
 
which
 
are
 
considered
foreign
 
officials
 
for
 
purposes of
 
the FCPA.
 
The UK
 
Bribery
 
Act includes
 
provisions
 
that extend
 
beyond bribery
 
of foreign
 
public
officials and also apply to
 
transactions with individuals not employed
 
by a government and
 
the act is also
 
more onerous than the FCPA
in a number of other respects, including
 
jurisdiction, non-exemption of facilitation
 
payments and penalties. Some of the international
locations in which we operate or have investments lack a developed
 
legal system and have higher than normal levels of corruption.
Any
 
failure
 
by
 
us
 
to
 
adopt
 
appropriate
 
compliance
 
procedures
 
and
 
ensure
 
that
 
our
 
employees,
 
agents
 
and
 
business
 
partners
comply with
 
the anti-corruption
 
laws and
 
regulations could
 
subject us
 
to substantial
 
penalties, and
 
the requirement
 
that we
 
comply
with these laws could
 
put us at a
 
competitive disadvantage against
 
companies that are not
 
required to comply.
 
For example, in many
emerging
 
markets,
 
there
 
may be
 
significant
 
levels
 
of official
 
corruption,
 
and
 
thus, bribery
 
of public
 
officials
 
may
 
be
 
a comm
 
only
accepted cost
 
of doing
 
business. Our
 
refusal to
 
engage in
 
illegal behavior,
 
such as
 
paying bribes,
 
may result
 
in us not
 
being able
 
to
obtain business that we
 
might otherwise have been able
 
to secure or possibly
 
even result in unlawful,
 
selective or arbitrary action being
taken against us.
Violations of anti-corruption laws and regulations are punishable by civil penalties, including fines, as well as criminal fines and
imprisonment. We
 
have developed policies
 
and procedures as part
 
of a company-wide
 
compliance program that
 
is designed to assist
our compliance with applicable U.S.,
 
South African and other international
 
anti-corruption laws and regulations,
 
and provide regular
training to our
 
employees to comply
 
with these laws
 
and regulations. However,
 
there can be
 
no assurance that
 
all of our
 
employees,
consultants, partners, agents or other associated persons will not take actions in violation of our policies or
 
these laws and regulations,
or that our
 
policies and procedures
 
will effectively prevent
 
us from violating
 
these regulations in every
 
transaction in which
 
we may
engage, or
 
provide a defense
 
to any alleged
 
violation. In
 
particular,
 
we may be
 
held liable for
 
the actions
 
that our
 
local, strategic
 
or
joint venture
 
partners take inside
 
or outside
 
of the United
 
States, even though
 
our partners may
 
not be subject
 
to these
 
laws. Such a
violation,
 
even
 
if
 
our
 
policies
 
prohibit
 
it,
 
could
 
materially
 
and
 
adversely
 
affect
 
our
 
reputation,
 
business,
 
results
 
of
 
operations
 
and
financial condition.
We
 
do not
 
have a South
 
African banking license
 
and, therefore, we
 
provide our EPE
 
solution through
an arrangement with
 
a third-party bank,
 
which limits our
 
control over this
 
business and the
 
economic benefit
we derive from it.
 
If this arrangement were
 
to terminate, we would
 
not be able to operate
 
our EPE business
without alternate means of access to a banking license.
The
 
South
 
African
 
retail
 
banking
 
market
 
is
 
highly
 
regulated.
 
Under
 
current
 
law
 
and
 
regulations,
 
our
 
EasyPay
 
Everywhere
(“EPE”) business activities require
 
us to be registered as
 
a bank in South Africa
 
or to have access to an
 
existing banking license.
 
We
are not currently so registered,
 
but we have an agreement
 
with Grindrod Bank, a subsidiary
 
of African Bank Limited, that
 
enables us
to implement
 
our EPE
 
program in
 
compliance
 
with the
 
relevant laws
 
and regulations.
 
If this
 
agreement
 
were to
 
be terminated,
 
we
would
 
not
 
be
 
able
 
to
 
operate
 
these
 
services
 
unless
 
we
 
were
 
able
 
to
 
obtain
 
access
 
to
 
a
 
banking
 
license
 
through
 
alternate
 
means.
Furthermore, we have
 
to comply with the
 
South African Financial
 
Intelligence Centre Act,
 
2001 and money
 
laundering and terrorist
financing
 
control
 
regulations,
 
when
 
we
 
open
 
new
 
bank
 
accounts
 
for
 
our
 
customers
 
and
 
when
 
they
 
transact.
 
Failure
 
to
 
effectively
implement and
 
monitor responses
 
to the
 
legislation and
 
regulations may
 
result in
 
significant fines
 
or prosecution
 
of Grindrod
 
Bank
and ourselves.
 
In
 
addition,
 
the
 
South
 
African
 
Financial
 
Advisory
 
and
 
Intermediary
 
Services
 
Act,
 
2002,
 
requires
 
persons
 
who
 
act
 
as
intermediaries between financial product
 
suppliers and consumers in
 
South Africa to register
 
as financial service providers.
 
EasyPay
Insurance was
 
granted a Financial
 
Service Provider,
 
or FSP,
 
license on June
 
9, 2015, and
 
EasyPay Financial
 
Services (Pty) Ltd
 
was
granted
 
a FSP
 
license on
 
July 11,
 
2017. If
 
our FSP
 
licenses are
 
withdrawn or
 
suspended, we
 
may be
 
stopped from
 
continuing our
financial
 
services businesses in South Africa unless we are able to enter into a representative arrangement
 
with a third party FSP.
Furthermore, the
 
proposed Conduct
 
of Financial
 
Institutions Bill
 
will make
 
significant changes
 
to the
 
current licensing
 
regime
however, the current proposal is that existing licences will be converted. The second draft of the Conduct of Financial
 
Institutions Bill
was published for public comment on September 29, 2020.
 
 
 
 
20
We
 
may
 
be
 
subject
 
to
 
regulations
 
regarding
 
privacy,
 
data
 
use
 
and/or
 
security,
 
which
 
could
 
adversely
affect our business.
 
We are
 
subject to regulations in
 
a number of the countries
 
in which we operate
 
relating to the processing
 
(which includes,
inter
alia
, the collection, use, retention, security and transfer) of
 
personal information about the people (whether natural or juristic)
 
who use
our products
 
and services.
 
The interpretation
 
and application
 
of user
 
data protection
 
laws are
 
in a
 
state of
 
flux. These
 
laws may
 
be
interpreted
 
and
 
applied
 
inconsistently
 
from
 
country
 
to
 
country
 
and
 
our
 
current
 
data
 
protection
 
policies
 
and
 
practices
 
may
 
not
 
be
consistent with those interpretations and applications. Complying
 
with these varying requirements could cause us to incur
 
substantial
costs or
 
require us
 
to change
 
our business
 
practices in
 
a manner
 
adverse to
 
our business.
 
Any failure,
 
or perceived
 
failure, by
 
us to
comply with any regulatory requirements or international
 
privacy or consumer protection-related laws and regulations could
 
result in
proceedings
 
or
 
actions
 
against
 
us
 
by
 
governmental
 
entities
 
or
 
others,
 
subject
 
us
 
to
 
significant
 
penalties
 
and
 
negative
 
publicity.
 
In
addition, as
 
noted above,
 
we are
 
subject to
 
the possibility
 
of security
 
breaches, which
 
themselves may
 
result in
 
a violation
 
of these
laws.
Amendments to
 
the NCA
 
were signed into
 
law in
 
South Africa
 
in August 2019.
 
Compliance with
 
these
amendments may adversely impact our micro-lending operations in South Africa.
 
In August 2019, the National Credit Amendment Bill, or debt-relief bill, was signed into law in South Africa.
 
The effective date
of the debt-relief
 
bill has not
 
yet been announced
 
and has been
 
significantly delayed.
 
We
 
believe that the
 
debt-relief bill will
 
restrict
the ability of financial services providers to provide lending
 
products to certain low-income earners and will increase
 
the cost of credit
to
 
these
 
consumers.
 
As a
 
result,
 
compliance
 
with
 
the debt
 
-relief
 
bill
 
may
 
adversely
 
impact
 
our
 
micro-lending
 
operations
 
in
 
South
Africa. Furthermore, we expect that it will take us, and other credit providers, some time to fully understand, interpret and implement
this new legislation
 
in our lending processes
 
and practices. Non-compliance
 
with the provisions of
 
this new legislation may
 
result in
financial loss and penalties, reputational loss or other administrative punishment.
Risks Relating to our Common Stock
Our stock price has been and may continue to be volatile.
Our stock price has periodically experienced significant volatility. During the 2024
 
fiscal year, our stock price ranged from a
 
low
of $3.00 to a high of $5.33. We
 
expect that the trading price of our common stock may
 
continue to be volatile as a result of a number
of factors, including, but not limited to the following:
•
any adverse developments in litigation or regulatory actions in which we are
 
involved;
•
fluctuations in currency exchange rates, particularly the U.S. dollar/ZAR exchange
 
rate;
•
announcement
 
of
 
additional
 
BEE
 
transactions,
 
especially
 
one
 
involving
 
the
 
issuance
 
or
 
potential
 
issuance
 
of
 
equity
securities or dilution or sale of our existing business in South Africa;
•
quarterly variations in our operating results;
•
significant fair value adjustments or impairment in respect of investments or
 
intangible assets;
•
announcements of acquisitions or disposals;
•
the timing of, or delays in the commencement, implementation or completion
 
of major projects;
•
large purchases or sales of our common stock; and
•
general conditions in the markets in which we operate.
Additionally,
 
shares of
 
our common
 
stock can
 
be expected
 
to be
 
subject to
 
volatility resulting
 
from purely
 
market forces
 
over
which we have no control.
The put
 
right we granted
 
to the IFC
 
Investors on the
 
occurrence of certain
 
triggering events may
 
have
adverse impacts on us.
In May
 
2016, we
 
issued an
 
aggregate of
 
9,984,311
 
shares of
 
our common
 
stock to
 
the IFC Investors,
 
of which,
 
as of
 
June 30,
2024,
 
the
 
IFC
 
Investors
 
held
 
7,366,866
 
shares.
 
We
 
granted
 
the
 
IFC
 
Investors
 
certain
 
rights,
 
including
 
the
 
right
 
to
 
require
 
us
 
to
repurchase
 
any
 
share held
 
by the
 
IFC Investors
 
pursuant
 
to
 
the
 
May
 
2016 transaction
 
upon
 
the occurrence
 
of specified
 
triggering
events,
 
which
 
we refer
 
to as
 
a
 
“put
 
right.”
 
The put
 
price
 
per share
 
will be
 
the higher
 
of the
 
price
 
per share
 
paid
 
to us
 
by
 
the IFC
Investors and
 
the volume-weighted
 
average price
 
per share prevailing
 
for the 60
 
trading days preceding
 
the triggering
 
event, except
that with respect
 
to a put right
 
triggered by rejection
 
of a bona
 
fide offer,
 
the put price
 
per share will
 
be the highest
 
price offered
 
by
the offeror.
 
If a put triggering event occurs, it could adversely impact
 
our liquidity and capital resources. In addition,
 
the existence of
the put right could also affect whether or on what terms a third party might in the future offer to purchase our company.
 
Our response
to any such offer could also be complicated, delayed or otherwise influenced
 
by the existence of the put right.
21
Approximately
 
35%
 
of
 
our
 
outstanding
 
common
 
stock
 
is
 
owned by
 
two shareholders.
 
The
 
interests of
these shareholders may conflict with those of our other shareholders.
There is a concentration of ownership
 
of our outstanding common stock because
 
approximately 35% of our outstanding common
stock is owned by two
 
shareholders. Based on their most
 
recent SEC filings disclosing
 
ownership of our shares, Value Capital Partners
(Pty) Ltd, or VCP,
 
and IFC Investors, beneficially own approximately 24% and 11%
 
of our outstanding common stock as of June 30,
2024,
 
respectively.
The interests of
 
VCP and the
 
IFC Investors may
 
be different
 
from or conflict
 
with the interests
 
of our other
 
shareholders. As a
result of
 
the significant
 
combined ownership
 
by VCP
 
and the
 
IFC Investors,
 
they may
 
be able,
 
if they
 
act together,
 
to significantly
influence the
 
voting outcome
 
of all
 
matters requiring
 
shareholder approval.
 
This concentration
 
of ownership
 
may have
 
the effect
 
of
delaying or preventing
 
a change of control of
 
our company,
 
thus depriving shareholders
 
of a premium for
 
their shares, or facilitating
a change of control that other shareholders may oppose.
We may seek to raise
 
additional financing by
 
issuing new securities
 
with terms or
 
rights superior to
 
those
of shares of our common stock, which could adversely affect the market price of such shares.
We
 
may require
 
additional financing
 
to fund future
 
operations, including
 
expansion in
 
current and new
 
markets, programming
development and acquisition,
 
capital costs and
 
the costs of any
 
necessary implementation of
 
technological innovations or
 
alternative
technologies, or to fund acquisitions. We may also wish to raise additional equity funding to
 
reduce the amount of debt funding on our
balance sheet. Because of the exposure to market risks associated
 
with economies in emerging markets, we may not
 
be able to obtain
financing on favorable terms or at all.
 
If we raise additional funds by
 
issuing equity securities, the percentage ownership of our
 
current
shareholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of
common stock,
 
which could
 
adversely affect
 
the market
 
price and
 
voting power
 
of shares
 
of common
 
stock. If
 
we raise
 
additional
funds by issuing debt securities, the holders of these debt securities would similarly have some rights senior
 
to those of the holders of
shares of common stock, and the terms of these debt securities could impose restrictions on operations and
 
create a significant interest
expense for us.
Issuances
 
of significant
 
amounts of
 
stock in
 
the future
 
could potentially
 
dilute
 
your equity
 
ownership
and adversely affect the price of our common stock.
We
 
believe that
 
it is necessary
 
to maintain
 
a sufficient
 
number of
 
available authorized
 
shares of our
 
common stock
 
in order
 
to
provide
 
us
 
with
 
the flexibility
 
to
 
issue shares
 
for
 
business
 
purposes
 
that
 
may
 
arise
 
from time
 
to
 
time.
 
For example,
 
we
 
could
 
sell
additional shares to raise
 
capital to fund our
 
operations, to reduce debt
 
or to acquire other
 
businesses, issue shares in
 
a BEE transaction,
issue additional shares under our stock incentive plan or declare a stock dividend. Our board may authorize
 
the issuance of additional
shares of common stock without notice to, or further
 
action by, our shareholders, unless shareholder approval is required by law or the
rules of the NASDAQ Stock
 
Market. The issuance of
 
additional shares could dilute the
 
equity ownership of our current
 
shareholders
and any such additional shares would likely be freely tradable, which could
 
adversely affect the trading price of our common
 
stock.
We
 
have
 
identified
 
material
 
weaknesses
 
in
 
our
 
internal
 
control
 
over financial
 
reporting
 
which, if
 
not
timely
 
remediated,
 
may
 
adversely
 
affect
 
the
 
accuracy
 
and
 
reliability
 
of
 
our
 
financial
 
statements,
 
and
 
our
reputation, business and stock price, as well as lead to a loss of investor confidence in us.
As described
 
under Item
 
9A—“Controls and
 
Procedures.”, we
 
concluded that
 
our disclosure
 
controls and
 
procedures were
 
not
effective
 
as of
 
June 30,
 
2024 and
 
that we
 
had, as
 
of such
 
date, material
 
weaknesses in
 
our internal
 
control over
 
financial reporting
related
 
to
 
information
 
technology
 
general
 
controls
 
and
 
our
 
annual
 
goodwill
 
impairment
 
assessment.
 
A
 
material
 
weakness
 
is
 
a
deficiency, or a combination
 
of deficiencies, in internal control over financial reporting such that there
 
is a reasonable possibility that
a material
 
misstatement of
 
our annual
 
or interim
 
consolidated financial
 
statements would
 
not be
 
prevented or
 
detected on
 
a timely
basis. The material weaknesses
 
identified in Item 9A—“Controls
 
and Procedures.”, did
 
not result in any adjustments
 
or restatements
of our audited and unaudited consolidated financial statements or disclosures
 
for any prior period previously reported by us.
We
 
intend to remediate
 
these material weaknesses.
 
While we believe
 
the steps we
 
take to remediate
 
these material weaknesses
will improve
 
the effectiveness
 
of our
 
internal
 
control over
 
financial
 
reporting
 
and will
 
remediate the
 
identified deficiencies,
 
if our
remediation
 
efforts
 
are
 
insufficient
 
to
 
address the
 
material
 
weakness
 
or
 
we identify
 
additional
 
material
 
weaknesses in
 
our
 
internal
control over financial reporting in the future, our ability
 
to analyze, record and report financial information
 
accurately, to prepare
 
our
financial statements within
 
the time periods
 
specified by the rules
 
and forms of the
 
SEC and to otherwise
 
comply with our
 
reporting
obligations
 
under
 
the federal
 
securities
 
laws may
 
be
 
adversely
 
affected.
 
The occurrence
 
of,
 
or failure
 
to
 
remediate,
 
these material
weaknesses and any future material weaknesses in our internal control over financial reporting may adversely affect
 
the accuracy and
reliability of our financial
 
statements and have other
 
consequences that could
 
materially and adversely affect
 
our business, including
an
 
adverse
 
impact
 
on
 
the
 
market
 
price
 
of
 
our
 
common
 
stock,
 
potential
 
actions
 
or
 
investigations
 
by
 
the
 
SEC
 
or
 
other
 
regulatory
authorities, shareholder lawsuits, a loss of investor confidence and
 
damage to our reputation.
 
22
Failure to maintain effective internal control over financial
 
reporting in accordance with Section 404
 
of
the Sarbanes-Oxley Act, especially
 
over companies that we may
 
acquire, could have a material
 
adverse effect
on our business and stock price.
Under
 
Section
 
404
 
of
 
Sarbanes,
 
we
 
are
 
required
 
to
 
furnish
 
a
 
management
 
certification
 
and
 
auditor
 
attestation
 
regarding
 
the
effectiveness of our
 
internal control over
 
financial reporting. We
 
are required to
 
report, among other things,
 
control deficiencies that
constitute
 
a
 
“material
 
weakness”
 
or
 
changes
 
in internal
 
control
 
that materially
 
affect,
 
or are
 
reasonably
 
likely to
 
materially
 
affect,
internal control
 
over financial reporting.
 
A “material weakness”
 
is a deficiency,
 
or a combination
 
of deficiencies, in
 
internal control
over financial reporting such that
 
there is a reasonable
 
possibility that a material misstatement
 
of annual or interim
 
financial statements
will not be prevented or detected on a timely basis.
The
 
requirement
 
to
 
evaluate
 
and
 
report
 
on
 
our
 
internal
 
controls
 
also
 
applies
 
to
 
companies
 
that
 
we
 
acquire.
 
Some
 
of
 
these
companies,
 
such as Adumo, may not be required to comply with Sarbanes prior
 
to the time we acquire them. The integration of these
acquired companies into
 
our internal
 
control over financial
 
reporting could require
 
significant time
 
and resources
 
from our
 
management
and
 
other
 
personnel
 
and
 
may
 
increase
 
our
 
compliance
 
costs.
 
If
 
we
 
fail
 
to
 
successfully
 
integrate
 
the
 
operations
 
of
 
these
 
acquired
companies into our internal control over financial reporting, our
 
internal control over financial reporting may not be effective.
While
 
we
 
continue
 
to
 
dedicate
 
resources
 
and
 
management
 
time
 
to
 
ensuring
 
that
 
we
 
have
 
effective
 
controls
 
over
 
financial
reporting, failure to
 
achieve and maintain
 
an effective internal
 
control environment could
 
have a material
 
adverse effect on
 
the market’s
perception of our business and our stock price.
You
 
may
 
experience
 
difficulties
 
in
 
effecting
 
service
 
of
 
legal
 
process,
 
enforcing
 
foreign
 
judgments
 
or
bringing
 
original
 
actions
 
based
 
upon
 
U.S.
 
laws,
 
including
 
federal
 
securities
 
laws
 
or
 
other
 
foreign
 
laws,
against us or certain of our directors and officers and experts.
While Lesaka is incorporated in the state of Florida, United States, the company is headquartered in Johannesburg, South Africa
and substantially all of the company’s
 
assets are located outside the United
 
States. In addition, the majority of
 
Lesaka’s directors and
all
 
its
 
officers
 
reside
 
outside
 
of
 
the
 
United
 
States
 
and
 
the
 
majority
 
of
 
our
 
experts,
 
including
 
our
 
independent
 
registered
 
public
accountants, are based in South Africa.
As a
 
result, even
 
though you
 
could effect
 
service of
 
legal process
 
upon Lesaka,
 
as a
 
Florida corporation,
 
in the
 
United States,
you may not be able
 
to collect any judgment obtained
 
against Lesaka in the United
 
States, including any judgment based
 
on the civil
liability
 
provisions
 
of
 
U.S.
 
federal
 
securities
 
laws,
 
because
 
substantially
 
all
 
of
 
our
 
assets
 
are
 
located
 
outside
 
the
 
United
 
States.
Moreover, it may not be possible for
 
you to effect service of legal process upon the majority of
 
our directors and officers or upon our
experts within
 
the United
 
States or
 
elsewhere outside
 
South Africa
 
and any
 
judgment obtained
 
against any
 
of our
 
foreign directors,
officers and experts in
 
the United States, including
 
one based on the
 
civil liability provisions of the
 
U.S. federal securities laws,
 
may
not be collectible in the United States and may not be enforced by a South African
 
court.
South Africa
 
is not
 
a party
 
to any
 
treaties regarding
 
the enforcement
 
of foreign
 
commercial judgments,
 
as opposed
 
to foreign
arbitral awards. Accordingly, a foreign judgment that
 
is not recognized in
 
South Africa has
 
no extra territorial effect, and
 
is not directly
enforceable in South Africa, but
 
constitutes a cause of action
 
which may be recognized and enforced
 
by South African courts provided
that:
•
the court which
 
pronounced the judgment
 
had international jurisdiction
 
and competence to entertain
 
the case according to
the principles recognized by South African law with reference to the jurisdiction
 
of foreign courts;
 
•
the judgment is final and conclusive (that is, it cannot be altered by the court which
 
pronounced it);
 
•
the judgment has not lapsed;
•
the recognition and
 
enforcement of the
 
judgment by South African
 
courts would not
 
be contrary to public
 
policy in South
Africa, including observance of the rules of natural justice which require
 
that no award is enforceable unless the defendant
was duly served with documents
 
initiating proceedings, that he
 
or she was given a
 
fair opportunity to be
 
heard and that he
or she enjoyed the right to be legally represented in a free and fair trial before an impartial
 
tribunal;
 
•
the judgment was not obtained by improper or fraudulent means;
•
the
 
judgment
 
does
 
not involve
 
the
 
enforcement
 
of a
 
penal
 
or
 
foreign
 
revenue
 
law or
 
any
 
award
 
of multiple
 
or punitive
damages; and
 
•
the enforcement of the judgment is not otherwise precluded by the provisions of
 
the Protection of Business Act 99 of 1978
(as amended), of the Republic of South Africa.
It has been the policy
 
of South African courts to award
 
compensation for the loss or damage
 
actually sustained by the person
 
to
whom the compensation is awarded. South African courts have awarded compensation to shareholders who have suffered damages as
a result
 
of a
 
diminution in
 
the value
 
of their
 
shares based
 
on various
 
actions by
 
the corporation
 
and its
 
management. Although
 
the
award
 
of punitive
 
damages
 
is generally
 
unenforceable
 
in the
 
South
 
African legal
 
system, that
 
does not
 
mean
 
that such
 
awards are
necessarily
 
contrary
 
to
 
public
 
policy.
 
The
 
award
 
of
 
punitive
 
damages
 
is
 
governed
 
by
 
the
 
relevant
 
South
 
African
 
legislation,
 
the
Conventional Penalties Act 15 of 1962 (as amended).
23
Whether a judgment
 
was contrary to
 
public policy
 
depends on the
 
facts of each
 
case. Exorbitant,
 
unconscionable, or
 
excessive
awards will generally be contrary to public policy. South African courts cannot enter into the merits of a foreign judgment and cannot
act as a court of appeal or review over the foreign court. Further, if a foreign judgment is enforced by a South African court,
 
it will be
payable in South African currency unless approval is obtained from SARB or an Authorised Dealer of SARB, to settle the judgement
in another
 
currency.
 
Also, under
 
South Africa’s
 
exchange control
 
laws, the
 
approval of
 
SARB or
 
an Authorised
 
Dealer is
 
required
before a defendant
 
resident in South Africa
 
may pay money to
 
a non-resident plaintiff
 
in satisfaction of a
 
foreign judgment enforced
by a court in South Africa.
 
It is
 
doubtful
 
whether an
 
original action
 
based on
 
United States
 
federal
 
securities laws
 
may
 
be brought
 
before South
 
African
courts. A plaintiff who
 
is not resident in South Africa may
 
be required to provide security for
 
costs in the event of proceedings being
initiated in
 
South Africa.
 
Furthermore, the
 
Rules of
 
the High
 
Court of
 
South Africa
 
require that
 
documents executed
 
outside South
Africa must be authenticated for the purpose of use in South African courts. In reaching the foregoing conclusions in respect of South
Africa, we consulted with our South African legal counsel, Werksmans
 
Inc.
24
ITEM 1B.
 
UNRESOLVED
 
STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
We
 
operate in
 
the Southern
 
African Fintech industry,
 
which is subject
 
to various
 
cybersecurity risks
 
that could
 
adversely affect
our business,
 
financial condition,
 
and results
 
of operations—including,
 
but not
 
limited to,
 
the following:
 
intellectual property
 
theft,
fraud, extortion,
 
harm to
 
employees or
 
customers, violation
 
of privacy
 
laws and
 
other litigation
 
and legal
 
risk and
 
reputational risk.
We
 
have
 
implemented
 
a
 
risk-based
 
approach
 
to
 
identify
 
and
 
assess
 
the
 
cybersecurity
 
threats
 
that
 
could
 
affect
 
our
 
business
 
and
information systems. Our cybersecurity
 
program is aligned with industry
 
standards and best practices, specifically
 
the Payment Card
Industry
 
Data
 
Security
 
Standard
 
(“PCI
 
DSS”)
 
and
 
the
 
National
 
Institute
 
of
 
Standards
 
and
 
Technology
 
(“NIST”)
 
Cybersecurity
Framework. We
 
periodically conduct a third-party
 
Security Risk Assessment (“SRA”) to
 
identify the potential impact and
 
likelihood
of various
 
cyber scenarios
 
and to
 
determine the
 
appropriate mitigation
 
strategies and
 
controls. We
 
also use
 
this SRA
 
to inform
 
our
cybersecurity roadmap and strategies to ensure the best IT security environment is
 
implemented at our company. We use various tools
and
 
methodologies
 
to
 
manage
 
cybersecurity
 
risk—including,
 
but
 
not
 
limited
 
to,
 
the
 
following:
 
the
 
use
 
of
 
a
 
Managed
 
Endpoint
Detection and Response
 
(“EDR”) software and
 
Managed Network Detection
 
and Response (“MNDR”)
 
for our Local
 
Area Network
(LAN) monitoring with
 
internal and external
 
Security Operations Center
 
(“SOC”) real-time monitoring, Data
 
Loss Prevention (“DLP”)
enabled across email and web
 
channels as well as
 
mandatory Multi-factor Authentication (“MFA”) in our IT environment. In addition,
we
 
do
 
periodic
 
backups
 
and
 
regularly
 
test
 
the
 
process
 
to
 
recover
 
any
 
lost
 
or
 
corrupted
 
data.
 
We
 
also
 
monitor
 
and
 
evaluate
 
our
cybersecurity
 
posture
 
and
 
performance
 
on
 
an
 
ongoing
 
basis
 
through
 
regular
 
vulnerability
 
scans,
 
penetration
 
tests,
 
and
 
threat
intelligence
 
feeds
 
provided
 
by
 
our
 
respective
 
security
 
vendors.
 
We
 
require
 
third-party
 
service
 
providers
 
with
 
access
 
to
 
personal,
confidential or proprietary
 
information to implement
 
and maintain comprehensive
 
cybersecurity practices consistent
 
with applicable
legal standards and industry best practices.
We
 
recognize
 
the
 
importance
 
of
 
cyber
 
security
 
awareness
 
and
 
skills
 
development
 
which
 
is
 
regularly
 
provided
 
to
 
the
 
general
workforce, security
 
teams, developers
 
and senior
 
management which
 
includes regular
 
crisis simulations to
 
prepare respective
 
teams
for crisis scenarios. This also includes regular phishing simulations and campaigns.
Our
 
business
 
depends
 
on
 
the availability,
 
reliability,
 
and
 
security
 
of our
 
information
 
systems, networks,
 
data, and
 
intellectual
property. Any disruption, compromise, or breach of our systems
 
or data due to a
 
cybersecurity threat or incident could adversely
 
affect
our operations, customer service, product development, and competitive position. This could also result in a breach of our contractual
obligations or
 
legal duties
 
to protect
 
the privacy
 
and confidentiality
 
of our
 
stakeholders. Such
 
a breach
 
could expose
 
us to business
interruption, lost revenue, ransom
 
payments, remediation costs, liabilities
 
to affected parties, cybersecurity protection
 
costs, lost assets,
litigation,
 
regulatory
 
scrutiny and
 
actions,
 
reputational harm,
 
customer dissatisfaction,
 
harm
 
to our
 
vendor
 
relationships,
 
or loss
 
of
market share.
Our Board of Directors
 
exercises its oversight role
 
through the Audit Committee,
 
which provides the Board
 
with regular reports
and findings
 
from our
 
Group Chief
 
Information
 
Security Officer
 
(“CISO”). Our
 
CISO has
 
24+ years
 
of experience
 
in Information
Technology,
 
20 years specifically in IT and
 
IT Security combined. The CISO also has
 
a Master’s Degree in Information Security from
Royal Holloway, University
 
of London.
As
 
of
 
the
 
date
 
of
 
this
 
Annual
 
Report,
 
we
 
do
 
not
 
believe
 
any
 
risks
 
from
 
cybersecurity
 
threats
 
have
 
materially
 
affected
 
or
 
are
reasonably likely
 
to materially
 
affect us,
 
including our
 
results of
 
operations or
 
financial condition.
 
It should
 
be read
 
in conjunction
with the other sections of
 
this Annual Report, particularly Item
 
1A—“Risk Factors.”, for a comprehensive
 
understanding of the risks
and uncertainties related to our business and operations.
25
ITEM 2.
 
PROPERTIES
 
We lease our corporate
 
headquarters facility which consists of approximately 81,000 square feet in Johannesburg,
 
South Africa.
We also lease properties throughout South
 
Africa, including an
 
approximately 10,000 square foot
 
manufacturing facility in Lazer
 
Park,
Johannesburg, 194 financial
 
services branches, 14 financial service
 
express stores and 14 satellite
 
branches. We
 
also lease additional
office space
 
in Johannesburg,
 
Cape Town
 
and Durban, South
 
Africa; and Gaborone,
 
Botswana. These leases
 
expire at various
 
dates
through
 
2029,
 
assuming
 
the
 
exercise
 
of
 
options
 
to
 
extend.
 
We
 
believe
 
that
 
we
 
have
 
adequate
 
facilities
 
for
 
our
 
current
 
business
operations.
ITEM 3.
 
LEGAL PROCEEDINGS
 
Litigation related to CPS
 
As
 
a
 
result
 
of
 
significant
 
obligations
 
relating
 
to,
 
and
 
ongoing
 
litigation
 
arising
 
out
 
of,
 
CPS’
 
SASSA
 
contract,
 
including
 
the
exhaustion
 
of CPS’
 
legal appeals
 
against a
 
court judgment
 
to repay
 
additional SASSA
 
implementation
 
costs, CPS
 
was placed
 
into
liquidation in October
 
2020. As a
 
result, CPS’ liquidators
 
are currently in
 
control of the CPS
 
liquidated estate
 
and are managing
 
the
affairs in
 
relation thereto.
 
We
 
have proven
 
our claims
 
and are
 
noted as
 
a creditor
 
along with
 
other creditors
 
in the
 
liquidated estate.
See Item
 
1A—“Risk Factors
 
—Cash Paymaster
 
Services, or
 
CPS, has
 
been placed
 
into liquidation.
 
While no
 
claim has
 
been made
against Lesaka for CPS’ obligations, we cannot provide assurance that
 
no such claim will be made” for additional information.
There are no other material pending legal proceedings, other than ordinary
 
routine litigation incidental to our business, to which
we are a party or of which any of our property is the subject.
ITEM 4.
 
MINE SAFETY DISCLOSURES
Not applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26
PART
 
II
ITEM 5.
 
MARKET FOR REGISTRANT’S COMMON EQUITY,
 
RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF
 
EQUITY SECURITIES
Market information
Our common stock is listed on The NASDAQ Global Select Market, or Nasdaq, in the United States under
 
the symbol “LSAK”
and on the JSE in South Africa under the symbol “LSK.” The Nasdaq is
 
our principal market for the trading of our common stock and
we have a secondary listing on the JSE.
Our transfer
 
agent in
 
the United
 
States is
 
Computershare Shareowner
 
Services LLC,
 
480 Washington
 
Blvd, Jersey
 
City,
 
New
Jersey,
 
07310.
 
According
 
to
 
the
 
records
 
of
 
our
 
transfer
 
agent,
 
as
 
of
 
August
 
30,
 
2024,
 
there
 
were
 
7
 
shareholders
 
of
 
record
 
of
 
our
common stock.
 
We
 
believe that
 
a substantially
 
greater number
 
of beneficial
 
owners of
 
our common
 
stock hold
 
their shares
 
though
banks, brokers,
 
and other financial
 
institutions (i.e. “street
 
name”). Our transfer
 
agent in South
 
Africa is JSE
 
Investor Services (Pty)
Ltd, One Exchange Square, 2 Gwen Lane, Sandown, Sandton, 2196, South
 
Africa.
 
Dividends
We
 
have not
 
paid any
 
dividends on
 
shares of our
 
common stock
 
during our
 
last two
 
fiscal years
 
and presently
 
intend to
 
retain
future earnings to finance the expansion of
 
the business. We do not anticipate paying any cash dividends in
 
the foreseeable future. The
future dividend policy will depend on our earnings, capital requirements, debt commitments, expansion plans, financial condition and
other relevant factors.
Issuer purchases of equity securities
On
 
February
 
5,
 
2020,
 
our
 
board
 
of
 
directors
 
approved
 
the
 
replenishment
 
of
 
our
 
existing
 
share
 
repurchase
 
authorization
 
to
repurchase up to an aggregate of $100 million of common stock. The authorization
 
has no expiration date.
 
The table
 
below presents
 
information relating
 
to purchases
 
of shares
 
of our
 
common stock
 
during the
 
fourth quarter
 
of fiscal
2024:
Period
(a)
 
Total
 
number of
shares purchased
(b)
 
Average price
paid per share ($)
(c)
 
Total
 
number of shares
purchased as part of
publicly announced
plans or programs
(d)
 
Maximum dollar value
of shares that may yet
be purchased under the
plans or programs ($)
April 2024
0
-
-
100,000,000
May 2024
(1)
262,468
4.84
-
100,000,000
June 2024
(1)
3,568
4.58
-
100,000,000
Total
266,036
-
(1) Relates to the delivery of shares of our common
 
stock to us by certain of our employees to settle their income
 
tax liabilities.
These shares do not reduce the repurchase authority under the share repurchase
 
program.
 
form10kp29i0
27
Share performance graph
The chart
 
below compares
 
the five-year
 
cumulative return,
 
assuming the
 
reinvestment of
 
dividends, where
 
applicable, on
 
our
common stock with that of the S&P 500 Index and the NASDAQ Industrial Index. This graph assumes
 
$100 was invested on June 30,
2019, in each of our common stock, the companies in the S&P 500 Index, and the companies
 
in the NASDAQ Industrial Index.
 
ITEM 6.
 
[RESERVED]
28
ITEM 7.
 
MANAGEMENT’S DISCUSSION AND ANALYSIS
 
OF FINANCIAL CONDITION AND
RESULTS
 
OF OPERATIONS
The following
 
discussion and
 
analysis should
 
be read
 
in conjunction
 
with Item
 
8—“Financial Statements
 
and Supplementary
Data.” In
 
addition
 
to historical
 
consolidated
 
financial
 
information,
 
the following
 
discussion
 
and
 
analysis contains
 
forward-looking
statements that involve risks, uncertainties and assumptions. See Item 1A—
 
“Risk Factors” and “Forward Looking Statements.”
U.S. securities laws
 
require that when
 
we publish any
 
non-GAAP measures, we
 
disclose the reason
 
for using these
 
non-GAAP
measures
 
and
 
provide
 
reconciliations
 
to
 
the
 
most
 
directly
 
comparable
 
GAAP
 
measures.
 
We
 
discuss
 
why
 
we
 
consider
 
it
 
useful
 
to
present these non-GAAP
 
measures and the
 
material risks and
 
limitations of these
 
measures, as well
 
as a reconciliation
 
of these non-
GAAP measures
 
to the
 
most directly
 
comparable GAAP
 
financial measure
 
below at
 
“—Results of Operations
 
—Use of Non-GAAP
Measures” below.
Overview
We
 
offer a wide
 
range of solutions
 
including transactional
 
accounts (banking), lending,
 
insurance, cash management
 
solutions,
card acceptance, supplier payments, software services
 
and bill payments. By providing
 
a full-service fintech platform in
 
our connected
ecosystem, we facilitate the digitization of commerce in our markets.
Sources of Revenue
We
 
generate our
 
revenues by
 
charging
 
transaction fees
 
to merchants,
 
financial service
 
providers, utility
 
providers, bill
 
issuers
and consumers; by selling airtime to merchants;
 
by providing loans to merchants and consumers,
 
and insurance products to consumers
and by selling hardware, licensing software and providing related technology
 
services to merchants.
We act
 
as a service provider whereby we
 
own and operate the technology and
 
apply it in a system ourselves,
 
charging one-time
and
 
ongoing fees
 
for
 
the use
 
of the
 
system either
 
on a
 
fixed or
 
ad valorem
 
basis. For
 
instance,
 
through
 
Connect,
 
we provide
 
cash
management
 
and payment
 
services to
 
merchant
 
customers
 
through
 
a digital
 
vault which
 
is located
 
at the
 
customer’s
 
premises and
generate processing revenue from
 
the provision of
 
these services. We also offer merchant customers
 
access to platforms through
 
which
we (a)
 
generate revenue
 
from the
 
sale of
 
prepaid airtime
 
and (b)
 
generate fees
 
from distribution
 
of VAS,
 
including prepaid
 
airtime,
prepaid electricity,
 
gaming voucher,
 
and other
 
services, to
 
users of
 
our platforms.
 
We
 
also generate
 
fees from
 
debit and
 
credit card
transaction processing and interest revenue from qualifying merchant customers who are able to access short-term loans. The revenue
and
 
costs
 
associated
 
with
 
these
 
services
 
and
 
sales
 
are
 
included
 
in
 
our
 
merchant
 
operating
 
segment.
 
We
 
also
 
generate
 
fees
 
from
consumers utilizing our ATM
 
network.
We
 
provide consumers with
 
bank accounts from
 
which we generate
 
a monthly fee
 
and also charge
 
fees on an ad
 
valorem basis
for goods
 
and services
 
purchased. Usage
 
of our
 
bank accounts
 
also provides
 
our customers
 
with access
 
to short-term
 
loans and
 
life
insurance products. The revenue and costs associated with this approach are
 
reflected in our consumer operating segment.
Developments during Fiscal 2024
This item
 
generally discusses
 
our 2024
 
results compared
 
to our
 
2023 results.
 
Discussions of
 
our 2023
 
results compared
 
to our
2022 results can be found within our Annual Report on Form 10-K
 
for the year ended June 30, 2023.
Fiscal 2024 represents
 
a transformative year for
 
Lesaka. The continuation of
 
our strong and consistent
 
performance delivered a
robust improvement
 
in profitability,
 
and we believe
 
the anticipated completion
 
of the Adumo
 
acquisition, announced
 
in fiscal 2024,
will facilitate
 
an acceleration
 
of our
 
organic
 
growth story
 
and cement
 
Lesaka’s
 
position as
 
Southern
 
Africa’s
 
leading Fintech.
 
The
consistent strengthening in our financial position enables us to continue
 
pursuing our organic and inorganic growth strategies.
 
Operating income of $3.6 million (ZAR 67.3 million) improved $18.9 million (ZAR
 
342.6 million) compared with an operating
loss of
 
$15.3 million
 
(ZAR 275.3
 
million) during
 
fiscal 2023.
 
We
 
reported a
 
net loss
 
attributable to
 
the company
 
of $17.4
 
million
(ZAR 326.1
 
million) during fiscal 2024 compared with a net loss of $35.1 million (ZAR 629.2
 
million) during fiscal 2023.
We
 
achieved our
 
Group Adjusted
 
EBITDA guidance,
 
a non-GAAP
 
measure, delivering
 
$36.9 million
 
(ZAR 690.9
 
million) in
fiscal 2024,
 
a 55%
 
increase in
 
ZAR, compared
 
to $24.8
 
million (ZAR
 
445.5
 
million) during
 
fiscal 2023,
 
demonstrating consistent
execution against our growth strategy.
 
Refer to reconciliation below at “—Results
 
of Operations—Use of Non-GAAP Measures”
 
for
a reconciliation
 
of Group
 
Adjusted EBITDA.
 
The continued
 
resilience of
 
our business
 
model in
 
a challenging
 
environment for
 
our
merchant and consumer customers demonstrates the value our customers
 
place on our services.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
Our mission
 
at Lesaka
 
is to
 
provide
 
financial services,
 
including software,
 
to Southern
 
Africa’s
 
underserviced consumers
 
and
merchants, improving people’s lives and
 
increasing financial inclusion in the markets in which we operate.
 
We achieved this through
our ability to efficiently digitalize commerce by providing a full-service fintech platform and facilitating the secular shift from cash to
digital that is currently taking place.
 
Merchant Division
 
The year-on-year growth achieved
 
by our Merchant
 
Division (“Merchant”) is
 
supported by the
 
robust secular trends
 
underpinning
financial
 
inclusion,
 
cash management
 
and
 
digitalization
 
to empower
 
micro-merchants,
 
merchants
 
and
 
enterprise
 
clients to
 
transact
efficiently and fulfill their potential.
Performance in Merchant has been driven by:
●
Our
VAS
 
and supplier payments
 
business continues to see adoption by micro-merchants.
VAS
 
and supplier payments
 
Fiscal year ended June 30,
2024
2023
2022
2024 vs.
2023
2 year
CAGR %
Approximate number of devices in deployment
1
87,500
75,000
51,000
17%
31%
Throughput for the year (ZAR billions)
33.0
27.6
20.6
20%
27%
Throughput
 
for
 
the
 
year
 
excluding
 
international
money transfers (ZAR billions)
30.6
21.4
13.7
43%
49%
1.
2024 includes approximately 6,400 devices attributable to the acquisition of Touchsides,
 
effective May 01, 2024, which are
not enabled for VAS
 
and supplier payments on the Kazang platform.
 
o
We
 
had
 
approximately
 
87,500 devices
 
deployed
 
at June
 
30, 2024,
 
representing
 
a 17%
 
year-on-year
 
growth
compared to approximately 75,000
 
devices one year ago, and
 
represents a 2-year CAGR of
 
31% compared to
June 30, 2022.
o
The 87,500 devices
 
includes approximately 2,300 Touchsides merchants with
 
devices already enabled for
 
VAS
and
 
supplier
 
payments
 
on
 
the
 
Kazang
 
platform
 
and
 
an
 
additional
 
6,400
 
Touchsides
 
devices
 
which
 
are
 
not
enabled
 
for
 
VAS
 
and
 
supplier
 
payments
 
on
 
the
 
Kazang
 
platform.
 
These
 
6,400
 
sites
 
present
 
an
 
immediate
opportunity to deploy a Kazang device enabling VAS
 
sales and supplier payments.
o
Core to our device placement strategy
 
is the decision to focus on
 
quality business and optimizing our
 
existing
fleet, which is reflected in a healthy throughput growth and margin
 
per device.
o
As previously
 
communicated,
 
our
 
product
 
mix for
 
VAS
 
and supplier
 
payment
 
sales has
 
changed
 
with low-
margin
 
money transfers
 
reducing significantly
 
due to
 
a change
 
in the
 
regulatory environment
 
impacting the
industry as a
 
whole. Money
 
transfers comprised
 
7% of VAS
 
and supplier
 
payment throughput
 
in fiscal 2024
compared to 22% in
 
fiscal 2023. This change
 
has had limited impact
 
on profitability as money
 
transfers are a
very low margin product.
o
VAS
 
and supplier
 
payments throughput,
 
excluding the low-margin
 
money transfers,
 
increased 43%
 
year-on-
year to ZAR 30.6 billion, and represents a 2-year CAGR of 49% compared
 
to June 30, 2022.
o
Whilst we saw growth in our traditional
 
VAS
 
products of electricity,
 
airtime and gaming, much of the growth
has
 
been
 
driven
 
by
 
the
 
uptake
 
of
 
our
 
supplier
 
payments
 
platform
 
by
 
micro-merchants.
 
As
 
we
 
bring
 
more
suppliers onto our platform,
 
we anticipate these volumes
 
will continue to grow.
 
Supplier payment throughput
volumes increased 124%
 
in fiscal 2024
 
compared to fiscal 2023
 
and now accounts
 
for approximately 35%
 
of
our VAS
 
throughput volumes, compared to approximately 20% a year ago.
o
Touchsides was acquired
 
at the end of April 2024 (refer below).
●
Our
card acceptance
solutions to micro-merchants via Kazang Pay and to merchants through Card Connect.
 
Card acceptance
Fiscal year ended June, 30
2024
2023
2022
2024 vs.
2023
2 year
CAGR %
Approximate number of devices in deployment
1
51,850
44,900
22,650
15%
51%
Throughput for the year (ZAR billions)
15.6
12.0
6.1
30%
60%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
●
Our
lending
solutions offered to merchants through Capital Connect
 
in the merchant market.
 
Lending
 
Fiscal year ended June, 30
2024
2023
2022
2024 vs.
2023
2 year
CAGR %
Capital Connect credit disbursed (ZAR millions)
716
769
601
(7)%
9%
Capital Connect loan book
 
size at period end (ZAR
millions)
284
294
229
(4)%
11%
o
Capital
 
Connect
 
disbursed
 
ZAR
 
716
 
million
 
during
 
fiscal
 
2024,
 
compared
 
to
 
ZAR
 
769
 
million
 
in
 
the
comparable
 
period
 
last
 
year,
 
representing
 
a
 
7%
 
decrease,
 
reflective
 
of
 
challenging
 
economic
 
conditions,
including higher interest rates, experienced by merchants in South
 
Africa during fiscal 2024
o
We
 
continue
 
to
 
see
 
demand
 
for
 
our
 
merchant
 
lending
 
offering
 
however
 
the
 
deteriorating
 
performance
 
and
financial strength of many
 
of our merchants means they
 
do not meet our credit
 
criteria, resulting in fewer and
smaller extensions.
 
Whilst strict
 
application of
 
our credit
 
criteria has
 
led to
 
negative growth,
 
it has
 
protected
and maintained the quality of our book through this cycle. Growth in credit disbursed and the Capital Connect
loan book size at the end of the year represents a 2-year CAGR of 9% and 11%
 
respectively.
 
o
Capital
 
Connect’s
 
lending
 
proposition
 
is
 
an
 
important
 
component
 
in
 
enabling
 
the
 
merchants
 
we
 
serve
 
to
compete and
 
grow.
 
Since inception,
 
Capital Connect
 
has distributed
 
more than
 
ZAR 3
 
billion of
 
funding to
merchants and can provide funding
 
of up to ZAR 5
 
million in under 24 hours. Quick
 
access to affordable and
flexible opportunity
 
capital is
 
vital in
 
every stage
 
of a
 
merchants’ lifecycle,
 
enabling them
 
to never
 
miss an
opportunity.
 
o
In fiscal 2024 Capital
 
Connect launched
“Fuel Connect”
, a tailored lending
 
solution addressing complexities
in fuel ordering, aimed at solving for merchants’ pain points.
o
Kazang Pay
 
Advance, our
 
lending offering
 
in the micro
 
-merchant sector,
 
was suspended
 
in early fiscal
 
2024
following the decision to discontinue
 
the current product, especially in
 
the high interest rate environment. We
continued
 
to
 
explore
 
other
 
options
 
with
 
respect
 
to
 
this
 
offering
 
with
 
it
 
now
 
in
 
live
 
pilot
 
phase.
 
We
 
are
monitoring payment
 
behavior on a
 
smaller loan book
 
and applying stricter
 
lending criteria before
 
the official
relaunch later in fiscal 2025.
 
●
Our
cash
 
management
 
and
 
digitalization
solutions
 
effectively
 
“puts
 
the
 
bank”
 
in
 
approximately
 
4,440
 
merchants’
stores.
Cash management and digitalization
 
Fiscal year ended June 30,
2024
2023
2022
2024 vs.
2023
2 year
CAGR %
Approximate number of devices in deployment
4,440
4,390
4,080
1%
4%
Cash
 
settlements
 
(throughput)
 
for
 
the
 
year
 
(ZAR
billions)
112.6
110.1
102.1
2%
5%
o
Our cash
 
business remains
 
a
 
vital product
 
in our
 
merchant offering
 
and is
 
a key
 
differentiator
 
for
 
us in
 
the
digitalization
 
of cash.
 
We
 
provide
 
robust
 
cash vaults
 
in
 
the SME
 
sector
 
(Cash
 
Connect) and
 
are building
 
a
presence
 
in
 
the
 
micro-merchant
 
sector
 
(Kazang
 
Vaults),
 
which
 
enables
 
our
 
merchant
 
customer
 
base
 
to
significantly mitigate their operational risks pertaining to cash management
 
and security.
 
o
Whilst there
 
is trend
 
towards digital payments,
 
cash remains
 
as the
 
most significant portion
 
of retail transactions
especially in informal markets. This business is
 
primarily exposed to the mid-market SMEs, a
 
sector which has
experienced
 
challenges such
 
as power
 
outages,
 
high
 
price inflation
 
and
 
a slowdown
 
in consumer
 
spending,
over
 
the
 
past
 
24
 
months.
 
This
 
impacted
 
the
 
merchants
 
we
 
serve
 
in
 
this
 
sector
 
and
 
resulted
 
in
 
increased
bankruptcies and vault upliftments which affected
 
the net growth in the vault estate.
o
Our merchants deposited over ZAR 113 billion in cash into our vaults in fiscal 2024 evidencing the value they
derive from our ability to digitalize this cash and immediately provide access to working
 
capital.
 
Acquisition of Touchsides
In February 2024
 
we announced the acquisition
 
of Touchsides
 
(Pty) Ltd (“Touchsides”)
 
and the deal
 
closed on April 30,
 
2024.
Touchsides
 
is a leading
 
data analytics and
 
insights company,
 
and highly
 
complementary with
 
our Kazang
 
business. The
 
acquisition
significantly expands
 
Kazang’s
 
footprint in
 
the informal
 
market by
 
adding an
 
established solution
 
that has
 
a strong
 
presence in
 
the
licensed tavern market. The business
 
provides platform-as-a-service (“PaaS”) and software-as-a-service (“SaaS”) solutions
 
to licensed
tavern
 
outlets,
 
enabling
 
the
 
measurement
 
of
 
sales
 
activity
 
in
 
real-time,
 
management
 
of
 
stock
 
levels
 
and
 
informing
 
commercial
decisions, such as pricing and promotional offers.
 
31
The data and insights gathered from these terminals carries significant value and potential to be monetized through relationships
with
 
a
 
range
 
of
 
clients
 
including
 
fast-moving
 
consumer
 
goods
 
companies,
 
retailers,
 
wholesalers,
 
route-to-market
 
suppliers,
 
and
financiers.
 
Touchsides is managed
 
as part of our micro-merchant business and has been allocated to our Merchant operating
 
segment.
 
Acquisition of Adumo
 
In May 2024
 
we announced the acquisition
 
of Adumo RF (Pty)
 
Ltd (“Adumo”), which
 
is subject to shareholder
 
and regulatory
approvals.
 
Adumo is an independent
 
payments and commerce enablement
 
platform in Southern Africa,
 
serving approximately 23,000 active
merchants with
 
operations across
 
South Africa,
 
Namibia, Botswana
 
and Kenya.
 
For more
 
than two
 
decades, Adumo
 
has facilitated
physical and online commerce between retail merchants and end-consumers by offering
 
a unique combination of payment processing
and integrated software
 
solutions, which currently
 
include embedded payments,
 
integrated payments, reconciliation services,
 
merchant
lending, customer engagement tools, card issuing program management
 
and data analytics.
 
 
Adumo operates
 
across three
 
businesses, which
 
provide payment
 
processing and
 
integrated software
 
solutions to
 
different
end markets:
●
The Adumo
 
Payments business offers
 
payment processing,
 
integrated payments
 
and reconciliation
 
solutions to small-
and-medium
 
(“SME”)
 
merchants
 
in
 
South
 
Africa,
 
Namibia
 
and
 
Botswana,
 
and
 
also
 
provides
 
card
 
issuing
 
program
management to corporate clients such as Anglo American and Coca-Cola;
●
The Adumo ISV business, also known as GAAP,
 
has operations in South Africa, Botswana and Kenya, and clients in a
further 21
 
countries, and
 
is the
 
leading provider
 
of integrated
 
point-of-sales software
 
and hardware
 
to the
 
hospitality
industry in Southern Africa, serving clients such as KFC, McDonald’s,
 
Pizza Hut, Nando’s and Krispy Kreme;
 
and,
 
●
The Adumo
 
Ventures
 
business offers
 
online commerce
 
solutions (Adumo
 
Online), cloud-based,
 
multi-channel point-
of-sales
 
solutions
 
(Humble)
 
and
 
an
 
aggregated
 
payment
 
and
 
credit
 
platform
 
for
 
in-store
 
and
 
online
 
commerce
(SwitchPay) to SME merchants and corporate clients in South Africa and Namibia.
 
Adumo generates
 
the majority
 
of its
 
revenue from
 
per transaction
 
fees that
 
are calculated
 
as a
 
percentage of
 
transaction value,
and software-as-a-service (“SaaS”) subscription fees charged to
 
merchants. As of June
 
30, 2024, Adumo employed approximately
 
950
employees throughout Southern Africa.
The
 
acquisition
 
continues
 
Lesaka’s
 
consolidation
 
in
 
the
 
Southern
 
African
 
fintech
 
sector.
 
The
 
Lesaka
 
ecosystem
 
will
 
serve
approximately 1.7 million
 
active consumers,
 
120,200 merchants,
 
and processes
 
over ZAR
 
270 billion
 
in throughput
 
(cash, card
 
and
VAS)
 
per year.
 
The
 
combined
 
Group
 
will
 
have
 
over
 
3,300
 
employees
 
operating
 
on
 
the
 
ground
 
in
 
five
 
countries:
 
South
 
Africa,
 
Namibia,
Botswana, Zambia, and Kenya.
The acquisition enhances Lesaka's strengths in both the consumer
 
and merchant markets.
The purchase
 
consideration will
 
be settled
 
through the
 
combination of
 
an issuance
 
of 17,279,803
 
shares of
 
our common
 
stock
and a ZAR 232 million ($12.5
 
million, translated at the prevailing rate of
 
$1: ZAR 18.5 as of
 
May 6, 2024) payment in cash.
 
The share
issuance
 
was
 
based
 
off
 
of
 
the
 
Base
 
Purchase
 
Consideration,
 
as
 
defined
 
in
 
the
 
transaction
 
agreement,
 
of
 
ZAR
 
1.59
 
billion
($85.9 million),
 
less
 
the
 
ZAR
 
232
 
million
 
cash
 
payment,
 
implying
 
a
 
value
 
per
 
share
 
of
 
$4.25
 
((ZAR
 
1.59
 
billion
 
–
 
ZAR
 
0.232
billion)/17,279,803 /
 
ZAR 18.5). Adumo
 
shareholders include Apis
 
Growth Fund I,
 
a private equity
 
fund managed by
 
Apis Partners
LLP (“Apis”), African Rainbow
 
Capital (“ARC”), the largest
 
shareholder of Crossfin Holdings
 
(RF) Pty Ltd (“Crossfin”),
 
as well as
the International Finance Corporation and Adumo management.
As of September 11, 2024, the majority of shareholder and regulatory approvals required in finalizing this transaction have been
satisfied. The transaction is expected to close by October 2024 (quarter two of fiscal 2025) once the remaining procedural customary improve the lives of historically underserviced consumers and continue to deliver against our strategic focus areas underpinning our
closing conditions are satisfied.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32
Consumer Division
In
 
our
 
Consumer
 
Division
 
we
 
offer
 
transactional
 
accounts
 
(banking),
 
insurance,
 
lending
 
and
 
payments
 
solutions
 
designed
 
to
growth
 
strategy.
 
Progress made
 
on these
 
levers: (i)
 
growing active
 
EasyPay Everywhere
 
(“EPE”)
 
account numbers,
 
(ii) increasing
average
 
revenue
 
per
 
user
 
(“ARPU”)
 
through
 
cross-selling
 
and
 
(iii)
 
cost
 
optimization,
 
and
 
(iv)
 
enhancing
 
our
 
product
 
and
 
service
offering, resulted in revenue and profitability growth in
 
the Consumer Division in fiscal 2024.
 
Consumer
Fiscal year ended June 30,
2024
2023
2024 vs.
2023
Transactional accounts
 
(banking) - EasyPay Everywhere ("EPE")
Approximate
 
Gross
 
EPE
 
account
 
activations
 
for
 
the
 
year
 
-
 
Permanent
 
grant
recipients (number)
326,000
186,000
75%
Approximate
 
Net
 
EPE
 
account
 
activations
 
for
 
the
 
year
 
-
 
Permanent
 
grant
recipients (number)
192,000
79,000
143%
Total active EPE transactional
 
account base at year end (millions)
1.51
1.28
19%
Total
 
active
 
EPE
 
transactional
 
account
 
base
 
at
 
year
 
end
 
-
 
Permanent
 
grant
recipients (millions)
1.33
1.10
21%
Lending - EasyPay Loans
Approximate number of loans originated during the year (number)
1,061,000
850,000
24%
Gross advances (ZAR billions)
1.7
1.3
29%
Loan book size, before allowances, at year end
1
 
(ZAR millions)
548
415
32%
Insurance - EasyPay Insurance
Approximate number of insurance policies written in the year (number)
170,000
124,000
37%
Total active insurance
 
policies on book at year end (number)
439,000
335,000
31%
Average revenue per customer per month,
 
as of June
 
30, (permanent grant
beneficiaries) (ZAR)
90
80
13%
1.
Gross loan book, before
 
provisions.
The progress on our key initiatives is as follows:
●
Driving customer acquisition
o
Gross
 
EPE
 
account
 
activations,
 
for
 
the
 
permanent
 
base,
 
during
 
fiscal
 
2024
 
showed
 
significant
 
year-on-year
improvement due
 
to various strategic
 
initiatives. We
 
achieved approximately
 
326,000 gross account
 
activations in
the year, increasing
 
75% compared to approximately
 
186,000 in fiscal 2023.
 
After accounting for churn, net
 
active
account growth for the year increased 143%
 
to approximately 192,000 accounts, compared to approximately 79,000
in fiscal 2023.
o
Our
 
total
 
active EPE
 
transactional
 
account base
 
stood
 
at
 
approximately
 
1.47 million
 
at
 
the end
 
of June
 
2024,
 
of
which approximately
 
1.33 million
 
(or approximately
 
87%) are
 
permanent grant
 
recipients. The
 
balance comprises
Social Relief of Distress
 
(“SRD”) grant recipients, which was
 
introduced during the COVID pandemic and
 
extended
in calendar year 2023.
o
Our priority
 
is to grow
 
our permanent
 
grant recipient
 
customers base,
 
where we
 
can build
 
deeper relationships
 
by
offering other products such as insurance and lending. We do not offer the same breadth of service to the SRD grant
base due to the temporary nature of the grant.
●
Progress on cross
 
selling
EasyPay Loans
 
o
We
 
originated approximately
 
1.06 million
 
loans during
 
the year
 
with our
 
consumer loan
 
book, before
 
allowances
(“gross book”), increasing
 
32% to ZAR 548
 
million as of June
 
30, 2024, compared
 
to ZAR 415 million
 
as of June
30, 2023.
o
We have not
 
amended our credit scoring or other lending criteria and the growth is reflective of the demand
 
for our
tailored
 
loan
 
product
 
for
 
this
 
market,
 
growth
 
in
 
EPE
 
bank
 
account
 
customer
 
base
 
and
 
improved
 
cross-selling
capabilities.
o
The
 
loan
 
conversion
 
rate continues
 
to improve
 
following
 
the implementation
 
of
 
a number
 
of targeted
 
Consumer
lending campaigns and encouraging results from our digital channels during
 
the year.
o
The portfolio loss ratio
 
of approximately 6%,
 
calculated as the loans
 
written off during
 
fiscal 2024 as a percentage
of the total gross
 
loan book at the
 
end of the period,
 
remained stable on an
 
annualized basis, compared to
 
fiscal 2023.
 
33
EasyPay Insurance
 
o
Our funeral
 
insurance product continued
 
its strong growth
 
and is a
 
material contributor
 
to the improvement
 
in our
overall ARPU. We
 
have been able to improve customer
 
penetration to approximately 33% of our
 
active permanent
grant account base
 
as of
 
June 30, 2024,
 
compared to approximately
 
31% as
 
of June 30,
 
2023. Approximately 170,000
new policies were
 
written during
 
fiscal 2024, increasing
 
37%, compared
 
to approximately
 
124,000 in
 
fiscal 2023.
The
 
total
 
number
 
of
 
active
 
policies
 
has
 
grown
 
by
 
31%
 
to
 
approximately
 
439,000
 
policies
 
as
 
of
 
June
 
30,
 
2024,
compared to June 30, 2023.
ARPU
 
o
ARPU
 
for
 
our
 
permanent
 
client
 
base
 
has
 
increased
 
to
 
approximately
 
ZAR
 
90
 
as
 
of
 
June
 
30,
 
2024,
 
from
approximately ZAR 80 as of June 30, 2023.
 
Economic Environment and Impact of loadshedding
The economic environment in South Africa remains challenging for our consumer and merchant customers. Whilst inflation
 
has
come down
 
into the top
 
end of the
 
Reserve Bank’s
 
target range,
 
the impact of
 
the past two
 
year’s high
 
inflationary and interest
 
rate
environment has
 
impacted consumers.
 
Likewise, our
 
merchant customers
 
have operated
 
in a challenging
 
environment, especially
 
in
the
 
formal
 
SME
 
segment
 
where
 
we
 
have
 
seen
 
the
 
impact
 
in
 
our
 
cash
 
and
 
lending
 
business.
 
Notwithstanding
 
the
 
challenges,
 
our
business model
 
has proved
 
resilient, and
 
we have
 
managed to
 
continue growing
 
our consumer
 
and merchant
 
base whilst
 
delivering
improved Group Adjusted EBITDA.
Recent developments have bolstered confidence in our economy.
 
Whilst, as of the date of this Annual Report, the Reserve Bank
has not reduced interest rates, there is a
 
possibility that a downward cycle in interest rates will
 
start soon. Power cuts, or loadshedding,
has seen a marked improvement compared to last year. South Africa recently went through more than 100 days without loadshedding.
The lead up to the
 
national elections in May 2024 was
 
a period of significant uncertainty for
 
South Africa. The eventual outcome, with
a Government of National Unity being formed, was positively received by
 
the market, with the stock exchange reaching record highs
and the bond market recording record inflows, reflecting renewed confidence.
Overall,
 
the
 
South
 
African
 
economy
 
remains
 
challenging
 
with
 
high
 
unemployment,
 
high
 
interest
 
rates
 
and
 
low
 
growth
expectations. We do not foresee
 
any major changes
 
however anticipate that
 
a lower interest
 
rate environment would
 
bring much needed
relief to consumers and merchants in South Africa.
Improvement in our Broad Based Black Economic
 
Empowerment (“B-BBEE”) rating to level 4
B-BBEE is
 
a key
 
strategic priority
 
for us. Achievement
 
of B-BBEE
 
objectives is
 
measured by
 
a scorecard
 
which establishes
 
a
weighting
 
for
 
various
 
elements.
 
Scorecards
 
are
 
independently
 
reviewed
 
by
 
accredited
 
BEE
 
verification
 
agencies
 
which
 
issue
 
a
certificate that presents an entity’s BEE Contributor Status Level, with
 
level 1 being the highest
 
and “no rating” (a level
 
below level 8)
as the lowest. During fiscal 2023, we made
 
significant progress in terms of improving our empowerment credentials and
 
in September
2023 we
 
reported that
 
our independently
 
verified B-BBEE
 
rating improved
 
to a
 
level 5
 
rating from
 
a level
 
8 rating,
 
simultaneously
setting out our aim to achieve a level 4 rating by the end of fiscal year 2024.
 
Together with various B-BBEE initiatives and programmes being rolled
 
out, including our Youth Employment Services (“YES”)
programme, we
 
achieved this
 
target during
 
the second
 
quarter of
 
fiscal 2024
 
and have
 
received an
 
independently verified
 
B-BBEE
rating of level 4.
Leadership Changes in fiscal 2024
On February 29, 2024 Mr. Chris Meyer completed his tenure as
 
Group CEO of Lesaka, a position he
 
held since July 1, 2021. Mr.
Ali Mazanderani
 
took
 
over
 
the majority
 
of
 
Mr.
 
Meyer’s
 
responsibilities
 
as Executive
 
Chairman
 
of Lesaka
 
on
 
March 1,
 
2024.
 
Ali
Mazanderani has been integral to the development of Lesaka’s strategy and has been a Non-Executive Director since 2020. As part of
the change
 
in leadership,
 
Mr.
 
Kuben Pillay,
 
stepped down
 
as our
 
Chairman on
 
January 31,
 
2024, and
 
commenced his
 
role as
 
Lead
Independent Director of Lesaka on February 1, 2024.
 
34
Critical Accounting Policies
Our audited consolidated
 
financial statements have
 
been prepared in accordance
 
with U.S. GAAP,
 
which requires management
to
 
make
 
estimates
 
and
 
assumptions
 
about
 
future
 
events
 
that
 
affect
 
the
 
reported
 
amount
 
of
 
assets
 
and
 
liabilities
 
and
 
disclosure
 
of
contingent assets and liabilities.
 
As future events and
 
their effects cannot be
 
determined with absolute certainty,
 
the determination of
estimates requires
 
management’s
 
judgment based
 
on a
 
variety of
 
assumptions and
 
other determinants
 
such as
 
historical experience,
current
 
and
 
expected
 
market
 
conditions
 
and
 
certain
 
scientific
 
evaluation
 
techniques.
 
Management
 
believes
 
that
 
the
 
following
accounting policies
 
are critical due
 
to the degree
 
of estimation required
 
and the impact
 
of these policies
 
on the understanding
 
of the
results of our operations and financial condition.
Business Combinations and the Recoverability of Goodwill
 
A significant component
 
of our growth
 
strategy is to acquire
 
and integrate businesses
 
that complement
 
our existing operations.
The purchase
 
price of
 
an acquired
 
business is
 
allocated to
 
the tangible
 
and intangible
 
assets acquired
 
and liabilities
 
assumed
 
based
upon their estimated
 
fair value at the
 
date of purchase.
 
The difference between
 
the purchase price and
 
the fair value of
 
the net assets
acquired is
 
recorded as goodwill.
 
In determining
 
the fair value
 
of assets acquired
 
and liabilities assumed
 
in a business
 
combination,
we use various
 
recognized valuation methods, including
 
present value modeling.
 
Further, we make assumptions
 
using certain valuation
techniques, including discount rates and timing of future cash flows.
 
We review the carrying value of goodwill annually
 
or more frequently if circumstances indicating impairment have occurred. In
performing this review,
 
we are required to estimate
 
the fair value of goodwill that
 
is implied from a valuation of
 
the reporting unit to
which the goodwill
 
has been allocated
 
after deducting the
 
fair values of
 
all the identifiable
 
assets and liabilities
 
that form part
 
of the
reporting
 
unit.
 
The determination
 
of
 
the fair
 
value
 
of a
 
reporting
 
unit requires
 
us
 
to
 
make
 
significant
 
judgments
 
and estimates.
 
In
determining the fair value of reporting units for fiscal 2024, our key judgements related to reporting unit revenue growth rates and the
weighted-average cost
 
of capital applicable
 
to peer and
 
industry comparables
 
of the reporting
 
units. In
 
determining the
 
fair value of
reporting units
 
for fiscal
 
2023, we
 
considered entity-specific
 
growth rates,
 
future expected
 
cash flows
 
to be
 
used in
 
our discounted
cash flow model, and the weighted-average cost of capital applicable to
 
peer and industry comparables of the reporting units. We base
our estimates
 
on assumptions
 
we believe
 
to be
 
reasonable but
 
that are
 
unpredictable and
 
inherently uncertain.
 
In addition,
 
we make
judgments and assumptions in allocating assets and liabilities to each of our reporting
 
units.
The results of our impairment tests during fiscal 2024
 
indicated that the fair value of our reporting units exceeded
 
their carrying
values and
 
so did
 
not require
 
impairment. The
 
results of
 
our impairment
 
tests during
 
fiscal 2023
 
indicated that
 
the fair value
 
of our
reporting
 
units
 
exceeded
 
their carrying
 
values,
 
with
 
the
 
exception
 
of
 
the $7.0
 
million
 
of goodwill
 
impaired
 
during
 
fiscal 202
 
3,
 
as
discussed in Note 10 to our audited consolidated financial statements.
Intangible Assets Acquired Through Acquisitions
The
 
fair values
 
of the
 
identifiable
 
intangible
 
assets acquired
 
through
 
acquisitions
 
were determined
 
by management
 
using
 
the
purchase method
 
of accounting.
 
We
 
did not
 
identify any
 
significant intangible
 
assets related
 
to the
 
Touchsides
 
acquisition in
 
fiscal
2024. We completed the acquisition
 
of Connect during fiscal 2022 where we identified and recognized intangible assets. We
 
used the
relief from royalty method to value identified brands
 
and the multi-period excess earnings method to value
 
the integrated platform and
identified customer relationships. We
 
have used the relief from royalty method,
 
the multi-period excess earnings method, the income
approach
 
and
 
the
 
cost
 
approach
 
to
 
value
 
other
 
historic
 
acquisition-related
 
intangible
 
assets.
 
In
 
so
 
doing,
 
we
 
made
 
assumptions
regarding
 
expected
 
future revenues
 
and
 
expenses
 
to develop
 
the underlying
 
forecasts, applied
 
contributory
 
asset charges,
 
discount
rates, exchange rates, cash tax charges and useful lives.
 
The valuations were based on information available at the
 
time of the acquisition and the expectations and
 
assumptions that were
deemed reasonable by us. No assurance can be given, however,
 
that the underlying assumptions or events associated with such assets
will occur as
 
projected. For these
 
reasons, among others,
 
the actual cash
 
flows may vary
 
from forecasts of
 
future cash flows.
 
To
 
the
extent actual cash flows vary, revisions to the useful life or impairment of intangible assets may be necessary.
 
Management assess the
useful life of
 
the acquired intangible
 
assets upon initial
 
recognition and revisions
 
to the useful
 
life or impairment
 
of these intangible
assets may be necessary in the future.
Revenue recognition – principal versus agent considerations
We generate
 
revenue from the provision of transaction-processing
 
services through our various platforms
 
and service offerings.
We
 
use these
 
platforms to
 
(a) sell
 
prepaid airtime
 
vouchers which
 
was held
 
as inventory
 
and (b)
 
distribute VAS,
 
including prepaid
airtime vouchers (which
 
we do
 
not hold as
 
inventory), prepaid electricity, gaming voucher,
 
and other services,
 
to users
 
of our platforms.
The
 
determination
 
of whether
 
we
 
act as
 
a principal
 
or as
 
an agent
 
when providing
 
these services
 
requires
 
a significant
 
amount
 
of
judgement and is based on whether (i)
 
we are primarily responsible for fulfilling the promise
 
to provide the specified goods or service,
(ii) we
 
have
 
inventory
 
risk before
 
the specified
 
good or
 
service has
 
been
 
transferred
 
to a
 
customer
 
and
 
(iii) we
 
have
 
discretion
 
in
establishing the
 
price for
 
the specified
 
good or
 
service. When
 
we are
 
the principal
 
in a
 
transaction, such
 
as when
 
we purchase
 
(and
thus control and assume
 
inventory risk) prepaid airtime
 
before selling it to customers
 
utilizing our platform,
 
revenue is reported on
 
a
gross basis. When
 
we are an
 
agent in a
 
transaction, such
 
as when we
 
distribute VAS
 
on behalf of
 
our customers,
 
and do not
 
control
the
 
good
 
or
 
service
 
to
 
be
 
provided,
 
revenue
 
is
 
recognized
 
based
 
on
 
the
 
amount
 
that
 
we
 
are
 
contractually
 
entitled
 
to
 
receive
 
for
performing the distribution service on behalf of our customers using our
 
platform.
 
 
 
 
 
 
 
 
 
 
35
Valuation
 
of investment in Cell C
We have elected to measure
 
our investment in
 
Cell C, an
 
unlisted equity security, at fair
 
value using the
 
fair value option.
 
Changes
in
 
the
 
fair
 
value
 
of
 
this
 
equity
 
security
 
are
 
recognized
 
in
 
the
 
caption
 
“change
 
in
 
fair
 
value
 
of
 
equity
 
securities”
 
in
 
our
 
audited
consolidated statements of operations. The tax impact related to the change in
 
fair value of equity securities is included in income tax
expense in our audited
 
consolidated statements of operation.
 
The determination of
 
the fair value of this
 
equity security requires us
 
to
make significant judgments
 
and estimates.
 
We base our estimates
 
on assumptions we
 
believe to be
 
reasonable but that
 
are unpredictable
and inherently uncertain. Refer
 
to Note 6
 
of our audited consolidated
 
financial statements regarding the
 
valuation inputs and
 
sensitivity
related to our investment in Cell C.
We used a discounted cash flow model to determine the fair value of our investment in Cell C as of June 30, 2024 and 2023, and
valued Cell C at
 
$0.0
 
(zero) as of each of
 
June 30, 2024 and 2023.
 
We utilized the latest business plan provided by Cell
 
C management
for the period ended December 31,
 
2027, for the June 30, 2024
 
and 2023 valuations, and the
 
following key valuation inputs were used:
Weighted Average
 
Cost of Capital:
Between 21% and 26% over the period of the forecast
Long-term growth rate:
4.5% (4.5% as of June 30, 2023)
Marketability discount:
21% (20% as of June 30, 2023)
Minority discount:
24% (24% as of June 30, 2023)
Net adjusted external debt - June 30, 2024:
(1)
ZAR 8 billion ($0.4 billion), no lease liabilities included
Net adjusted external debt - June 30, 2023:
(2)
ZAR 8.1 billion ($0.4 billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable
 
as of June 30, 2024.
(2) translated from ZAR to U.S. dollars at exchange rates applicable
 
as of June 30, 2023.
We
 
believe the
 
Cell C
 
business plan
 
is reasonable
 
based on
 
the current
 
performance and
 
the expected
 
changes in
 
the business
model. Refer to the sensitivity analysis included in
 
Note 6 to our audited consolidated financial statements
 
related to our valuation of
Cell C as of June 30, 2024.
Recoverability of equity securities and equity-accounted investments
We
 
review our
 
equity securities
 
and equity-accounted
 
investments for
 
impairment whenever
 
events or
 
circumstances indicate
that the
 
carrying amount
 
of the
 
investment may
 
not be
 
recoverable.
 
In performing
 
this review,
 
we are
 
required to
 
estimate the
 
fair
value of our
 
equity-accounted investments and other
 
equity securities. The
 
determination of the
 
fair value of
 
these investments requires
us to make significant judgments and estimates.
 
Other equity securities include our investments in MobiKwik and CPS. These equity securities do not have readily determinable
fair
 
values
 
and
 
therefore
 
we
 
have
 
elected
 
to
 
measure
 
these
 
investments
 
at
 
cost
 
minus
 
impairment,
 
if
 
any,
 
plus
 
or
 
minus
 
changes
resulting
 
from
 
observable
 
price
 
changes
 
in
 
orderly
 
transactions
 
for
 
the
 
identical
 
or
 
a
 
similar
 
investment
 
of
 
the
 
same
 
issuer.
 
If
 
we
identify an impairment indicator related
 
to these equity
 
securities, we are required
 
to assess the
 
carrying value of these
 
equity securities
against their fair
 
value. We
 
did not identify
 
any impairment indicators
 
during each
 
of fiscal 2024,
 
2023
 
and 2022,
 
and therefore did
not recognize any impairment losses related to these equity securities during
 
those years.
The determination of the fair value of an investment requires us to make significant judgments and estimates. We are required to
base our
 
estimates on
 
assumptions
 
which we
 
believe to
 
be reasonable,
 
but these
 
assumptions may
 
be unpredictable
 
and inherently
uncertain.
The Company did
 
not identify any
 
observable transactions
 
during either of
 
the years ended June
 
30, 2024, 2023
 
and 2022, and
therefore there was no change in
 
the fair value of MobiKwik
 
during the year. During the year ended June 30,
 
2021, MobiKwik entered
into
 
a
 
number
 
of
 
separate
 
agreements
 
with
 
new
 
shareholders
 
to
 
raise
 
additional
 
capital
 
through
 
the
 
issuance
 
of
 
additional
 
shares.
Specifically,
 
our
 
current
 
valuation
 
is based
 
on
 
an
 
observable
 
price
 
change
 
in
 
an orderly
 
transaction
 
for
 
similar
 
or
 
identical equity
securities issued by MobiKwik
 
in a capital raise concluded
 
in June 2021, of $245.50
 
per share. The carrying value
 
of our investment
in MobiKwik is
 
$76.3 million as
 
of June 30,
 
2024. Any change
 
in the fair
 
value of MobiKwik
 
is included in
 
the caption “Change
 
in
fair value of equity securities” in our audited consolidated statement of operations
 
.
We did
 
not identify any impairment indicators
 
during fiscal 2022 and therefore
 
did not recognize any impairment
 
losses related
to our
 
equity-accounted investments
 
during that
 
year.
 
We
 
performed impairment
 
assessments
 
during fiscal
 
2024 and
 
2023, for
 
our
investment in
 
Finbond Group
 
Limited “(Finbond”)
 
following the
 
identification of
 
certain impairment
 
indicators. The
 
results of
 
our
impairment tests
 
during fiscal
 
2024
 
and 2023,
 
resulted in
 
impairments of
 
$1.2 million
 
and $1.1
 
million, respectively,
 
related to
 
our
equity-accounted investments. These impairments are discussed in Note
 
9 to our audited consolidated financial
 
statements. On August
10, 2023, we, through our wholly owned subsidiary
 
Net1 Finance Holdings (Pty) Ltd, entered into an agreement
 
with Finbond to sell
our remaining shareholding to Finbond for a cash consideration of ZAR 64.2
 
million ($3.5 million), or ZAR 0.2911 per share.
 
36
For
 
fiscal
 
2024,
 
in
 
determining
 
the
 
fair
 
value
 
of
 
Finbond,
 
we
 
used
 
the
 
price
 
of
 
ZAR
 
0.2911
 
referenced
 
in
 
the
 
August
 
2023
agreement to calculate
 
the determined fair value
 
for Finbond. For
 
fiscal 2023, in determining
 
the fair value of
 
Finbond, as it is
 
listed
on the Johannesburg Stock Exchange, its market price as
 
of the impairment assessment dates, adjusted for a
 
liquidity discount of 25%.
We based our estimates on assumptions
 
we believe to be reasonable but that are unpredictable and inherently uncertain. The fair
value of
 
our investment
 
in Finbond
 
was sensitive
 
to movements
 
in its
 
market price,
 
which is
 
quoted in
 
ZAR, because
 
we used
 
the
market price as the basis of our valuation.
Deferred Taxation
We
 
estimate
 
our
 
tax
 
liability
 
through
 
the
 
calculations
 
done
 
for
 
the
 
determination
 
of
 
our
 
current
 
tax
 
liability,
 
together
 
with
assessing temporary
 
differences
 
resulting
 
from the
 
different
 
treatment of
 
items for
 
tax and
 
accounting purposes.
 
These differ
 
ences
result in deferred tax assets and liabilities which are disclosed on our balance
 
sheet.
 
Management then
 
has to assess
 
the likelihood
 
that deferred tax
 
assets are more
 
likely than not
 
to be realized
 
in the foreseeable
future. A valuation allowance is
 
created if it is determined
 
that a deferred tax asset will not
 
be realized in the foreseeable
 
future. Any
change to the valuation allowance
 
would be charged or
 
credited to income in the period
 
such determination is made. In
 
assessing the
need for a valuation allowance,
 
historical levels of income, expectations
 
and risks associated with estimates of
 
future taxable income
and
 
ongoing
 
prudent
 
and
 
practicable
 
tax
 
planning
 
strategies
 
are
 
considered.
 
During
 
fiscal
 
2024,
 
2023,
 
and
 
2022,
 
respectively
 
we
recorded a net decrease of $5.6 million,
 
$8.0 million and $1.7 million, to our
 
valuation allowance. As of June 30, 2024
 
and 2023, the
valuation allowance related to deferred tax assets was $114.7
 
million and $109.1 million, respectively.
Stock-based Compensation
Management is required to make estimates and assumptions related to our valuation and recording of stock-based
 
compensation
charges under
 
current accounting
 
standards. These standards
 
require all share-based
 
compensation to employees
 
to be recognized
 
in
the
 
statement
 
of
 
operations
 
based on
 
their
 
respective
 
grant date
 
fair
 
values
 
over
 
the requisite
 
service
 
periods
 
and
 
also
 
requires
 
an
estimation of forfeitures when calculating compensation expense.
 
We utilize the Cox Ross
 
Rubinstein binomial model to
 
measure the fair
 
value of stock
 
options granted to
 
employees and directors.
We
 
have also utilized
 
a bespoke adjusted Monte
 
Carlo simulation discounted
 
cash flow model to
 
measure the fair value
 
of restricted
stock with market
 
conditions granted to
 
employees and directors.
 
The stock-based compensation
 
cost related to
 
these valuations has
been
 
recognized
 
on
 
a
 
straight-line
 
basis.
 
These
 
valuation
 
models
 
require
 
estimates
 
of
 
a
 
number
 
of
 
key
 
valuation
 
inputs
 
including
expected volatility, expected dividend yield, expected term and
 
risk-free interest rate. Our
 
management has estimated forfeitures based
on
 
historic
 
employee
 
behavior
 
under
 
similar
 
compensation
 
plans.
 
The
 
fair
 
value
 
of
 
stock
 
options
 
is
 
affected
 
by
 
the
 
assumptions
selected. The fair value calculation is especially sensitive
 
to our valuation assumption with respect to expected volatility. For instance,
a 5% increase (to 53%) or 5% decrease (to 43%) in the expected volatility used (of 48%) to value stock options granted in June 2024,
would result
 
in a
 
charge that
 
was 11%
 
higher (if
 
53% were
 
used) or
 
11%
 
lower (if
 
43% were
 
used). Net
 
stock-based compensation
expense from continuing operations was $7.9 million, $7.3 million and $3.0
 
million for fiscal 2024, 2023 and 2022, respectively.
Accounts Receivable and Allowance for Credit Losses
We
use a lifetime loss rate by expressing
 
write-off experience as a percentage
 
of corresponding invoice amounts (as
 
opposed to
outstanding balances). The allowance for credit losses related to these receivables has been calculated by multiplying the lifetime loss
rate with recent invoice/origination amounts.
 
Prior to July 1, 2023, a specific provision is established where it is considered likely that all or a portion of the amount due from
customers
 
renting
 
safe
 
assets,
 
point
 
of
 
sale
 
(“POS”)
 
equipment,
 
receiving
 
support
 
and
 
maintenance
 
or
 
transaction
 
services
 
or
purchasing licenses
 
or SIM
 
cards from
 
us that
 
will not
 
be recovered.
 
Non-recoverability is
 
assessed based
 
on a
 
quarterly review
 
by
management of the
 
ageing of outstanding
 
amounts, the location and
 
the payment history of
 
the customer in relation
 
to those specific
amounts.
We use historical default experience over the lifetime of loans in order to calculate a lifetime loss
 
rate for our lending books. The
allowance for
 
credit losses related
 
to Consumer
 
finance loans receivables
 
is calculated by
 
multiplying the
 
lifetime loss rate
 
with the
month-end outstanding lending book.
 
Prior to July
 
1, 2023, we
 
regularly reviewed the
 
ageing of outstanding
 
amounts due from
 
borrowers and adjusted
 
its allowance
based
 
on
 
management’s
 
estimate
 
of
 
the
 
recoverability
 
of
 
the
 
finance
 
loans
 
receivable.
 
We
 
write
 
off
 
microlending
 
finance
 
loans
receivable and related service fees and
 
interest if a borrower is in arrears
 
with repayments for more than three months
 
or is deceased.
We write off merchant and working capital finance
 
receivables and related fees when
 
it is evident that
 
reasonable recovery procedures,
including where deemed necessary,
 
formal legal action, have failed.
 
37
Lending
Merchant lending
The allowance for credit losses related to Merchant finance loans receivables
 
is calculated by adding together actual receivables
in
 
default
 
plus
 
multiplying
 
the
 
lifetime
 
loss
 
rate
 
with
 
the
 
month-end
 
outstanding
 
lending
 
book.
 
Our
 
risk
 
management
 
procedures
include adhering to
 
our proprietary lending
 
criteria which
 
uses an
 
online-system loan application
 
process, obtaining necessary
 
customer
transaction-history
 
data
 
and
 
credit
 
bureau
 
checks.
 
We
 
consider
 
these
 
procedures
 
to
 
be
 
appropriate
 
because
 
it
 
takes
 
into
 
account
 
a
variety of factors such as the customer’s credit capacity and
 
customer-specific risk factors when originating a loan.
We
recently (in the past
 
three years) commenced lending
 
to merchant customers and
 
uses historical default experience
 
over the
lifetime of loans generated thus
 
far in order to calculate
 
a lifetime loss
 
rate for the lending book.
 
The allowance for credit losses
 
related
to these merchant finance loans receivables is calculated by adding together actual receivables in default plus multiplying the lifetime
loss
 
rate
 
with
 
the
 
month-end
 
outstanding
 
lending
 
book.
 
The
 
lifetime
 
loss
 
rate
 
as
 
of
 
each of
 
July
 
1,
 
2023
 
and
 
June
 
30,
 
2024,
 
was
approximately 1.18%.
 
The performing
 
component (that
 
is, outstanding
 
loan payments
 
not in
 
arrears), under-performing
 
component
(that is, outstanding loan payments that are in arrears)
 
and non-performing component (that is, outstanding loans
 
for which payments
appeared to have ceased) of the book represents approximately 84%, 15% and 1%, respectively, of the outstanding lending book as of
June 30, 2024.
Prior to
 
July 1, 2023,
 
we maintained
 
an allowance
 
for credit
 
losses -
 
finance loans
 
receivable related
 
to our Merchant
 
services
segment
 
with
 
respect
 
to
 
short-term
 
loans
 
to
 
qualifying
 
merchant
 
customers.
 
Our
 
policy
 
was
 
to
 
regularly
 
review
 
the
 
ageing
 
of
outstanding
 
amounts due
 
from these
 
merchants and
 
an allowance
 
is created
 
for the
 
full amount
 
outstanding if
 
the customer
 
was in
arrears for more than 15 days. We wrote off loans and related interest and fees when it is evident that reasonable recovery procedures,
including where deemed necessary,
 
formal legal action, had failed.
Consumer microlending
The allowance for credit
 
losses related to Consumer finance
 
loans receivables is calculated
 
by multiplying the lifetime
 
loss rate
with
 
the
 
month-end
 
outstanding
 
lending
 
book.
 
Loans
 
to
 
customers
 
have
 
a
 
tenor
 
of
 
up
 
to
 
six
 
months,
 
with
 
the
 
majority
 
of
 
loans
originated having a
 
tenor of six months.
 
Credit bureau checks
 
as well as an
 
affordability test are
 
conducted as part
 
of the origination
process, both
 
of which
 
are in
 
line with
 
local regulations.
 
We
 
consider this
 
policy to
 
be appropriate
 
because the
 
affordability
 
test it
performs takes into account a variety of factors such
 
as other debts and total expenditures on normal
 
household and lifestyle expenses.
Additional allowances
 
may be
 
required should
 
the ability
 
of its
 
customers to
 
make payments
 
when due
 
deteriorate in
 
the future.
 
A
significant amount
 
of judgment is
 
required to
 
assess the ultimate
 
recoverability of
 
these finance loan
 
receivables, including
 
ongoing
evaluation of the creditworthiness of each customer.
We
have operated this
 
lending book for
 
more than five
 
years and use
 
historical default experience
 
over the lifetime
 
of loans in
order to calculate a lifetime loss rate for the lending book.
We
analyze this lending book as a single portfolio because the loans within
the portfolio
 
have similar characteristics
 
and management
 
uses similar processes
 
to monitor
 
and assess the
 
credit risk of
 
the lending
book. The allowance for credit losses related to these microlending finance loans receivables is calculated
 
by multiplying the lifetime
loss rate with the month end outstanding lending book. The
 
lifetime loss rate as of each
 
of July 1, 2023 and June 30, 2024,
 
was 6.50%.
The performing
 
component
 
(that is,
 
outstanding
 
loan payments
 
not in
 
arrears)
 
of the
 
book exceeds
 
more than
 
98% of
 
outstanding
lending book as of June 30, 2024.
Prior to July
 
1, 2023, we
 
maintained an allowance
 
for credit losses
 
- finance loans
 
receivable related to
 
our Consumer services
segment with respect
 
to short-term loans
 
to qualifying customers.
 
Our policy was
 
to regularly review
 
the ageing
 
of outstanding amounts
due from
 
borrowers and
 
adjust the
 
provision based
 
on management’s
 
estimate of
 
the recoverability
 
of finance
 
loans receivable.
 
We
wrote off microlending loans and related service fees if
 
a borrower is in arrears with repayments for more than three months or dies.
Recent Accounting Pronouncements
Recent accounting pronouncements adopted
Refer
 
to
 
Note
 
2 of
 
our
 
audited consolidated
 
financial
 
statements for
 
a full
 
description
 
of recent
 
accounting
 
pronouncements,
including the dates of adoption and effects on financial
 
condition, results of operations and cash flows.
 
Recent accounting pronouncements not yet adopted as of June 30, 2024
Refer to Note 2
 
of our audited consolidated
 
financial statements for a
 
full description of recent
 
accounting pronouncements not
yet adopted as of June 30, 2024, including the expected dates of adoption and effects on financial condition, results of operations and The actual exchange rates for and at the end of the periods presented were as follows:
cash flows.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
form10kp40i0
38
Currency Exchange Rate Information
 
Actual exchange rates
Table 1
June 30,
2024
2023
2022
ZAR : $ average exchange rate
 
18.7070
17.7641
15.2154
Highest ZAR : $ rate during period
 
19.4568
19.7558
16.2968
Lowest ZAR : $ rate during period
 
17.6278
16.2034
14.1630
Rate at end of period
 
18.1808
18.8376
16.2903
Translation Exchange Rates
We are required
 
to translate our results of operations from ZAR to U.S. dollars on a monthly
 
basis. Thus, the average rates used
to translate this data for the years ended June 30, 2024, 2023 and 2022, vary slightly from the averages shown in the table above. The
translation rates we use in presenting our results of operations are the rates shown
 
in the following table:
Table 2
June 30,
2024
2023
2022
Income and expense items: $1 = ZAR
 
18.6844
17.9400
15.1978
Balance sheet items: $1 = ZAR
 
18.1808
18.8376
16.2903
We have translated the results of operations and operating segment information for the year
 
ended June 30, 2024, provided in the
tables below
 
using the
 
actual average
 
exchange rates
 
per month
 
between the
 
USD and
 
ZAR in order
 
to reduce
 
the reconciliation
 
of
information presented to our chief operating
 
decision maker. The impact of
 
using this method compared with the average rate
 
for the
quarter and year to date is not significant, however, it does result in minor differences.
 
We believe that presentation using
 
the average
exchange
 
rates
 
per
 
month
 
compared
 
with
 
the
 
average
 
exchange
 
rate
 
per
 
quarter
 
and
 
for
 
the
 
year
 
improves
 
the
 
accuracy
 
of
 
the
information presented in our
 
external financial reporting and
 
leads to fewer
 
differences between our external reporting
 
measures which
are supplementally presented in ZAR, and our internal management
 
information, which is also presented in ZAR.
 
39
Results of operations
The
 
discussion
 
of our
 
consolidated overall
 
results of
 
operations is
 
based on
 
amounts
 
as reflected
 
in our
 
audited consolidated
financial statements which are prepared in accordance
 
with U.S. GAAP.
 
We analyze our
 
results of operations both in U.S. dollars, as
presented in the audited consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the
entities which contribute the majority of our results and is the currency in which
 
the majority of our transactions are initially incurred
and
 
measured.
 
Presentation
 
of
 
our
 
reported
 
results
 
in
 
ZAR
 
is
 
a
 
non-GAAP
 
measure.
 
Due
 
to
 
the
 
significant
 
impact
 
of
 
currency
fluctuations between
 
the U.S. dollar
 
and ZAR on
 
our reported
 
results and
 
because we
 
use the
 
U.S. dollar as
 
our reporting
 
currency,
we believe that
 
the supplemental presentation
 
of our results
 
of operations in
 
ZAR is useful
 
to investors to
 
understand the changes
 
in
the underlying trends of our business.
 
Our
 
operating
 
segment
 
revenue
 
presented
 
in
 
“—Results
 
of
 
operations
 
by
 
operating
 
segment”
 
represents
 
total
 
revenue
 
per
operating segment before intercompany
 
eliminations. A reconciliation between
 
total operating segment revenue and
 
revenue, as well
as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our audited
consolidated financial statements in Note
 
21 to those statements. Our chief operating
 
decision maker was our Group Chief
 
Executive
Officer until
 
February 29, 2024
 
and has been
 
our Executive Chairman
 
since March 1,
 
2024, and our
 
Group Chief Executive
 
Officer
evaluated and our
 
Executive Chairman evaluates,
 
respectively,
 
segment performance based
 
on segment earnings
 
before interest, tax,
depreciation
 
and amortization
 
(“EBITDA”),
 
adjusted for
 
items mentioned
 
in the
 
next sentence
 
(“Segment Adjusted
 
EBITDA”) for
each operating
 
segment. We
 
do not allocate
 
once-off items
 
(as defined below),
 
stock-based compensation
 
charges, depreciation
 
and
amortization,
 
impairment
 
of goodwill
 
or other
 
intangible assets,
 
certain
 
lease
 
expenses
 
(“Lease expenses”),
 
other
 
items
 
(including
gains or
 
losses on
 
disposal of
 
investments,
 
fair value
 
adjustments to
 
equity
 
securities, fair
 
value
 
adjustments
 
to currency
 
options),
interest income, interest expense, income tax expense or loss
 
from equity-accounted investments to our reportable segments. Once-off
items represents non-recurring expense
 
items, including costs related to
 
acquisitions and transactions consummated
 
or ultimately not
pursued. The Lease
 
expenses reflect lease
 
expenses (refer to
 
Note 8 to
 
our audited consolidated
 
financial statements)
 
and the Stock-
based compensation
 
adjustments reflect
 
stock-based compensation
 
expense and
 
are both
 
excluded from
 
the calculation
 
of Segment
Adjusted EBITDA and
 
are therefore reported
 
as reconciling items to
 
reconcile the reportable
 
segments’ Segment Adjusted
 
EBITDA
to our loss before income tax expense.
Group Adjusted
 
EBITDA represents
 
Segment
 
Adjusted EBITDA
 
after deducting
 
Lease expenses
 
and group
 
costs. Refer
 
also
“Results of Operations—Use of Non-GAAP Measures” below.
Fiscal 2024
 
and 2023 includes
 
Connect for
 
the entire fiscal
 
year and
 
fiscal 2022
 
includes consolidation
 
of Connect
 
from April
14, 2022. Refer also to Note 3 to the audited consolidated financial statements for
 
additional information regarding this transaction.
We analyze our business and operations in terms of two
 
inter-related but independent operating segments: (1) Merchant Division
and (2)
 
Consumer Division.
 
In addition,
 
corporate activities
 
that are
 
impracticable to
 
allocate directly
 
to the
 
operating segments,
 
as
well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included
 
in Eliminations.
 
Fiscal 2024 Compared to Fiscal 2023
The following factors had
 
a significant influence on
 
our results of
 
operations during fiscal 2024
 
as compared with
 
the same period
in the prior year:
●
Higher revenue:
Our revenues increased by 11.4% in ZAR, primarily due to an increase in low margin prepaid airtime sales
and other value-added
 
services, as well as
 
higher transaction, insurance
 
and lending revenues, which
 
was partially offset
 
by
lower hardware sales revenue in our POS hardware distribution business given
 
the lumpy nature of bulk sales;
●
Operating
 
income
 
generated:
Operating
 
profitability
 
was
 
achieved
 
following
 
years
 
of
 
operating
 
losses
 
as
 
a
 
result
 
of the
various cost reduction initiatives in Consumer implemented in prior periods as well as the contribution
 
from Connect;
●
Higher net interest charge:
 
The net interest
 
charge increased to
 
ZAR 311.2
 
million from ZAR 299.9
 
million primarily due
to higher interest rates;
●
Significant transaction costs:
 
We expensed $2.3 million of transaction costs related to the Adumo transaction in fiscal 2024;
and
●
Foreign exchange movements:
 
The U.S. dollar was 4.1% stronger against the ZAR during fiscal
 
2024 compared to the prior
period, which adversely impacted our U.S. dollar reported results.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40
Consolidated overall results of operations
This discussion is based on the amounts prepared in accordance with U.S. GAAP.
The following tables show the changes in the items comprising our statements of operations,
 
both in U.S. dollars and in ZAR:
 
Table 3
In U.S. Dollars
Year
 
ended June 30,
2024
2023
$ %
 
$ ’000
$ ’000
change
Revenue
 
564,222
527,971
7%
Cost of goods sold, IT processing, servicing and support
 
442,673
417,544
6%
Selling, general and administration
 
92,001
95,050
(3%)
Depreciation and amortization
 
23,665
23,685
(0%)
Impairment loss
-
7,039
nm
Transaction costs related to Adumo transaction
2,293
-
nm
Operating income (loss)
3,590
(15,347)
nm
Reversal of allowance for EMI doubtful debt receivable
250
-
nm
Loss on disposal of equity-accounted investment
-
205
nm
Interest income
 
2,294
1,853
24%
Interest expense
 
18,932
18,567
2%
Loss before income tax expense (benefit)
(12,798)
(32,266)
(60%)
Income tax expense (benefit)
 
3,363
(2,309)
nm
Net loss before loss from equity-accounted investments
 
(16,161)
(29,957)
(46%)
Loss from equity-accounted investments
 
(1,279)
(5,117)
(75%)
Net loss attributable to us
 
(17,440)
(35,074)
(50%)
Table 4
In South African Rand
Year
 
ended June 30,
2024
2023
ZAR %
 
ZAR ’000
ZAR ’000
change
Revenue
 
10,553,233
9,471,800
11%
Cost of goods sold, IT processing, servicing and support
 
8,280,262
7,490,739
11%
Selling, general and administration
 
1,720,585
1,705,196
1%
Depreciation and amortization
 
442,570
424,909
4%
Impairment loss
-
126,280
nm
Transaction costs related to Adumo transaction
42,561
-
nm
Operating income (loss)
67,255
(275,324)
nm
Reversal of allowance for EMI doubtful debt receivable
4,741
-
nm
Loss on disposal of equity-accounted investment
-
3,678
nm
Interest income
 
42,896
33,243
29%
Interest expense
 
354,048
333,092
6%
Loss before income tax expense (benefit)
(239,156)
(578,851)
(59%)
Income tax expense (benefit)
 
62,616
(41,423)
nm
Net loss before loss from equity-accounted investments
 
(301,772)
(537,428)
(44%)
Loss from equity-accounted investments
 
(24,298)
(91,799)
(74%)
Net loss attributable to us
 
(326,070)
(629,227)
(48%)
Revenue increased by $36.3 million (ZAR 1.1 billion), or 6.9% (in ZAR, 11.4%),
 
primarily due to the increase in the number of
low-margin
 
prepaid
 
airtime
 
vouchers
 
sold
 
and
 
an
 
increase
 
in
 
volume
 
of
 
other
 
value-added
 
services
 
provided,
 
as
 
well
 
as
 
higher
transaction volumes processed, insurance premiums collected
 
and lending revenues following an increase in loan
 
originations, which
was partially offset
 
by a lower
 
number of
 
hardware sales in
 
our POS hardware
 
distribution business
 
given the
 
lumpy nature of
 
bulk
sales. Refer to discussion above at “—Recent Developments”
 
for a description of key trends impacting our revenue this fiscal year.
 
41
Cost of goods sold, IT processing, servicing and
 
support increased by $25.1 million (ZAR
 
0.8 billion), or 6.0% (in ZAR,
 
10.5%),
primarily due to
 
the increase in low
 
margin prepaid airtime
 
sales, which were
 
partially offset by
 
the lower cost of
 
goods sold related
to fewer hardware sales.
Selling, general and
 
administration expenses decreased
 
by $3.0 million
 
(in USD 3.2%),
 
and increased by
 
ZAR 15.4 million
 
(in
ZAR, 0.9%)
 
.
 
In ZAR,
 
the modest
 
increase
 
was primarily
 
due to
 
higher employee
 
-related expenses
 
related
 
to the
 
expansion of
 
our
senior management team and the year-over-year
 
impact of inflationary increases on employee-related
 
expenses, which were partially
offset by the benefits of various cost reduction initiatives in Consumer
 
.
Depreciation and amortization expense decreased by $0.02
 
million (in USD, 0.1%),
 
and increased by ZAR 17.7 million
 
(in ZAR,
4.2%).
 
In ZAR, the increase was due to an increase in depreciation expense related to additional POS devices
 
deployed.
During fiscal 2023, we
 
recorded an impairment loss
 
of $7.0 million related
 
to the impairment of
 
our hardware/ software supply
business
 
unit’s
 
allocated
 
goodwill.
 
Refer
 
to
 
Note
 
10
 
of
 
our
 
audited
 
consolidated
 
financial
 
statements
 
for
 
additional
 
information
regarding these impairment losses.
Transaction costs related to Adumo
 
acquisition includes fees
 
paid to external
 
service providers associated
 
with legal, commercial,
financial and tax due
 
diligence activities performed,
 
fees paid to legal advisors
 
to draft the purchase
 
agreement as well as
 
other legal
and advisory services procured related to the transaction.
Our operating income
 
(loss) margin in
 
fiscal 2024 and 2023
 
was 0.6% and (2.9%),
 
respectively.
 
We
 
discuss the components of
operating loss margin under “—Results of operations
 
by operating segment.”
 
We
 
did
 
not
 
record
 
any
 
changes
 
in
 
the
 
fair
 
value
 
of
 
equity
 
interests
 
in
 
MobiKwik
 
and
 
Cell
 
C
 
during
 
fiscal
 
2024
 
and
 
2023,
respectively.
 
We continue
 
to carry our investment
 
in Cell C at $0
 
(zero). Refer to Note
 
9 to our consolidated financial
 
statements for
the methodology
 
and inputs used
 
in the fair
 
value calculation for
 
MobiKwik and Note
 
6 for the
 
methodology and
 
inputs used in
 
the
fair value calculation for Cell C.
During fiscal 2024, we
 
received an outstanding amount
 
of $0.3 million related
 
to the sale
 
of Carbon in fiscal
 
2023, which resulted
in the reversal
 
of an allowance
 
for doubtful
 
loans receivable
 
of $0.3
 
million recorded
 
in fiscal 2023.
 
We
 
recorded a
 
net loss of
 
$0.2
million comprising a
 
loss of $0.4 million
 
related to the disposal of
 
a minor portion of
 
our investment in Finbond
 
and a $0.25 million
gain related to the disposal of our entire interest in Carbon during fiscal 2023. Refer
 
to Note 9 to our consolidated financial statements
for additional information regarding these disposals.
Interest on
 
surplus cash
 
increased to
 
$2.3 million
 
(ZAR 42.9
 
million) from
 
$1.9 million
 
(ZAR 33.2
 
million), primarily
 
due to
higher interest rates.
Interest expense increased
 
to $18.9 million
 
(ZAR 354.0 million)
 
from $18.6 million
 
(ZAR 333.1 million),
 
primarily as a
 
result
of higher overall
 
interest rates and
 
higher overall borrowings
 
during fiscal 2024
 
compared with comparable
 
period in the
 
prior year,
which was partially offset by lower interest
 
expense incurred on certain of our borrowings
 
for which we were able to negotiate lower
rates of interest during the latter half of fiscal 2023 and again towards the end
 
of calendar 2023.
Fiscal 2024 tax
 
expense was $3.4
 
million (ZAR 62.6
 
million) compared to
 
a tax benefit
 
of $(2.3) million
 
(ZAR (41.4) million)
in
 
fiscal
 
2023.
 
Our
 
effective
 
tax
 
rate
 
for
 
fiscal
 
2024
 
was
 
impacted
 
by
 
the
 
tax
 
expense
 
recorded
 
by
 
our
 
profitable
 
South
 
African
operations, a
 
deferred tax
 
benefit related
 
to acquisition-related
 
intangible asset
 
amortization, non-deductible
 
expenses, the
 
on-going
losses incurred by certain
 
of our South African businesses and
 
the associated valuation allowances created
 
related to the deferred tax
assets recognized regarding net operating losses incurred by these entities.
Our effective
 
tax rate for
 
fiscal 2024 was impacted
 
by a reduction
 
in the enacted
 
South African corporate
 
income tax rate from
28% to 27% from January 2023 (but backdated to July 1, 2022), the tax expense recorded by our profitable South African operations,
a
 
deferred
 
tax
 
benefit
 
related
 
to
 
acquisition-related
 
intangible
 
asset
 
amortization,
 
non-deductible
 
expenses,
 
a
 
deferred
 
tax
 
benefit
related to an expense paid by Connect before
 
we acquired the business and which subsequently has been
 
determined to be deductible
for
 
tax purposes,
 
the on-going
 
losses incurred
 
by certain
 
of our
 
South
 
African
 
businesses and
 
the associated
 
valuation
 
allowances
created related to the deferred tax assets recognized regarding net operating
 
losses incurred by these entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
42
Finbond is listed on the Johannesburg Stock Exchange
 
and reports its six-month results during
 
our first half and its
 
annual results
during our fourth quarter.
 
We sold
 
our entire remaining interest in
 
Finbond during the second
 
quarter of fiscal 2024.
We
recorded an
impairment loss related to our
 
investment in Finbond in fiscal
 
2024 as the carrying value
 
of Finbond exceeded the fair
 
value of holding
in Finbond
 
using the
 
price of
 
ZAR 0.2911
 
per share
 
referenced in
 
the August
 
2023 agreement
 
with Finbond.
 
We
 
also recorded
 
an
impairment loss in fiscal 202
 
3
 
following on-going losses reported
 
by Finbond and its lower
 
listed share price.
 
Refer to Note 9 to
 
our
consolidated financial statements for additional information
 
regarding the impairments.
 
The table below
 
presents the relative loss
 
from
our equity accounted investments:
Table 5
Year
 
ended June 30,
2024
2023
$ %
$ ’000
$ ’000
change
Finbond
(1,445)
(5,206)
(72%)
Share of net (loss) income
 
(278)
(4,096)
(93%)
Impairment
(1,167)
(1,110)
5%
Other
166
89
87%
Share of net income (loss)
166
89
87%
Total
 
loss from equity-accounted investment
(1,279)
(5,117)
(75%)
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
 
(loss) income are illustrated below:
 
Table 6
In U.S. Dollars
Year
 
ended June 30,
2024
% of
2023
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
498,314
89%
463,701
88%
7%
Consumer
69,211
12%
62,801
12%
10%
Subtotal: Operating segments
 
567,525
101%
526,502
100%
8%
Not allocated to operating segments
-
-
1,469
-
nm
Corporate/Eliminations
 
(3,303)
(1%)
-
-
nm
Total
 
consolidated revenue
 
564,222
100%
527,971
100%
7%
Group Adjusted EBITDA:
Merchant
(1)
33,368
90%
33,531
135%
(0%)
Consumer
(1)
14,650
40%
3,314
13%
342%
Lease expenses
(2)
(3,238)
(9%)
(2,906)
(11%)
11%
Group costs
(7,844)
(21%)
(9,109)
(37%)
(14%)
Group Adjusted EBITDA (non-GAAP)
(3)
36,936
100%
24,830
100%
49%
(1) Segment Adjusted EBITDA for Merchant includes retrenchments costs of $0.3 million and Consumer includes retrenchment
costs of $0.2 million for fiscal 2024.
(2) Lease expenses
 
which were previously
 
excluded from the
 
calculation of Group
 
Adjusted EBITDA have
 
now been included
in the calculation. This change is
 
in response to comments received from
 
the staff of the SEC in
 
March 2024 regarding our non-GAAP
financial reporting. Comparative information has been adjusted to conform
 
with the updated presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below
 
at “—Results of Operations—Use of Non-
GAAP Measures”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
43
Table 7
In South African Rand
Year
 
ended June 30,
2024
% of
2023
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
9,320,468
89%
8,318,796
88%
12%
Consumer
1,294,632
12%
1,126,650
12%
15%
Subtotal: Operating segments
 
10,615,100
101%
9,445,446
100%
12%
Not allocated to operating segments
-
-
26,354
-
nm
Corporate/Eliminations
 
(61,867)
(1%)
-
-
nm
Total
 
consolidated revenue
 
10,553,233
100%
9,471,800
100%
11%
Group Adjusted EBITDA:
Merchant
(1)
624,111
90%
601,546
135%
4%
Consumer
(1)
274,190
40%
59,453
13%
361%
Lease expenses
(2)
(60,543)
(9%)
(52,134)
(11%)
16%
Group costs
(146,815)
(21%)
(163,415)
(37%)
(10%)
Group Adjusted EBITDA (non-GAAP)
(3)
690,943
100%
445,450
100%
55%
(1)
 
Segment
 
Adjusted
 
EBITDA
 
for
 
Merchant
 
includes
 
retrenchments
 
costs
 
of
 
ZAR
 
4.9
 
million
 
and
 
Consumer
 
includes
retrenchment costs of ZAR 3.5 million for fiscal 2024.
(2) Lease expenses
 
which were previously
 
excluded from the
 
calculation of Group
 
Adjusted EBITDA have
 
now been included
in the calculation. This change is
 
in response to comments received from
 
the staff of the SEC in
 
March 2024 regarding our non-GAAP
financial reporting. Comparative information has been adjusted to conform
 
with the updated presentation.
(3) Group Adjusted EBITDA
 
is a non-GAAP measure, refer
 
to reconciliation below at
 
“—Results of Operations—Use of
 
Non-
GAAP Measures”.
Merchant
Segment revenue increased due to the increase in prepaid airtime vouchers
 
sold and other value-added services provided, which
was partially offset
 
by a lower
 
number of
 
hardware sales in
 
our POS hardware
 
distribution business
 
given the
 
lumpy nature of
 
bulk
sales as
 
well as
 
lower revenue
 
generated
 
from a
 
decrease
 
in certain
 
valued-added
 
services transaction
 
volumes processed
 
(such
 
as
international money transfers). In ZAR, the increase in Segment Adjusted EBITDA
 
is primarily due to the higher sales activity, which
was partially offset by lower hardware sales
 
Prepaid airtime sales
In South Africa and other countries, mobile network operators (“MNOs”) offer prepaid or contract (or postpaid) services to their
customers to telephony
 
services using a
 
mobile telephony network
 
or networks. MNOs
 
also offer similar
 
products (prepaid or
 
postpaid)
for mobile data
 
which uses other
 
wireless network protocols
 
such as wireless
 
fidelity (“wifi”).
 
We
 
use the term
 
“prepaid airtime”
 
to
include both of these prepaid products.
 
Generally speaking, the difference between the two
 
models is that prepaid is
 
paid for upfront by the
 
customer and contract is paid
in arrears. MNOs sell prepaid products directly to their customers and also indirectly
 
to their customers through distribution channels
(which include wholesalers, retailers and other parties, including ourselves).
We sell
 
a variety of products through our
 
distribution channels, including prepaid airtime,
 
prepaid electricity,
 
gaming vouchers.
We refer to these
 
products collectively as VAS.
In order to “load” airtime onto
 
a mobile device an MNOs customer
 
requires a prepaid airtime voucher. A unique code is
 
assigned
to each prepaid
 
airtime voucher and
 
is required to
 
activate the prepaid
 
airtime on a
 
mobile device. Like
 
certain tangible goods,
 
once
sold, our
 
customers cannot
 
return prepaid
 
airtime vouchers
 
to us (except
 
of course
 
if there is
 
a defect
 
in the
 
service provided
 
by us,
which rarely occurs).
We
 
can either
 
purchase an
 
agreed quantity
 
of prepaid
 
airtime vouchers
 
upfront directly
 
from
 
wholesalers or
 
other parties
 
(so
called “Pinned airtime” - these electronic vouchers are stored
 
on a server owned and maintained by us and we treat
 
these vouchers as
inventory)
 
or
 
we
 
can
 
“interface”
 
directly
 
into
 
a
 
wholesaler
 
and
 
deliver
 
the
 
airtime
 
voucher
 
directly
 
to
 
our
 
customers
 
(typically
merchants) as the airtime is sold by the merchant to MNOs customers (so called Pinless airtime).
 
 
44
Our Segment
 
Adjusted EBITDA
 
(loss) margin
 
(calculated as
 
Segment Adjusted
 
EBITDA (loss)
 
divided by
 
revenue) in
 
fiscal
2024 and 2023 was 6.7% and 7.2%, respectively.
Consumer
Segment revenue increased
 
primarily due to
 
more transaction fees
 
generated from the
 
higher EPE account
 
holders base, higher
insurance revenues, and an increase
 
in lending revenue as
 
a result of an
 
increase in loan originations.
 
This increase in revenue,
 
together
with the cost reduction
 
initiatives initiated in fiscal
 
2022 and through
 
fiscal 2023, have
 
translated into a turnaround
 
in the Consumer
Division and
 
the realization
 
of sustained
 
positive Segment
 
Adjusted EBITDA
 
in fiscal
 
2024 compared
 
with fiscal
 
2023. Consumer
Segment Adjusted
 
EBITDA during
 
fiscal 2024
 
was also
 
impacted by
 
higher credit
 
losses (as
 
a result
 
of an increase
 
in originations)
and higher insurance-related claims (as a result of a higher number of
 
insurance policies) compared with fiscal 2023.
Our Segment Adjusted EBITDA margin in fiscal 2024
 
and 2023
 
was 21.2% and 5.3%, respectively.
Group costs
Our group
 
costs primarily
 
include employee
 
related costs
 
in relation
 
to employees
 
specifically hired
 
for group
 
roles and
 
costs
related
 
directly
 
to
 
managing
 
the
 
US-listed
 
entity;
 
expenditures
 
related
 
to
 
compliance
 
with
 
the
 
Sarbanes-Oxley
 
Act
 
of
 
2002;
 
non-
employee directors’ fees; legal fees; group and US-listed related audit
 
fees; and directors’ and officers’ insurance premiums.
Our group costs for
 
fiscal 2024 decreased compared
 
with the prior period
 
due to lower external
 
audit, legal and consulting
 
fees
and lower provision for executive bonuses, which was partially offset
 
by higher employee costs and travel expenses.
Fiscal 2023 Compared to Fiscal 2022
The following factors had
 
a significant influence on
 
our results of
 
operations during fiscal
 
2023 as compared with
 
the same period
in the prior year:
●
Higher revenue:
Our revenues
 
increased by
 
180.0% in
 
ZAR, primarily
 
due to
 
the contribution
 
from Connect
 
in Merchant
and an increase in account fees and insurance revenues in Consumer;
●
Lower operating
 
losses:
Operating
 
losses decreased,
 
delivering
 
an improvement
 
of 55%
 
in ZAR
 
compared
 
with the
 
prior
period
 
primarily
 
due
 
to
 
the
 
contribution
 
from
 
Connect,
 
strong
 
hardware
 
sales,
 
and
 
the
 
implementation
 
of
 
various
 
cost
reduction
 
initiatives
 
in
 
Consumer,
 
which
 
was
 
partially
 
offset
 
by
 
an
 
increase
 
in
 
acquisition
 
related
 
intangible
 
asset
amortization;
●
Higher
 
net
 
interest
 
charge:
 
The
 
net
 
interest
 
charge
 
increased
 
to
 
ZAR
 
299.9
 
million
 
from
 
ZAR
 
56.9
 
million
 
due
 
to
 
the
additional borrowings
 
incurred in
 
order to
 
fund the
 
acquisition of
 
Connect as
 
well as
 
the debt
 
acquired within
 
the Connect
business itself;
●
Significant transaction costs:
 
We expensed $6.0 million of transaction
 
costs related to
 
the Connect acquisition in
 
fiscal 2022;
and
●
Foreign exchange movements:
The U.S. dollar was 18.0% stronger against the ZAR during fiscal 2023, which impacted our The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR:
reported results.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45
Table 8
In U.S. Dollars
Year
 
ended June 30,
2023
2022
$ %
 
$ ’000
$ ’000
change
Revenue
 
527,971
222,609
137%
Cost of goods sold, IT processing, servicing and support
 
417,544
168,317
148%
Selling, general and administration
 
95,050
74,993
27%
Depreciation and amortization
 
23,685
7,575
213%
Impairment loss
7,039
-
nm
Reorganization costs
-
5,894
nm
Transaction costs related to Connect acquisition
-
6,025
nm
Operating loss
(15,347)
(40,195)
(62%)
Gain related to fair value adjustment to currency options
-
3,691
nm
Loss on disposal of equity-accounted investment
205
376
(45%)
Gain on disposal of equity securities
-
720
nm
Interest income
 
1,853
2,089
(11%)
Interest expense
 
18,567
5,829
219%
Loss before income tax (benefit) expense
 
(32,266)
(39,900)
(19%)
Income tax (benefit) expense
(2,309)
327
nm
Net loss before loss from equity-accounted investments
 
(29,957)
(40,227)
(26%)
Loss from equity-accounted investments
 
(5,117)
(3,649)
40%
Net loss attributable to us
 
(35,074)
(43,876)
(20%)
Table 9
In South African Rand
(US GAAP)
Year
 
ended June 30,
2023
2022
ZAR %
 
ZAR ’000
ZAR ’000
change
Revenue
 
9,471,800
3,383,166
180%
Cost of goods sold, IT processing, servicing and support
 
7,490,739
2,558,047
193%
Selling, general and administration
 
1,705,196
1,139,728
50%
Depreciation and amortization
 
424,909
115,123
269%
Impairment loss
126,280
-
nm
Reorganization costs
-
89,576
nm
Transaction costs related to Connect acquisition
-
91,567
nm
Operating loss
(275,324)
(610,875)
(55%)
Gain related to fair value adjustment to currency options
-
56,095
nm
Loss on disposal of equity-accounted investment
3,678
5,714
(36%)
Gain on disposal of equity securities
-
10,942
nm
Interest income
 
33,243
31,748
5%
Interest expense
 
333,092
88,587
276%
Loss before income tax (benefit) expense
 
(578,851)
(606,391)
(5%)
Income tax (benefit) expense
(41,423)
4,970
nm
Net loss before loss from equity-accounted investments
 
(537,428)
(611,361)
(12%)
Loss from equity-accounted investments
 
(91,799)
(55,457)
66%
Net loss attributable to us
 
(629,227)
(666,818)
(6%)
Revenue increased by $305.4 million (ZAR 6.1 billion), or 137.2% (in ZAR, 180.0%), primarily due to the inclusion of Connect
for
 
the entire
 
fiscal year,
 
which has
 
substantial low
 
margin
 
prepaid
 
airtime sales
 
in addition
 
to its
 
core processing
 
revenue and
 
an
increase in account fees and insurance revenues.
 
 
46
Cost of
 
goods sold,
 
IT processing,
 
servicing and
 
support increased
 
by $249.2
 
million (ZAR
 
4.9 billion),
 
or 148.1%
 
(in ZAR,
192.8%), primarily due to the inclusion of Connect,
 
which were partially offset by the benefits of
 
various cost reduction initiatives in
Consumer and lower insurance-related claims.
Selling, general and administration expenses increased by $20.1 million (ZAR 0.6 billion), or 26.7% (in ZAR, 49.6%), primarily
due
 
to
 
higher
 
employee-related
 
expenses
 
related
 
to
 
the
 
expansion
 
of
 
our
 
senior
 
management
 
team,
 
the
 
year-over-year
 
impact
 
of
inflationary
 
increases
 
on
 
employee-related
 
expenses
 
and
 
the
 
inclusion
 
of
 
expenses
 
related
 
to
 
Connect’s
 
operations,
 
which
 
were
partially offset by the benefits of various cost reduction initiatives in Consumer.
Depreciation and
 
amortization expense
 
increased by
 
$16.1 million
 
(ZAR 309.8
 
million), or
 
212.7% (in
 
ZAR, 269.1%),
 
due to
the
 
inclusion
 
of
 
acquisition-related
 
intangible
 
asset
 
amortization
 
related
 
to
 
intangible
 
assets
 
identified
 
pursuant
 
to
 
the
 
Connect
acquisition, as well as the inclusion of depreciation expense related to
 
Connect’s property,
 
plant and equipment.
During fiscal 2023, we
 
recorded an impairment loss
 
of $7.0 million related
 
to the impairment of
 
our hardware/ software supply
business
 
unit’s
 
allocated
 
goodwill.
 
Refer
 
to
 
Note
 
10
 
of
 
our
 
audited
 
consolidated
 
financial
 
statements
 
for
 
additional
 
information
regarding these impairment losses.
We embarked on a retrenchment process on January 10, 2022, and incurred reorganization expenses of $5.9 million during fiscal
2022.
Transaction
 
costs related
 
to Connect
 
acquisition in
 
fiscal 2022
 
includes fees
 
paid to
 
external service
 
providers associated
 
with
the contract drafting and negotiations; corporate finance advisory services; legal, financial and tax due diligence
 
activities performed;
warranty and
 
indemnity insurance
 
related to the
 
transaction; and other
 
advisory services procured;
 
as well as
 
our portion
 
of the fees
paid to competition authorities related to the regulatory filings made in
 
various jurisdictions.
Our operating loss
 
margin in fiscal
 
2023
 
and 2022
 
was
 
(2.9%) and
 
(18.1%), respectively.
We
discuss the
 
components of operating
loss margin under “—Results of operations by operating
 
segment.”
 
We
 
did
 
not
 
record
 
any
 
changes
 
in
 
the
 
fair
 
value
 
of
 
equity
 
interests
 
in
 
MobiKwik
 
and
 
Cell
 
C
 
during
 
fiscal
 
2023
 
and
 
2022,
respectively.
 
We continue
 
to carry our investment
 
in Cell C at $0
 
(zero). Refer to Note
 
9 to our consolidated financial
 
statements for
the methodology
 
and inputs used
 
in the fair
 
value calculation for
 
MobiKwik and Note
 
6 for the
 
methodology and
 
inputs used in
 
the
fair value calculation for Cell C.
Gain related to fair value adjustment to currency options
 
represents the realized gain related to foreign exchange
 
option contracts
entered into in November 2021
 
in order to manage the risk of
 
currency volatility and to fix
 
the USD amount to be utilized
 
for part of
the Connect purchase
 
consideration settlement. The
 
foreign exchange option
 
contracts matured on
 
February 24, 2022.
 
Refer to Note
6 to our consolidated financial statements for additional information
 
related to these currency options.
We
 
recorded
 
a
 
net
 
loss
 
of
 
$0.2
 
million
 
comprising
 
a
 
loss
 
of
 
$0.4
 
million
 
related
 
to
 
the
 
disposal
 
of
 
a
 
minor
 
portion
 
of
 
our
investment in Finbond and a $0.25 million gain related to
 
the disposal of our entire interest in Carbon
 
during fiscal 2023. We recorded
a loss of $0.4
 
million related to the disposal of a minor portion of our
 
investment in Finbond during fiscal 2022. Refer to Note 9 to
 
our
consolidated financial statements for additional information regarding
 
these disposals.
We recorded
 
a gain of $0.7 million related to the disposal of our entire interest
 
in an equity security during fiscal 2022. Refer to
Note 9 to our consolidated financial statements for additional information
 
regarding this gain.
Interest on surplus cash decreased to $1.9 million (ZAR
 
33.2 million) from $2.1 million (ZAR 31.7 million), primarily
 
due to the
inclusion of Connect, which was partially offset by lower overall surplus
 
cash balances following the acquisition of Connect.
Interest expense increased
 
to $18.6 million
 
(ZAR 333.1 million)
 
from $5.8 million
 
(ZAR 88.6 million),
 
primarily as a result
 
of
additional
 
interest
 
expense
 
incurred
 
related
 
to
 
borrowings
 
obtained
 
to
 
partially
 
fund
 
the acquisition
 
of
 
Connect,
 
interest
 
expenses
incurred in Connect to fund our cash management, digitization and VAS offerings, and a higher utilization of our facilities to fund our
ATMs,
 
which was also coupled with an increase in base interest rates.
Fiscal 2023
 
tax benefit was $(2.3) million (ZAR (41.4) million) compared
 
to a tax expense of $0.3 million (ZAR 5.0 million) in
fiscal 2022. Our effective tax rate for fiscal 2023 was impacted by a reduction in
 
the enacted South African corporate income tax rate
from
 
28%
 
to
 
27%
 
from
 
January
 
2023
 
(but
 
backdated
 
to
 
July
 
1,
 
2022),
 
the
 
tax
 
expense
 
recorded
 
by
 
our
 
profitable
 
South
 
African
operations, a deferred
 
tax benefit related to
 
acquisition-related intangible asset
 
amortization, non-deductible
 
expenses, a deferred tax
benefit related
 
to an
 
expense paid
 
by Connect
 
before we
 
acquired the
 
business and
 
which subsequently
 
has been
 
determined to
 
be
deductible
 
for
 
tax
 
purposes,
 
the
 
on-going
 
losses
 
incurred
 
by
 
certain
 
of
 
our
 
South
 
African
 
businesses
 
and
 
the
 
associated
 
valuation
allowances created related to the deferred tax assets recognized regarding
 
net operating losses incurred by these entities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47
Our effective
 
tax rate
 
for fiscal
 
2022 was
 
impacted by
 
the tax
 
expense recorded
 
by our
 
profitable South
 
African operations,
 
a
deferred
 
tax
 
benefit
 
related
 
to
 
acquisition-related
 
intangible
 
asset
 
amortization,
 
non-deductible
 
expenses
 
(including
 
transaction
expenses
 
related
 
to
 
the
 
acquisition
 
of
 
Connect),
 
the
 
on-going
 
losses
 
incurred
 
by
 
certain
 
of
 
our
 
South
 
African
 
businesses
 
and
 
the
associated valuation allowances created
 
related to the deferred
 
tax assets recognized regarding
 
net operating losses incurred
 
by these
entities.
Finbond is listed on the Johannesburg Stock Exchange
 
and reports its six-month results during
 
our first half and its
 
annual results
during
 
our fourth
 
quarter.
We
recorded
 
impairment
 
losses related
 
to
 
our investment
 
in Finbond
 
in fiscal
 
2023
 
following
 
on-going
losses reported
 
by Finbond
 
and its
 
lower listed
 
share price.
 
Refer to
 
Note 9
 
to our
 
consolidated
 
financial statements
 
for additional
information regarding the impairments.
 
The table below presents the relative loss from our equity accounted investments:
Table 10
Year
 
ended June 30,
2023
2022
$ ’000
$ ’000
$ % change
Finbond
(5,206)
(3,665)
42%
Share of net (loss) income
 
(4,096)
(3,665)
12%
Impairment
(1,110)
-
nm
Other
89
16
456%
Share of net loss
89
16
456%
Total
 
loss from equity-accounted investments
(5,117)
(3,649)
40%
Results of operations by operating segment
The composition of revenue and the contributions of our business activities to operating
 
(loss) income are illustrated below:
 
Table 11
In U.S. Dollars
Year
 
ended June 30,
2023
% of
2022
% of
%
Operating Segment
$ ’000
total
$ ’000
total
change
Consolidated revenue:
Merchant
463,701
88%
156,689
70%
196%
Consumer
62,801
12%
65,932
30%
(5%)
Subtotal: Operating segments
 
526,502
100%
222,621
100%
137%
Not allocated to operating segments
1,469
-
-
-
nm
Corporate/Eliminations
 
-
-
(12)
-
nm
Total
 
consolidated revenue
 
527,971
100%
222,609
100%
137%
Group Adjusted EBITDA:
Merchant
33,531
135%
12,646
(59%)
165%
Consumer
(1)
3,314
13%
(21,674)
100%
nm
Lease expenses
(2)
(2,906)
(11%)
(3,955)
19%
(27%)
Group costs
(9,109)
(37%)
(8,587)
40%
6%
Group Adjusted EBITDA (non-GAAP)
(3)
24,830
100%
(21,570)
100%
nm
(1) Consumer Segment Adjustment EBITDA for fiscal 2022 includes reorganization
 
cost of $5.9 million.
(2) Lease expenses which were previously excluded from the calculation of
 
Group Adjusted EBITDA have now been included in the
calculation. This change is in response to comments received from the staff
 
of the SEC in March 2024 regarding our non-GAAP
financial reporting. Comparative information has been adjusted to conform
 
with the updated presentation.
(3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation
 
below at “—Results of Operations—Use of Non-
GAAP Measures”.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48
Table 12
In South African Rand
Year
 
ended June 30,
2023
% of
2022
% of
%
Operating Segment
ZAR ’000
total
ZAR ’000
total
change
Consolidated revenue:
Merchant
8,318,796
88%
2,381,323
70%
249%
Consumer
1,126,650
12%
1,002,021
30%
12%
Subtotal: Operating segments
 
9,445,446
100%
3,383,344
100%
179%
Not allocated to operating segments
26,354
-
-
-
nm
Corporate/Eliminations
 
-
-
(178)
-
nm
Total
 
consolidated revenue
 
9,471,800
100%
3,383,166
100%
180%
Group Adjusted EBITDA:
Merchant
601,546
135%
192,197
(59%)
213%
Consumer
(1)
59,453
13%
(329,403)
100%
nm
Lease expenses
(2)
(52,134)
(11%)
(60,107)
19%
(13%)
Group costs
(163,415)
(37%)
(130,503)
40%
25%
Group Adjusted EBITDA (non-GAAP)
(3)
445,450
100%
(327,816)
100%
nm
(1) Consumer Segment Adjustment EBITDA for fiscal 2022 includes
 
reorganization cost of ZAR 89.6 million.
(2) Lease expenses
 
which were previously
 
excluded from the
 
calculation of Group
 
Adjusted EBITDA have
 
now been included
in the calculation. This change is
 
in response to comments received from
 
the staff of the SEC in
 
March 2024 regarding our non-GAAP
financial reporting. Comparative information has been adjusted to conform
 
with the updated presentation.
(3) Group Adjusted EBITDA
 
is a non-GAAP measure, refer
 
to reconciliation below at
 
“—Results of Operations—Use of
 
Non-
GAAP Measures”.
Merchant
Segment
 
revenue
 
increased
 
due
 
to
 
the
 
contribution
 
from
 
Connect
 
for
 
the
 
full fiscal
 
year
 
compared
 
with
 
only
 
two
 
and a
 
half
months in fiscal
 
2022. This increase
 
was partially offset
 
by lower hardware
 
sales revenue given
 
the lumpy nature
 
of bulk sales.
 
The
increase in
 
Segment Adjusted
 
EBITDA is
 
also due
 
to the inclusion
 
of Connect,
 
which was partially
 
offset by
 
lower hardware
 
sales.
Connect records a significant proportion of its airtime sales in revenue and cost of sales, while only earning a relatively small margin.
This significantly depresses the Segment Adjusted EBITDA margins
 
shown by the business.
Our Segment
 
Adjusted EBITDA
 
(loss) margin
 
(calculated as
 
Segment Adjusted
 
EBITDA (loss)
 
divided by
 
revenue) in
 
fiscal
2023
 
and 2022 was 7.2% and 8.1%, respectively.
Consumer
Segment revenue increased primarily due to higher insurance revenues and higher account holder fees, though this was partially
offset by
 
lower ATM
 
transaction fees.
 
We
 
embarked on a
 
retrenchment process
 
during the third
 
quarter of fiscal
 
2022 and recorded
an expense of
 
$5.9 million which is
 
included in Segment
 
Adjusted EBITDA loss. The
 
cost reduction initiatives
 
we initiated in
 
fiscal
2022 delivered
 
a significant
 
reduction in
 
Consumer’s operating
 
expenses which
 
resulted in
 
a significantly
 
lower Segment
 
Adjusted
EBITDA
 
loss
 
compared
 
with
 
fiscal
 
2022.
 
Specifically,
 
expenses
 
associated
 
with
 
operating
 
a
 
mobile
 
distribution
 
network
 
were
discontinued
 
in
 
early
 
fiscal
 
2022,
 
and
 
we
 
have
 
streamlined
 
our
 
fixed
 
distribution
 
network
 
through
 
reductions
 
in
 
certain
 
expenses
including
 
employee-related
 
costs,
 
security,
 
guarding
 
and
 
premises costs.
 
In
 
June
 
2022
 
we
 
recalibrated
 
our
 
allowance
 
for
 
doubtful
microlending finance
 
loans receivable
 
from 10%
 
of the
 
lending book
 
outstanding to
 
6.5% of
 
the lending
 
book, which
 
resulted in
 
a
release from the allowance in fiscal 2022.
Our Segment
 
Adjusted EBITDA loss
 
margin in
 
fiscal 2023
 
and 2022
 
was 5.3% and
 
(32.9%), respectively.
 
After adjusting for
the
 
reorganization
 
charge
 
our fiscal
 
2022
 
Segment
 
Adjusted
 
EBITDA
 
loss margin
 
was
 
(23.9%).
 
Segment
 
Adjusted
 
EBITDA
 
loss
margin before the reorganization charge is a non-GAAP measure. We believe that the presentation of our Segment Adjusted EBITDA
loss margin
 
before the
 
reorganization
 
charge
 
is useful
 
to investors
 
to understand
 
the improvement
 
in the
 
operating performance
 
in
Consumer, before the reorganization
 
charge, in fiscal 2023 compared with fiscal 2022.
 
Group costs
Our
 
group
 
costs
 
for
 
fiscal
 
2023
 
increased
 
compared
 
with
 
the
 
prior
 
period
 
due
 
to
 
higher
 
employee
 
costs
 
and
 
an
 
increase
 
in
directors’ and officers’ insurance premiums.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49
Use of Non-GAAP Measures
U.S. securities laws
 
require that when
 
we publish any
 
non-GAAP measures, we
 
disclose the reason
 
for using these
 
non-GAAP
measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA
is
 
a
 
non-GAAP
 
measure.
 
We
 
provide
 
this
 
non-GAAP
 
measure
 
to
 
enhance
 
our
 
evaluation
 
and
 
understanding
 
of
 
our
 
financial
performance
 
and
 
trends.
 
We
 
believe
 
that
 
this
 
measure
 
is
 
helpful
 
to
 
users
 
of
 
our
 
financial
 
information
 
understand
 
key
 
operating
performance and
 
trends in our
 
business because
 
it excludes certain
 
non-cash expenses
 
(including depreciation
 
and amortization
 
and
stock-based compensation charges) and income
 
and expenses that we consider once-off in nature.
Non-GAAP Measures
Group
 
Adjusted
 
EBITDA
 
is
 
earnings
 
before
 
interest,
 
tax,
 
depreciation
 
and
 
amortization
 
(“EBITDA”),
 
adjusted
 
for
 
non-
operational transactions (including loss on disposal
 
of equity-accounted investments, gain related to
 
fair value adjustments to currency
options), (earnings)
 
loss from
 
equity-accounted investments,
 
stock-based compensation
 
charges and
 
once-off
 
items. Once-off
 
items
represents non-recurring income and
 
expense items, including
 
costs related to
 
acquisitions and transactions consummated
 
or ultimately
not pursued.
 
Lease expenses
 
which were
 
previously excluded
 
from the
 
calculation of
 
Group Adjusted
 
EBITDA have
 
now been
 
included in
the calculation. This
 
change is in response
 
to comments received from
 
the staff of the
 
SEC in March 2024
 
regarding our non-GAAP
financial reporting. Comparative information has been adjusted to conform
 
with the updated presentation.
The table below presents the reconciliation between GAAP net loss attributable
 
to Lesaka to Group Adjusted EBITDA:
Table 13
Years
 
ended June 30,
2024
2023
2022
$ ’000
$ ’000
$ ’000
Loss attributable to Lesaka - GAAP
(17,440)
(35,074)
(43,876)
Loss from equity accounted investments
1,279
5,117
3,649
Net loss before loss from equity-accounted investments
(16,161)
(29,957)
(40,227)
Income tax expense (benefit)
 
3,363
(2,309)
327
Loss before income tax expense
(12,798)
(32,266)
(39,900)
Interest expense
18,932
18,567
5,829
Interest income
(2,294)
(1,853)
(2,089)
Reversal of allowance for doubtful EMI loan receivable
(250)
-
-
Gain on disposal of equity securities
-
-
(720)
Net loss on disposal of equity-accounted investment
-
205
376
Gain related to fair value adjustment to currency options
-
-
(3,691)
Operating loss
3,590
(15,347)
(40,195)
Impairment loss
-
7,039
-
PPA amortization
 
(amortization of acquired intangible assets)
 
14,419
15,149
3,826
Depreciation
9,246
8,536
3,749
Stock-based compensation charges
7,911
7,309
2,962
Once-off items
(1)
1,853
1,922
8,088
Unrealized Loss FV for currency adjustments
(83)
222
-
Group Adjusted EBITDA - Non-GAAP
(A)
36,936
24,830
(21,570)
(A) As noted in
 
footnote (3) to table
 
11 and 12,
 
Lease expenses which
 
were previously excluded
 
from the calculation of
 
Group
Adjusted EBITDA have now been included in the calculation.
(1) The table below presents the components of once-off
 
items for the periods presented:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50
Table 14
Years
 
ended June 30,
2024
2023
2022
$ ’000
$ ’000
$ ’000
Transaction costs related to Adumo transaction
2,293
-
-
Transaction costs
512
850
6,460
(Income recognized) Expenses incurred related to closure of legacy
 
businesses
(952)
639
-
Non-recurring revenue not allocated to segments
-
(1,469)
-
Employee misappropriation of company funds
-
1,202
-
Indirect taxes provision
-
438
-
Separation of employee expense
-
262
-
Legacy processing adjustments
-
-
1,628
Total once-off
 
items
1,853
1,922
8,088
Once-off items are non-recurring in nature, however, certain
 
items may be reported in
 
multiple quarters. For instance, transaction
costs include costs incurred related to acquisitions and
 
transactions consummated or ultimately not pursued. The transactions can span
multiple
 
quarters,
 
for
 
instance
 
in
 
fiscal
 
2024
 
we
 
incurred
 
significant
 
transaction
 
costs
 
related
 
to
 
the
 
acquisition
 
of
 
Adumo
 
over
 
a
number of quarters, and the transactions are generally non-recurring.
(Income
 
recognized)
 
Expenses
 
incurred
 
related
 
to
 
closure
 
of
 
legacy
 
businesses
 
represents
 
(i)
 
gains
 
recognized
 
related
 
to
 
the
release of
 
the foreign
 
currency translation
 
reserve on
 
deconsolidation
 
of a
 
subsidiary
 
and (ii)
 
costs incurred
 
related
 
to subsidiaries
which we are
 
in the process of
 
deregistering/ liquidation and
 
therefore we consider
 
these costs non-operational
 
and ad hoc in
 
nature.
Non-recurring revenue
 
not allocated
 
to segments
 
includes once
 
off revenue
 
recognized that
 
we believe
 
does not
 
relate to
 
either our
Merchant
 
or
 
Consumer
 
divisions.
 
Employee
 
misappropriation
 
of
 
company
 
funds
 
represents
 
a
 
once-off
 
loss
 
incurred.
 
Indirect
 
tax
provision includes non-recurring indirect taxes which have been provided related to prior periods following an on-going investigation
from a tax authority. We
 
incurred separation costs related to the termination of certain senior-level employees, including an executive
officer and
 
senior managers,
 
during the
 
fiscal year
 
and we consider
 
these specific
 
terminations to
 
be of
 
a non-recurring
 
nature. The
legacy processing
 
adjustments represents
 
amounts we
 
identified during
 
fiscal 2022
 
related to
 
prior periods
 
that are
 
payable to
 
third
parties.
Liquidity and Capital Resources
At June 30,
 
2024, our unrestricted
 
cash and cash
 
equivalents were $59.1
 
million and comprised
 
of ZAR-denominated
 
balances
of
 
ZAR
 
961.6
 
million
 
($52.9
 
million),
 
U.S.
 
dollar-denominated
 
balances
 
of
 
$4.5
 
million,
 
and
 
other
 
currency
 
deposits,
 
primarily
Botswana pula, of
 
$1.7 million, all
 
amounts translated at
 
exchange rates applicable as
 
of June 30,
 
2024. The increase in
 
our unrestricted
cash balances from June 30, 2023, was primarily due to a positive contribution from our Merchant
 
and Consumer operations, the sale
of
 
certain
 
Cell
 
C
 
prepaid
 
inventory
 
held,
 
higher
 
year
 
end
 
clearing
 
accounts
 
and
 
vendor
 
wallet
 
balances,
 
and
 
utilization
 
of
 
our
borrowings facilities
 
to fund
 
certain components
 
of our
 
operations, which
 
was partially
 
offset by
 
the utilization
 
of cash
 
reserves to
fund certain scheduled and
 
other repayments of our borrowings,
 
pay transaction related expenses,
 
purchase ATMs
 
and vaults, and to
make an investment in working capital.
We generally
 
invest any surplus cash held by our
 
South African operations in overnight
 
call accounts that we maintain at
 
South
African banking institutions,
 
and any surplus
 
cash held by
 
our non-South African
 
companies in
 
U.S. dollar-denominated money market
accounts.
 
Historically,
 
we have financed
 
most of our
 
operations, research and
 
development, working capital,
 
and capital expenditures,
 
as
well
 
as
 
acquisitions
 
and
 
strategic
 
investments,
 
through
 
internally
 
generated
 
cash
 
and
 
our
 
financing
 
facilities.
 
When
 
considering
whether to borrow under our financing
 
facilities, we consider the cost
 
of capital, cost of financing, opportunity cost
 
of utilizing surplus
cash and
 
availability of
 
tax efficient
 
structures to
 
moderate financing
 
costs. For
 
instance, in
 
fiscal 2022,
 
we obtained
 
loan facilities
from RMB
 
to fund
 
a portion
 
of our
 
acquisition of
 
Connect.
 
Following the
 
acquisition of
 
Connect, we
 
now utilize
 
a combination
 
of
short
 
and
 
long-term
 
facilities to
 
fund our
 
operating
 
activities and
 
a long-term
 
asset-backed
 
facility to
 
fund
 
the acquisition
 
of POS
devices and
 
safe assets.
 
Refer to
 
Note 12
 
to our
 
consolidated financial
 
statements for
 
the year
 
ended June
 
30, 2024,
 
for additional
information related to our borrowings.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51
Available short-term
 
borrowings
Summarized below are our short-term facilities available and utilized as of
 
June 30, 2024:
Table 15
RMB Facility E
RMB Indirect
RMB Connect
Nedbank
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
$ ’000
ZAR ’000
Total
 
short-term facilities
available, comprising:
Overdraft
 
-
-
-
-
11,276
205,014
-
-
Overdraft restricted as to
use
(1)
49,503
899,996
-
-
-
-
-
-
Total overdraft
49,503
899,996
-
-
11,276
205,014
-
-
Indirect and derivative
facilities
(2)
-
-
7,425
134,991
-
-
8,611
156,553
Total
 
short-term facilities
available
49,503
899,996
7,425
134,991
11,276
205,014
8,611
156,553
Utilized short-term
facilities:
Overdraft
 
-
-
-
-
9,351
170,011
-
-
Overdraft restricted as to
use
(1)
6,737
122,480
-
-
-
-
-
-
Indirect and derivative
facilities
(2)
-
-
1,821
33,106
-
-
116
2,105
Total
 
short-term facilities
available
6,737
122,480
1,821
33,106
9,351
170,011
116
2,105
Interest rate, based on South
African prime rate
11.75%
11.65%
(1) Overdraft may only be used to fund ATMs
 
and upon utilization is considered restricted cash.
(2) Indirect and derivative facilities may only be used for guarantees, letters of credit and forward
 
exchange contracts to support
guarantees issued by RMB and Nedbank to various third parties on our behalf.
Long-term borrowings
We have aggregate long-term
 
borrowings
 
outstanding of ZAR 2.6 billion ($143.2 million translated at exchange rates as of June
30, 2024) as
 
described in Note
 
12. These borrowings
 
include outstanding
 
long-term borrowings
 
obtained by Lesaka
 
SA of ZAR
 
1.0
billion,
 
including
 
accrued
 
interest,
 
which
 
was
 
used
 
to
 
partially
 
fund
 
the
 
acquisition
 
of
 
Connect.
 
The
 
Lesaka
 
SA
 
borrowing
arrangements
 
were amended
 
in March
 
2023 to
 
include
 
a ZAR
 
200
 
million
 
revolving
 
credit facility.
 
We
 
used this
 
revolving
 
credit
facility
 
during
 
the
 
year
 
ended
 
June
 
30,
 
2024,
 
and
 
ZAR
 
70.0
 
million
 
was
 
drawn
 
as
 
of
 
June
 
30,
 
2024,
 
with
 
the
 
remaining
 
balance
available for utilization in the future. In contemplation of
 
the Connect transaction, Connect obtained total facilities of ZAR
 
1.3 billion,
which were
 
utilized to
 
repay its existing
 
borrowings, to
 
fund a
 
portion of
 
its capital
 
expenditures and
 
to settle
 
obligations under
 
the
transaction documents,
 
and which has
 
subsequently been
 
upsized for its
 
operational requirements
 
and has an
 
outstanding balance
 
as
of June 30, 2024, of ZAR 1.2
 
billion, We also have a revolving credit facility, of ZAR 300.0 million which is utilized to fund a
 
portion
of our merchant finance loans receivable book.
Restricted cash
We
 
have credit
 
facilities with RMB
 
in order
 
to access cash
 
to fund
 
our ATMs
 
in South Africa.
 
Our cash, cash
 
equivalents and
restricted cash
 
presented in
 
our consolidated
 
statement of
 
cash flows
 
as of
 
June 30,
 
2024, includes
 
restricted cash
 
of approximately
$6.7
 
million
 
related
 
to
 
cash
 
withdrawn
 
from
 
our
 
debt
 
facility
 
to
 
fund
 
ATMs.
 
This
 
cash
 
may
 
only
 
be
 
used
 
to
 
fund
 
ATMs
 
and
 
is
considered restricted as to use and therefore is classified as restricted cash on
 
our consolidated balance sheet.
We
 
have also
 
entered into
 
cession and
 
pledge agreements
 
with Nedbank
 
related to
 
our Nedbank
 
credit facilities
 
and we
 
have
ceded and
 
pledged certain
 
bank accounts
 
to Nedbank.
 
The funds
 
included in
 
these bank
 
accounts are
 
restricted as
 
they may
 
not be
withdrawn without
 
the express permission
 
of Nedbank. Our
 
cash, cash equivalents
 
and restricted cash
 
presented in our
 
consolidated
statement of cash flows as of June 30, 2024, includes restricted cash of approximately
 
$0.1 million that has been ceded and pledged.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52
Cash flows from operating activities
Net cash
 
provided by
 
operating activities
 
during fiscal
 
2024
 
was $28.8
 
million (ZAR
 
537.9 million)
 
compared to
 
$0.4 million
(ZAR 7.4 million) during fiscal
 
2023. Excluding the impact of
 
income taxes, our cash
 
provided by operating activities during
 
the fiscal
2024 was positively impacted by the contribution from Merchant and
 
Consumer, the sale of Cell C inventory and temporary
 
working
capital movements within
 
our merchant business
 
as a result
 
of quarter-end
 
transaction processing activities
 
closing on a
 
Sunday and
which were settled in the following week, which was partially offset
 
by growth in our consumer finance loans receivable book.
Net cash provided
 
by operating activities
 
during fiscal
 
2023 was $0.4
 
million (ZAR 7.4
 
million) compared
 
to net cash
 
utilized
by
 
operating
 
activities
 
of
 
$37.2
 
million
 
(ZAR
 
565.3
 
million)
 
during
 
fiscal
 
2022.
 
Excluding
 
the
 
impact
 
of
 
income
 
taxes,
 
our
 
cash
provided by operating activities
 
during fiscal 2023 was
 
impacted by the positive
 
contribution from Connect and
 
certain business within
our consumer
 
business, which was
 
partially offset
 
by growth
 
in our consumer
 
and merchant finance
 
loans receivable
 
books. During
fiscal 2023, we
 
observed fluctuations in
 
our working capital, primarily
 
within our merchant business,
 
as a result of
 
monthly changes
in our inventory and prepayment
 
account balances as a result of
 
payments made to secure prepaid
 
airtime inventory.
 
Certain of these
purchases were funded from our borrowing arrangements and the impact
 
of the funding is included in financing activities.
During fiscal 2024,
 
we paid our
 
first provisional South
 
African tax payments
 
of $2.7 million
 
(ZAR 49.5 million)
 
related to our
2024
 
tax year. During fiscal 2024, we
 
also made our second
 
provisional South African tax
 
payments
 
of $2.9 million (ZAR
 
52.7 million
related to our 2024
 
tax year and received
 
tax refunds of $0.04
 
million (ZAR 0.8 million).
 
We
 
also paid taxes totaling
 
$0.4 million in
other tax jurisdictions, primarily in the Botswana.
During fiscal 2023,
 
we paid our
 
first provisional South
 
African tax payments
 
of $3.0 million
 
(ZAR 50.8 million)
 
related to our
2023 tax year. During fiscal 2023,
 
we also made
 
our second provisional South
 
African tax payments of
 
$4.1 million (ZAR 76.1
 
million
related to our
 
2023 tax year
 
and received
 
tax refunds of
 
$0.2 million (ZAR
 
3.8 million).
 
We
 
also paid taxes
 
totaling $0.4
 
million in
other tax jurisdictions, primarily in the Botswana.
During fiscal 2022,
 
we made our
 
first provisional South
 
African tax payments
 
of $0.6 million
 
(ZAR 9.1 million)
 
related to our
2022
 
tax year. During fiscal 2022, we
 
also made our second
 
provisional South African tax
 
payments
 
of $0.7 million (ZAR
 
10.9 million
related to our 2022 tax year and made an additional tax payment of $0.001 million (ZAR
 
0.02 million) related to our 2021 tax year.
 
Taxes paid during
 
fiscal 2024, 2023 and 2022 were as follows:
Table 16
Year
 
ended June 30,
2024
2023
2022
2024
2023
2022
$
$
$
ZAR
ZAR
ZAR
‘000
‘000
‘000
‘000
‘000
‘000
First provisional payments
 
2,663
2,955
585
49,534
50,798
9,142
Second provisional payments
 
2,861
4,079
691
52,721
76,089
10,929
Taxation paid related
 
to prior years
 
641
15
1
12,187
273
19
Tax refund received
(38)
(210)
(300)
(768)
(3,756)
(4,542)
Total South African
 
taxes paid
 
6,127
6,839
977
113,674
123,404
15,548
Foreign taxes paid
379
361
161
7,063
6,482
2,482
Total
 
tax paid
 
6,506
7,200
1,138
120,737
129,886
18,030
We expect to make additional provisional
 
income tax payments in South Africa related to our 2024 tax year in the first quarter of
fiscal 2025, however, the amount was not quantifiable
 
as of the date of the filing of this Annual Report.
Cash flows from investing activities
Cash used
 
in investing
 
activities for
 
fiscal 2024
 
included capital
 
expenditures of
 
$12.7 million
 
(ZAR 236.6
 
million), primarily
due
 
to
 
the
 
acquisition
 
of
 
vaults
 
and
 
POS
 
devices.
 
During
 
fiscal
 
2024,
 
we
 
received
 
proceeds
 
of
 
$3.5
 
million
 
related
 
to
 
the
 
sale of
remaining interest in Finbond and $0.25 million related to the second (and final) tranche from the
 
disposal of our entire equity interest
in Carbon.
Cash used
 
in investing
 
activities for
 
fiscal 2023
 
included capital
 
expenditures of
 
$16.2 million
 
(ZAR 289.8
 
million), primarily
due to the
 
acquisition of ATMs
 
.
 
During fiscal 2023,
 
we received proceeds
 
of $0.25 million
 
related to the
 
first tranche (of
 
two) from
the disposal of our entire equity interest in Carbon and $0.4 million related to
 
the sale of minor positions in Finbond.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53
During fiscal
 
2022, we
 
paid approximately
 
$4.6 million
 
(ZAR 69.3
 
million), primarily
 
due to
 
the roll
 
out of
 
our new
 
express
branches, acquisitions of ATMs and the acquisition of
 
computer equipment. During fiscal
 
2022, we paid approximately
 
$202.2 million
(ZAR 2.9 billion), net of cash acquired, for 100% of Connect. We
 
also received funds totaling approximately $11.4
 
million related to
the sale of Bank
 
Frick in fiscal
 
2021, proceeds from sale of
 
property, plant and equipment of $4.2 million,
 
and proceeds of $0.9
 
million
and $0.7 million, respectively, related to the sale of minor positions in Finbond and from the disposal of our entire interest in Revix in
fiscal 2022.
Cash flows from financing activities
During fiscal 2024, we utilized approximately $183.0
 
million from our South African overdraft facilities to fund
 
our ATMs
 
and
repaid $199.6 million of these facilities. We utilized approximately
 
$23.7 million of our long-term borrowings to fund the acquisition
of certain
 
capital expenditures
 
and for
 
working capital
 
requirements.
 
We
 
repaid approximately
 
$20.1 million
 
of these
 
long-term in
accordance with our repayment schedule as
 
well as to settle
 
a portion of our revolving credit
 
facility utilized. We received $0.1
 
million
from the exercise of stock options. We also paid $1.5 million to repurchase shares from employees in order for the
 
employees to settle
taxes due related to the vesting of shares of restricted stock.
During fiscal 2023, we utilized approximately $520.1 million
 
from our South African overdraft facilities to fund our ATMs
 
and
our cash management business through Connect and
 
repaid $547.3 million of these facilities.
 
We utilized approximately $24.4 million
of our long-term
 
borrowings to settle approximately
 
$10.5 million of our
 
revolving credit facilities, fund
 
our merchant finance
 
loans
receivable business, and to fund the acquisition of certain capital expenditures.
 
We repaid approximately
 
$17.5 million of these long-
term, including approximately $10.5 million to settle our
 
revolving credit balance in full. We
 
received $0.5 million from the exercise
of stock options. We also paid $1.3 million to repurchase shares from employees in order for the employees to settle taxes due related
to the vesting of shares of restricted stock and to settle the strike price due and taxes
 
due related to the exercise of stock options.
During fiscal 2022, we utilized approximately $570.9 million
 
from our South African overdraft facilities to fund our ATMs
 
and
our cash management business through Connect and
 
repaid $525.5 million of these facilities.
 
We utilized approximately $78.9 million
of our long-term borrowings
 
to fund a portion
 
of the acquisition of Connect,
 
to fund our merchant
 
finance loans receivable business,
and to fund the acquisition
 
of certain capital expenditures. We
 
repaid approximately $5.6 million
 
of these long-term borrowings.
 
We
also received $0.8 million from the exercise of stock options.
Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2024:
Table 17
Payments due by Period, as of June 30, 2024 (in $ ’000s)
Total
Less than 1
year
2-3 years
3-5 years
Thereafter
Short-term credit facilities
(A)
16,088
16,088
-
-
-
Long-term borrowings
Principal repayments
(A)(B)
143,186
3,878
83,404
55,904
-
Interest payments
(A)(B)
34,010
10,136
18,291
5,583
-
Operating lease liabilities, including imputed interest
(C)
8,831
3,143
4,306
1,382
-
Purchase obligations
2,478
2,478
-
-
-
Capital commitments
329
329
-
-
-
Other long-term obligations reflected on our balance
sheet
(D)(E)
2,595
-
-
-
2,595
Total
207,517
36,052
106,001
62,869
2,595
 
(A) – Refer to Note 12 to our audited consolidated financial statements.
 
(B) – Long-term
 
borrowings principal
 
repayments for the
 
3-5 year period
 
includes all unamortized
 
fees as of
 
June 30, 2024.
Interest payments based on
 
applicable interest rates as of
 
June 30, 2024, and expected
 
outstanding long-term borrowings over
the period. All amounts converted from ZAR to USD using the June 30, 2024,
 
USD/ ZAR exchange rate.
 
(C) – Refer to Note 8 to our audited consolidated financial statements.
 
(D) – Includes policyholder liabilities of $2.6 million related to
 
our insurance business. All amounts are translated at exchange
rates applicable as of June 30, 2024.
 
 
(E) –
 
We
 
have excluded
 
cross-guarantees in
 
the aggregate
 
amount of
 
$0.1 million
 
issued as
 
of June
 
30, 2024,
 
to RMB
 
and
Nedbank
 
to secure
 
guarantees it
 
has issued
 
to third
 
parties on
 
our behalf
 
as the
 
amounts that
 
will be
 
settled in
 
cash are
 
not
known and the timing of any payments is uncertain.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54
Off-Balance Sheet Arrangements
We have no off
 
-balance sheet arrangements.
Capital Expenditures
Capital expenditures for the years ended June 30, 2024, 2023 and 2022
 
were as follows:
Table 18
2024
2023
2022
2024
2023
2022
$
$
$
ZAR
ZAR
ZAR
‘000
‘000
‘000
‘000
‘000
‘000
Consumer
1,317
3,170
1,712
24,607
56,870
26,019
Merchant
11,348
12,986
2,846
212,030
232,969
43,253
Total
12,665
16,156
4,558
236,637
289,839
69,272
Our capital expenditures
 
for fiscal 2024,
 
2023 and 2022, are
 
discussed under “—Liquidity
 
and Capital Resources—Cash
 
flows
from investing activities.”
All of our capital expenditures
 
for the past three fiscal
 
years were funded through
 
internally-generated funds, except
 
for certain
capital
 
expenditures
 
of
 
POS devices
 
and
 
safe
 
assets, made
 
by
 
Connect
 
which
 
were funded
 
through
 
the utilization
 
of asset-backed
borrowings.
 
We
 
had
 
outstanding
 
capital commitments
 
as of
 
June 30,
 
2024,
 
of $0.3
 
million.
 
We
 
expect
 
to fund
 
these expenditures
through
 
internally-generated
 
funds.
 
In
 
addition
 
to
 
these
 
capital
 
expenditures,
 
we
 
expect
 
that
 
capital
 
spending
 
for
 
fiscal
 
2025
 
will
include acquisition of POS devices, safe assets, vehicles, computer and office equipment, as well as for our ATM infrastructure and ITEM 7A.
branch
 
network
 
in
 
South
 
Africa.
 
These
 
assets
 
will
 
be
 
funded
 
through
 
the
 
use
 
of
 
internally-generated
 
funds
 
and
 
our
 
asset-backed
borrowing arrangement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
55
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We seek to manage our exposure to currency exchange, translation, interest rate, credit, microlending credit and equity price and
liquidity risks as discussed below.
Currency Exchange Risk
We are subject to currency exchange risk because we purchase components for vaults, that we assemble, and inventories that we
are required
 
to settle
 
in other
 
currencies, primarily
 
the euro,
 
renminbi, and
 
U.S. dollar.
 
We
 
have used
 
forward contracts
 
in order
 
to
limit our exposure
 
in these transactions
 
to fluctuations in
 
exchange rates between
 
the South African
 
rand (“ZAR”), on
 
the one hand,
and the U.S. dollar and the euro, on the other hand.
 
We
had no outstanding foreign exchange contracts as of June 30,
 
2024 and 2023.
Translation Risk
Translation risk relates to the risk that our
 
results of operations will vary significantly as
 
the U.S. dollar is our
 
reporting currency,
but we earn a significant amount of our revenues and
 
incur a significant amount of our expenses in ZAR. The U.S. dollar
 
to the ZAR
exchange rate has
 
fluctuated significantly over
 
the past three
 
years. As exchange rates
 
are outside our
 
control, there can
 
be no assurance
that future fluctuations will not adversely affect our results
 
of operations and financial condition.
Interest Rate Risk
As a result
 
of our normal borrowing
 
activities, our operating results
 
are exposed to fluctuations
 
in interest rates,
 
which we manage
primarily through
 
regular financing
 
activities. Interest rates
 
in South Africa
 
have been trending
 
upwards in recent
 
quarters but have,
as of the
 
date of this
 
Annual Report, stabilized and
 
are expected to
 
remain at current
 
levels, or perhaps
 
even decline moderately
 
towards
the last quarter of calendar 2024. We periodically evaluate the cost and effectiveness of interest rate hedging
 
strategies to manage this
risk.
 
We
 
generally
 
maintain
 
investments
 
in
 
cash
 
equivalents
 
and
 
held
 
to
 
maturity
 
investments
 
and
 
have
 
occasionally
 
invested
 
in
marketable securities.
We have
 
short and long-term borrowings in South
 
Africa as described in Note 12
 
to our consolidated financial statements which
attract interest
 
at rates
 
that fluctuate
 
based on
 
changes in
 
the South
 
African prime
 
and 3-month
 
JIBAR interest
 
rates. The
 
following
table illustrates the effect on
 
our annual expected interest charge,
 
translated at exchange rates
 
applicable as of June 30,
 
2024, as a result
of changes in the South African prime and 3-month JIBAR interest
 
rates, using our outstanding short and long-term borrowings
 
as of
June 30, 2024. The effect of a hypothetical 1% (i.e. 100 basis points) increase and a 1% decrease in the interest rates applicable to the
borrowings as of June 30,
 
2024, are shown. The
 
selected 1% hypothetical change does
 
not reflect what could be considered
 
the best-
or worst-case scenarios.
 
Table 19
As of June 30, 2024
Annual expected
interest charge
 
($ ’000)
Hypothetical
change in
interest rates
Impact of
hypothetical
change in
interest rates
 
($ ’000)
Estimated annual
expected interest
charge after
hypothetical change
in interest rates
 
($ ’000)
Interest on South Africa borrowings
19,930
1%
1,599
21,529
(1%)
(1,598)
18,332
Credit Risk
 
Credit risk
 
relates to
 
the risk of
 
loss that we
 
would incur
 
as a
 
result of non-performance
 
by counterparties.
We
maintain credit
risk
 
policies
 
in
 
respect
 
of
 
our
 
counterparties
 
to
 
minimize
 
overall
 
credit
 
risk.
 
These
 
policies
 
include
 
an
 
evaluation
 
of
 
a
 
potential
counterparty’s
 
financial
 
condition,
 
credit
 
rating,
 
and
 
other
 
credit
 
criteria
 
and
 
risk
 
mitigation
 
tools
 
as
 
our
 
management
 
deems
appropriate.
 
With
 
respect to
 
credit risk
 
on financial
 
instruments,
 
we maintain
 
a policy
 
of entering
 
into such
 
transactions only
 
with
South African and European financial institutions that have a credit rating
 
of “B” (or its equivalent) or better, as determined
 
by credit
rating agencies such as Standard & Poor’s, Moody’s
 
and Fitch Ratings.
 
 
56
Consumer microlending credit risk
We are exposed
 
to credit risk in our Consumer microlending activities, which provides unsecured short-term loans
 
to qualifying
customers. Credit bureau checks as well as an affordability test are conducted as part of the origination process, both of
 
which are line
with local regulations.
We
consider this policy to be appropriate because the affordability test we perform takes into account a variety
of
 
factors
 
such
 
as
 
other
 
debts
 
and
 
total
 
expenditures
 
on
 
normal
 
household
 
and
 
lifestyle
 
expenses.
 
Additional
 
allowances
 
may
 
be
required should the
 
ability of our customers
 
to make payments when
 
due deteriorate in
 
the future. A significant
 
amount of judgment
is required to assess the ultimate recoverability of these
 
finance loan receivables, including ongoing evaluation of the creditworthiness
of each customer.
Merchant lending
We
maintain an allowance
 
for doubtful finance
 
loans receivable related
 
to its Merchant
 
services segment with
 
respect to short-
term loans
 
to qualifying
 
merchant customers.
 
Our risk
 
management procedures
 
include adhering
 
to our
 
proprietary lending
 
criteria
which uses an online-system loan
 
application process, obtaining necessary customer transaction-history data and
 
credit bureau checks.
We
consider these procedures to be appropriate because it
 
takes into account a variety of
 
factors such as the customer’s credit capacity
and customer-specific risk factors when originating a loan.
Equity Securities Price Risk
Equity price risk relates to the risk
 
of loss that we would incur as
 
a result of the volatility in the exchange
 
-traded price of equity
securities that we hold. As of June 30, 2024, we did not have any equity securities that
 
were exchange-traded and held as available for
sale. Historically, exchange
 
-traded equity securities held as available for sale were expected to be held for an extended period of time
and we were
 
not concerned with
 
short-term equity price volatility
 
with respect to
 
these securities provided that
 
the underlying business,
economic and management characteristics of the company remained
 
sound.
 
The market price of these exchange-traded equity securities may fluctuate for a variety of reasons
 
and, consequently, the amount
we may obtain in a subsequent sale of these securities may significantly differ
 
from the reported market value.
Equity Securities Liquidity Risk
Equity liquidity risk
 
relates to the
 
risk of loss
 
that we would
 
incur as a
 
result of the
 
lack of liquidity
 
on the exchange
 
on which
those securities are
 
listed.
We
may not
 
be able to
 
sell some or
 
all of these
 
securities at one
 
time, or over
 
an extended period
 
of time
without influencing the exchange-traded price, or at all.
We monitor these investments for impairment and make appropriate reductions in carrying value when an impairment is deemed
to be other-than-temporary.
 
As of June 30, 2024, we did not own any exchange-traded equity securities.
57
ITEM 8.
 
FINANCIAL STATEMENTS
 
AND SUPPLEMENTARY
 
DATA
Our audited
 
consolidated financial
 
statements, together
 
with the
 
reports
 
of our independent
 
registered public
 
accounting firms,
appear on pages F-1 through F-76 of this Annual Report.
58
ITEM 9.
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
 
CONTROLS AND PROCEDURES
Evaluation of disclosure controls
 
and procedures
Under the
 
supervision and
 
with the
 
participation of
 
our management,
 
including our
 
Executive Chairman
 
and our
 
Group Chief
Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as
 
such term is defined under Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Executive Chairman and
Group Chief
 
Financial Officer
 
concluded that
 
our disclosure
 
controls and
 
procedures were
 
not effective
 
as of
 
June 30,
 
2024, due
 
to
the material weaknesses in internal control over financial reporting as described
 
below.
Internal Control over Financial Reporting
Internal control over financial reporting
 
is a process designed
 
by, or under the supervision of, our
 
Executive Chairman and Group
Chief
 
Financial
 
Officer,
 
or
 
persons
 
performing
 
similar
 
functions,
 
and
 
effected
 
by
 
our
 
board
 
of
 
directors,
 
management,
 
and
 
other
personnel, to provide
 
reasonable assurance regarding
 
the reliability of
 
financial reporting and
 
the preparation of
 
financial statements
for external purposes in accordance with U.S. GAAP.
Internal control over financial reporting includes
 
those policies and procedures that
 
(1) pertain to the
 
maintenance of records that,
in reasonable detail, accurately and fairly
 
reflect the transactions and dispositions of
 
our assets; (2) provide reasonable
 
assurance that
transactions are recorded as
 
necessary to permit preparation of
 
financial statements in accordance
 
with U.S. GAAP,
 
and that receipts
and expenditures of the company are being made only in accordance with authorizations of our officers and directors; and (3) provide
reasonable assurance regarding prevention
 
or timely detection of unauthorized
 
acquisition, use or disposition
 
of our assets that could
have a material effect on our audited consolidated financial statements.
Inherent Limitations in Internal Control
 
over Financial Reporting
Internal control over financial reporting cannot provide absolute assurance of achieving
 
financial reporting objectives because of
its inherent
 
limitations.
 
Internal
 
control
 
over
 
financial reporting
 
is a
 
process that
 
involves
 
human
 
diligence
 
and
 
compliance
 
and
 
is
subject
 
to
 
lapses
 
in
 
judgment and
 
breakdowns
 
resulting
 
from human
 
failures.
 
Internal
 
control over
 
financial
 
reporting
 
also
 
can
 
be
circumvented by collusion or improper
 
management override. Because of such
 
limitations, there is a risk that
 
material misstatements
may not
 
be prevented
 
or detected
 
on a
 
timely basis
 
by internal
 
control over
 
financial reporting.
 
However,
 
these inherent
 
limitations
are known features of the financial reporting
 
process. Therefore, it is possible to design into the process safeguards
 
to reduce, though
not eliminate, this risk.
Management’s
 
Report on Internal Control Over Financial Reporting
Management,
 
including
 
our
 
Executive
 
Chairman
 
and
 
our
 
Group
 
Chief
 
Financial
 
Officer,
 
is
 
responsible
 
for
 
establishing
 
and
maintaining
 
adequate
 
internal
 
control
 
over
 
our
 
financial
 
reporting.
 
Management
 
conducted
 
an
 
evaluation
 
of
 
the
 
effectiveness
 
of
internal control over financial reporting based on criteria established in Internal Control – Integrated Framework
 
(2013) issued by the
Committee
 
of Sponsoring
 
Organizations
 
of the
 
Treadway
 
Commission
 
(COSO). Based
 
on this
 
evaluation
 
and as
 
described
 
below,
management concluded that our internal control over financial reporting
 
was not effective as of June 30, 2024.
A material
 
weakness is
 
a deficiency,
 
or a
 
combination of
 
deficiencies, in
 
internal control
 
over financial
 
reporting, such
 
that a
reasonable
 
possibility
 
exists that
 
a
 
material
 
misstatement
 
of
 
our
 
annual
 
or
 
interim
 
financial statements
 
would
 
not
 
be
 
prevented
 
or
detected on a timely basis.
As
 
of
 
June
 
30,
 
2024,
 
we
 
identified
 
material
 
weaknesses
 
related
 
to
 
information
 
technology
 
general
 
controls
 
(“ITGCs”),
specifically
 
insufficient
 
risk
 
assessment,
 
design
 
and
 
implementation,
 
monitoring
 
activities
 
and
 
training
 
of
 
individuals
 
to
 
operate
controls in the
 
areas of user access
 
and program-change management
 
for certain information
 
technology (“IT”) systems
 
that support
our financial reporting processes. As a result, the related process-level
 
IT dependent manual and automated application controls were
deemed ineffective since they could not be relied upon.
Management has also identified material weaknesses
 
related to insufficient design and implementation of
 
controls and associated
policies and procedures in
 
its annual goodwill
 
impairment assessment, resulting in
 
a lack of
 
precision in evaluating certain
 
assumptions
used and a lack of validation of the completeness and accuracy of data used
 
in the goodwill impairment model.
 
59
The material
 
weaknesses described
 
above did
 
not result
 
in any
 
misstatements to
 
our
 
annual
 
or interim
 
consolidated
 
financial
statements, and
 
there were
 
no changes
 
to previously
 
reported financial
 
results. However,
 
each of
 
these material
 
weaknesses, if
 
not
remedied, present a
 
reasonable possibility that
 
a misstatement to
 
our financial statement
 
accounts or disclosures
 
would not be
 
prevented
or detected on a timely basis.
Lesaka’s independent registered public accounting firm, KPMG,
 
Inc., who audited the
 
consolidated financial statements
 
included
in this Annual
 
Report, has expressed
 
an adverse report
 
on the operating
 
effectiveness of our
 
internal control over
 
financial reporting
as of June 30, 2024, which appears in Part II, Item 8 of this Annual Report.
Remediation of Material Weaknesses
To
 
address
 
the
 
material
 
weaknesses,
 
our
 
management,
 
with
 
the
 
support
 
of
 
our
 
IT
 
governance
 
team,
 
has
 
commenced
 
with
remediation of these material
 
weaknesses including, but not
 
limited to: (1) developing
 
and implementing a comprehensive
 
remediation
plan
 
that includes
 
specific actions
 
aimed
 
at educating
 
control owners
 
about
 
the operation
 
and
 
importance
 
of ITGCs,
 
including
 
the
principles and requirements of each control,
 
with a focus on
 
user access and change management
 
controls over IT systems that
 
support
financial reporting processes;
 
(2) enhancing and
 
maintaining documentation of
 
ITGCs to ensure
 
continuity in the
 
event of employee
or personnel
 
changes; (3)
 
implementing improved
 
risk assessment
 
procedures and
 
controls for
 
IT system
 
changes to
 
better identify
financially relevant
 
applications and
 
to enhance the
 
selection, development,
 
and monitoring of
 
control activities and
 
procedures; (4)
collaborating
 
closely with
 
internal and
 
external assurance
 
partners
 
to ensure
 
the robustness
 
of our
 
remediation
 
plan; (5)
 
creating a
goodwill
 
impairment
 
model
 
reviewer
 
checklist
 
that
 
includes
 
specific
 
review
 
procedures
 
to
 
be
 
performed
 
by
 
the
 
reviewer
 
of
 
the
goodwill impairment
 
model, who
 
will be required
 
to complete the
 
checklist as
 
evidence of
 
their review;
 
and (6) enhanced
 
quarterly
reporting to the Audit Committee on the remediation measures and effectiveness
 
of the same.
While we are actively taking steps
 
to implement our remediation plan, the material weaknesses
 
will not be deemed resolved until
the enhanced controls operate
 
for a sufficient period
 
of time and
 
management has confirmed
 
through testing that the
 
same are operating
effectively.
 
We
 
will continue to
 
monitor the remediation
 
plan's effectiveness
 
and adjust
 
our efforts
 
as needed. As
 
we assess and
 
test
our internal control over financial reporting, we may identify the need for additional
 
measures or modifications to the plan.
Changes in Internal Control over Financial Reporting
Except as described above,
 
there were no changes
 
in our internal control over
 
financial reporting during the
 
quarter ended June
30, 2024, that have materially affected, or are reasonably
 
likely to materially affect, our internal control over financial reporting.
 
60
REPORT OF INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
To the shareholders
 
and Board of Directors of Lesaka Technologies,
 
Inc.
Opinion on Internal Control Over Financial Reporting
 
We
 
have
 
audited
 
Lesaka
 
Technologies,
 
Inc.
 
and
 
subsidiaries’
(the
 
Company)
 
internal
 
control
 
over
 
financial
 
reporting
 
as
 
of
June 30, 2024, based
 
on criteria established
 
in
Internal Control – Integrated
 
Framework (2013)
 
issued by the
 
Committee of
 
Sponsoring
Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the
achievement of the objectives
 
of the control
 
criteria, the Company has
 
not maintained effective internal
 
control over financial reporting
as of
 
June 30,
 
2024,
 
based on
 
criteria established
 
in
Internal
 
Control
 
– Integrated
 
Framework (2013)
 
issued by
 
the Committee
 
of
Sponsoring Organizations of the Treadway
 
Commission.
We
 
also have
 
audited, in
 
accordance with
 
the standards
 
of the
 
Public Company
 
Accounting Oversight
 
Board (United
 
States)
(PCAOB),
 
the consolidated
 
balance sheets
 
of the
 
Company as
 
of June
 
30, 2024,
 
the related
 
consolidated
 
statements of
 
operations,
comprehensive (loss) income, changes in equity,
 
and cash flows for the year ended June 30, 2024, and the related
 
notes (collectively,
the consolidated financial
 
statements), and
 
our report
 
dated September 11,
 
2024 expressed an
 
unqualified opinion on
 
those consolidated
financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that
 
a material misstatement of the
 
company’s annual
 
or interim financial statements will
 
not be prevented
or
 
detected
 
on
 
a
 
timely
 
basis.
 
Material
 
weaknesses
 
related
 
to
 
information
 
technology
 
general
 
controls
 
(“ITGCs”),
 
specifically
insufficient
 
risk assessment,
 
design and
 
implementation, monitoring
 
activities and
 
training of
 
individuals to
 
operate controls
 
in the
areas of
 
user access
 
and program-change
 
management for
 
certain information
 
technology (“IT”)
 
systems that
 
support the
 
financial
reporting
 
processes
 
and
 
insufficient
 
design
 
and
 
implementation
 
of
 
controls
 
and
 
associated
 
policies
 
and
 
procedures
 
in
 
the
 
annual
goodwill
 
impairment
 
assessment
 
have
 
been
 
identified
 
and
 
included
 
in
 
management’s
 
assessment.
 
The
 
material
 
weaknesses
 
were
considered in determining
 
the nature, timing,
 
and extent of
 
audit tests
 
applied in our
 
audit of
 
the 2024 consolidated
 
financial statements,
and this report does not affect our report on those consolidated
 
financial statements.
Basis for Opinion
 
The
 
Company’s
 
management
 
is
 
responsible
 
for
 
maintaining
 
effective
 
internal
 
control
 
over
 
financial
 
reporting
 
and
 
for
 
its
assessment of
 
the effectiveness
 
of internal
 
control over
 
financial reporting,
 
included in
 
the accompanying
 
Management’s
 
Report on
Internal Control over Financial Reporting. Our
 
responsibility is to express
 
an opinion on the Company’s internal control over financial
reporting based
 
on our
 
audit. We
 
are a
 
public accounting
 
firm registered
 
with the
 
PCAOB and
 
are required
 
to be
 
independent with
respect to the
 
Company in accordance
 
with the U.S. federal
 
securities laws and
 
the applicable rules
 
and regulations of
 
the Securities
and Exchange Commission and the PCAOB.
We conducted
 
our audit in accordance with
 
the standards of the PCAOB. Those
 
standards require that we plan
 
and perform the
audit to
 
obtain reasonable
 
assurance about
 
whether effective
 
internal control
 
over financial
 
reporting was
 
maintained in
 
all material
respects. Our
 
audit of internal
 
control over financial
 
reporting included
 
obtaining an understanding
 
of internal control
 
over financial
reporting,
 
assessing
 
the
 
risk
 
that
 
a
 
material
 
weakness
 
exists,
 
and
 
testing
 
and
 
evaluating
 
the
 
design
 
and
 
operating
 
effectiveness
 
of
internal control
 
based on the
 
assessed risk. Our
 
audit also included
 
performing such other
 
procedures as we
 
considered necessary
 
in
the circumstances. We
 
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
 
A
 
company’s
 
internal
 
control
 
over
 
financial
 
reporting
 
is
 
a
 
process
 
designed
 
to
 
provide
 
reasonable
 
assurance
 
regarding
 
the
reliability of financial
 
reporting and the
 
preparation of financial
 
statements for external
 
purposes in accordance with
 
generally accepted
accounting principles. A company’s internal
 
control over financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
 
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted
 
accounting principles, and that
 
receipts and expenditures of
 
the company are being made
 
only in
accordance
 
with
 
authorizations
 
of
 
management
 
and
 
directors
 
of
 
the
 
company;
 
and
 
(3)
 
provide
 
reasonable
 
assurance
 
regarding
prevention or timely detection of
 
unauthorized acquisition, use, or disposition
 
of the company’s assets that could have
 
a material effect
on the financial statements.
Because
 
of
 
its
 
inherent
 
limitations,
 
internal
 
control
 
over
 
financial
 
reporting
 
may
 
not
 
prevent
 
or
 
detect
 
misstatements.
 
Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
 
procedures may deteriorate.
/s/
 
KPMG, Inc
KPMG, Inc.
Registered Auditors
Johannesburg, South Africa
September 11, 2024
61
ITEM 9B.
 
OTHER INFORMATION
Our Section 16 officers and directors, as defined in Rule 16a-1(f) of the Securities
 
Exchange Act of 1934 (the “Exchange Act”),
may from time to time
 
enter into plans for the
 
purchase or sale of our
 
common stock that are
 
intended to satisfy the affirmative defense
conditions of Rule 10b5-1(c) of the Exchange Act. During the
 
quarter ended June 30, 2024, no officers or directors, as defined in
 
Rule
16a-1(f),
adopted
,
modified
,
 
or
terminated
 
a
 
“Rule
 
10b5-1
trading
 
arrangement”
 
or
 
a
 
“non-Rule
 
10b5-1
 
trading
 
arrangement,”
 
as
defined in Item 408 of Regulation S-K.
ITEM 9C.
 
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
62
PART
 
III
ITEM 10.
 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
 
GOVERNANCE
Information
 
about
 
our
 
executive
 
officers
 
is
 
set
 
out
 
in
 
Part
 
I,
 
Item
 
1
 
under
 
the
 
caption
 
“Our
 
Executive
 
Officers.”
 
The
 
other
information required
 
by this
 
Item is incorporated
 
by reference
 
to the
 
sections of
 
our definitive
 
proxy statement
 
for our
 
2024 annual
meeting of shareholders entitled “Board of Directors and Corporate
 
Governance” and “Additional Information.”
ITEM 11.
 
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the sections of our definitive proxy
 
statement for our 2024
annual meeting of shareholders entitled
 
“Executive Compensation,” “Board of
 
Directors and Corporate Governance—Compensation
of Directors” and “—Remuneration Committee Interlocks and Insider Participation.”
ITEM 12.
 
SECURITY OWNERSHIP OF CERTAIN
 
BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER
 
MATTERS
 
The information required by this Item is incorporated by reference to the sections of our definitive
 
proxy statement for our 2024
annual
 
meeting
 
of
 
shareholders
 
entitled
 
“Security
 
Ownership
 
of
 
Certain
 
Beneficial
 
Owners
 
and
 
Management”
 
and
 
“Equity
Compensation Plan Information.”
ITEM 13.
 
CERTAIN
 
RELATIONSHIPS
 
AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item is incorporated by reference to the sections of our definitive proxy
 
statement for our 2024
annual
 
meeting
 
of
 
shareholders
 
entitled
 
“Certain
 
Relationships
 
and
 
Related
 
Transactions”
 
and
 
“Board
 
of
 
Directors
 
and
 
Corporate
Governance.”
ITEM 14.
 
PRINCIPAL ACCOUNTANT
 
FEES AND SERVICES
The information required by this Item is incorporated by reference to the sections of our definitive proxy
 
statement for our 2024
annual meeting of shareholders entitled “Audit and Non-Audit Fees.”
 
 
 
 
 
 
 
63
PART
 
IV
ITEM 15.
 
EXHIBITS AND FINANCIAL STATEMENT
 
SCHEDULES
 
a)
 
The following documents are filed as part of this report
1. Financial Statements
 
The following financial statements are included on pages F-1 through F-76.
Report of the Independent Registered Public Accounting Firm
 
–
KPMG, Inc.
 
(PCAOB Firm ID
1025
)
Report of the Independent Registered Public Accounting Firm
 
–
Deloitte & Touche
 
(South Africa) (PCAOB
Firm ID 0
1130
)
Consolidated statements of operations for the years ended June 30, 2024,
 
2023 and 2022
2. Financial Statement Schedules
 
Financial statement schedules have been
 
omitted since they are
 
either not required, not
 
applicable, or the
 
information is otherwise
included.
 
 
(b) Exhibits
Incorporated by Reference Herein
Exhibit
No.
Description of Exhibit
Included
Herewith
Form
Exhibit
Filing Date
2.1
8-K
10.1
November 2, 2021
2.2
8-K
10.1
May 7, 2024
3.1
8-K
 
3.1
May 17, 2022
3.2
8-K
3.2
May 17, 2022
4.1
10-K
4.1
September 9, 2022
4.2
X
10.1*
 
10-Q
10.49
February 7, 2023
10.2*
10-Q
10.50
February 7, 2023
10.3*
10-Q
10.51
February 7, 2023
10.4*
X
10.5*
10-K
10.5
August 24, 2017
10.6*
 
14A
A
September 30, 2022
 
64
10.7*
14A
B
April 22, 2024
10.8*
8-K
10.1
December 4, 2023
10.9*
14A
A
April 22, 2024
10.10*
8-K
10.1
June 30, 2021
10.11*
8-K
10.2
June 30, 2021
10.12*
8-K
10.3
June 30, 2021
10.13*
8-K
10.4
June 30, 2021
10.14*
8-K
10.1
February 11, 2021
10.15*
8-K
10.2
February 11, 2021
10.16*
8-K
10.1
December 10, 2021
 
10.17*
8-K
10.2
December 10, 2021
 
10.18*
8-K
10.3
December 10, 2021
 
10.19*
8-K
10.4
December 10, 2021
10.20*
10-Q
10.52
May 9, 2023
10.21*
 
10-Q
10.53
May 9, 2023
10.22*
8-K
10.7
December 10, 2021
10.23*
8-K
10.2
August 5, 2020
10.24
8-K
10.27
December 19, 2013
10.25
certain of its subsidiaries, dated December 7, 2016
8-K
10.50
December 9, 2016
10.26
8-K
10.32
April 12, 2016
65
10.27
8-K
10.1
May 14, 2020
10.28
8-K
10.1
December 10, 2020
10.29
 
10-K
10.32
September 9, 2022
10.30
10-Q
10.58
May 10, 2022
10.31
8-K
10.3
March 22, 2023
10.32
8-K
10.96
October 2, 2018
10.33
8-K
10.1
August 2, 2021
10.34
8-K
10.1
January 23, 2024
10.35
8-K
10.1
March 22, 2023
10.36
8-K
10.1
December 1, 2023
10.37
8-K
10.2
March 22, 2023
 
66
10.38
8-K
10.1
December 5, 2022
14
X
21
X
23.1
X
23.2
X
31.1
X
31.2
X
32
X
97
X
101.INS
XBRL Instance Document
 
X
101.SCH
XBRL Taxonomy
 
Extension Schema
 
X
101.CAL
XBRL Taxonomy
 
Extension Calculation Linkbase
 
X
101.DEF
XBRL Taxonomy
 
Extension Definition Linkbase
 
X
101.LAB
XBRL Taxonomy
 
Extension Label Linkbase
 
X
101.PRE
XBRL Taxonomy
 
Extension Presentation Linkbase
 
X
104
Cover Page Interactive Data File (formatted as inline
XBRL and continued in Exhibit 101)
X
* Indicates a management contract or compensatory plan or arrangement.
ITEM 16.
 
FORM 10-K SUMMARY
None.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
 
Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LESAKA TECHNOLOGIES, INC.
 
By: /s/ Ali Mazanderani
Ali Mazanderani
Executive Chairman and Director
 
Date: September 11, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report
 
has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
NAME
TITLE
DATE
 
 
 
/s/ Kuben Pillay
Lead Independent Director and Director
September 11, 2024
Kuben Pillay
 
 
 
 
/s/ Ali Mazanderani
Executive Chairman and Director (Principal Executive
Officer)
September 11, 2024
Ali Mazanderani
/s/ Naeem E. Kola
Group Chief Financial Officer and Director (Principal
Financial and Accounting Officer)
September 11, 2024
Naeem E. Kola
 
 
 
 
/s/ Antony C. Ball
Director
September 11, 2024
Antony C. Ball
/s/ Nonkululeko N. Gobodo
Director
September 11, 2024
Nonkululeko N. Gobodo
/s/ Javed Hamid
Director
September 11, 2024
Javed Hamid
/s/ Steven J. Heilbron
Director
September 11, 2024
Steven J. Heilbron
/s/ Lincoln C. Mali
Director
September 11, 2024
Lincoln C. Mali
/s/ Chris G.B. Meyer
Director
September 11, 2024
Chris G.B. Meyer
 
 
 
 
/s/ Sharron Venessa
 
Naidoo
Director
September 11, 2024
Sharron Venessa
 
Naidoo
/s/ Monde Nkosi
Director
September 11, 2024
Monde Nkosi
/s/ Ekta Singh-Bushell
Director
September 11, 2024
Ekta Singh-Bushell
F-2
REPORT OF INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
To the shareholders
 
and the Board of Directors of Lesaka Technologies,
 
Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying
 
consolidated balance sheets of Lesaka Technologies Inc. and
 
subsidiaries (the Company) as
of June 30,
 
2024, the related
 
consolidated statements of
 
operations, comprehensive
 
(loss) income, changes
 
in equity,
 
and cash flows
for
 
the
 
year
 
ended
 
June
 
30,
 
2024,
 
and
 
the
 
related
 
notes
 
(collectively,
 
the
 
consolidated
 
financial
 
statements).
 
In
 
our
 
opinion,
 
the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and
the results of its operations and
 
its cash flows for the
 
year ended June 30, 2024, in conformity
 
with U.S. generally accepted accounting
principles.
We
 
also have
 
audited, in
 
accordance with
 
the standards
 
of the
 
Public Company
 
Accounting
 
Oversight Board
 
(United States)
(PCAOB), the Company’s internal
 
control over financial
 
reporting as of
 
June 30, 2024, based
 
on criteria established
 
in
Internal Control
– Integrated Framework
 
(2013)
 
issued by the Committee
 
of Sponsoring Organizations
 
of the Treadway
 
Commission, and our report
dated September 11,
 
2024
expressed an
 
adverse opinion on
 
the effectiveness of
 
the Company’s internal control
 
over financial
 
reporting.
Basis for Opinion
These consolidated
 
financial statements
 
are the
 
responsibility of
 
the Company’s
 
management. Our
 
responsibility is
 
to express
an opinion on these
 
consolidated financial statements based on
 
our audits. We are a public accounting
 
firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
 
that we plan and perform the
audit to
 
obtain reasonable
 
assurance about
 
whether the
 
consolidated financial
 
statements are
 
free of
 
material misstatement,
 
whether
due
 
to
 
error
 
or
 
fraud.
 
Our
 
audits included
 
performing
 
procedures
 
to
 
assess
 
the
 
risks
 
of
 
material
 
misstatement
 
of
 
the
 
consolidated
financial statements, whether
 
due to error or
 
fraud, and performing
 
procedures that respond
 
to those risks. Such
 
procedures included
examining, on
 
a test basis,
 
evidence regarding
 
the amounts
 
and disclosures
 
in the
 
consolidated financial
 
statements. Our
 
audits also
included evaluating
 
the accounting principles
 
used and significant
 
estimates made by
 
management, as well
 
as evaluating
 
the overall
presentation of the consolidated financial statements. We
 
believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The
 
critical
 
audit
 
matter
 
communicated
 
below
 
is a
 
matter
 
arising
 
from
 
the
 
current
 
period audit
 
of
 
the
 
consolidated
 
financial
statements
 
that
 
was
 
communicated
 
or
 
required
 
to
 
be
 
communicated
 
to
 
the
 
audit
 
committee
 
and
 
that:
 
(1)
 
relates
 
to
 
accounts
 
or
disclosures
 
that
 
are
 
material
 
to
 
the
 
consolidated
 
financial
 
statements
 
and
 
(2)
 
involved
 
our
 
especially
 
challenging,
 
subjective,
 
or
complex judgments. The communication of the
 
critical audit matter does
 
not alter in any way
 
our opinion on the consolidated
 
financial
statements, taken
 
as a
 
whole, and
 
we are
 
not, by
 
communicating the
 
critical audit
 
matter below,
 
providing separate
 
opinions on
 
the
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the Company’s
 
goodwill impairment test for certain reporting units
As discussed in Notes 2 and 10 to the consolidated financial statements, the
 
Company recorded goodwill as of June 30, 2024 of
$138,551 thousand. The Company tests
 
for impairment of goodwill on
 
an annual basis and
 
at any other time if
 
events or circumstances
change
 
that could
 
trigger an
 
impairment
 
test. The
 
Company uses
 
a discounted
 
cash flow
 
model to
 
estimate the
 
fair value
 
for each
reporting unit,
 
which requires
 
the Company
 
to make
 
significant estimates
 
and assumptions
 
related to
 
reporting unit
 
revenue growth
rates. In
 
addition,
 
the discounted
 
cash flow
 
model requires
 
the Company
 
to select
 
an appropriate
 
weighted average
 
cost of
 
capital
applicable to peer and industry comparables of the reporting units.
 
We
 
identified the
 
assessment of
 
the Company’s
 
goodwill impairment
 
test for
 
certain reporting
 
units as
 
a critical
 
audit matter.
Subjective
 
auditor
 
judgement
 
and
 
specialized
 
skills
 
and
 
knowledge
 
were
 
required
 
to
 
evaluate
 
certain
 
assumptions
 
used
 
in
 
the
discounted
 
cashflow model,
 
specifically,
 
reporting unit
 
revenue
 
growth rates
 
and the
 
weighted
 
average cost
 
of capital.
 
Changes
 
in
these assumptions could have a significant impact on the fair value of the reporting
 
units.
 
The following are the primary procedures we performed to address this critical audit
 
matter:
 
•
we evaluated the reporting
 
unit revenue growth rates
 
by comparing the growth
 
rates against historic performance,
 
approved
budgets and expected future performance based on industry and reporting
 
unit specific factors and independent research;
 
•
we involved
 
valuation professionals
 
with specialized
 
skills and
 
knowledge who
 
assisted in
 
the evaluation
 
of the
 
weighted
average cost of
 
capital used by the
 
Company by developing a
 
range of independent
 
estimates of weighted average
 
cost of capital
 
for
certain reporting units and comparing this range to the weighted average
 
cost of capital selected by the Company; and
•
we performed sensitivity analyses over these assumptions to
 
assess their impact on the Company’s determination that the fair
value of the reporting units exceeds their carrying value.
F-3
/s/ KPMG, Inc
We have served
 
as the Company’s auditor since 2024
KPMG, Inc.
Registered Auditors
Johannesburg, South Africa
September 11, 2024
F-4
REPORT OF INDEPENDENT REGISTERED
 
PUBLIC ACCOUNTING FIRM
To the shareholders
 
and the Board of Directors of Lesaka Technologies,
 
Inc.
Opinion on the Financial Statements
We have
 
audited the accompanying consolidated
 
balance sheet of Lesaka Technologies,
 
Inc. and subsidiaries (the “Company”)
as of June
 
30, 2023, the related
 
consolidated statements of operations,
 
comprehensive (loss) income, changes
 
in equity, and cash flows,
for each of
 
the two years
 
in the period
 
ended June 30,
 
2023, and the
 
related notes (collectively
 
referred to as
 
the “financial statements”).
In our
 
opinion, the
 
financial statements
 
present fairly,
 
in all
 
material respects,
 
the financial
 
position of
 
the Company
 
as of
 
June 30,
2023, and
 
the results of
 
its operations
 
and its cash
 
flows for
 
each of
 
the two years
 
in the period
 
ended June 30,
 
2023, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements
 
are the responsibility
 
of the Company's
 
management. Our
 
responsibility is to express
 
an opinion on
the
 
Company's
 
financial
 
statements
 
based
 
on
 
our
 
audits.
 
We
 
are
 
a
 
public
 
accounting
 
firm
 
registered
 
with
 
the
 
Public
 
Company
Accounting Oversight Board (United States) (PCAOB) and are required to be
 
independent with respect to the Company in accordance
with the
 
U.S. federal
 
securities laws
 
and
 
the applicable
 
rules and
 
regulations
 
of the
 
Securities and
 
Exchange
 
Commission
 
and
 
the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
 
that we plan and perform the
audit to obtain reasonable assurance about whether
 
the financial statements are free of material misstatement, whether
 
due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and
 
performing procedures that respond to those risks.
 
Such procedures included examining, on a
 
test basis, evidence
regarding the amounts and
 
disclosures in the financial statements.
 
Our audits also included evaluating
 
the accounting principles used
and significant estimates made by
 
management, as well as evaluating
 
the overall presentation of the financial
 
statements. We
 
believe
that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche
Deloitte & Touche
Registered Auditors
Johannesburg, South Africa
September 12, 2023
We began serving
 
as the Company's auditor in 2004. In 2023 we became the predecessor auditor.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
as of June 30, 2024 and 2023
F-5
June 30,
June 30,
2024
2023
(In thousands, except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
59,065
$
35,499
Restricted cash related to ATM funding
 
and short-term credit facilities (Note 12)
6,853
23,133
Accounts receivable, net and other receivables (Note 4)
36,667
25,665
Finance loans receivable, net (Note 4)
44,058
36,744
Inventory (Note 5)
18,226
27,337
Total current assets before settlement assets
164,869
148,378
Settlement assets
22,827
15,258
Total current assets
187,696
163,636
PROPERTY,
 
PLANT AND EQUIPMENT, NET (Note 7)
31,936
27,447
OPERATING LEASE RIGHT-OF-USE (Note 8)
7,280
4,731
EQUITY-ACCOUNTED INVESTMENTS
 
(Note 9)
206
3,171
GOODWILL (Note 10)
138,551
133,743
INTANGIBLE ASSETS, NET (Note 10)
111,353
121,597
DEFERRED TAX ASSETS, NET
3,446
10,315
OTHER LONG-TERM ASSETS, including equity securities (Note 9 and 11)
77,982
77,594
TOTAL ASSETS
558,450
542,234
LIABILITIES
CURRENT LIABILITIES
Short-term credit facilities for ATM funding (Note 12)
6,737
23,021
Short-term credit facilities (Note 12)
9,351
9,025
Accounts payable
16,674
12,380
Other payables (Note 13)
56,051
36,297
Operating lease liability - current (Note 8)
2,343
1,747
Current portion of long-term borrowings (Note 12)
3,878
3,663
Income taxes payable
654
1,005
Total current liabilities before settlement obligations
95,688
87,138
Settlement obligations
22,358
14,774
Total current liabilities
118,046
101,912
DEFERRED TAX LIABILITIES, NET
38,128
46,840
OPERATING LEASE LIABILITY - LONG TERM (Note 8)
5,087
3,138
LONG-TERM BORROWINGS (Note 12)
139,308
129,455
OTHER LONG-TERM LIABILITIES, including insurance policy liabilities (Note 11)
2,595
1,982
TOTAL LIABILITIES
303,164
283,327
REDEEMABLE COMMON STOCK (Note 14)
79,429
79,429
EQUITY
COMMON STOCK (Note 14)
Authorized:
200,000,000
 
with $
0.001
 
par value;
Issued and outstanding shares, net of treasury - 2024:
64,272,243
; 2023:
63,640,246
83
83
PREFERRED STOCK
Authorized shares:
50,000,000
 
with $
0.001
 
par value;
Issued and outstanding shares, net of treasury:
 
2024:
-
 
; 2023:
-
-
-
ADDITIONAL PAID-IN-CAPITAL
343,639
335,696
TREASURY SHARES, AT
 
COST: 2024:
25,563,808
; 2023:
25,244,286
(289,733)
(288,238)
ACCUMULATED OTHER
 
COMPREHENSIVE LOSS (Note 15)
(188,355)
(195,726)
RETAINED EARNINGS
310,223
327,663
TOTAL LESAKA EQUITY
175,857
179,478
NON-CONTROLLING INTEREST
-
-
TOTAL EQUITY
175,857
179,478
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS’ EQUITY (In thousands, except per share data)
$
558,450
$
542,234
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT
 
OF OPERATIONS
for the years ended June 30, 2024, 2023 and 2022
F-6
2024
2023
2022
REVENUE (Note 16)
$
564,222
$
527,971
$
222,609
Services rendered
529,818
486,800
178,846
Loan-based fees received
29,948
25,308
22,444
Sale of goods
4,456
15,863
21,319
EXPENSE
Cost of goods sold, IT processing, servicing and support
442,673
417,544
168,317
Selling, general and administration
92,001
95,050
74,993
Depreciation and amortization
23,665
23,685
7,575
Reorganization costs
-
-
5,894
Transaction costs related to Adumo (2024) and Connect (2022) acquisitions (Note 3)
2,293
-
6,025
Impairment loss (Note 10)
-
7,039
-
OPERATING INCOME (LOSS)
3,590
(15,347)
(40,195)
REVERSAL OF ALLOWANCE FOR
 
DOUBTFUL EMI DEBT RECEIVABLE
 
(Note 9)
250
-
-
LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT (Note 9)
-
205
376
GAIN ON DISPOSAL OF EQUITY SECURITIES (Note 9)
-
-
720
GAIN RELATED TO
 
FAIR VALUE
 
ADJUSTMENT TO CURRENCY OPTIONS (Note 6)
-
-
3,691
INTEREST INCOME
2,294
1,853
2,089
INTEREST EXPENSE
18,932
18,567
5,829
LOSS BEFORE INCOME TAX EXPENSE (BENEFIT)
(12,798)
(32,266)
(39,900)
INCOME TAX EXPENSE (BENEFIT) (Note 18)
3,363
(2,309)
327
LOSS BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS
(16,161)
(29,957)
(40,227)
LOSS FROM EQUITY-ACCOUNTED INVESTMENTS
 
(Note 9)
(1,279)
(5,117)
(3,649)
NET LOSS FROM CONTINUING OPERATIONS
(17,440)
(35,074)
(43,876)
NET LOSS ATTRIBUTABLE
 
TO LESAKA
$
(17,440)
$
(35,074)
$
(43,876)
Net loss per share, in United States dollars
(Note 19):
Basic loss attributable to Lesaka shareholders
$
(0.27)
$
(0.56)
$
(0.75)
Diluted loss attributable to Lesaka shareholders CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME
$
(0.27)
$
(0.56)
$
(0.75)
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
for the years ended June 30, 2024, 2023 and 2022
F-7
2024
2023
2022
(In thousands)
Net loss
$
(17,440)
$
(35,074)
$
(43,876)
Other comprehensive income (loss), net of taxes:
Movement in foreign currency translation reserve
6,291
(31,183)
(25,413)
Movement in foreign currency translation reserve related to equity-accounted
investments (Note 15)
489
3,935
1,239
Release of foreign currency translation reserve related to disposal of
 
Finbond equity
securities (Note 9 and Note 15)
1,543
362
587
Release of foreign currency translation reserve related to liquidation of subsidiaries
(Note 15)
(952)
-
468
Total other comprehensive
 
income (loss), net of taxes
7,371
(26,886)
(23,119)
Comprehensive loss
(10,069)
(61,960)
(66,995)
Comprehensive loss attributable to Lesaka Consolidated Statement of Changes in Equity for the year ended June 30, 2022 (dollar amounts in thousands)
$
(10,069)
$
(61,960)
$
(66,995)
See accompanying notes to consolidated financial statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
F-8
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,
 
2021
81,607,912
$
80
(24,891,292)
$
(286,951)
56,716,620
$
301,959
$
406,613
$
(145,721)
$
275,980
$
-
$
275,980
$
84,979
Stock issued
3,185,079
3
3,185,079
16,655
16,658
16,658
Restricted stock granted
2,278,643
2,278,643
-
-
-
Exercise of stock options
249,521
249,521
760
760
760
Stock-based compensation charge (Note
17)
3,082
3,082
3,082
Reversal of stock-based compensation
charge (Note 17)
(105,542)
(105,542)
(120)
(120)
(120)
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
5
5
5
Transfer from redeemable common
stock to additional paid-in-capital (Note
14)
5,550
5,550
5,550
(5,550)
Net loss
(43,876)
(43,876)
-
(43,876)
Other comprehensive loss (Note 15)
(23,119)
(23,119)
-
(23,119)
Balance – June 30, 2022
87,215,613
$
83
(24,891,292)
$
(286,951)
62,324,321
$
327,891
$
362,737
$
(168,840)
$
234,920
$
-
$
234,920
$
79,429
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Consolidated Statement of Changes in Equity for the year ended June 30, 2023 (dollar amounts in thousands)
F-9
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,
 
2022
87,215,613
$
83
(24,891,292)
$
(286,951)
62,324,321
$
327,891
$
362,737
$
(168,840)
$
234,920
$
-
$
234,920
$
79,429
Treasury shares repurchased
(352,994)
(1,287)
(352,994)
-
(1,287)
(1,287)
Shares issued
206,239
206,239
-
-
-
Restricted stock granted
1,418,386
1,418,386
-
-
-
Exercise of stock options
158,659
158,659
481
481
481
Stock-based compensation charge (Note
17)
7,673
7,673
7,673
Reversal of stock-based compensation
charge (Note 17)
(114,365)
(114,365)
(364)
(364)
(364)
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
15
15
15
Net loss
(35,074)
(35,074)
-
(35,074)
Other comprehensive loss (Note 15)
(26,886)
(26,886)
-
(26,886)
Balance – June 30, 2023
88,884,532
$
83
(25,244,286)
$
(288,238)
63,640,246
$
335,696
$
327,663
$
(195,726)
$
179,478
$
-
$
179,478
$
79,429
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Consolidated Statement of Changes in Equity for the year ended June 30, 2024 (dollar amounts in thousands)
F-10
Lesaka Technologies, Inc. Shareholders
Number of
Shares
Amount
Number of
Treasury
Shares
Treasury
Shares
Number of
shares, net of
treasury
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
other
comprehensive
loss
Total
Lesaka
Equity
Non-
controlling
Interest
Total
Redeemable
common
stock
Balance – July 1,
 
2023
88,884,532
$
83
(25,244,286)
$
(288,238)
63,640,246
$
335,696
$
327,663
$
(195,726)
$
179,478
$
-
$
179,478
$
79,429
Treasury shares repurchased
(319,522)
(1,495)
(319,522)
-
(1,495)
(1,495)
Shares issued
194,454
194,454
-
-
-
Restricted stock granted
1,002,241
1,002,241
-
-
-
Exercise of stock options
54,287
54,287
165
165
165
Stock-based compensation charge (Note
17)
8,045
8,045
8,045
Reversal of stock-based compensation
charge (Note 17)
(299,463)
(299,463)
(134)
(134)
(134)
Stock-based compensation charge
related to equity-accounted investment
(Note 9)
(133)
(133)
(133)
Net loss
(17,440)
(17,440)
-
(17,440)
Other comprehensive income (Note 15)
7,371
7,371
-
7,371
Balance – June 30, 2024
89,836,051
$
83
(25,563,808)
$
(289,733)
64,272,243
$
343,639
$
310,223
$
(188,355)
$
175,857
$
-
$
175,857
$
79,429
See accompanying notes to consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT
 
OF CASHFLOWS
for the years ended June 30, 2024, 2023 and 2022
F-11
2024
2023
2022
(In thousands)
Cash flows from operating activities
Net loss
$
(17,440)
$
(35,074)
$
(43,876)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
23,665
23,685
7,575
Impairment loss (Note 10)
-
7,039
-
Movement in allowance for credit losses
5,158
6,495
1,551
Fair value adjustment related to financial liabilities
(853)
(20)
(466)
(Profit) Loss on disposal of property, plant and equipment
(305)
(468)
(2,849)
Stock-based compensation charge (Note 17)
7,911
7,309
2,962
Gain on disposal of equity securities (9)
-
-
(720)
Loss on disposal of equity-accounted investment (9)
-
205
376
Interest payable
1,119
5,069
9
Facility fee amortized (Note 12)
443
864
251
Loss from equity-accounted investments (Note 9)
1,279
5,117
3,649
Movement in allowance for doubtful loans to equity-accounted investments
(250)
-
38
Dividends received from equity-accounted investments
95
42
155
Changes in net working capital
(Increase) Decrease in accounts receivable (Note 20)
(10,873)
(1,687)
11,102
Increase in finance loans receivable (Note 20)
(10,029)
(12,353)
(2,047)
Decrease (Increase) in inventory
9,840
2,172
(4,820)
Increase (Decrease) in accounts payable and other payables
22,141
1,705
(8,851)
(Decrease) Increase in income taxes payable
(400)
(800)
1,087
Deferred tax expense (benefit)
(2,712)
(8,890)
(2,324)
Net cash provided by (used in) operating activities
28,789
410
(37,198)
Cash flows from investing activities
Capital expenditures
(12,665)
(16,156)
(4,558)
Proceeds from disposal of property, plant and equipment
1,565
1,497
4,217
Acquisition of intangible assets
(294)
(419)
-
Proceeds from disposal of equity-accounted investment (Note 9)
3,508
656
865
Loans to equity-accounted investment (Note 9)
-
(112)
-
Repayment of loans by equity-accounted investments
250
112
-
Acquisitions, net of cash acquired (Note 3)
(1,583)
-
(202,159)
Proceeds from disposal of equity-accounted investment - Bank Frick (Note 9)
-
-
11,390
Proceeds from disposal of equity securities (Note 9)
-
-
720
Net change in settlement assets
(7,196)
(2,036)
(4,163)
Net cash (used in) provided by investing activities
(16,415)
(16,458)
(193,688)
Cash flows from financing activities
Proceeds from bank overdraft (Note 12)
182,990
520,065
570,862
Repayment of bank overdraft (Note 12)
(199,642)
(547,271)
(525,459)
Long-term borrowings utilized (Note 12)
23,728
24,355
78,851
Repayment of long-term borrowings (Note 12)
(20,073)
(17,512)
(5,581)
Non-refundable deal origination fees/ guarantee fees (Note 12)
-
(100)
(1,307)
Acquisition of treasury stock
 
(1,495)
(1,287)
-
Proceeds from exercise of stock options
165
481
759
Net change in settlement obligations
7,214
2,148
4,134
Net cash (used in) provided by financing activities
(7,113)
(19,121)
122,259
Effect of exchange rate changes on cash
2,025
(10,999)
(10,338)
Net decrease in cash, cash equivalents and restricted cash
7,286
(46,168)
(118,965)
Cash, cash equivalents and restricted cash – beginning of period
58,632
104,800
223,765
Cash, cash equivalents and restricted cash – end of period (Note 20)
$
65,918
$
58,632
$
104,800
See accompanying notes to consolidated financial statements
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-12
1.
 
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Lesaka Technologies, Inc. (“Lesaka” and collectively
 
with its consolidated subsidiaries, the “Company”), formerly named Net 1
UEPS Technologies, Inc., was incorporated in
 
the State of
 
Florida on May
 
8, 1997. The
 
Company is a
 
provider of financial technology,
or fintech, products and services, primarily in South Africa and neighboring
 
countries,
 
to unbanked and underbanked consumers, and
fintech solutions for
 
merchants operating in formal
 
and informal markets.
 
The Company provides
 
cash management and digitization
services and
 
card acquiring to
 
merchants,
 
and has developed
 
and provides secure
 
transaction technology
 
solutions and services,
 
and
offers transaction processing, including bill payment and value-added services (including prepaid
 
airtime and electricity products) and
financial solutions to its customers.
Basis of presentation
The accompanying
 
consolidated financial
 
statements include
 
subsidiaries over
 
which Lesaka
 
exercises control
 
and have
 
been
prepared in accordance with accounting principles generally accepted
 
in the United States of America (“GAAP”).
 
Reorganization charge - financial services restructuring
 
during the year ended June 30, 2022
The Company has incurred significant losses since its contract to distribute social grants expired in September 2018. A strategic
imperative for the Company was to
 
return its South African consumer
 
business to a breakeven position and
 
then profitability as soon
as possible.
 
As part
 
of
 
a
 
cost
 
optimization
 
review
 
completed
 
in
 
late
 
calendar
 
2021,
 
the Company
 
performed
 
a
 
review
 
of
 
its labor
structure and determined that
 
a number of its defined
 
employee roles would need to
 
be terminated due to redundancy.
 
The Company
embarked on a retrenchment process pursuant to Section 189A of the South African Labour Relations Act (“Labour Act”) on January
10, 2022. The Company incurred
 
cash costs of approximately $
6.7
 
million (ZAR
103.4
 
million) during the third quarter
 
of fiscal 2022,
principally consisting of severance and related
 
payments and the payment of
 
unutilized leave days. The Company
 
recorded an expense
of $
5.9
 
million in the caption reorganization costs in the Company’s
 
consolidated statement of operations for the year ended June 30,
2022. The primary difference between the
 
reorganization charge amount and the total
 
cash paid relates to
 
leave pay which was
 
accrued
in prior periods.
July 2021 civil unrest in South Africa impacting
 
the year ended June 30, 2022
Two
 
of South
 
Africa’s
 
nine provinces
 
experienced significant
 
civil unrest
 
in July
 
2021 resulting
 
in mass
 
looting, loss
 
of life,
disruption of
 
transport and
 
supply routes,
 
and widespread
 
destruction of
 
property.
 
In total
 
337 South
 
Africans lost
 
their lives
 
in the
unrest
 
– fortunately
 
none of
 
the Company’s
 
employees were
 
injured or
 
harmed. There
 
was widespread
 
damage to
 
bank and
 
ATM
infrastructure in the affected provinces. In
 
total approximately 1,800 ATMs
 
and 300 branches were damaged across the industry,
 
and
the Banking Association
 
of South
 
Africa (“BASA”), estimates
 
that total
 
damage to banking
 
infrastructure amounted to
 
ZAR 1.6
 
billion.
The
 
South
 
African
 
Special
 
Risks
 
Insurance
 
Association
 
(“SASRIA”),
 
a
 
public
 
enterprise
 
and
 
a
 
non-life
 
insurance
 
company
 
that
provides coverage for damage caused
 
by special risks such as politically
 
motivated malicious acts, riots, strikes,
 
terrorism and public
disorders, estimates that the total damage to property
 
across South Africa will be between
 
ZAR 19.0 billion and ZAR 20.0
 
billion. The
Company suffered
 
damage at
19
 
of its branches
 
and to
173
 
ATMs.
 
The disruption and
 
related closure of
 
branches also impacted
 
the
Company’s efforts to grow EPE customer numbers.
 
The Company also saw an impact on transaction volumes through its ATMs
 
with
July 2021 volumes
13
% lower than June 2021, and August 2021
3
% lower than July 2021.
The Company’s insurance claims to recover the cost to repair and replace its branches and ATMs have been met in full, with the
Company receiving ZAR
38.6
 
million from SASRIA during the year ended June 30, 2022.
As a result
 
of the disruption
 
to ATM
 
coverage and
 
availability,
 
BASA and the
 
South Africa’s
 
banks agreed
 
that the fee
 
which
customers
 
pay
 
to utilize
 
other banks’
 
ATMs
 
would be
 
waived for
 
August and
 
September 2021.
 
The Company
 
lost transaction
 
fee
revenue of approximately ZAR
6.0
 
million ($
0.4
 
million) during the year ended June 30, 2022, as a result of this decision.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-13
2.
 
SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The financial statements of
 
entities which are controlled
 
by Lesaka, referred to as
 
subsidiaries, are consolidated. Inter-company
accounts and transactions are eliminated upon consolidation.
 
The Company, if it is the primary beneficiary,
 
consolidates entities which are considered to be variable interest entities (“VIE”).
The primary beneficiary is considered
 
to be the entity that will absorb a
 
majority of the entity's expected losses,
 
receive a majority of
the entity's expected residual returns, or both. No entities were required to be consolidated as a result of these requirements during the
years ended June 30, 2024, 2023 and 2022.
Business combinations
The
 
Company
 
accounts
 
for
 
its
 
business
 
acquisitions
 
under
 
the
 
acquisition
 
method
 
of
 
accounting.
 
The
 
total
 
value
 
of
 
the
consideration paid
 
for acquisitions is
 
allocated to
 
the underlying
 
net assets acquired,
 
based on their
 
respective estimated fair
 
values.
The Company uses a number
 
of valuation methods to determine
 
the fair value of assets and
 
liabilities acquired, including discounted
cash
 
flows,
 
external
 
market
 
values,
 
valuations
 
on
 
recent
 
transactions
 
or
 
a
 
combination
 
thereof,
 
and
 
believes
 
that
 
it
 
uses
 
the
 
most
appropriate
 
measure
 
or
 
a
 
combination
 
of
 
measures
 
to
 
value
 
each
 
asset
 
or
 
liability.
 
The Company
 
recognizes
 
measurement-period
adjustments in the reporting period in which the adjustment amounts are determined.
 
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions
 
that
affect
 
the
 
reported
 
amounts
 
of
 
assets
 
and
 
liabilities
 
and
 
disclosure
 
of
 
contingent
 
assets
 
and
 
liabilities
 
at
 
the
 
date
 
of
 
the
 
financial
statements
 
and
 
the reported
 
amounts
 
of revenues
 
and
 
expenses during
 
the reporting
 
period.
 
Actual results
 
could
 
differ
 
from
 
those
estimates.
Translation of foreign
 
currencies
The primary
 
functional currency
 
of the
 
consolidated entities
 
is the
 
South African
 
Rand (“ZAR”)
 
and the
 
Company’s
 
reporting
currency is the U.S. dollar.
 
Assets and liabilities are translated
 
at the exchange rates in effect
 
at the balance sheet date. Revenues
 
and
expenses are translated at average
 
rates for the period. Translation
 
gains and losses are reported in
 
accumulated other comprehensive
income in total
 
equity.
 
The Company releases the
 
foreign currency translation
 
reserve included in accumulated
 
other comprehensive
income attributable
 
to a foreign
 
entity upon sale
 
or complete, or
 
substantially complete,
 
liquidation of the
 
investment in that
 
foreign
entity and includes the release in the gain or loss reported related to the sale or
 
liquidation of the foreign entity.
Foreign exchange transactions are translated at the spot rate ruling at the date of the transaction. Monetary items are translated at
the closing
 
spot rate
 
at the
 
balance sheet
 
date. Transactional
 
gains and
 
losses are
 
recognized
 
in selling,
 
general and
 
administration
expense on the Company’s consolidated
 
statement of operations for the period.
Cash, cash equivalents and restricted cash
Cash and cash equivalents
 
include cash on hand and funds
 
deposited in bank accounts with
 
financial institutions that are liquid,
unrestricted and
 
readily available.
 
Restricted cash
 
represents cash
 
which is
 
legally or
 
contractually restricted
 
as to
 
use and
 
includes
cash related to cash withdrawn from the Company’s debt facilities to fund ATMs
 
as well cash in certain bank accounts that have been
ceded to under certain of the Company’s
 
borrowings.
Allowance for credit losses
Allowance for credit losses
The Company uses historical default experience over the lifetime of loans in order to calculate a lifetime loss rate for its lending
books. The allowance for credit losses related
 
to Consumer finance loans receivables is calculated by multiplying the
 
lifetime loss rate
with
 
the
 
month-end
 
outstanding
 
lending
 
book.
 
The
 
allowance
 
for
 
credit
 
losses
 
related
 
to
 
Merchant
 
finance
 
loans
 
receivables
 
is
calculated
 
by
 
adding
 
together
 
actual
 
receivables
 
in
 
default
 
plus
 
multiplying
 
the
 
lifetime
 
loss
 
rate
 
with
 
the
 
month-end
 
outstanding
lending book. The Company
 
writes off microlending
 
finance loans receivable and
 
related service fees and interest
 
if a borrower is
 
in
arrears with
 
repayments for
 
more than
 
three months
 
or is
 
deceased. The
 
Company writes
 
off merchant
 
and working
 
capital finance
receivables and related
 
fees when it is
 
evident that reasonable
 
recovery procedures,
 
including where deemed
 
necessary, formal
 
legal
action, have failed. Prior to July 1, 2023, the Company regularly reviewed the ageing of outstanding amounts due from borrowers and
adjusted its allowance based on management’s
 
estimate of the recoverability of the finance loans receivable.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-14
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for credit losses (continued)
Allowance for credit losses (continued)
The Company uses a lifetime loss rate by expressing write-off
 
experience as a percentage of corresponding invoice amounts (as
opposed to outstanding balances).
 
The allowance for credit
 
losses related to these
 
receivables has been calculated
 
by multiplying the
lifetime loss
 
rate with
 
recent invoice/origination amounts.
 
Prior to
 
July 1,
 
2023, a specific
 
provision is
 
established where it
 
is considered
likely that all or
 
a portion of
 
the amount due
 
from customers renting
 
safe assets, point of
 
sale (“POS”) equipment,
 
receiving support
and
 
maintenance
 
or
 
transaction
 
services
 
or
 
purchasing
 
licenses
 
or
 
SIM
 
cards
 
from
 
the
 
Company
 
will
 
not
 
be
 
recovered.
 
Non-
recoverability
 
is assessed
 
based
 
on
 
a
 
quarterly
 
review
 
by management
 
of
 
the ageing
 
of outstanding
 
amounts,
 
the
 
location
 
and
 
the
payment history of the customer in relation to those specific amounts.
Inventory
Inventory
 
is valued
 
at the
 
lower of
 
cost and
 
net realizable
 
value. Cost
 
is determined
 
on a
 
first-in,
 
first-out basis
 
and includes
transport and handling costs.
Property, plant
 
and equipment
Property,
 
plant and
 
equipment are
 
shown at
 
cost less accumulated
 
depreciation. Property,
 
plant and
 
equipment are
 
depreciated
on the straight-line basis at rates which
 
are estimated to amortize the assets to
 
their anticipated residual values over their useful
 
lives.
Within the following asset classifications, the expected
 
economic lives are approximately:
Vaults
8
 
years
Computer equipment
3
 
to
8
 
years
Office equipment
2
 
to
10
 
years
Vehicles
3
 
to
8
 
years
Furniture and fittings
3
 
to
10
 
years
The gain or loss arising
 
on the disposal or retirement
 
of an asset is determined
 
as the difference between
 
the sales proceeds and
the carrying amount of the asset and is recognized in income.
Leases
The Company determines whether an arrangement is a lease at inception.
 
Operating leases are included in operating lease right-
of-use assets (“ROU”),
 
operating lease liability
 
- current, and
 
operating lease liability
 
– long term
 
in its consolidated
 
balance sheets.
The Company
 
does not
 
have any
 
significant finance
 
leases as
 
of June
 
30, 2024
 
and 2023,
 
respectively,
 
but its
 
policy is
 
to include
finance leases in property and equipment, other payables, and other
 
long-term liabilities in its consolidated balance sheets.
A ROU asset
 
represents the
 
Company’s
 
right to use
 
an underlying
 
asset for the
 
lease term and
 
the lease liabilities
 
represent its
obligation to
 
make lease
 
payments arising
 
from the
 
lease arrangement.
 
Operating lease
 
ROU assets
 
and liabilities
 
are recognized
 
at
commencement date based on
 
the present value of
 
lease payments over the
 
lease term. As
 
most of the
 
Company’s leases do not provide
an implicit rate,
 
the Company generally
 
uses its incremental
 
borrowing rate
 
based on
 
the estimated rate
 
of interest for
 
collateralized
borrowing over
 
a similar term
 
of the lease
 
payments at commencement
 
date. The operating
 
lease ROU asset
 
also includes any
 
lease
prepayments made
 
and excludes lease
 
incentives. The terms
 
of the Company’s
 
lease arrangements may
 
include options to
 
extend or
terminate
 
the
 
lease
 
when
 
it is
 
reasonably
 
certain
 
that
 
the Company
 
will exercise
 
that
 
option.
 
Lease
 
expense
 
for
 
lease payments
 
is
recognized on a straight-line basis over the lease term.
The Company does not recognize right-of-use assets and lease liabilities for lease arrangements with a term of twelve months or
less. The Company
 
accounts for all
 
components in a
 
lease arrangement as
 
a single combined
 
lease component. Costs
 
incurred in the
adaptation of leased properties to
 
serve the requirements of
 
the Company (leasehold improvements) are
 
capitalized and amortized over
the shorter of the estimated useful life of the asset and the remaining term of
 
the lease.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-15
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity-accounted investments
The Company uses the equity
 
method to account for
 
investments in companies when
 
it has significant influence but
 
not control
over
 
the operations
 
of the
 
company.
 
Under the
 
equity method,
 
the Company
 
initially records
 
the investment
 
at cost
 
and
 
thereafter
adjusts the carrying value of the investment to recognize its proportional share of the equity-accounted company’s net income or loss.
In addition, when an investment qualifies for the equity
 
method (as a result of an increase in the level of ownership
 
interest or degree
of influence),
 
the cost
 
of acquiring
 
the additional
 
interest in
 
the investee
 
is added
 
to the
 
current basis
 
of the
 
Company’s
 
previously
held interest and the equity method would be
 
applied subsequently from the date on which
 
the Company obtains the ability to exercise
significant influence over the investee.
The Company
 
releases a
 
pro rata
 
portion of
 
the foreign
 
currency translation
 
reserve related
 
to an
 
equity-accounted investment
that is
 
included
 
in accumulated
 
other comprehensive
 
income to
 
earnings upon
 
the sale
 
of a
 
portion of
 
its ownership
 
interest in
 
the
equity-accounted
 
investment.
 
The
 
release
 
of
 
the
 
pro
 
rata
 
portion
 
of
 
the
 
foreign
 
currency
 
translation
 
reserve
 
is
 
included
 
in
 
the
measurement of
 
the gain
 
or loss
 
on sale
 
of a
 
portion of
 
the Company’s
 
ownership interest
 
in the
 
equity-accounted investment.
 
The
Company does not recognize cumulative losses in excess of its investment or loans in an equity-accounted
 
investment except if it has
an obligation to provide additional financial support.
Dividends received from an equity-accounted investment reduce the carrying value
 
of the Company’s investment. The Company
has elected to classify distributions received from equity method investees using the nature of the distribution approach.
 
This election
requires the Company to evaluate
 
each distribution received on the
 
basis of the source of the
 
payment and classify the distribution
 
as
either
 
operating
 
cash
 
inflows
 
or
 
investing
 
cash
 
inflows.
 
The
 
Company
 
reviews
 
its
 
equity-accounted
 
investments
 
for
 
impairment
whenever events or circumstances indicate that the carrying amount of
 
the investment may not be recoverable.
Goodwill
Goodwill
 
represents
 
the
 
excess
 
of
 
the
 
purchase
 
price
 
of
 
an
 
acquired
 
enterprise
 
over
 
the
 
fair
 
values
 
of
 
the
 
identifiable
 
assets
acquired and liabilities assumed. The Company tests for impairment
 
of goodwill on an annual basis and at any other time if events
 
or
circumstances change that would more likely than not
 
reduce the fair value of the
 
reporting unit’s goodwill below its carrying amount.
 
Circumstances that
 
could trigger
 
an impairment test
 
include but are
 
not limited to:
 
a significant adverse
 
change in the
 
business
climate or legal
 
factors; an adverse
 
action or assessment
 
by a regulator;
 
unanticipated competition; loss
 
of key personnel;
 
the likelihood
that a reporting unit or
 
significant portion of a reporting
 
unit will be sold
 
or otherwise disposed; and results
 
of testing for recoverability
of a significant asset group within a reporting unit. If goodwill is allocated to a reporting unit
 
and the carrying amount of the reporting
unit exceeds
 
the fair value
 
of that reporting
 
unit, an impairment
 
loss is recorded
 
in the statement
 
of operations.
 
Measurement of
 
the
fair value
 
of a reporting
 
unit is based
 
on one
 
or more
 
of the following
 
fair value
 
measures: the amount
 
at which the
 
unit as a
 
whole
could be
 
bought or sold
 
in a current
 
transaction between
 
willing parties; present
 
value techniques
 
of estimated future
 
cash flows; or
valuation techniques based on multiples of earnings or revenue, or
 
a similar performance measure.
 
Intangible assets
Intangible assets are shown at
 
cost less accumulated amortization. Intangible assets
 
are amortized over the following useful
 
lives:
Customer relationships
1
 
to
15
 
years
Software, integrated platform and unpatented technology
3
 
to
10
 
years
FTS patent
10
 
years
Exclusive licenses
7
 
years
Brands and trademarks
3
 
to
20
 
years
Intangible assets
 
are periodically
 
evaluated for
 
recoverability,
 
and those
 
evaluations take
 
into account
 
events or
 
circumstances
that warrant revised estimates of useful lives or that indicate that impairment
 
exists.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-16
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Debt and equity securities
Debt securities
The Company is required to
 
classify all applicable debt securities
 
as either trading securities, available
 
for sale or held
 
to maturity
upon investment in the security.
 
Trading
Debt securities
 
acquired by
 
the Company
 
which it
 
intends
 
to sell
 
in the
 
short-term
 
are classified
 
as trading
 
securities and
 
are
initially measured
 
at fair
 
value. These
 
debt securities
 
are subsequently
 
measured at
 
fair value
 
and realized
 
and unrealized
 
gains and
losses
 
from
 
these
 
trading
 
securities
 
are
 
included
 
in
 
the
 
Company’s
 
consolidated
 
statement
 
of
 
operations.
 
Classification
 
of
 
a
 
debt
security as a trading
 
security is not precluded
 
simply because the Company
 
does not intend to sell
 
the security in the
 
short term. The
Company had no debt securities that were classified as trading securities as of June
 
30, 2024 and 2023, respectively.
Available for sale
Debt
 
securities
 
acquired
 
by the
 
Company
 
that
 
have
 
readily
 
determinable
 
fair values
 
are classified
 
as available
 
for
 
sale if
 
the
Company has not classified them as trading securities or if it does not have
 
the ability or positive intent to hold the debt security until
maturity.
 
The Company is
 
required to make
 
an election to
 
account for these
 
debt securities as
 
available for
 
sale. These available
 
for
sale debt securities
 
are initially measured
 
at fair value. These
 
debt securities are
 
subsequently measured at
 
fair value with unrealized
gains
 
and
 
losses
 
from
 
available
 
for
 
sale
 
investments
 
in
 
debt
 
securities
 
reported
 
as
 
a
 
separate
 
component
 
of
 
accumulated
 
other
comprehensive income, net of deferred income
 
taxes, in shareholders’ equity. The Company had
no
 
debt securities that were classified
as available for sale securities as of June 30, 2024 and 2023, respectively.
Held to maturity
Debt securities acquired by the Company which it has the ability and the positive intent to hold to maturity are classified as held
to maturity debt securities. The Company is required to make an election to classify these debt securities as held to maturity and these
securities are carried at amortized cost. The amortized cost
 
of held to maturity debt securities
 
is adjusted for amortization of premiums
and accretion of discounts to maturity.
 
Interest received from the held to
 
maturity security together with this amortization
 
is included
in interest income in the Company’s consolidated statement of operations. The Company had
 
a held to maturity security as of
 
June 30,
2024 and
 
2023, respectively,
 
refer to
 
Note 4.
 
The Company
 
uses historical
 
default experience
 
over the
 
lifetime of
 
debt securities
 
in
order to calculate a lifetime loss rate
 
for its held to maturity debt securities. As
 
of each of July 1, 2023, and
 
June 30, 2024, the carrying
value of the Company’s held
 
to maturity debt securities was $
0
.
Impairment of debt securities
Up
 
until
 
the
 
adoption
 
of
 
guidance
 
regarding
Measurement
 
of
 
Credit
 
Losses
 
on
 
Financial
 
Instruments
 
on
 
July
 
1,
 
2023,
 
the
Company’s available for sale and held to maturity debt securities with unrealized
 
losses are reviewed quarterly to identify other-than-
temporary impairments in value.
With regard to available for sale and held to maturity debt securities, the Company considers (i) the ability and intent to hold the
debt security for a
 
period of time to
 
allow for recovery of
 
value (ii) whether it
 
is more likely than
 
not that the Company
 
will be required
to sell the debt security;
 
and (iii) whether it expects
 
to recover the entire carrying
 
amount of the debt security.
 
The Company records
an impairment
 
loss in its
 
consolidated statement
 
of operations representing
 
the difference between
 
the debt securities
 
carrying value
and the current fair value as
 
of the date of the impairment
 
if the Company determines that
 
it intends to sell the debt
 
security or if that
it is
 
more likely
 
than not
 
that it
 
will be
 
required to
 
sell the
 
debt security
 
before recovery
 
of the
 
amortized cost
 
basis. However,
 
the
impairment loss
 
is split
 
between a
 
credit loss
 
and a
 
non-credit loss
 
for debt
 
securities that
 
the Company
 
determines that
 
it does
 
not
intend to sell or that it is more likely than not that it will
 
not be required to sell the debt securities before the recovery of the amortized
cost basis. The credit loss portion, which is measured as the difference
 
between the debt security’s cost
 
basis and the present value of
expected future cash flows,
 
is recognized in the Company’s
 
consolidated statement of operations.
 
The non-credit loss portion,
 
which
is measured
 
as the
 
difference between
 
the debt
 
security’s
 
cost basis and
 
its current
 
fair value,
 
is recognized
 
in other
 
comprehensive
income, net of applicable taxes.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-17
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity securities
Equity
 
securities
 
are
 
measured
 
at
 
fair
 
value.
 
Changes
 
in
 
the
 
fair
 
value
 
of
 
equity
 
securities
 
are
 
recorded
 
in
 
the
 
Company’s
consolidated statement
 
of operations within
 
the caption titled
 
“change in fair
 
value of equity
 
securities”. The
 
Company may elect
 
to
measure equity securities without readily determinable fair
 
values at its cost
 
minus impairment, if any, plus or minus changes resulting
from observable price changes in orderly transactions for the identical or
 
a similar investment of the same issuer (“cost minus changes
in observable
 
prices equity
 
securities”). Changes
 
in the fair
 
value of
 
the Company’s
 
cost minus
 
changes in
 
observable prices
 
equity
securities are discussed in Note 9. There were
no
 
changes in the fair value of the Company’s cost minus
 
changes in observable prices
equity securities during the
 
year ended June 30,
 
2024, 2023 and 2022,
 
respectively.
 
The Company performs a qualitative
 
assessment
on a quarterly basis and recognizes an impairment loss if there are sufficient indicators that the fair value
 
of the equity security is less
than its carrying value.
Policy reserves and liabilities
 
Reserves for policy benefits and claims payable
The Company determines its reserves for policy benefits under
 
its life insurance products using a model which estimates claims
incurred
 
that have
 
not been
 
reported
 
and
 
total
 
present
 
value
 
of disability
 
claims-in-payment
 
at
 
the balance
 
sheet
 
date. This
 
model
allows for
 
best estimate
 
assumptions based
 
on experience
 
(where sufficient)
 
plus prescribed
 
margins,
 
as required
 
in the
 
markets
 
in
which these products are offered, namely South Africa.
The best estimate assumptions include (i) mortality and morbidity assumptions reflecting the company’s
 
most recent experience
and (ii) claim reporting delays reflecting Company specific and industry experience. Most of the disability claims-in-payment reserve
is
 
reinsured
 
and
 
the
 
reported
 
values
 
were
 
based
 
on
 
the
 
reserve
 
held
 
by
 
the
 
relevant
 
reinsurer.
 
The
 
values
 
of
 
matured
 
guaranteed
endowments are increased by late payment interest (net of the asset management
 
fee and allowance for tax on investment income).
Deposits on investment contracts
For the Company’s interest-sensitive
 
life contracts, liabilities approximate the policyholder’s account
 
value.
Reinsurance contracts held
The Company enters into reinsurance
 
contracts with reinsurers under
 
which the Company is compensated
 
for the entire amount
or a portion of losses arising on one or more of the insurance contracts it issues.
The expected benefits to which the Company is
 
entitled under its reinsurance contracts held are recognized as reinsurance
 
assets.
These assets consist
 
of short-term
 
balances due from
 
reinsurers (classified within
 
Accounts receivable,
 
net and other
 
receivables) as
well as long-term receivables (classified within other long-term assets) that are dependent on the expected claims and benefits arising
under the
 
related reinsurance
 
contracts. Amounts
 
recoverable from
 
or due
 
to reinsurers
 
are measured
 
consistently with
 
the amounts
associated with the reinsured contracts and in accordance with the terms of each reinsurance contract. Reinsurance assets are assessed
for impairment at
 
each balance sheet
 
date. If there
 
is reliable
 
objective evidence that
 
amounts due may
 
not be recoverable,
 
the Company
reduces the carrying amount of the reinsurance asset to its recoverable amount and recognizes that impairment loss in its consolidated
statement of operations. Reinsurance premiums are recognized when
 
due for payment under each reinsurance contract.
Redeemable common stock
Common stock
 
that is
 
redeemable (1)
 
at a
 
fixed or
 
determinable price
 
on a
 
fixed or
 
determinable date,
 
(2) at
 
the option
 
of the
holder,
 
or (3)
 
upon the
 
occurrence of
 
an event
 
that is
 
not solely
 
within the
 
control of
 
Company is
 
presented outside
 
of total
 
Lesaka
equity (i.e. permanent equity). Redeemable common stock is
 
initially recognized at issuance date fair value
 
and the Company does not
adjust
 
the
 
issuance date
 
fair value
 
if redemption
 
is not
 
probable.
 
The Company
 
re-measures
 
the redeemable
 
common
 
stock
 
to the
maximum
 
redemption
 
amount
 
at
 
the
 
balance
 
sheet
 
date
 
once
 
redemption
 
is
 
probable.
 
Reduction
 
in
 
the
 
carrying
 
amount
 
of
 
the
redeemable common stock is
 
only appropriate to the
 
extent that the Company
 
has previously recorded increases
 
in the carrying amount
of the
 
redeemable
 
equity instrument
 
as the
 
redeemable common
 
stock may
 
not be
 
carried at
 
an amount
 
that is
 
less than
 
the initial
amount reported outside of permanent equity.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-18
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Redeemable common stock (continued)
Redeemable common stock is reclassified as permanent equity when presentation outside
 
permanent equity is no longer required
(if, for example, a redemption
 
feature lapses, or there
 
is a modification of the
 
terms of the instrument). The
 
existing carrying amount
of the redeemable common
 
stock is reclassified to permanent
 
equity at the date of
 
the event that caused the
 
reclassification and prior
period consolidated financial statements are not adjusted.
Revenue recognition
 
The
 
Company
 
recognizes
 
revenue
 
upon
 
transfer
 
of
 
control
 
of
 
promised
 
products
 
or
 
services
 
to
 
customers
 
in
 
an
 
amount
 
that
reflects
 
the
 
consideration
 
the
 
Company
 
expects
 
to
 
receive
 
in
 
exchange
 
for
 
those
 
products
 
or
 
services.
 
The
 
Company
 
enters
 
into
contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted
for as
 
separate performance
 
obligations
based on
 
observable standalone
 
selling prices.
 
Revenue is
 
recognized net
 
of allowances
 
for
returns and any taxes collected from customers, which are subsequently remitted
 
to governmental authorities.
Nature of products and services
Prepaid airtime sold
The Company purchases airtime vouchers for resale to customers and acts as
 
a principal in these transactions.
 
Airtime purchased
for resale is included in inventory and released to cost of goods sold,
 
IT processing, servicing and support upon sale of the inventory.
The Company negotiates and agrees sales prices for airtime sales
 
with its customers and revenue is measured at the agreed contractual
price. The Company recognizes revenue when the airtime is delivered
 
to the customer.
Processing fees
The Company
 
earns processing
 
fees from
 
transactions processed
 
for its
 
customers. The
 
Company provides
 
its customers
 
with
transaction processing services that
 
involve the collection, transmittal
 
and retrieval of
 
all transaction data
 
in exchange for
 
consideration
upon completion of the transaction
 
and recognizes revenue from these
 
activities at a point in time.
 
In certain instances, the Company
also provides a funds collection
 
and settlement service for its
 
customers and recognizes revenue from these
 
activities at a point in
 
time.
The
 
Company
 
also
 
provides
 
customers
 
with
 
cash
 
management
 
and
 
digitization
 
services
 
which
 
enables
 
its
 
merchant
 
customers
 
to
deposit
 
cash into
 
digital vaults
 
operated
 
by the
 
Company,
 
after which
 
the funds
 
are then
 
electronically
 
accessible by
 
customers
 
to
either transfer to their nominated bank account or to pay certain pre-selected suppliers and recognizes revenue from these activities at
a point in time.
 
The Company considers
 
each of these services
 
as a single performance
 
obligation. The Company’s
 
contracts specify
a transaction
 
price for
 
services provided.
 
Processing revenue fluctuates
 
based on
 
the type and
 
the volume of
 
transactions processed.
Revenue is recognized on the completion of the processed transaction.
The Company, as a transaction processor and in the capacity
 
of an agent, facilitates the delivery of
 
value added services (“VAS”)
to its
 
customers (including
 
prepaid airtime
 
vouchers, prepaid
 
electricity and
 
gaming vouchers)
 
and earns
 
a commission
 
once these
services are delivered to the
 
customer. The Company
 
recognizes revenue from these activities at
 
a point in time. Revenue
 
from these
transactions fluctuates based on the volume of VAS
 
services distributed.
Customers
 
serviced
 
by the
 
Company’s
 
Consumer
 
operating segment
 
that have
 
a bank
 
account managed
 
by the
 
Company
 
are
issued cards that can be utilized to withdraw
 
funds at an ATM or to transact at a merchant point of sale device
 
(“POS”). The Company
earns processing fees
 
from transactions processed
 
for these customers. The
 
Company’s contracts
 
specify a transaction
 
price for each
service provided (for instance,
 
ATM
 
withdrawal, balance enquiry,
 
etc.). Processing revenue fluctuates based
 
on the type and
 
volume
of transactions performed by the customer.
 
Revenue is recognized on the completion of the processed transaction at
 
a point in time.
Account holder fees
The Company
 
provides bank accounts
 
to customers
 
and this service
 
is underwritten
 
by a regulated
 
banking institution
 
because
the Company is not
 
a bank. The Company
 
charges its customers
 
a fixed monthly
 
bank account administration
 
fee for all active
 
bank
accounts regardless of
 
whether the account
 
holder has transacted
 
or not. The
 
Company recognizes account
 
holder fees on a
 
monthly
basis on
 
all active
 
bank
 
accounts,
 
which
 
are earned
 
over
 
time and
 
billed
 
on a
 
monthly
 
basis. Revenue
 
from account
 
holders’
 
fees
fluctuates based on the number of active bank accounts.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-19
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Nature of products and services (continued)
Lending revenue
The
 
Company
 
provides
 
short-term
 
loans
 
to
 
customers
 
(consumers)
 
in
 
South
 
Africa
 
and
 
charges
 
up-front
 
initiation
 
fees
 
and
monthly service fees.
 
Initiation fees are
 
recognized using
 
the effective interest
 
rate method, which
 
requires the utilization
 
of the rate
of return implicit in the loan, that is, the contractual interest rate adjusted for any net deferred loan fees or costs, premium, or discount
existing at the origination or acquisition of
 
the loan. Monthly service fee
 
revenue is recognized under the contractual terms
 
of the loan.
The
 
monthly
 
service
 
fee
 
are
 
earned
 
over
 
time
 
and
 
is
 
fixed
 
upon
 
initiation
 
and
 
does
 
not
 
change
 
over
 
the
 
term
 
of
 
the
 
loan
 
and
 
is
recognized when billed on a monthly basis.
Interest earned from
 
customers
The Company provides short-term loans to merchants in South Africa and levies interest on the amount lent. The Company does
not charge
 
these customers
 
up-front initiation
 
fees or
 
monthly service
 
fees. Interest
 
earned from
 
customers is
 
recognized using
 
the
effective interest
 
rate method,
 
which requires
 
the utilization
 
of the
 
rate of
 
return implicit
 
in the
 
loan, that
 
is, the
 
contractual interest
rate adjusted
 
for any net
 
deferred loan
 
fees or
 
costs, premium,
 
or discount
 
existing at
 
the origination
 
or acquisition
 
of the
 
loan. The
interest rate included in the contract with the customer generally changes with changes to benchmark rates of interest set by the South
African Reserve Bank.
Technology
 
products
 
The Company supplies hardware and licenses for its customers to use the Company’s
 
technology. Hardware includes the sale of
POS devices, SIM cards and other consumables which
 
can occur on an ad
 
hoc basis. The Company recognizes revenue from hardware
at the transaction price specified
 
in the contract as the hardware is
 
delivered to the customer.
 
Licenses include the right to use
 
certain
technology developed by the Company and the associated revenue is recognized
 
ratably over the license period.
Insurance revenue
The Company writes
 
life insurance contracts, and
 
policy holders pay
 
the Company a
 
monthly insurance premium at
 
the beginning
of each month. Premium revenue
 
is recognized on a monthly basis net of
 
policy lapses. Policy lapses are provided
 
for on the basis of
expected non-payment of policy premiums.
Accounts Receivable, Contract Assets and Contract Liabilities
The
 
Company
 
recognizes
 
accounts
 
receivable
 
when
 
its
 
right
 
to
 
consideration
 
under
 
its
 
contracts
 
with
 
customers
 
becomes
unconditional. The Company has no contract assets or contract liabilities.
 
Research and development expenditure
Research and
 
development expenditure
 
is charged
 
to net
 
income in
 
the period
 
in which
 
it is
 
incurred. During
 
the years
 
ended
June 30, 2024,
 
2023 and 2022, the
 
Company incurred research
 
and development expenditures
 
of $
0.5
 
million, $
0.5
 
million and $
0.5
million, respectively.
Computer software development
Product
 
development
 
costs in
 
respect
 
of
 
software
 
intended
 
for
 
sale
 
to
 
licensees
 
are
 
expensed
 
as
 
incurred
 
until
 
technological
feasibility is attained.
 
Technological
 
feasibility is attained
 
when the Company’s
 
software has completed
 
system testing and has
 
been
determined
 
to
 
be
 
viable
 
for
 
its
 
intended
 
use.
 
Once
 
technological
 
feasibility
 
is
 
reached,
 
the
 
Company
 
capitalized
 
such
 
costs
 
and
amortizes
 
these costs over
 
the products’
 
estimated life. The
 
time between
 
the attainment
 
of technological feasibility
 
and completion
of software development is generally short with insignificant amounts of development
 
costs incurred during this period.
 
Costs in
 
respect of
 
the development
 
of software
 
for the
 
Company’s
 
internal use
 
are expensed
 
as incurred,
 
except to
 
the extent
that
 
these
 
costs
 
are
 
incurred
 
during
 
the
 
application
 
development
 
stage.
 
All
 
other
 
costs
 
including
 
those
 
incurred
 
in
 
the
 
project
development and post-implementation stages are expensed as incurred.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-20
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
 
The Company
 
provides for income
 
taxes using the
 
asset and liability
 
method. This
 
approach recognizes
 
the amount of
 
income
taxes payable or refundable
 
for the current year,
 
as well as deferred
 
tax assets and liabilities for
 
the future tax consequence
 
of events
recognized in the financial statements and tax returns. Deferred taxes are adjusted
 
to reflect the effects of changes in tax laws or rates
in the
 
period of
 
enactment. The
 
majority of
 
the Company’s
 
income
 
taxes and
 
deferred tax
 
balances arise
 
in the
 
South Africa.
 
The
Company used the enacted statutory
 
tax rate of
27
% for the years ended June 30,
 
2024 and 2023, and the enacted rate
 
of
28
% for the
year ended
 
June 30,
 
2022 to
 
measure current
 
tax expense
 
(benefit) and
 
deferred tax
 
expense (benefit)
 
in South
 
Africa. There
 
was a
change in the South African
 
enacted tax rate during the
 
year ended June 30, 2023,
 
from
28
% to
27
%, and the Company measured
 
its
South African current tax expense for the years ended June 30, 2023 and 2024 and its South African deferred tax assets and liabilities
as of June 30, 2023 and 2024, using the enacted statutory tax rate in South
 
Africa of
27
%.
In establishing the appropriate deferred tax asset valuation allowances, the Company assesses the realizability of its deferred tax
assets, and based on all available evidence, both positive
 
and negative, determines whether it is more likely than not
 
that the deferred
tax assets or a portion thereof will be realized.
Unrecognized tax benefits are recorded in the financial statements for positions which are not considered more likely than not of
being sustained based on the
 
technical merits of the position
 
on examination by the taxing authorities.
 
For positions that meet the more
likely than not standard, the measurement of the tax benefit recognized in the financial statements is based upon the largest amount of
tax benefit that, in
 
management’s judgement, is greater than 50%
 
likely of being realized
 
based on a
 
cumulative probability assessment
of the
 
possible outcomes.
 
The Company’s
 
policy
 
is to
 
include interest
 
related
 
to income
 
taxes in
 
interest expense
 
and penalties
 
in
selling, general and administration in the consolidated statements of operations.
The Company has elected the period cost method
 
and records U.S. inclusions in taxable income related to global
 
intangible low
taxed income (“GILTI”)
 
as a current-period expense when incurred.
Stock-based compensation
Stock-based compensation represents the
 
cost related to
 
stock-based awards granted.
 
The Company measures
 
equity-based stock-
based compensation cost at
 
the grant date, based on
 
the estimated fair value of
 
the award, and recognizes the
 
cost as an expense on
 
a
straight-line basis (net of estimated forfeitures) over the requisite
 
service period. In respect of awards with only service
 
conditions that
have a graded
 
vesting schedule, the
 
Company recognizes compensation
 
cost on a straight-line
 
basis over the
 
requisite service period
for the
 
entire award.
 
The forfeiture
 
rate is
 
estimated using
 
historical trends
 
of the
 
number of
 
awards forfeited
 
prior to
 
vesting.
 
The
expense is recorded in
 
the statement of operations and
 
classified based on the recipients’
 
respective functions. The Company
 
records
deferred tax
 
assets for awards
 
that result in
 
deductions on the
 
Company’s
 
income tax returns,
 
based on the
 
amount of compensation
cost recognized and the Company’s
 
statutory tax rate in the jurisdiction
 
in which it will receive a deduction.
 
Differences between the
deferred tax
 
assets recognized
 
for financial
 
reporting purposes
 
and the
 
actual tax
 
deduction reported
 
on the
 
Company’s
 
income tax
return are recorded in income tax expense in the consolidated statement
 
of operations.
Equity instruments issued to third parties
Equity instruments issued
 
to third parties represents
 
the cost related to
 
equity instruments granted.
 
The Company measures this
cost at the grant date, based on the
 
estimated fair value of the award, and recognizes the cost as
 
an expense on a straight-line basis (net
of estimated forfeitures) over
 
the requisite service period. The forfeiture
 
rate is estimated based on
 
the Company’s expectation
 
of the
number of
 
awards that will
 
be forfeited
 
prior to vesting.
 
The Company
 
records deferred tax
 
assets for equity
 
instrument awards that
result
 
in
 
deductions
 
on
 
the
 
Company’s
 
income
 
tax
 
returns,
 
based
 
on
 
the
 
amount
 
of
 
equity
 
instrument
 
cost
 
recognized
 
and
 
the
Company’s
 
statutory
 
tax
 
rate
 
in
 
the
 
jurisdiction
 
in
 
which
 
it
 
will
 
receive
 
a
 
deduction.
 
Differences
 
between
 
the
 
deferred
 
tax
 
assets
recognized for financial reporting purposes and the actual tax deduction reported on the Company’s income tax return are recorded in Settlement assets and settlement obligations
the statement of operations.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-21
2.
 
SIGNIFICANT ACCOUNTING POLICIES (continued)
The
 
Company
 
provides
 
customers
 
with
 
cash
 
management
 
and
 
digitization
 
services
 
which
 
enable
 
its
 
merchant
 
customers
 
to
deposit
 
cash into
 
digital vaults
 
operated
 
by the
 
Company,
 
after which
 
the funds
 
are then
 
electronically
 
accessible by
 
customers
 
to
either transfer to their nominated bank account or to pay certain pre-selected suppliers.
Settlement assets comprise (1) cash received from merchant customers
 
from cash deposits into the Company’s safe assets, which
are
 
then
 
electronically
 
accessible
 
by
 
customers
 
to
 
either
 
transfer
 
to
 
their
 
nominated
 
bank
 
account
 
or
 
to
 
pay
 
certain
 
pre-selected
suppliers,
 
and
 
(2)
 
cash
 
received
 
from
 
credit
 
card
 
companies
 
(as
 
well
 
as
 
other
 
types
 
of
 
payment
 
services)
 
which
 
have
 
business
relationships
 
with
 
merchants
 
selling
 
goods
 
and
 
services
 
that
 
are
 
the
 
Company’s
 
customers
 
and
 
on
 
whose
 
behalf
 
it
 
processes
 
the
transactions between various parties.
Settlement
 
obligations
 
comprise
 
(1)
 
amounts
 
that
 
the
 
Company
 
is
 
obligated
 
to
 
disburse
 
to
 
merchant
 
customers
 
or
 
to
 
their
nominated pre-selected suppliers, and (2)
 
amounts that the Company is obligated
 
to disburse to merchants selling goods
 
and services
that are the Company’s customers and on whose behalf it processes
 
the transactions between various parties and settles the funds from
the credit card companies to the Company’s
 
merchant customers.
The balances
 
at each reporting
 
date may vary
 
widely depending on
 
the timing of
 
the receipts and
 
payments of these
 
assets and
obligations.
Recent accounting pronouncements adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance regarding
Measurement of Credit Losses on
Financial Instruments
. The guidance
 
replaces the incurred
 
loss impairment
 
methodology in
 
current GAAP
 
with a methodology
 
that
reflects expected credit losses
 
and requires consideration of a
 
broader range of reasonable and
 
supportable information to inform credit
loss estimates.
 
For trade and
 
other receivables,
 
loans, and
 
other financial
 
instruments, an entity
 
is required
 
to use a
 
forward-looking
expected loss
 
model rather
 
than the incurred
 
loss model for
 
recognizing credit
 
losses, which reflects
 
losses that are
 
probable. Credit
losses relating to
 
available-for-sale debt securities will
 
also be
 
recorded through an
 
allowance for credit
 
losses rather than
 
as a
 
reduction
in the amortized cost basis of the securities. The guidance became effective for the Company beginning July 1, 2023. The adoption of
this guidance did not have a material impact on the Company’s
 
financial statements and related disclosures, refer to Note 4.
In November
 
2019, the
 
FASB
 
issued guidance
 
regarding
 
Financial
 
Instruments—Credit
 
Losses (Topic
 
326),
 
Derivatives and
Hedging
 
(Topic
 
815),
 
and
 
Leases
 
(Topic
 
842).
 
The
 
guidance
 
provides
 
a
 
framework
 
to
 
stagger
 
effective
 
dates
 
for
 
future
 
major
accounting
 
standards
 
and
 
amends
 
the
 
effective
 
dates
 
for
 
certain
 
major
 
new
 
accounting
 
standards
 
to
 
give
 
implementation
 
relief
 
to
certain types
 
of entities,
 
including Smaller
 
Reporting Companies.
 
The Company
 
is a Smaller
 
Reporting Company.
 
Specifically,
 
the
guidance changes some effective
 
dates for certain
 
new standards on
 
the following topics
 
in the FASB Codification, namely Derivatives
and Hedging
 
(ASC 815);
 
Leases (ASC
 
842); Financial
 
Instruments —
 
Credit Losses
 
(ASC 326);
 
and Intangibles
 
— Goodwill
 
and
Other
 
(ASC
 
350).
 
The
 
guidance
 
defers
 
the
 
adoption
 
date
 
of
 
guidance
 
regarding
Measurement
 
of
 
Credit
 
Losses
 
on
 
Financial
Instruments
 
by the
 
Company from
 
July 1, 2020
 
to July
 
1, 2023.
 
The guidance
 
became effective
 
for the
 
Company beginning
 
July 1,
2023. The
 
adoption of
 
this guidance
 
did not
 
have a
 
material impact
 
on the
 
Company’s
 
financial statements
 
and related
 
disclosures,
refer to Note 4.
Recent accounting pronouncements not yet adopted
 
as of June 30, 2024
In
 
November
 
2023.
 
the
 
FASB
 
issued
 
guidance
 
regarding
Segment
 
Reporting
 
(Topic
 
280)
 
to
 
improve
 
reportable
 
segment
disclosure
 
requirements,
 
primarily
 
through
 
enhanced
 
disclosures
 
about
 
significant
 
segment
 
expenses.
 
In
 
addition,
 
the
 
guidance
enhances
 
interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit
or loss,
 
provides
 
new segment
 
disclosure
 
requirements
 
for entities
 
with a
 
single reportable
 
segment,
 
and
 
contains
 
other disclosure
requirements. This
 
guidance is
 
effective
 
for the
 
Company beginning
 
July 1,
 
2024 for
 
its year
 
ended June
 
30, 2025,
 
and for
 
interim
periods commencing from July
 
1, 2025 (i.e.
 
for the quarter
 
ended September 30, 2025).
 
The Company is currently
 
assessing the impact
of this guidance on its financial statements and related disclosures.
In
 
December
 
2023,
 
the
 
FASB
 
issued
 
guidance
 
regarding
Income
 
Taxes
 
(Topic
 
740)
 
to
 
improve
 
income
 
tax
 
disclosure
requirements. The guidance requires
 
entities, on an
 
annual basis, to
 
(1) disclose specific categories
 
in the income tax
 
rate reconciliation
and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect
 
of those reconciling items
is equal
 
to or
 
greater
 
than
 
five percent
 
of the
 
amount computed
 
by multiplying
 
pre-tax
 
income
 
or loss
 
by the
 
applicable
 
statutory
income tax rate). This guidance is effective for the Company beginning July 1, 2025. The Company is currently assessing the impact The Company did not make any acquisitions during the year ended June 30, 2023.
of this guidance on its financial statements and related disclosures.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-22
3.
 
ACQUISITIONS
The cash paid, net of cash received related to
the Company’s acquisition during
 
the years ended June 30, 2024 and 2022, is summarized in the table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2022
Total cash paid
$
2,248
$
240,582
Less: cash acquired
665
38,423
Total cash paid, net
 
of cash received
(1)
$
1,583
$
202,159
(1) – amount for 2022 represents the cash paid, net of cash acquired, to acquire
 
a controlling interest in Connect.
 
2025
 
proposed acquisition of Adumo
On May 7,
 
2024, the Company
 
entered into a
 
Sale and Purchase
 
Agreement (the
 
“Purchase Agreement”)
 
with Lesaka SA,
 
and
Crossfin Apis Transactional
 
Solutions (Pty) Ltd
 
and Adumo ESS
 
(Pty) Ltd (“the
 
Sellers”). Pursuant to
 
the Purchase Agreement
 
and
subject to its terms and
 
conditions, Lesaka, through its
 
subsidiary,
 
Lesaka SA, agreed to
 
acquire, and the Sellers agreed
 
to sell, all of
the outstanding equity interests and certain claims in the Adumo (RF) Proprietary
 
Limited (“Adumo”).
The
 
purchase
 
consideration
 
will
 
be
 
settled
 
through
 
the
 
combination
 
of
 
an
 
issuance
 
of
17,279,803
 
shares
 
of
 
the
 
Company’s
common stock (“Consideration Shares”) and a ZAR
232
 
million ($
12.5
 
million, translated at the prevailing rate of $1: ZAR
18.5
 
as of
May
 
7,
 
2024)
 
payment
 
in
 
cash.
 
The
 
share
 
issuance
 
was
 
based
 
off
 
of
 
the
 
base
 
purchase
 
consideration
 
of
 
ZAR
1.59
 
billion
 
($
85.9
million),
 
less
 
the
 
ZAR
232
 
million
 
cash
 
payment,
 
implying
 
a
 
value
 
per
 
share
 
of
 
$
4.25
 
((ZAR
1.59
 
billion
 
–
 
ZAR
0.232
 
billion)/
17,279,803
 
/ ZAR
18.5
).
The Purchase
 
Agreement includes
 
customary covenants
 
from the
 
Sellers, including
 
(i) to
 
conduct the
 
business in
 
the ordinary
course during the period between
 
the execution of the Purchase
 
Agreement and the closing of
 
the transactions contemplated thereby,
and (ii) not to engage in certain kinds of transactions during such period.
The closing of
 
the transaction is
 
subject to customary
 
closing conditions,
 
including the following
 
open conditions (i)
 
obtaining
certain third-party
 
consents; and (ii).
 
Lesaka SA (or
 
is nominee),
 
on or before
 
October 31, 2024,
 
concluding a written
 
unconditional
agreement with Crossfin SPV in relation to the acquisition of all (and not
 
only a portion) of one of the ultimate shareholders’ pro rata
entitlements to
 
Consideration Shares
 
(other than
 
those which
 
are required
 
to be
 
liquidated in
 
order to
 
satisfy cash
 
tax obligations),
provided that the aggregate consideration
 
for such entitlements will be equal
 
to an amount of ZAR
285,772,238
 
and provided further
that: (1)
 
Lesaka (or
 
its nominee,
 
as applicable)
 
has provided
 
a bank
 
guarantee from
 
Rand Merchant
 
Bank (a
 
division of
 
FirstRand
Bank Limited) or other South African
 
registered bank in respect of the
 
settlement of such aggregate consideration
 
and (2) that, to the
extent applicable,
 
Lesaka's nominee
 
has, prior
 
to the
 
conclusion thereof,
 
obtained all
 
approvals as
 
may be
 
required to
 
conclude and
implement such agreement.
The
 
following
 
closing
 
conditions
 
have
 
been
 
met
 
as
 
of
 
the
 
date
 
of
 
this
 
Annual
 
Report
 
on
 
Form
 
10-K
 
(i)
 
approval
 
from
 
the
competition authorities of South Africa and Namibia; (ii) exchange control approval from the financial surveillance department of the
South
 
African
 
Reserve
 
Bank
 
(iii)
 
approval
 
from
 
all necessary
 
regulatory
 
bodies
 
and
 
from
 
shareholders
 
to
 
issue the
 
Consideration
Shares to the
 
Sellers; (iv) the
 
Company obtained confirmation
 
from RMB that it
 
has sufficient
 
funds to settle
 
the cash portion
 
of the
purchase
 
consideration;
 
(v)
 
approval
 
of Adumo
 
shareholders
 
(including
 
preference
 
shareholders)
 
with respect
 
to entering
 
into and
implementation of the Purchase
 
Agreement, and all other
 
agreements and transactions contemplated
 
in the Purchase Agreement;
 
(vi)
obtained
 
the consent
 
of Adumo’s
 
lender
 
regarding
 
Adumo entering
 
into and
 
implementing
 
the
 
Purchase
 
Agreement,
 
and
 
all other
agreements and
 
transactions contemplated
 
in the
 
Purchase Agreement,
 
(vii) the
 
release of
 
certain Seller’s
 
shares held
 
as security
 
by
such bank;
 
(viii) obtained
 
the consent
 
of the lender
 
of one of
 
Adumo’s
 
shareholders regarding
 
Adumo entering
 
into the transaction;
and (ix) the
 
Company signing a written
 
addendum to the Policy
 
Agreement with International
 
Finance Corporation that
 
provides for
the inclusion of the Consideration Shares attributable to certain Seller shareholders
 
in the definition of “Put Shares” under the Policy
Agreement, and related change.
The
 
Company
 
has
 
agreed
 
to file
 
a
 
resale
 
registration
 
statement
 
with
 
the
 
United
 
States
 
Securities
 
and
 
Exchange
 
Commission
(“SEC”) covering
 
the resale
 
of the
 
Consideration
 
Shares by
 
the Sellers
 
following
 
the closing
 
of the
 
transaction. The
 
Company has
undertaken to use its commercially reasonable efforts to
 
have the resale registration statement declared effective by
 
the SEC following
its filing.
The
 
Company
 
incurred
 
transaction-related
 
expenditures
 
of
 
$
2.3
 
million
 
during
 
the
 
year
 
ended
 
June
 
30,
 
2024,
 
related
 
to
 
the
process
 
to
 
acquire
 
Adumo.
 
The Company
 
’s
 
accruals
 
presented
 
in
 
Note
 
13
 
of
 
as June
 
30,
 
2024,
 
includes
 
an
 
accrual
 
of
 
transaction
related expenditures of
 
$
0.9
 
million and the
 
Company expects to
 
incur a further
 
$
1.4
 
million in transaction
 
costs over the
 
remainder
of the 2025 calendar year.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-23
3.
 
ACQUISITIONS (continued)
2024
 
Acquisitions
April 2024
 
acquisition of Touchsides
In April 2024
 
the Company closed
 
the acquisition of
 
Touchsides (Pty) LTd (“Touchsides”). Touchsides
 
is a leading
 
data analytics
and insights company,
 
and complementary with
 
the Company’s
 
Kazang business. The
 
acquisition expands Kazang’s
 
footprint in the
informal market by adding an established solution that
 
has a strong presence in the
 
licensed tavern market. Touchsides has an installed
base of over
10,000
 
active POS terminals across South Africa’s licensed taverns, and processes more than
1.5
 
million transactions per
day.
 
The business
 
provides
 
platform-as-a-service
 
(“PaaS”) and
 
software-as-a-service
 
(“SaaS”) solutions
 
to
 
licensed
 
tavern outlets,
enabling
 
the measurement
 
of sales
 
activity in
 
real-time,
 
management
 
of stock
 
levels and
 
informing
 
commercial
 
decisions,
 
such as
pricing
 
and
 
promotional
 
offers.
 
The
 
data
 
and
 
insights
 
gathered
 
from
 
these
 
terminals
 
carries
 
significant
 
value
 
and
 
potential
 
to
 
be
monetized
 
through
 
relationships
 
with
 
a
 
range
 
of
 
clients
 
including
 
fast-moving
 
consumer
 
goods
 
companies,
 
retailers,
 
wholesalers,
route-to-market suppliers, and financiers.
Touchsides has been
 
allocated to our Merchant operating segment.
The final purchase price allocation
 
of the Touchsides
 
acquisition, translated at the foreign exchange
 
rates applicable on the date
of acquisition, is provided in the table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Touchsides
April 2024
Cash and cash equivalents
 
$
665
Accounts receivable
788
Property, plant and equipment
1,106
Operating lease right of use asset
112
Intangible assets
33
Accounts payable
 
(53)
Other payables
 
(279)
Operating lease liability – current
(63)
Deferred income taxes liabilities
(9)
Operating lease liability - long-term
(52)
Fair value of assets and liabilities on acquisition
$
2,248
Pro forma
 
results of
 
operations have
 
not been presented
 
because the
 
effect of
 
the Touchsides
 
acquisition is
 
not material
 
to the
Company. During
 
the year ended June 30, 2024, the Company
 
incurred acquisition-related expenditure of
 
$
0.1
 
million related to this
acquisition. Since the
 
closing of the Touchsides
 
acquisition, it has contributed
 
revenue and net loss
 
of $
0.9
 
million and $
0.2
 
million,
respectively, for the
 
year ended June 30, 2024.
2023
 
Acquisitions
None.
2022
 
Acquisitions
April 2022 acquisition of Connect
On October 31, 2021, the Company entered into a
 
Sale of Shares Agreement (the “Sale Agreement”) with the
 
Sellers (as defined
in
 
the
 
Sale
 
Agreement),
 
Cash
 
Connect
 
Management
 
Solutions
 
Proprietary
 
Limited
 
(“CCMS”),
 
Ovobix
 
(RF)
 
Proprietary
 
Limited
(“Ovobix”),
 
Luxiano
 
227
 
Proprietary
 
Limited
 
(“Luxiano”)
 
and
 
K2021477132
 
(South
 
Africa)
 
Proprietary
 
Limited
 
(“K2021”
 
and
together with CCMS, Ovobix
 
and Luxiano, “Connect”).
 
Pursuant to the Sale
 
Agreement, and subject
 
to its terms and
 
conditions, the
Company’s
 
wholly-owned subsidiary,
 
Lesaka SA (formerly
 
named Net1 SA),
 
agreed to acquire,
 
and the Sellers agreed
 
to sell, all of
the outstanding equity interests and certain claims in Connect. The transaction
 
closed on April 14, 2022.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-24
3.
 
ACQUISITIONS (continued)
2022
 
Acquisitions (continued)
April 2022 acquisition of Connect (continued)
The total
 
purchase consideration
 
was ZAR
3.8
 
billion ($
258.9
 
million), comprising
 
ZAR
3.5
 
billion ($
240.6
 
million) in
 
cash,
contingent
 
consideration
 
of
 
ZAR
23.8
 
million
 
($
1.6
 
million),
 
and
 
ZAR
241.9
 
million
 
($
16.7
 
million)
 
in
3,185,079
 
shares
 
of
 
the
Company’s common stock. The contingent
 
consideration related to
 
a tax matter
 
which was resolved
 
in July 2022,
 
and the consideration
was
 
settled
 
in
 
cash
 
in
 
September
 
2022.
 
The
 
contingent
 
consideration
 
is
 
included
 
in
 
the
 
caption
 
other
 
payables
 
in
 
the
 
Company’s
consolidated balance
 
sheet as of
 
June 30,
 
2022, refer
 
to Note 13.
 
The
3,185,079
 
shares of common
 
stock are
 
issuable in
three
 
equal
tranches on
 
each of
 
the first,
 
second and
 
third anniversaries
 
of the
 
closing and
 
was calculated
 
as ZAR
350.0
 
million divided
 
by the
sum of $
7.50
 
multiplied by the closing date exchange
 
rate (as defined in the Sale Agreement)
 
of $1:ZAR
14.65165
. Refer to Note 14
for issuances during the year
 
ended June 30, 2024 and
 
2023, respectively. The fair value of the purchase
 
consideration settled in shares
of
 
common
 
stock
 
of $
16.7
 
million
 
was calculated
 
as
3,185,079
 
shares
 
of
 
Lesaka
 
common
 
stock
 
multiplied
 
by the
 
April 13,
 
2022
closing price on the NasdaqGS of $
5.23
.
The
 
closing
 
of
 
the
 
transaction
 
was
 
subject
 
to
 
customary
 
closing
 
conditions,
 
including
 
(i)
 
approval
 
from
 
the
 
competition
authorities of South
 
Africa, Namibia and
 
Botswana, (ii) exchange
 
control approval from
 
the financial surveillance
 
department of the
South
 
African Reserve Bank, and (iii) obtaining certain third-party
 
consents. In addition, the closing of the transaction was subject to
entry into
 
definitive financing
 
agreements by
 
each of
 
Lesaka SA
 
and CCMS
 
for an
 
aggregate of
 
ZAR
2.4
 
billion in
 
debt financing
provided by Rand Merchant Bank and satisfying the conditions precedent
 
for funding thereunder, of which ZAR
1.1
 
billion relates to
the financing agreements described below and ZAR
1.3
 
billion related to finance agreements signed between CCMS
 
and RMB. Of the
ZAR
1.3
 
billion related to
 
CCMS, approximately ZAR
250
 
million related to
 
new debt as part
 
of the funding of
 
the acquisition. The
definitive loan agreements became effective upon closing the transaction
 
,
 
refer to Note 12.
The
 
South
 
African
 
competition
 
authorities
 
approved
 
the
 
transaction
 
subject
 
to
 
certain
 
public
 
interest
 
conditions
 
relating
 
to
employment, increasing the spread
 
of ownership by
 
historically disadvantaged people (“HDPs”)
 
and workers, and investing
 
in supplier
and enterprise development. Further to increasing the
 
spread of ownership by
 
HDPs, Lesaka is required to
 
establish an employee share
ownership scheme
 
(“ESOP”) within
36
 
months of
 
the implementation
 
of the
 
Connect acquisition
 
that complies
 
with certain
 
design
principles for the
 
benefit of the workers
 
of the merged
 
entity to receive
 
a shareholding in Lesaka
 
equal in value
 
to at least
3
% of the
issued
 
shares
 
in
 
Lesaka
 
at the
 
date
 
of the
 
Connect
 
acquisition.
 
If
 
within
24
 
months
 
of the
 
implementation
 
date of
 
the transaction,
Lesaka generates
 
a positive net
 
profit for three
 
consecutive quarters,
 
the ESOP shall
 
increase to an
 
amount equal
 
in value to
 
at least
5
% of
 
the issued
 
shares in
 
Lesaka at
 
the date
 
of the
 
Connect acquisition.
 
The final
 
structure of
 
the ESOP
 
is contingent
 
on Lesaka
shareholder
 
approval
 
and
 
relevant
 
regulatory
 
and
 
governance
 
approvals.
 
The ESOP
 
had not
 
been
 
established
 
as of
 
the date
 
of the
consolidated annual financial statements.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-25
3.
 
ACQUISITIONS (continued)
2022
 
Acquisitions (continued)
April 2022 acquisition of Connect (continued)
The
 
Company
 
incurred
 
transaction-related
 
expenditures
 
of
 
$
6.0
 
million
 
during
 
the
 
year
 
ended
 
June
 
30,
 
2022,
 
related
 
to
 
the
acquisition of Connect. On acquisition, the Company recognized
 
a deferred tax liability of approximately $
50.3
 
million related to the
acquisition
 
of
 
Connect
 
intangible
 
assets
 
during
 
the
 
year
 
ended
 
June
 
30,
 
2022.
 
The
 
final
 
purchase
 
price
 
allocation
 
of
 
the
 
Connect
acquisition, translated at the foreign exchange rates applicable on the date
 
of acquisition, is provided in the table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Connect
April 2022
Cash and cash equivalents
 
$
38,423
Accounts receivable
24,032
Finance loans receivable
15,706
Inventory
 
11,431
Property, plant and equipment
20,872
Operating lease right of use asset
753
Equity-accounted investment
73
Goodwill
153,693
Intangible assets
179,484
Deferred income taxes assets
2,284
Short term facilities
(16,903)
Accounts payable
 
(27,914)
Other payables
 
(4,793)
Operating lease liability – current
(434)
Current portion of long – term borrowings
-
Income taxes payable
 
(982)
Deferred income taxes liabilities
(50,255)
Operating lease liability - long-term
(319)
Long-term borrowings
(86,960)
Settlement assets
 
13,561
Settlement liabilities
 
(12,875)
Fair value of assets and liabilities on acquisition
$
258,877
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-26
4.
 
ACCOUNTS RECEIVABLE,
 
net AND OTHER RECEIVABLES
 
and FINANCE LOANS RECEIVABLE,
 
net
 
Accounts receivable, net and other receivables
The Company’s
 
accounts receivable,
 
net, and other
 
receivables as of
 
June 30,
 
2024, and June
 
30, 2023, are
 
presented in the
table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Accounts receivable, trade, net
 
$
13,262
$
11,037
Accounts receivable, trade, gross
 
14,503
11,546
Allowance for credit losses, end of period
1,241
509
Beginning of period
509
509
Reallocation to allowance for credit losses
(1)
-
(418)
Reversed to statement of operations
(511)
(31)
Charged to statement of operations
 
1,305
2,005
Utilized
 
(67)
(1,645)
Foreign currency adjustment
 
5
89
Current portion of amount outstanding related to sale of interest in Carbon,
 
net of
allowance: 2024: $
750
 
2023: $
1,000
-
-
Current portion of total held to maturity investments
-
-
Investment in
7.625
% of Cedar Cellular Investment 1 (RF) (Pty) Ltd
8.625
%
notes
-
-
Other receivables
 
23,405
14,628
Total accounts receivable,
 
net
 
$
36,667
$
25,665
(1) Represents reallocation
 
of a portion of
 
the Merchant allowance for
 
credit losses as of
 
June 30, 2022, which
 
was included in
the allowance for credit losses as of June 30, 2022.
Trade receivables include amounts
 
due from customers
 
which generally have
 
a very
 
short-term life from
 
date of invoice
 
or service
provided to settlement. The duration
 
is less than a year in all cases and
 
generally less than 30 days in many
 
instances. The short-term
nature
 
of
 
these
 
exposures
 
often
 
results
 
in
 
balances
 
at
 
month-end
 
that
 
are
 
disproportionately
 
small
 
compared
 
to
 
the
 
total
 
invoiced
amounts.
 
The
 
month-end
 
outstanding
 
balance
 
are
 
more
 
volatile
 
than
 
the
 
monthly
 
invoice
 
amounts
 
because
 
they
 
are
 
affected
 
by
operational timing issues and
 
the fact that a balance
 
is outstanding at month-end
 
is not necessarily an indication
 
of increased risk but
rather a matter of operational timing.
Credit risk in respect of trade receivables are generally not
 
significant and the Company has not developed a sophisticated model
for these basic
 
credit exposures. The
 
Company determined to
 
use a lifetime
 
loss rate by
 
expressing write-off experience as
 
a percentage
of corresponding
 
invoice amounts
 
(as opposed
 
to outstanding
 
balances). The
 
allowance for credit
 
losses related to
 
these receivables
has
 
been
 
calculated
 
by
 
multiplying
 
the
 
lifetime
 
loss
 
rate
 
with
 
recent
 
invoice/origination
 
amounts.
 
Management
 
actively
 
monitors
performance of these receivables over
 
short periods of time. Different
 
balances have different rules to
 
identify an account in distress.
Once balances
 
in distress are
 
identified, specific
 
allowances are immediately
 
created. Subsequent
 
recovery from distressed
 
accounts
is not significant.
Current portion of amount outstanding related to sale of interest in Carbon represents the amount due from the purchaser related
to the sale of
 
the Company’s interest in Carbon Tech Limited (“Carbon”),
 
which was accounted for
 
as an equity-accounted investment,
of $
0.25
 
million, net of an allowance for doubtful loans receivable of $
0.25
 
million as of June 30, 2023, and an amount due related to
the sale of
 
the loan,
 
with a face
 
value of
 
$
3.0
 
million, which was
 
sold in September
 
2022 for
 
$
0.75
 
million, net of
 
an allowance
 
for
doubtful loans
 
receivable of
 
$
0.75
 
million, refer
 
to Note 9
 
for additional
 
information. The Company
 
received the
 
outstanding $
0.25
million
 
related
 
to the
 
sale of
 
the equity
 
-accounted
 
investment in
 
October
 
2023,
 
and
 
has reversed
 
the allowance
 
for
 
doubtful
 
loans
receivable of
 
$
0.25
 
million during
 
the year
 
ended June
 
30, 2024.
 
The Company
 
has not
 
yet received
 
the outstanding
 
$
0.75
 
million
related to the sale of the $
3.0
 
million loan, and continues to engage with the purchaser to recover
 
the outstanding balance.
Investment in
7.625
% of Cedar Cellular
 
Investment 1 (RF) (Pty) Ltd
8.625
% notes represents the
 
investment in a note which was
due to mature
 
in August 2022 and
 
forms part of
 
Cell C’s
 
capital structure. The
 
carrying value as
 
of each of
 
June 30, 2024
 
and 2023,
respectively was $
0
 
(zero).
No
 
interest income from the Cedar Cellular note was recorded during the years ended June 30, 2024, 2023
and 2022, respectively.
 
Interest, if any,
 
on this investment
 
will only be
 
paid, at Cedar
 
Cellular’s election, on
 
its maturity which
 
is in
the process of being extended beyond its original date of August 2022.
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-27
4.
 
ACCOUNTS RECEIVABLE,
 
net AND OTHER RECEIVABLES
 
and FINANCE LOANS RECEIVABLE,
 
net
(continued)
Accounts receivable, net and other receivables (continued)
The Company does not expect
 
to recover the amortized cost
 
basis of the Cedar
 
Cellular notes due to its
 
assessment that the equity
in Cell
 
C currently
 
has no
 
value
 
which
 
would
 
result in
 
there
 
being
 
no future
 
cash flows
 
to be
 
collected
 
from
 
the debt
 
security
 
on
maturity.
 
The Company could
 
not calculate an
 
effective interest
 
rate on the
 
Cedar Cellular note
 
because the carrying
 
value was zero
($
0.0
 
million) as of June 30, 2024 and 2023. The Company
 
therefore could not calculate the present value of the expected cash flows
to be collected from the debt security by discounting these cash flows at the interest rate implicit in the security upon acquisition (at a
rate of
24.82
%) because there are no future cash flows to discount.
Other receivables include prepayments, deposits, income taxes receivable and
 
other receivables.
Contractual maturities of held to maturity investments
Summarized below is the contractual maturity of the Company’s
 
held to maturity investment as of June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost basis
Estimated
fair
value
(1)
Due in one year or less
(2)
$
-
$
-
Due in one year through five years
-
-
Due in five years through ten years
 
-
-
Due after ten years
 
-
-
Total
 
$
-
$
-
(1) The estimated fair value of the Cedar Cellular note has been calculated utilizing the
 
Company’s portion of the assets held by
Cedar Cellular, namely,
 
Cedar Cellular’s investment in Cell C.
(2) The cost basis is zero ($
0.0
 
million).
Finance loans receivable, net
The Company’s finance
 
loans receivable, net, as of June 30, 2024, and June 30, 2023, is presented in the table
 
below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Microlending finance loans receivable, net
$
28,184
$
20,605
Microlending finance loans receivable, gross
30,131
22,037
Allowance for credit losses - finance loans receivable, end of period
1,947
1,432
Beginning of period
1,432
1,394
Reversed to statement of operations
 
(210)
-
Charged to statement of operations
 
2,454
1,452
Utilized
 
(1,795)
(1,214)
Foreign currency adjustment
 
66
(200)
Merchant finance loans receivable, net
15,874
16,139
Merchant finance loans receivable, gross
18,571
18,289
Allowance for credit losses - finance loans receivable, end of period
2,697
2,150
Beginning of period
2,150
297
Reallocation from allowance for credit losses
(1)
-
418
Reversed to statement of operations
 
(359)
(1,268)
Charged to statement of operations
 
2,479
3,068
Utilized
 
(1,672)
-
Foreign currency adjustment
 
99
(365)
Total finance
 
loans receivable, net
 
$
44,058
$
36,744
(1) Represents reallocation of
 
a portion of the
 
Merchant allowance for credit losses
 
- finance loans receivable
 
as of June 30,
 
2022,
which was included in the allowance for credit losses as of June 30, 2022.
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-28
4.
 
ACCOUNTS RECEIVABLE,
 
net AND OTHER RECEIVABLES
 
and FINANCE LOANS RECEIVABLE,
 
net
(continued)
Finance loans receivable, net (continued)
Total finance
 
loans receivable, net, comprises microlending finance loans receivable related to the Company’s
 
microlending
operations
 
in South
 
Africa as
 
well as
 
its merchant
 
finance loans
 
receivable related
 
to Connect’s
 
lending activities
 
in South
 
Africa.
Certain merchant finance
 
loans receivable with
 
an aggregate balance
 
of $
15.2
 
million as
 
of June 30,
 
2024 have been
 
pledged as security
for the Company’s revolving
 
credit facility (refer to Note 12).
Allowance for credit losses
Microlending finance loans receivable
Microlending finance loans receivable is related to the Company’s
 
microlending operations in South Africa whereby it provides
unsecured short-term
 
loans to qualifying
 
customers. Loans to customers
 
have a tenor
 
of up to
six months
, with the majority
 
of loans
originated having
 
a tenor of
six months
. The Company
 
analyses this lending
 
book as a
 
single portfolio
 
because the
 
loans within the
portfolio have similar characteristics and management uses similar processes to monitor and assess
 
the credit risk of the lending book.
 
Refer to Note 6 related to the Company risk management process related to these
 
receivables.
 
The Company has operated this lending book for more than
five years
 
and uses historical default experience over the lifetime of
loans in order
 
to calculate a
 
lifetime loss rate
 
for the lending
 
book. The allowance
 
for credit losses
 
related to these
 
microlending finance
loans receivables
 
is calculated
 
by multiplying
 
the lifetime
 
loss rate
 
with the
 
month end
 
outstanding lending
 
book. The
 
lifetime loss
rate as of each
 
of July 1, 2023
 
and June 30,
 
2024, was
6.50
%. The performing
 
component (that is, outstanding
 
loan payments not
 
in
arrears) of the book exceeds more than
98
% of outstanding lending book as of June 30, 2024.
Merchant finance loans receivable
Merchant finance loans
 
receivable is related
 
to the Company’s
 
Merchant lending activities
 
in South Africa
 
whereby it provides
unsecured
 
short-term loans
 
to qualifying
 
customers. Loans
 
to customers
 
have a
 
tenor of
 
up to
twelve months
, with
 
the majority
 
of
loans originated having a tenor of approximately
eight months
. The Company analyses this lending book as a single portfolio because
the loans within the portfolio have similar characteristics and management uses similar processes to monitor and assess the credit risk
of the lending book.
 
Refer to Note 6 related to the Company risk management process related to these receivables.
The
 
Company
 
has
 
recently
 
(in
 
the
 
past
three years
)
 
commenced
 
lending
 
to
 
merchant
 
customers
 
and
 
uses
 
historical
 
default
experience over
 
the lifetime of
 
loans generated thus
 
far in order
 
to calculate a
 
lifetime loss rate
 
for the lending
 
book. The allowance
for credit losses related to these merchant finance loans receivables
 
is calculated by adding together actual receivables in
 
default plus
multiplying the lifetime
 
loss rate with the
 
month-end outstanding lending
 
book. The lifetime loss
 
rate as of each
 
of July 1, 2023
 
and
June
 
30,
 
2024,
 
was
 
approximately
1.18
%.
 
The
 
performing
 
component
 
(that
 
is,
 
outstanding
 
loan
 
payments
 
not
 
in
 
arrears),
 
under-
performing
 
component (that
 
is, outstanding
 
loan payments
 
that are
 
in arrears)
 
and non-performing
 
component (that
 
is, outstanding
loans
 
for
 
which
 
payments
 
appeared
 
to have
 
ceased)
 
of the
 
book represents
 
approximately
84
%,
15
% and
1
%,
 
respectively,
 
of the
outstanding lending book as of June 30, 2024.
5.
 
INVENTORY
The Company’s inventory
 
comprised the following categories as of June 30, 2024, and 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Raw materials
$
2,791
$
2,819
Work in
 
progress
71
30
Finished goods
 
15,364
24,488
$
18,226
$
27,337
As of June
 
30, 2024 and
 
2023, finished goods
 
includes $
1.8
 
million and $
8.6
 
million, respectively,
 
of Cell C
 
airtime inventory
that was
 
previously classified
 
as finished
 
goods subject
 
to sale restrictions.
 
In support
 
of Cell C’s
 
liquidity position
 
and pursuant
 
to
Cell C’s
 
recapitalization process,
 
the Company
 
limited the
 
resale of
 
this airtime
 
to its
 
own distribution
 
channels. On
 
September 30,
2022, Cell C concluded its recapitalization process and the Company and Cell
 
C entered into an agreement under which Cell C
 
agreed
to
 
repurchase,
 
from
 
October
 
2023,
 
up
 
to
 
ZAR
10
 
million
 
of
 
Cell
 
C
 
inventory
 
from
 
the
 
Company
 
per
 
month.
 
The
 
amount
 
to
 
be
repurchased by
 
Cell C was
 
calculated as
 
ZAR
10
 
million less the
 
face value
 
of any
 
sales made
 
by the
 
Company during
 
that month.
The Company’s
 
ability to
 
sell this
 
airtime increased
 
significantly since
 
the acquisition
 
of Connect
 
because Connect
 
is a
 
significant
reseller of Cell C airtime. As a result, the Company sold higher volumes of airtime through this channel than it did prior to the Cell C
recapitalization. The Company agreed to notify Cell C prior to selling any of this airtime, however,
 
there was no restriction placed on
the Company on the sale of the airtime. The Company has sold all of this inventory
 
as of the end of August 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-29
6.
 
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
Fair value of financial instruments
Initial recognition and measurement
Financial instruments
 
are recognized
 
when the
 
Company becomes
 
a party
 
to the
 
transaction. Initial
 
measurements are
 
at cost,
which includes transaction costs.
 
Risk management
The Company manages its exposure
 
to currency exchange, translation, interest rate,
 
credit, microlending credit and equity price
and liquidity risks as discussed below.
 
Currency exchange risk
The Company is subject to currency exchange risk because it purchases components
 
for its vaults, that the Company assembles,
and inventories
 
that it is
 
required to
 
settle in other
 
currencies, primarily
 
the euro, renminbi,
 
and U.S. dollar.
 
The Company
 
has used
forward contracts in order to limit its
 
exposure in these transactions to fluctuations
 
in exchange rates between the South African
 
rand
(“ZAR”), on the one hand, and the U.S. dollar and the euro, on the other hand.
Translation risk
Translation risk relates to
 
the risk that
 
the Company’s results of operations
 
will vary significantly
 
as the U.S.
 
dollar is its
 
reporting
currency,
 
but it earns a
 
significant amount of its
 
revenues and incurs a
 
significant amount of its
 
expenses in ZAR. The
 
U.S. dollar to
the ZAR
 
exchange rate
 
has fluctuated
 
significantly over
 
the past
 
three years.
 
As exchange
 
rates are
 
outside the
 
Company’s
 
control,
there can be no
 
assurance that future fluctuations will
 
not adversely affect the Company’s results of operations and
 
financial condition.
Interest rate risk
As a result of its
 
normal borrowing activities, the Company’s operating results are exposed to fluctuations in
 
interest rates, which
it manages primarily through regular financing activities. Interest rates in South Africa have been trending upwards
 
in recent quarters
but have,
 
as of the
 
date of
 
these consolidated
 
annual financial
 
statements, stabilized
 
and are
 
expected to
 
remain at
 
current levels,
 
or
perhaps even
 
decline moderately
 
towards the last
 
quarter of calendar
 
2024. Therefore,
 
ignoring the impact
 
of changes to
 
the margin
on its borrowings (refer to Note 12), the Company expects its
 
cost of borrowing to remain stable, or even to decline moderately, in the
foreseeable
 
future, however
 
if the
 
upward trend
 
resumes
 
the Company
 
would
 
expect
 
higher interest
 
rates in
 
the future
 
which
 
will
increase its
 
cost of
 
borrowing. The
 
Company periodically
 
evaluates the
 
cost and
 
effectiveness
 
of interest
 
rate hedging
 
strategies to
manage
 
this
 
risk.
 
The
 
Company
 
generally
 
maintains
 
surplus
 
cash
 
in
 
cash
 
equivalents
 
and
 
held
 
to
 
maturity
 
investments
 
and
 
has
occasionally invested in marketable securities.
Credit risk
Credit
 
risk
 
relates
 
to
 
the
 
risk
 
of
 
loss
 
that
 
the
 
Company
 
would
 
incur
 
as
 
a
 
result
 
of
 
non-performance
 
by
 
counterparties.
 
The
Company
 
maintains
 
credit
 
risk
 
policies
 
in
 
respect
 
of
 
its
 
counterparties
 
to
 
minimize
 
overall
 
credit
 
risk.
 
These
 
policies
 
include
 
an
evaluation
 
of
 
a
 
potential
 
counterparty’s
 
financial
 
condition,
 
credit
 
rating,
 
and
 
other
 
credit
 
criteria
 
and
 
risk
 
mitigation
 
tools
 
as
 
the
Company’s
 
management deems appropriate.
 
With respect
 
to credit risk on
 
financial instruments, the
 
Company maintains a
 
policy of
entering
 
into such
 
transactions only
 
with South
 
African
 
and European
 
financial institutions
 
that have
 
a credit
 
rating of
 
“B” (or
 
its
equivalent) or better, as determined by credit
 
rating agencies such as Standard & Poor’s, Moody’s
 
and Fitch Ratings.
Consumer microlending credit
 
risk
The Company
 
is exposed
 
to credit
 
risk in
 
its Consumer
 
microlending activities,
 
which provides
 
unsecured short-term
 
loans to
qualifying customers.
 
Credit bureau
 
checks as
 
well as
 
an affordability
 
test are
 
conducted as
 
part of
 
the origination
 
process, both
 
of
which are in line with local regulations. The Company considers this
 
policy to be appropriate because the affordability test it
 
performs
takes into account
 
a variety of
 
factors such
 
as other debts
 
and total expenditures
 
on normal household
 
and lifestyle expenses.
 
Additional
allowances
 
may
 
be required
 
should the
 
ability of
 
its customers
 
to make
 
payments when
 
due
 
deteriorate
 
in the
 
future. Judgment
 
is
required to assess
 
the ultimate recoverability
 
of these finance
 
loan receivables, including
 
ongoing evaluation
 
of the creditworthiness
of each customer.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-30
6.
 
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS (continued)
Risk management (continued)
Merchant lending
The Company maintains an allowance for
 
doubtful finance loans receivable related to
 
its Merchant services segment with
 
respect
to short-term loans to qualifying merchant customers. The
 
Company’s risk management procedures include adhering to its proprietary
lending criteria which uses
 
an online-system loan application
 
process, obtaining necessary customer transaction-history
 
data and credit
bureau checks.
 
The Company considers
 
these procedures
 
to be appropriate
 
because it takes
 
into account
 
a variety of
 
factors such
 
as
the customer’s credit capacity and customer-specific
 
risk factors when originating a loan.
Equity price and liquidity risk
Equity price risk relates to the risk of loss that the Company would incur as a result of the volatility in the exchange-traded price
of equity
 
securities that
 
it holds.
 
The market
 
price of
 
these securities
 
may fluctuate
 
for a
 
variety of
 
reasons and,
 
consequently,
 
the
amount that the Company may obtain in a subsequent sale of these securities may significantly differ
 
from the reported market value.
 
Equity liquidity risk
 
relates to the risk
 
of loss that the
 
Company would incur as
 
a result of the lack
 
of liquidity on the
 
exchange
on
 
which
 
those
 
securities
 
are
 
listed.
 
The
 
Company
 
may
 
not be
 
able
 
to
 
sell some
 
or
 
all
 
of
 
these
 
securities
 
at
 
one
 
time,
 
or
 
over
 
an
extended period of time without influencing the exchange-traded price,
 
or at all.
Financial instruments
Fair value
 
is defined
 
as the price
 
that would
 
be received
 
upon sale
 
of an
 
asset or
 
paid upon
 
transfer of
 
a liability
 
in an orderly
transaction between
 
market participants
 
at the
 
measurement date
 
and in
 
the principal
 
or most
 
advantageous market
 
for that
 
asset or
liability. The
 
fair value should be calculated based
 
on assumptions that market participants
 
would use in pricing the asset
 
or liability,
not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk
including the Company’s own credit
 
risk.
 
Fair value measurements and inputs are categorized into a
 
fair value hierarchy which prioritizes the inputs into
 
three levels based
on the
 
extent to which
 
inputs used
 
in measuring
 
fair value
 
are observable
 
in the
 
market. Each fair
 
value measurement
 
is reported in
one of the three levels which is determined by the lowest level input that is significant
 
to the fair value measurement in its entirety.
These levels are:
 
●
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments
 
traded in active markets.
●
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in
 
markets that
 
are not
 
active, and
 
model-based valuation
 
techniques for
 
which all
 
significant assumptions
 
are
observable
 
in the
 
market or
 
can be
 
corroborated
 
by observable
 
market
 
data for
 
substantially the
 
full term
 
of the
 
assets or
liabilities.
●
Level
 
3
 
–
 
inputs
 
are
 
generally
 
unobservable
 
and
 
typically
 
reflect
 
management’s
 
estimates
 
of
 
assumptions
 
that
 
market
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques
that include option pricing models, discounted cash flow models, and
 
similar techniques.
The following
 
section describes
 
the valuation
 
methodologies the
 
Company uses
 
to measure
 
its significant
 
financial assets
 
and
liabilities at fair value.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-31
6.
 
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Asset measured at fair value using significant unobservable inputs – investment
 
in Cell C
The Company’s
 
Level 3 asset represents
 
an investment of
75,000,000
 
class “A” shares in Cell
 
C, a significant
 
mobile telecoms
provider in South Africa.
 
The Company used a discounted cash flow model developed by the Company to determine
 
the fair value of
its investment
 
in Cell
 
C as of
 
June 30,
 
2024 and
 
June 30, 2023,
 
respectively,
 
and valued Cell
 
C at $
0.0
 
(zero) and
 
$
0.0
 
(zero) as
 
of
June 30, 2024, and June 30, 2023, respectively.
 
The Company incorporates the payments under Cell C’s
 
lease liabilities into the cash
flow forecasts and assumes
 
that Cell C’s
 
deferred tax assets would
 
be utilized over the
 
forecast period. The Company
 
has assumed a
the marketability
 
discount of
20
% and a
 
minority discount from
 
of
24
%. The Company
 
utilized the latest
 
business plan provided
 
by
Cell C management for the period ended December 31, 2027, for the June 30, 2024, and June 30, 2023, valuations. Adjustments have
been made to the WACC
 
rate to reflect the Company’s
 
assessment of risk to Cell C achieving its business plan.
The following key valuation inputs were used as of June 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average
 
Cost of Capital ("WACC"):
Between
21
% and
26
% over the period of the forecast
Long-term growth rate:
4.5
% (
4.5
% as of June 30, 2023)
Marketability discount:
21
% (
20
% as of June 30, 2023)
Minority discount:
24
% (
24
% as of June 30, 2023)
Net adjusted external debt - June 30, 2024:
(1)
ZAR
8
 
billion ($
0.4
 
billion), no lease liabilities included
Net adjusted external debt - June 30, 2023:
(2)
ZAR
8.1
 
billion ($
0.4
 
billion), no lease liabilities included
(1) translated from ZAR to U.S. dollars at exchange rates applicable as of
 
June 30, 2024.
(2) translated from ZAR to U.S. dollars at exchange rates applicable as of
 
June 30, 2023.
The fair value
 
of Cell C
 
as of June
 
30, 2024, utilizing
 
the discounted
 
cash flow valuation
 
model developed
 
by the Company
 
is
sensitive to the following inputs: (i) the ability of Cell C to
 
achieve the forecasts in their business case; (ii) the weighted
 
average cost
of capital
 
(“WACC”)
 
rate used;
 
and (iii)
 
the minority
 
and marketability
 
discount used.
 
Utilization of
 
different inputs,
 
or changes
 
to
these inputs, may result in a significantly higher or lower fair value measurement.
 
The following table presents the impact on the carrying value of the Company’s
 
Cell C investment of a
1.0
% decrease and
1.0
%
increase in the WACC rate and the EBITDA margins used
 
in the Cell
 
C valuation on June
 
30, 2024, all amounts translated at
 
exchange
rates applicable as of June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sensitivity for fair value of Cell C investment
1.0% increase
1.0% decrease
WACC
 
rate
$
-
$
1,010
EBITDA margin
$
607
$
-
The fair value of
 
the Cell C shares as
 
of June 30, 2024,
 
represented approximately
0
% of the Company’s
 
total assets, including
these shares.
 
The Company expects to
 
hold these shares for
 
an extended period
 
of time and that
 
there will be short-term
 
equity price
volatility with respect to these shares particularly given the current situation of
 
Cell C’s business.
Derivative transactions - Foreign exchange contracts
As part
 
of the
 
Company’s
 
risk management
 
strategy,
 
the Company
 
enters into
 
derivative transactions
 
to mitigate
 
exposures to
foreign
 
currencies
 
using
 
foreign
 
exchange
 
contracts. These
 
foreign
 
exchange
 
contracts
 
are
 
over-the-counter
 
derivative
transactions. Substantially all of the Company’s derivative exposures are with counterparties that have long-term credit ratings of “B”
(or equivalent)
 
or better.
 
The Company
 
uses quoted
 
prices in
 
active markets
 
for similar
 
assets and liabilities
 
to determine
 
fair value
(Level 2). The Company has no derivatives that require fair value measurement
 
under Level 1 or 3 of the fair value hierarchy.
 
The Company had
no
 
outstanding foreign exchange contracts as of June 30, 2024 and June 30,
 
2023, respectively.
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-32
6.
 
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
Derivative transactions - Foreign exchange option contracts during the year ended June
 
30, 2022
The Company held a significant amount of U.S. dollars in early fiscal 2022 and intended to use a portion of these funds to settle
part of the purchase
 
consideration related to the
 
Connect acquisition. The purchase
 
consideration was expected
 
to be settled in
 
ZAR.
Accordingly,
 
the
 
Company
 
entered
 
into
 
foreign
 
exchange
 
option
 
contracts
 
with
 
FirstRand
 
Bank
 
Limited
 
acting
 
through
 
its
 
Rand
Merchant Bank division (“RMB”) in November 2021
 
in order to manage the risk of currency volatility and to fix
 
the ZAR amount to
be
 
utilized
 
for
 
part
 
of
 
the
 
purchase
 
consideration
 
settlement. These
 
foreign
 
exchange
 
option
 
contracts,
 
also
 
known
 
as
 
synthetic
forwards, were over-the-counter derivative transactions (Level 2). RMB’s long
 
-term credit rating is “BB”. The Company used quoted
prices in active markets for similar assets and liabilities to determine fair value
 
of the foreign exchange option contracts (Level 2).
 
The Company
 
marked-to-market the synthetic
 
forwards as of
 
December 31, 2021,
 
using a Black-Scholes
 
option pricing model
which determined
 
the respective fair
 
value of the
 
options utilizing
 
current market
 
parameters. During
 
the year ended
 
June 30, 2022,
the Company recorded a net gain of $
3.7
 
million, which comprised a net gain of $
6.1
 
million (which includes the reversal of the $
2.4
.
million unrealized
 
loss which
 
was previously
 
recognized) recorded
 
during the
 
three months
 
ended March
 
2022, and
 
the unrealized
loss of $
2.4
 
million recorded during
 
the three months ended
 
December 31, 2021.
 
The net gain is
 
included in the caption
 
gain related
to fair value adjustment to currency options in the Company’s consolidated statements of operations for the year ended June 30, 2022.
The following table presents the
 
Company’s assets measured
 
at fair value on a recurring basis as of
 
June 30, 2024, according to
the fair value hierarchy:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance business:
 
Cash, cash equivalents and
restricted cash (included in other
long-term assets)
 
216
-
-
216
Fixed maturity investments
(included in cash and cash
equivalents)
4,635
-
-
4,635
Total assets at fair value
 
$
4,851
$
-
$
-
$
4,851
The following table presents the Company’s
 
assets measured at fair value on a recurring basis as of
 
June 30, 2023, according to
the fair value hierarchy:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets
Investment in Cell C
$
-
$
-
$
-
$
-
Related to insurance business
Cash and cash equivalents
(included in other long-term
assets)
258
-
-
258
Fixed maturity investments
(included in cash and cash
equivalents)
3,119
-
-
3,119
Total assets at fair value
 
$
3,377
$
-
$
-
$
3,377
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-33
6.
 
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS (continued)
Financial instruments (continued)
There have been
no
 
transfers in or out of Level 3 during the years ended June 30, 2024, 2023 and 2022, respectively.
There was
no
 
movement in the carrying value of assets measured at fair value on a recurring basis, and categorized within Level
3, during the years ended June 30, 2024
 
and 2023. Summarized below is the movement in
 
the carrying value of assets measured at fair
value on a recurring basis, and categorized within Level 3, during the year
 
ended June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value
Assets
Balance as of June 30, 2023
$
-
Foreign currency adjustment
(1)
-
Balance as of June 30, 2024
$
-
(1) The
 
foreign currency
 
adjustment represents
 
the effects
 
of the fluctuations
 
of the South
 
African rand
 
against the
 
U.S. dollar
on the carrying value.
Summarized below is the movement in the carrying value of
 
assets and liabilities measured at fair value on a recurring
 
basis, and
categorized within Level 3, during the year ended June 30, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carrying value
Assets
Balance as at June 30, 2022
$
-
Foreign currency adjustment
(1)
-
Balance as of June 30, 2023
$
-
(1) The
 
foreign currency
 
adjustment represents
 
the effects
 
of the fluctuations
 
of the South
 
African rand
 
against the
 
U.S. dollar
on the carrying value.
Trade, finance loans and other receivables
Trade,
 
finance loans
 
and other
 
receivables originated
 
by the
 
Company
 
are stated
 
at cost
 
less allowance
 
for doubtful
 
accounts
receivable. The fair value
 
of trade, finance loans
 
and other receivables approximates their
 
carrying value due to
 
their short-term nature.
Trade and other payables
The fair values of trade and other payables approximates their carrying amounts, due
 
to their short-term nature.
Assets and liabilities measured at fair value on a nonrecurring basis
 
The Company
 
measures equity
 
investments without
 
readily determinable
 
fair values
 
at fair
 
value on
 
a nonrecurring
 
basis. The
fair values of
 
these investments are
 
determined based on
 
valuation techniques using
 
the best information
 
available, and may
 
include
quoted market prices, market comparables, and discounted cash flow
 
projections. An impairment charge is recorded when the cost
 
of
the
 
asset
 
exceeds
 
its
 
fair
 
value
 
and
 
the
 
excess
 
is
 
determined
 
to
 
be
 
other-than-temporary.
 
Refer
 
to
 
Note
 
9
 
for
 
impairment
 
charges
recorded during the
 
reporting periods presented
 
herein. The Company
 
has
no
liabilities that are measured at fair value on a nonrecurring Summarized below is the cost, accumulated depreciation and carrying amount of property, plant and equipment as of June 30,
basis.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-34
7.
 
PROPERTY,
 
PLANT AND EQUIPMENT,
 
net
2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Cost
Vaults
$
24,641
$
19,229
Computer equipment
44,538
35,158
Furniture and office equipment
9,365
7,508
Motor vehicles
3,088
2,070
Plant and machinery
66
45
81,698
64,010
Accumulated depreciation:
Vaults
8,838
4,353
Computer equipment
32,871
25,645
Furniture and office equipment
6,854
5,602
Motor vehicles
1,165
955
Plant and machinery
34
8
49,762
36,563
Carrying amount:
Vaults
15,803
14,876
Computer equipment
11,667
9,513
Furniture and office equipment
2,511
1,906
Motor vehicles
1,923
1,115
Plant and machinery
32
37
$
31,936
$
27,447
8.
 
LEASES
The
 
Company
 
has
 
entered into
 
leasing
 
arrangements
 
classified
 
as operating
 
leases under
 
accounting
 
guidance.
 
These leasing
arrangements
 
relate primarily
 
to the
 
lease of
 
its corporate
 
head
 
office,
 
administration
 
offices,
 
a manufacturing
 
facility,
 
and branch
locations through which the
 
Company operates its financial services
 
business in South Africa.
 
The Company’s
 
operating leases have
a remaining
 
lease term
 
of between
one year
 
to
five years
. The
 
Company also
 
operates parts
 
of its
 
financial services
 
business from
locations which it leases for a period of less than
one year
.
The Company’s
 
operating lease expense
 
during the years
 
ended June 30,
 
2024, 2023 and
 
2022, was $
3.2
 
million, $
2.9
 
million,
and $
4.0
 
million, respectively. The Company
 
does not have any significant leases that have not commenced as of June 30, 2024.
The Company
 
has entered into
 
short-term leasing
 
arrangements, primarily
 
for the lease
 
of branch
 
locations and other
 
locations
to operate
 
its financial
 
services business
 
in South
 
Africa.
 
The Company’s
 
short-term lease
 
expense during
 
the years
 
ended June
 
30,
2024, 2023 and 2022, was $ The following table presents supplemental balance sheet disclosure related to our right-of-use assets and our operating leases
3.6
 
million, $
4.2
 
million and $
4.9
 
million, respectively.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-35
8.
 
LEASES (continued)
liabilities as of June 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Right-of-use assets obtained in exchange for lease obligations
Weighted average
 
remaining lease term (years)
3.07
1.77
Weighted average
 
discount rate
10.5
%
9.7
%
Maturities of operating lease liabilities
2025
$
3,143
2026
2,442
2027
1,864
2028
1,226
2029
156
Thereafter
-
Total undiscounted
 
operating lease liabilities
8,831
Less imputed interest
1,401
Total operating lease liabilities,
 
included in
7,430
Operating lease liability - current
2,343
Operating lease liability - long-term
$
5,087
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS
Equity-accounted investments
The Company’s ownership percentage
 
in its equity-accounted investments as of June 30, 2024 and 2023, was as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Sandulela Technology
 
Proprietary Limited ("Sandulela")
49
 
%
49
 
%
SmartSwitch Namibia (Pty) Ltd (“SmartSwitch Namibia”)
50
 
%
50
 
%
Finbond Group Limited (“Finbond”)
-
 
%
28
 
%
Finbond
In December
 
2023, the
 
Company sold
 
its entire
 
remaining equity
 
interest in
 
Finbond which
 
comprised of
220,523,358
 
shares,
and which represented approximately
27.8
% of Finbond’s issued and
 
outstanding ordinary shares immediately
 
prior to the
 
sale. Lesaka
SA had pledged, among other things, its entire equity interest in Finbond as security for the South African facilities described in Note
12.
Sale of Finbond shares during the years ended
 
June 30, 2024, 2023 and 2022
On
 
August
 
10,
 
2023,
 
the
 
Company,
 
through
 
its
 
wholly
 
owned
 
subsidiary
 
Net1
 
Finance
 
Holdings
 
(Pty)
 
Ltd,
 
entered
 
into
 
an
agreement with Finbond to sell its remaining shareholding to Finbond for a cash consideration of ZAR
64.2
 
million ($
3.5
 
million), or
ZAR
0.2911
 
per share. The transaction was subject to certain conditions, including regulatory and shareholder approvals, which were
finalized in December 2023. The
 
Company did
no
t record a gain or loss on the disposal
 
because the sale proceeds were equivalent
 
to
the net carrying
 
value, including accumulated
 
reserves, of the
 
investment in Finbond
 
as of
 
the disposal
 
date. The cash
 
proceeds received
of ZAR
64.2
 
million ($
3.5
 
million) were used to repay capitalized interest under our borrowing facilities, refer
 
to Note 12.
The
 
Company
 
sold
25,456,545
 
and
22,841,030
 
shares
 
in
 
Finbond
 
for
 
cash
 
during
 
the
 
years
 
ended
 
June
 
30,
 
2023
 
and
 
2022,
respectively, and recorded a loss of $
0.4
 
million and $
0.4
 
million in the caption loss
 
on equity-accounted investment in the
 
Company’s
consolidated statement of operations for the years ended June 30,
 
2023 and 2022.
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-36
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Finbond (continued)
Sale of Finbond shares during the years ended
 
June 30, 2024, 2023 and 2022 (continued)
The following table presents the calculation of
 
the loss on disposal of Finbond
 
shares during the years ended June
 
30, 2024, 2023
and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year
 
ended June 30,
2024
2023
2022
Loss on disposal of Finbond shares:
Consideration received in cash
$
3,508
$
265
$
865
Less: carrying value of Finbond shares sold
(2,112)
(363)
(630)
Less: release of foreign currency translation reserve from accumulated
other comprehensive loss
(1,543)
(252)
(620)
Add: release of stock-based compensation charge related
 
to equity-
accounted investment
147
9
9
Loss on sale of Finbond shares
$
-
$
(341)
$
(376)
Finbond impairments
 
recorded during
 
the year ended June 30, 2024
As noted
 
earlier,
 
the Company
 
entered into
 
an agreement
 
to exit
 
its position
 
in Finbond
 
and the
 
Company considered
 
this an
impairment indicator. The
 
Company is required to include any foreign currency translation reserve
 
and other equity account amounts
in its impairment assessment if it considers exiting an equity method investment. The Company performed an impairment assessment
of its
 
holding in
 
Finbond, including
 
the foreign
 
currency translation
 
reserve and
 
other equity
 
account amounts,
 
as of September
 
30,
2023. The Company recorded an impairment loss of $
1.2
 
million during the quarter ended September 30, 2023, which represented the
difference between
 
the determined fair value
 
of the Company’s
 
interest in Finbond and
 
the Company’s
 
carrying value, including
 
the
foreign currency
 
translation reserve
 
(before the
 
impairment). The
 
Company used
 
the price
 
of ZAR
0.2911
 
referenced in
 
the August
2023 agreement referred to above to calculate the determined fair value for Finbond.
Finbond impairments
 
recorded during
 
the year ended June 30, 2023
The Company
 
considered the combination
 
of the ongoing
 
losses incurred and
 
reported by Finbond
 
and its lower
 
share price as
impairment indicators as of
 
September 30, 2022. The
 
Company performed an impairment
 
assessment of its holding
 
in Finbond as of
September 30,
 
2022. The Company
 
recorded an impairment
 
loss of $
1.1
 
million during the
 
year ended
 
June 30, 2023,
 
related to the
other-than-temporary
 
decrease
 
in
 
Finbond’s
 
value,
 
which
 
represented
 
the
 
difference
 
between
 
the
 
determined
 
fair
 
value
 
of
 
the
Company’s interest
 
in Finbond and the Company’s
 
carrying value (before the impairment).
 
During fiscal 2023, there continued
 
to be
limited trading
 
in Finbond
 
shares on
 
the JSE
 
because a
 
small number
 
of shareholders
 
owned approximately
80
% of
 
its issued
 
and
outstanding shares between them. The Company calculated a fair value per share for Finbond by applying a liquidity discount of
25
%
to the September 30, 2022, Finbond closing price of ZAR
0.49
. The Company increased the liquidity discount from
15
% (used in the
previous impairment assessment)
 
to
25
% (used in
 
the September 30,
 
2022 assessment) as
 
a result of
 
the ongoing limited
 
trading activity
observed on the JSE.
Carbon
In September
 
2022, the
 
Company,
 
through its
 
wholly-owned subsidiary,
 
Net1 Applied
 
Technologies
 
Netherlands B.V.
 
(“Net1
BV”),
 
entered
 
into
 
a binding
 
term
 
sheet
 
with the
 
Etobicoke
 
Limited
 
(“Etobicoke”)
 
to sell
 
its entire
 
interest, or
25
%,
 
in Carbon
 
to
Etobicoke for $
0.5
 
million and a loan
 
due from Carbon, with
 
a face value of
 
$
3
 
million, to Etobicoke for $
0.75
 
million. Both the equity
interest and
 
the loan had
 
a carrying value
 
of $
0
 
(zero) at June
 
30, 2022. The
 
parties agreed that
 
Etobicoke pledge the
 
Carbon shares
purchased as security for the amounts outstanding under the binding term sheet.
 
The
 
Company
 
received
 
$
0.25
 
million
 
on
 
closing
 
and
 
the
 
outstanding
 
balance
 
due
 
by
 
Etobicoke
 
was
 
expected
 
to
 
be
 
paid
 
as
follows: (i) $
0.25
 
million on September 30, 2023 (the amount was received in October 2023), and (ii) the remaining amount, of $
0.75
million in March
 
2024 (the amount
 
has not been
 
received as of
 
June 30, 2024
 
(refer to Note
 
4)). Both amounts
 
were included in
 
the
caption accounts receivable, net and
 
other receivables in the
 
Company’s consolidated balance sheet as of June
 
30, 2023. The Company
has allocated the $
0.25
 
million received on closing
 
to the sale of
 
the equity interest and
 
allocated the subsequent
 
funds received first
to the sale of the equity interest and then to the loans.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-37
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Carbon (continued)
The Company
 
believed that
 
the fair
 
value of
 
the Carbon
 
shares provided
 
as security
 
was $
0
 
(zero), which
 
was in
 
line with
 
the
carrying value as
 
of June 30, 2022,
 
and created an allowance
 
for doubtful loans receivable
 
related to the $
1.0
 
million previously due
from Etobicoke.
 
The Company
 
did not
 
incur any significant
 
transaction costs.
 
The Company
 
has included
 
the gain of
 
$
0.25
 
million
related to the sale of the Carbon equity interest in the caption net
 
gain on disposal of equity-accounted investments in the Company’s
consolidated statements of operations.
The following table presents the calculation of the gain on disposal of Carbon
 
during the year ended June 30, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year
 
ended
June 30,
2023
Gain on disposal of Carbon shares:
Consideration received in cash in September 2022
$
250
Less: carrying value of Carbon
-
Gain on disposal of Carbon shares:
(1)
$
250
(1)
 
The
 
Company
 
did
 
not
 
pay
 
taxes
 
related
 
to
 
the
 
sale
 
of
 
Carbon
 
because
 
the
 
base
 
cost
 
of
 
its
 
investment
 
exceeds
 
the
 
sales
consideration
 
received.
 
The Company
 
does not
 
believe
 
that it
 
will be
 
able to
 
utilize the
 
loss generated
 
because
 
Net1 BV
 
does
 
not
generate taxable income.
Bank Frick
Sale of entire interest in Bank Frick in February 2021 – receipt of cash proceeds during the year ended June 30, 2022
On February 3, 2021,
 
the Company, through its wholly-owned subsidiary, Net1 Holdings LI
 
AG (“Net1 LI”), entered
 
into a share
sales agreement
 
with the Frick
 
Family Foundation
 
(“KFS”) to sell
 
its entire interest,
 
or
35
%, in Bank
 
Frick to KFS
 
for $
30
 
million.
Lesaka and certain entities within the
 
IPG group also entered into an
 
indemnity and release agreement with KFS
 
and Bank Frick under
which
 
the
 
parties
 
agreed
 
to
 
terminate
 
all existing
 
arrangements
 
with
 
Bank
 
Frick
 
and
 
settle all
 
liabilities
 
related
 
to
 
the
 
Company’s
activities with Bank Frick
 
through the payment of
 
$
3.6
 
million to KFS. The Company
 
received $
15.0
 
million, net, on closing, which
comprised $
18.6
 
million less the
 
$
3.6
 
million due to
 
KFS to terminate
 
all existing arrangements
 
with Bank Frick
 
and settle all
 
liabilities
related to IPG’s activities with Bank Frick. The outstanding
 
balance due by KFS of $
11.4
 
million was received in full during the year
ended June 30, 2022.
V2 Limited
The Company sold its investment in V2 Limited, now named VantagePay,
 
(“V2”),
 
an equity accounted investment, on April 22,
2021,
 
for
 
one
 
dollar.
 
The
 
Company
 
had
 
also
 
committed
 
to provide
 
V2
 
with
 
a working
 
capital
 
facility
 
of $
5.0
 
million,
 
which
 
was
subject to
 
the achievement
 
of certain
 
pre-defined objectives,
 
and in
 
June 2020
 
it provided
 
$
0.5
 
million to
 
V2 under
 
this facility.
 
In
September 2020, the Company and V2 agreed to reduce the $
5.0
 
million working capital facility to $
1.5
 
million. In October 2020, V2
drew down the remaining available $
1.0
 
million of the working capital facility. The Company created an allowance for doubtful loans
receivable of $
1.5
 
million during the year
 
ended June 30, 2021,
 
related to the full
 
amount outstanding as of
 
June 30, 2021. This
 
amount
was still outstanding as of June 30, 2024.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-38
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Equity-accounted investments (continued)
Summarized
 
below is
 
the movement
 
in equity-accounted
 
investments during
 
the years
 
ended June
 
30, 2024
 
and 2023,
 
which
includes the investment in equity and the investment in loans provided
 
to equity-accounted investees:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finbond
Other
(1)
Total
Investment in equity
Balance as of June 30, 2022
$
5,760
$
101
$
5,861
Stock-based compensation
 
28
-
28
Comprehensive loss:
(1,271)
89
(1,182)
Other comprehensive income
 
3,935
-
3,935
Equity accounted (loss) earnings
(5,206)
89
(5,117)
Share of net (loss) income
(4,096)
89
(4,007)
Impairment
(1,110)
-
(1,110)
Dividends received
 
-
(42)
(42)
Sale of shares in equity-accounted investment
(506)
-
(506)
Foreign currency adjustment
(2)
(971)
(17)
(988)
Balance as of June 30, 2023
3,040
131
3,171
Stock-based compensation
 
14
-
14
Comprehensive (loss) income:
(956)
166
(790)
Other comprehensive income
 
489
-
489
Equity accounted (loss) earnings
(1,445)
166
(1,279)
Share of (loss) net income
(278)
166
(112)
Impairment
(1,167)
-
(1,167)
Dividends received
 
-
(95)
(95)
Sale of shares in equity-accounted investment
(2,096)
-
(2,096)
Foreign currency adjustment
(2)
(2)
4
2
Balance as of June 30, 2024
$
-
$
206
$
206
Investment in loans:
Balance as of June 30, 2022
$
-
$
-
$
-
Loans repaid
-
(112)
(112)
Loans granted
-
112
112
Balance as of June 30, 2023
-
-
-
Balance as of June 30, 2024
$
-
$
-
$
-
Equity
Loans
Total
Carrying amount as of :
June 30, 2023
$
3,171
 
$
-
 
$
3,171
 
June 30, 2024
$
206
 
$
-
 
$
206
 
(1) Includes Carbon,
 
Sandulela and SmartSwitch Namibia;
(2) The foreign
 
currency adjustment represents
 
the effects
 
of the fluctuations
 
of the ZAR,
 
Nigerian naira
 
and Namibian dollar,
against the U.S. dollar on the carrying value.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-39
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets
Summarized below is the breakdown of other long-term assets as of June 30,
 
2024, and June 30, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Total equity investments
 
$
76,297
$
76,297
Investment in
10
% (June 30, 2023:
10
%) of MobiKwik
(1)
76,297
76,297
Investment in
5
% of Cell C (June 30, 2023:
5
%) at fair value (Note 6)
-
-
Investment in
87.50
% of CPS (June 30, 2023:
87.50
%) at fair value
(1)(2)
-
-
Policy holder assets under investment contracts (Note 11)
216
257
Reinsurance assets under insurance contracts (Note 11)
1,469
1,040
Total other long-term
 
assets
$
77,982
$
77,594
(1)
 
The Company
 
determined
 
that
 
MobiKwik
 
and CPS
 
do not
 
have
 
readily
 
determinable
 
fair
 
values and
 
therefore
 
elected to
record these investments
 
at cost minus impairment,
 
if any,
 
plus or minus changes
 
resulting from observable
 
price changes in orderly
transactions for the identical or a similar investment of the same issuer.
(2) On October 16, 2020,
 
the High Court of
 
South Africa, Gauteng Division, Pretoria
 
ordered that CPS be
 
placed into liquidation.
MobiKwik
The Company
 
signed a
 
subscription agreement
 
with MobiKwik,
 
which is
 
one of
 
India’s
 
largest independent
 
mobile payments
networks and buy now
 
pay later businesses.
 
Pursuant to the
 
subscription agreement, the Company agreed
 
to make an
 
equity investment
of up to $
40.0
 
million in MobiKwik over a
24
-month period. The Company made an
 
initial $
15.0
 
million investment in August 2016
and a
 
further
 
$
10.6
 
million investment
 
in June
 
2017,
 
under this
 
subscription
 
agreement.
 
During the
 
year ended
 
June 30,
 
2019, the
Company paid $
1.1
 
million to subscribe
 
for additional shares in
 
MobiKwik. As of
 
each of June 30,
 
2024 and 2023, respectively,
 
the
Company owned approximately
10
% of MobiKwik’s issued share capital.
In October
 
2021, the
 
Company converted
 
(at a
 
rate of
 
approximately
20
 
for 1)
 
its
310,781
 
shares of
 
compulsorily convertible
cumulative
 
preferences
 
shares
 
to
6,215,620
 
equity
 
shares
 
in
 
anticipation
 
of
 
MobiKwik’s
 
initial
 
public
 
offering.
 
The
 
Company’s
investment
 
percentage
 
remained
 
unchanged
 
following
 
the
 
conversion.
 
The
 
Company
 
did
 
not
 
identify
 
any
 
observable
 
transactions
during the years ended June 30, 2024,
 
2023 and 2022, respectively,
 
and therefore there was no change in
 
the fair value of MobiKwik
during these years. Change in the fair value of MobiKwik are included in the caption “Change in fair value of equity securities” in the
consolidated statement of operations. During
 
the year ended June 30, 2021, MobiKwik
 
entered into a number of separate agreements
with new
 
shareholders
 
to raise
 
additional
 
capital through
 
the issuance
 
of additional
 
shares. The
 
Company
 
used the
 
valuation
 
from
MobiKwik’s June 2021
 
capital raise as the basis for its fair value determination of $
76.3
 
million.
 
Cell C
On
 
August
 
2,
 
2017,
 
the
 
Company,
 
through
 
its
 
subsidiary,
 
Net1SA,
 
purchased
75,000,000
 
class
 
“A”
 
shares
 
of
 
Cell
 
C
 
for
 
an
aggregate purchase price of ZAR
2.0
 
billion ($
151.0
 
million) in cash. The Company funded the transaction through
 
a combination of
cash and a
 
borrowing facility.
 
Net1 SA has
 
pledged, among other
 
things, its entire
 
equity interest in
 
Cell C as
 
security for the
 
South
African
 
facilities
 
described
 
in
 
Note
 
12.
 
On
 
September
 
30,
 
2022,
 
Cell C
 
completed
 
its recapitalization
 
process
 
which
 
included
 
the
issuance of additional equity instruments by Cell C. The Company’s effective percentage holding in Cell C’s equity
 
has reduced from
15
% to
5
% following the recapitalization. The Company’s
 
investment in Cell C is carried at fair value. Refer
 
to Note 6 for additional
information regarding changes in the fair value of Cell C.
CPS
The Company
 
deconsolidated
 
its investment
 
in CPS
 
in May
 
2020. As
 
of June
 
30, 2024
 
and 2023,
 
respectively,
 
the Company
owned
87.5
% of CPS’ issued share capital.
 
 
 
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-40
9.
 
EQUITY-ACCOUNTED
 
INVESTMENTS AND OTHER LONG-TERM ASSETS (continued)
Other long-term assets (continued)
Revix
In February 2022,
 
the Company sold its
 
entire interest in
 
Revix UK Limited
 
for cash of
 
$0.7 million because
 
the Company did
not consider
 
the investment
 
core to
 
its strategy
 
to operate
 
primarily
 
in Southern
 
Africa. The
 
Company
 
had
 
previously written
 
this
investment to
 
$
0
 
(nil) and recognized
 
a gain on
 
disposal of $
0.7
 
million, which
 
is included in
 
the caption gain
 
on disposal of
 
equity
securities in the Company’s
 
consolidated statements of operations for the year ended June 30, 2022.
Summarized below
 
are the components
 
of the Company’s
 
equity securities
 
without readily
 
determinable fair
 
value and held
 
to
maturity investments as of June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in Mobikwik
$
26,993
$
49,304
$
-
$
76,297
Investment in CPS
-
-
-
-
Held to maturity:
Investment in Cedar Cellular notes
 
-
-
-
-
Total
 
$
26,993
$
49,304
$
-
$
76,297
Summarized below are the components of the Company’s
 
equity securities without readily determinable fair value and held to
maturity investments as of June 30, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost basis
Unrealized
holding gains
Unrealized
holding losses
Carrying
value
Equity securities:
Investment in MobiKwik
$
26,993
$
49,304
$
-
$
76,297
Investment in CPS
-
-
-
-
Held to maturity:
Investment in Cedar Cellular notes
 
-
-
-
-
Total
 
$
26,993
$
49,304
$
-
$
76,297
10.
 
GOODWILL AND INTANGIBLE
 
ASSETS,
 
net
Goodwill
Summarized below is the movement in the carrying value of goodwill
 
for the years ended June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross value
Accumulated
impairment
Carrying value
Balance as of July 1, 2021
$
42,949
$
(13,796)
$
29,153
Acquisition of Connect (Note 3)
(2)
153,693
-
153,693
Foreign currency adjustment
(1)
(21,166)
977
(20,189)
Balance as of June 30, 2022
175,476
(12,819)
162,657
Impairment loss
-
(7,039)
(7,039)
Foreign currency adjustment
(1)
(22,857)
982
(21,875)
Balance as of June 30, 2023
152,619
(18,876)
133,743
Foreign currency adjustment
(1)
5,280
(472)
4,808
Balance as of June 30, 2024
$
157,899
$
(19,348)
$
138,551
(1) – The
 
foreign currency
 
adjustment represents
 
the effects
 
of the fluctuations
 
between the South
 
African Rand and
 
the Euro,
against the U.S. dollar on the carrying value.
(2) – Represents
 
goodwill arising from
 
the acquisition of
 
Connect and translated
 
at the foreign exchange
 
rate applicable on the
date the transaction became effective. This goodwill has been
 
allocated to the merchant reportable operating segment.
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-41
10.
 
GOODWILL AND INTANGIBLE
 
ASSETS,
 
net (continued)
Goodwill (continued)
Goodwill
 
associated
 
with
 
the
 
acquisition
 
of
 
Connect
 
represents the
 
excess
 
of
 
cost
 
over
 
the
 
fair
 
value
 
of
 
acquired
 
net assets.
Connect goodwill
 
is not deductible
 
for tax purposes.
 
See Note 3
 
for the allocation
 
of the purchase
 
price to the
 
fair value of
 
acquired
net assets.
Impairment loss
The Company assesses the carrying
 
value of goodwill for impairment
 
annually, or
 
more frequently,
 
whenever events occur and
circumstances change indicating
 
potential impairment. The Company
 
performs its annual impairment
 
test as at June 30 of
 
each year.
Except as discussed below,
no
 
goodwill has been impaired during the years ended June 30, 2024, 2023
 
and 2022, respectively.
Year ended
 
June 30, 2023 goodwill impairment loss
The Company
 
recognized an
 
impairment loss
 
of $
7.0
 
million as
 
a result
 
of its
 
annual impairment
 
analysis related
 
to goodwill
allocated
 
to
 
its
 
hardware/
 
software
 
support
 
business
 
within
 
its
 
merchant
 
operating
 
segment.
 
The
 
impairment
 
loss
 
resulted
 
from
 
a
reassessment
 
of
 
the
 
business’
 
growth
 
prospects
 
given
 
the
 
change
 
in
 
customer
 
demand
 
as
 
a
 
result
 
of
 
the
 
introduction
 
of
 
cheaper
hardware devices which incorporate
 
software widely adopted by our customers
 
customer-base, coupled with a challenging
 
economic
environment
 
in
 
South
 
Africa.
 
The
 
impairment
 
is
 
included
 
within
 
the
 
caption
 
impairment
 
loss
 
in
 
the
 
consolidated
 
statement
 
of
operations for the year ended June 30, 2023.
In order to determine the
 
amount of the goodwill
 
impairment, the estimated fair value
 
of our hardware/ software support business
assets and liabilities were compared to the carrying
 
value of its assets and liabilities.
 
The Company used a discounted cash flow model
in order
 
to determine
 
the fair
 
value of
 
the business.
 
Based on
 
this analysis,
 
the Company
 
determined that
 
the carrying
 
value of
 
the
business’ assets and liabilities exceeded their fair value at the reporting date.
In the event that there is a deterioration in the Company’s operating segments, or in any other of the Company’s
 
businesses, this
may lead
 
to impairments
 
in future
 
periods.
 
Furthermore, the
 
difficulties of
 
integrating acquired
 
businesses may
 
be increased
 
by the
necessity of integrating personnel with disparate
 
business backgrounds and combining different corporate cultures. The
 
Company also
may not be able to retain key employees or
 
customers of an acquired business or realize cost
 
efficiencies or synergies or other benefits
that it
 
anticipated when
 
selecting its
 
acquisition candidates.
 
Acquisition candidates
 
may have
 
liabilities or
 
adverse operating
 
issues
that the Company fails to discover through due diligence prior to the acquisition. These factors may also lead to impairments in future
periods.
Goodwill has been allocated to the Company’s
 
reportable segments as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
Merchant
Carrying value
Balance as of July 1, 2021
$
-
$
29,153
$
29,153
Acquisition of Connect (Note 3)
-
153,693
153,693
Foreign currency adjustment
(1)
-
(20,189)
(20,189)
Balance as of June 30, 2022
-
162,657
162,657
Impairment loss
-
(7,039)
(7,039)
Foreign currency adjustment
(1)
-
(21,875)
(21,875)
Balance as of June 30, 2023
-
133,743
133,743
Foreign currency adjustment
(1)
-
4,808
4,808
Balance as of June 30, 2024
$
-
$
138,551
$
138,551
(1) –
 
The foreign
 
currency adjustment
 
represents the
 
effects of
 
the fluctuations
 
between the
 
South African
 
rand and
 
the Euro,
against the U.S. dollar on the carrying value.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-42
10.
 
GOODWILL AND INTANGIBLE
 
ASSETS,
 
net
Intangible assets
Intangible assets acquired
Summarized below
 
is the
 
fair value
 
of intangible
 
assets acquired,
 
translated at
 
the exchange
 
rate applicable
 
as of
 
the relevant
acquisition dates, and the weighted-average amortization period:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value as of
acquisition date
Weighted-average
amortization
period (in years)
Finite-lived intangible asset:
Acquired during the year ended June 30, 2022:
Connect – integrated platform
$
142,981
10
 
Connect – customer relationships
20,516
8
 
Connect – brands
$
15,987
10
 
Impairment loss
The Company
 
assesses the carrying
 
value of
 
intangible assets
 
for impairment
 
whenever events
 
occur or
 
circumstances change
indicating that the carrying amount of the intangible asset may not be recoverable.
No
 
intangible assets have been impaired during the
years ended June 30, 2024, 2023 and 2022, respectively.
Summarized below is the carrying value and accumulated amortization of the intangible assets as of June 30, 2024, and June 30,
2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30, 2024
As of June 30, 2023
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Finite-lived intangible assets:
Customer relationships
$
25,880
$
(14,030)
$
11,850
$
24,978
$
(11,565)
$
13,413
Software, integrated
platform and unpatented
technology
115,213
(25,763)
89,450
110,906
(13,711)
97,195
FTS patent
 
2,107
(2,107)
-
2,034
(2,034)
-
Brands and trademarks
 
14,353
(4,300)
10,053
13,852
(2,863)
10,989
Total finite-lived
intangible assets
 
$
157,553
$
(46,200)
$
111,353
$
151,770
$
(30,173)
$
121,597
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate
 
amortization
 
expense on
 
the finite-lived
 
intangible assets
 
for
 
the
 
years
 
ended June
 
30,
 
2024,
 
2023
 
and
 
2022,
 
was
approximately $
14.4
 
million, $
15.0
 
million and $
3.8
 
million, respectively.
Future estimated annual amortization expense for the next five
 
fiscal years and thereafter, using the exchange rates that prevailed
on June
 
30, 2024, is
 
presented in the
 
table below.
 
Actual amortization
 
expense in future
 
periods could differ
 
from this estimate
 
as a
result of acquisitions, changes in useful lives, exchange rate fluctuations and other
 
relevant factors.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal 2025
$
14,945
Fiscal 2026
14,944
Fiscal 2027
14,888
Fiscal 2028
14,853
Fiscal 2029
14,743
Thereafter
36,980
Total future estimated annual amortization expense 11.
$
111,353
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-43
ASSETS AND POLICYHOLDER LIABILITIES UNDER INSURANCE AND INVESTMENT CONTRACTS
Reinsurance assets and policyholder liabilities under insurance contracts
 
Summarized below is the movement in reinsurance assets and policyholder liabilities under
 
insurance contracts during the years
ended June 30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reinsurance
Assets
(1)
Insurance
contracts
(2)
Balance as of July 1, 2022
$
1,424
$
(1,955)
Increase in policy holder benefits under insurance contracts
 
785
(5,833)
Claims and policyholders’ benefits under insurance contracts
(986)
5,928
Foreign currency adjustment
(3)
(183)
260
Balance as of June 30, 2023
1,040
(1,600)
Increase in policy holder benefits under insurance contracts
 
844
(7,610)
Claims and policyholders’ benefits under insurance contracts
(464)
7,043
Foreign currency adjustment
(3)
49
(74)
Balance as of June 30, 2024
$
1,469
$
(2,241)
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
The Company has agreements with reinsurance companies in order to limit its losses from large insurance contracts, however,
 
if
the reinsurer is unable to meet its obligations, the Company retains the liability.
 
The value of insurance contract liabilities is based on
the best
 
estimate assumptions
 
of future
 
experience plus
 
prescribed margins,
 
as required
 
in the
 
markets in
 
which these
 
products are
offered, namely
 
South Africa. The
 
process of deriving
 
the best estimates
 
assumptions plus
 
prescribed margins
 
includes assumptions
related to claim reporting delays (based on average industry experience).
Assets and policyholder liabilities under investment contracts
Summarized below is the movement in assets
 
and policyholder liabilities under investment contracts during the years
 
ended June
30, 2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
(1)
Investment
contracts
(2)
Balance as of July 1, 2022
$
371
$
(349)
Increase in policy holder benefits under investment contracts
 
6
(6)
Claims and decrease in policyholders’ benefits under investment contracts
 
(69)
69
Foreign currency adjustment
(3)
(51)
45
Balance as of June 30, 2023
257
(241)
Increase in policy holder benefits under investment contracts
 
4
(4)
Claims and decrease in policyholders’ benefits under investment contracts
 
(44)
44
Foreign currency adjustment
(3)
(1)
(15)
Balance as of June 30, 2024
$
216
$
(216)
(1) Included in other long-term assets (refer to Note 9);
(2) Included in other long-term liabilities;
(3) Represents the effects of the fluctuations of the ZAR against the U.S. dollar.
 
The Company does not offer any investment products with guarantees
 
related to capital or returns.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-44
12.
 
BORROWINGS
South Africa
The
 
amounts
 
below
 
have
 
been
 
translated
 
at
 
exchange
 
rates
 
applicable
 
as
 
of
 
the
 
dates
 
specified.
 
The
 
3-month
 
Johannesburg
Interbank Agreed Rate (“JIBAR”), the rate at which private sector banks borrow funds from the
 
South African Reserve Bank, on June
30, 2024, was
8.4
%. The prime rate, the benchmark
 
rate at which private sector banks
 
lend to the public in South
 
Africa, on June 30,
2024, was
11.75
%.
RMB Facilities, as amended, comprising a short-term facility (Facility E) and
 
long-term borrowings
On July 21,
 
2017, Lesaka SA
 
entered into a
 
Common Terms
 
Agreement, Subordination
 
Agreement, Security
 
Cession & Pledge
and
 
certain
 
ancillary
 
loan
 
documents
 
(collectively,
 
the
 
“Original
 
Loan
 
Documents”)
 
with
 
RMB,
 
a
 
South
 
African
 
corporate
 
and
investment
 
bank, and
 
Nedbank Limited
 
(acting
 
through its
 
Corporate
 
and Investment
 
Banking division),
 
an African
 
corporate
 
and
investment bank (collectively, the “Lenders”).
 
Since 2017, these agreements have been amended to add
 
additional facilities, including
Facilities G and H, which were obtained to finance the acquisition of Connect (refer to Note 3). Facilities A, B, C, D and F have been
repaid and cancelled. As of June
 
30, 2024, the only remaining facilities are
 
Facility G and Facility H (as defined
 
below), and Facility
E, an overdraft facility.
Available short-term facility -
 
Facility E
On
 
September
 
26,
 
2018,
 
Lesaka
 
SA
 
revised
 
its
 
amended
 
July
 
2017
 
Facilities
 
agreement
 
with
 
RMB
 
to
 
include
 
Facility
 
E,
 
an
overdraft facility of up to ZAR
1.5
 
billion ($
82.5
 
million, translated at exchange rates applicable as of June 30, 2024) to fund the cash
in the Company’s
 
ATMs.
 
The Facility E overdraft
 
facility was subsequently
 
reduced to ZAR
1.2
 
billion ($
66.0
 
million, translated at
exchange rates applicable as
 
of June 30, 2024) in
 
September 2019. On August
 
2, 2021, Lesaka SA and
 
RMB entered into a Letter
 
of
Amendment to increase Facility
 
E from ZAR
1.2
 
billion to ZAR
1.4
 
billion ($
77.0
 
million, translated at exchange rates
 
applicable as
of June 30, 2024).
 
On January 22, 2024,
 
Lesaka SA and RMB
 
entered into a
 
Letter of Amendment
 
to decrease Facility E
 
from ZAR
1.4
 
billion to ZAR
0.9
 
billion ($
49.5
 
million, translated at exchange rates applicable as of June 30, 2024).
Interest
 
on
 
the
 
overdraft
 
facility
 
is
 
payable
 
on
 
the
 
first
 
day
 
of
 
the
 
month
 
following
 
utilization
 
of
 
the
 
facility
 
and
 
on
 
the
 
final
maturity date based on the South African prime rate. The overdraft facility amount utilized must be repaid in full within one month of
utilization and
 
at least
90
% of
 
the amount
 
utilized must
 
be repaid
 
within
25 days
. The
 
overdraft facility
 
is secured
 
by a
 
pledge by
Lesaka SA
 
of, among
 
other things,
 
cash and
 
certain bank
 
accounts utilized
 
in the
 
Company’s
 
ATM
 
funding process,
 
the cession
 
of
Lesaka
 
SA’s
 
shareholding
 
in
 
Cell
 
C,
 
the
 
cession
 
of
 
an
 
insurance
 
policy
 
with
 
Senate
 
Transit
 
Underwriters
 
Managers
 
Proprietary
Limited, and
 
any rights
 
and claims
 
Lesaka SA
 
has against
 
Grindrod Bank
 
Limited. As
 
at June
 
30, 2024,
 
the Company
 
had utilized
approximately ZAR
0.1
 
billion ($
6.7
 
million) of
 
this overdraft
 
facility.
 
This overdraft
 
facility may
 
only be
 
used to
 
fund ATMs
 
and
therefore the overdraft utilized and converted to cash to fund the Company’s
 
ATMs
 
is considered restricted cash.
 
Long-term borrowings - Facility G and Facility H
On March
 
16, 2023,
 
the Company,
 
through Lesaka
 
SA, entered
 
into a
 
Fifth Amendment
 
and
 
Restatement Agreement,
 
which
includes, among other agreements, an Amended and
 
Restated Common Terms Agreement (“CTA”), an Amended and Restated Senior
Facility G Agreement (“Facility
 
G Agreement”) and an
 
Amended and Restated Senior
 
Facility H Agreement (“Facility
 
H Agreement”)
(collectively,
 
the “Loan
 
Documents”) with
 
RMB. Main
 
Street 1692
 
(RF) Proprietary
 
Limited (“Debt
 
Guarantor”), a
 
South African
company incorporated
 
for the sole
 
purpose of
 
holding collateral for
 
the benefit of
 
the Lenders and
 
acting as debt
 
guarantor is also
 
a
party to
 
the Loan
 
Documents. Pursuant
 
to the
 
Facility G
 
Agreement,
 
Lesaka SA
 
may borrow
 
up to
 
an aggregate
 
of approximately
ZAR
708.6
 
million. Facility G now
 
includes a term loan
 
of ZAR
508.6
 
million and a
 
revolving credit facility of
 
up to ZAR
200
 
million.
Pursuant to the Facility H Agreement, Lesaka SA may borrow up to an aggregate
 
of approximately ZAR
357.4
 
million.
 
The Loan
 
Documents contain
 
customary
 
covenants that
 
require Lesaka
 
SA to
 
maintain a
 
specified total
 
asset cover
 
ratio and
restrict the ability of Lesaka, Lesaka SA, and certain of its subsidiaries to make
 
certain distributions with respect to their capital stock,
prepay
 
other debt,
 
encumber their
 
assets, incur
 
additional indebtedness,
 
make investment
 
above specified
 
levels, engage
 
in certain
business combinations and engage in other corporate activities. The
 
March 16, 2023, amendments to the CTA
 
include an amendment
to the asset cover
 
ratio to change the
 
Covenant Equity Value
 
(as defined in
 
the CTA)
 
definition to include
90
% of the book
 
value of
the Lesaka Financial Service Proprietary Limited (formerly known as Moneyline Financial Service Proprietary Limited)
 
receivables,
and to deduct the net debt
 
(as defined in the CTA) of Cash Connect Management Solutions
 
Proprietary Limited (“CCMS”) and K2021
Proprietary Limited (“K2021”) from the respective CCMS and
 
K2021 valuations. When determining the Covenant Equity Value,
 
the
value of the aggregate of the CCMS Equity Value
 
(as defined in the CTA) and the K2021 Equity Value
 
(as defined in the CTA) must
be at least
50
 
per cent of the Covenant Equity Value.
 
To the extent that the value of the
 
aggregate of the CCMS Equity Value
 
and the
K2021 Equity Value
 
is not at least
50
 
per cent of the
 
Covenant Equity Value,
 
the Covenant Equity Value
 
will be reduced so
 
that the
aggregate of the CCMS Equity Value and the K2021 Equity Value
 
is
50
 
per cent of the Covenant Equity Value. The amendments also
include the removal of a requirement to maintain a minimum group cash balance.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-45
12.
 
BORROWINGS (continued)
South Africa (continued)
RMB Facilities, as amended, comprising a short-term facility (Facility E) and
 
long-term borrowings (continued)
Interest on Facility
 
G and Facility
 
H (together,
 
the “Facilities”) was based
 
on JIBAR in effect
 
from time to
 
time plus a margin,
as a result
 
of the amendment,
 
from January
 
1, 2023 of:
 
(i)
5.50
% for as
 
long as the
 
aggregate balance
 
under the
 
Facilities is greater
than ZAR
800
 
million; (ii)
4.25
% if
 
the aggregate
 
balance under
 
the Facilities
 
is equal
 
to or
 
less than ZAR
800
 
million, but
 
greater
than ZAR 350
 
million; or (iii)
2.50
% if the
 
aggregate balance under the
 
Facilities is less
 
than ZAR
350
 
million. Interest on
 
the Facilities
may be capitalized
 
to each of
 
the facilities, and
 
will be repaid
 
on the maturity
 
date, provided that
 
the sum of
 
the outstanding facility
(including interest and fees) plus any accrued interest does
 
not exceed
1.2
 
times of the Facilities outstanding balance. Any interest that
exceeds this cap must be settled in full on a quarterly basis.
 
On
 
November
 
24,
 
2023,
 
the
 
Company,
 
through
 
Lesaka
 
SA,
 
entered
 
into
 
an
 
Amendment
 
and
 
Restatement
 
Agreement
 
(the
“Amendment”), which
 
includes an
 
amendment to
 
the interest rate
 
applicable to
 
Facility G and
 
Facility H,
 
respectively.
 
Under these
amendments a Look Through Leverage (“LTL”)
 
ratio, as defined in the Amendment,
 
was added. The LTL
 
ratio is expressed as times
(“x”), and was introduced to calculate
 
the margin used in the determination of
 
the interest rate. The LTL ratio is calculated as the
 
Total
Attributable Net
 
Debt, as defined
 
in the Loan
 
Documents, to
 
the Total
 
Attributable EBITDA,
 
as defined
 
in the
 
Amendment, for
 
the
measurement period ending on a specified date.
Interest on
 
Facility G
 
and Facility H
 
is based
 
on the
 
JIBAR in
 
effect from
 
time to
 
time plus
 
a margin,
 
which as
 
a result of
 
the
Amendment, from October 1, 2023,
 
will be calculated as: (i)
5.50
% if the LTL
 
ratio is greater than 3.50x; (ii)
4.75
% if the LTL
 
ratio
is less than 3.50x but greater than 2.75x; (iii)
3.75
% if the LTL ratio is less than 2.75x but greater than 1.75x; or (iv)
2.50
% if the LTL
ratio is less than 1.75x.
Lesaka SA will pay a quarterly commitment fee computed at a rate of
35
% of the Applicable Margin (as defined in the CTA) on
the amount of the revolving credit facility outstanding
 
and such commitment fee will also be capitalized,
 
subject to the cap discussed
above.
The Facilities are repayable in
 
full on or before
 
December 31, 2025. The Company
 
used cash proceeds of ZAR
64.2
 
million ($
3.5
million) received from
 
the sale of Finbond
 
shares (refer to Note
 
9) during the year
 
ended June 30, 2024,
 
to repay capitalized interest
under Facility G and Facility H.
The then
 
available
 
amounts available
 
under
 
the Facilities
 
were utilized,
 
in full,
 
on April
 
14,
 
2022,
 
primarily
 
to part
 
fund the
acquisition
 
of Connect.
 
In
 
April 2022,
 
Lesaka SA
 
paid
 
non-refundable
 
deal
 
origination
 
fees of
 
ZAR
11.25
 
million
 
and
 
ZAR
5.25
million to the Lenders related to Facility G and Facility H, respectively.
The Facility H
 
Agreement provides the Lenders
 
with a right
 
to discuss the
 
capitalization of the Lesaka
 
group with its
 
management
and Value
 
Capital Partners Proprietary
 
Limited (“VCP”) if Lesaka’s
 
market capitalization on
 
the NASDAQ Stock Market
 
(based on
the closing price
 
on the NASDAQ Stock
 
Market) on any day
 
falls below the USD
 
equivalent of ZAR
3.250
 
billion. VCP is required
to maintain an asset cover ratio above
5.00
:1.00, calculated as the total VCP investment fund net
 
asset value (as defined in the Facility
H agreement) divided by the Facility H borrowings outstanding, measured as of March, June, September and December
 
each year (as
applicable) (each a
 
“Measurement Date”). The Lenders
 
require Lesaka SA to
 
deliver a compliance certificate
 
procured from VCP as
of each applicable Measurement Date, which shows the computation
 
of the asset cover ratio.
Connect Facilities, comprising long-term borrowings and a short-term facility
On March 22, 2023,
 
the Company, through CCMS, entered
 
into a First
 
Amendment and Restatement Agreement, which
 
includes,
among other
 
agreements, an
 
Amended
 
and Restated
 
Facilities Agreement
 
(“CCMS Facilities
 
Agreement”)
 
with RMB.
 
The CCMS
Facilities Agreement was
 
amended to increase
 
the Facility B available
 
under the CCMS Facilities
 
Agreement by ZAR
200.0
 
million
to ZAR
550.0
 
million. The
 
final maturity
 
date has
 
been extended
 
to December
 
31, 2027,
 
and scheduled
 
principal repayments
 
have
been amended, with the
 
first scheduled repayment commencing from March 31, 2026.
As of June
 
30, 2024, the Connect
 
Facilities include (i) an
 
overdraft facility (general banking
 
facility) of ZAR
205.0
 
million ($
11.3
million)
 
(of which
 
ZAR
170.0
 
million ($
9.4
 
million) has
 
been utilized);
 
(ii) Facility
 
A of
 
ZAR
700.0
 
million ($
38.5
 
million);
 
(iii)
Facility B
 
of ZAR
550.0
 
million ($
30.3
 
million) (both
 
fully utilized);
 
and (iv)
 
an asset-backed
 
facility of
 
ZAR
200.0
 
million ($
11.0
million) (of which ZAR
152.3
 
million ($
8.4
 
million)has been utilized).
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-46
12.
 
BORROWINGS (continued)
South Africa (continued)
Connect Facilities, comprising long-term borrowings and a short-term facility
 
(continud)
In February 2023, the Company,
 
through CCMS, obtained a ZAR
175.0
 
million temporary increase in its overdraft facility for a
period of
four months
 
to specifically
 
fund the
 
purchase of
 
prepaid airtime
 
vouchers. This
 
temporary increase
 
was repayable
 
in
four
equal monthly instalments of ZAR
43.8
 
million and which commenced
 
in March 2023. In May 2023,
 
the Company,
 
through CCMS,
obtained a ZAR
155.0
 
million temporary increase
 
in its overdraft facility
 
for a period of
one month
 
to specifically fund the
 
purchase
of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less
0.1
%
was payable on a monthly basis on both of these temporary facilities.
CCMS paid a non-refundable structuring fee of approximately ZAR
5.5
 
million during the year ended June 30, 2022. Interest on
Facility A and Facility
 
B is payable quarterly in
 
arrears based on JIBAR
 
in effect from time to
 
time plus a margin.
 
Interest on the asset-
backed facility is payable quarterly in arrears based on prime in effect
 
from time to time plus a margin.
Borrowings under
 
the CCMS
 
Facilities Agreement
 
are secured
 
by a
 
pledge by
 
CCMS of,
 
among other
 
things, all
 
of its
 
equity
shares, its
 
entire equity
 
interests in
 
equity securities
 
it owns
 
and any
 
claims outstanding.
 
The CCMS
 
Facilities Agreement
 
contains
customary covenants that require CCMS to maintain specified debt service, interest
 
cover and leverage ratios.
CCC Revolving Credit Facility, comprising
 
long-term borrowings
On
 
November
 
29,
 
2022,
 
the
 
Company,
 
through
 
its
 
indirect
 
South
 
African
 
subsidiary
 
Cash
 
Connect
 
Capital
 
(Pty)
 
Limited
(“CCC”), entered into
 
a Revolving Credit
 
Facility Agreement (the
 
“CCC Loan Document”)
 
with RMB
 
and other Company
 
subsidiaries
within the Connect Group of companies listed therein, as guarantors. The transaction
 
closed on December 1, 2022.
The CCC Loan Document contains
 
customary covenants that require CCC and
 
K2020 to collectively maintain a
 
specified capital
adequacy ratio, restrict the ability of the entities to make certain distributions with respect to their capital stock,
 
encumber their assets,
incur additional indebtedness, make investments, engage in certain business
 
combinations and engage in other corporate activities.
 
Pursuant
 
to
 
the
 
CCC Loan
 
Document,
 
CCC may
 
borrow
 
up to
 
an aggregate
 
of ZAR
300.0
 
million
 
(“CCC Revolving
 
Credit
Facility”) for the sole purposes of funding CCC’s
 
consumer lending business, providing a limited recourse loan to
 
K2020, settling up
to ZAR
35.0
 
million related to
 
an intercompany
 
loan to CCC’s
 
direct parent,
 
and paying the
 
structuring and
 
execution fee and
 
legal
costs. The Revolving
 
Credit Facility replaces
 
K2020’s existing lending arrangement and
 
increases the
 
borrowings available to
 
facilitate
further growth of the
 
business. Certain merchant finance
 
loans receivable have been
 
pledged as security for
 
the revolving credit
 
facility
obtained from
 
RMB. CCMS
 
also provided
 
RMB with
 
an unsecured
 
limited guarantee
 
(“the guarantee”)
 
in respect
 
of the
 
revolving
credit facility entered into between
 
K2020 and RMB. The guarantee is limited
 
to a maximum aggregate amount of ZAR
10.0
 
million
and will become due and payable should there be any default on any of K2020’s
 
payment obligations to RMB.
Interest on
 
the Revolving
 
Credit Facility
 
is payable
 
on the last
 
business day
 
of each
 
calendar month and
 
is based on
 
the South
African prime rate in effect from time to time plus a margin
 
of
0.95
% per annum.
 
The Company
 
paid a
 
non-refundable structuring
 
and execution
 
fee of ZAR
1.7
 
million, or
 
$
0.1
 
million, including
 
value added
taxation, to the Lenders on closing.
As of June 30, 2024, the amount of the CCC
 
Revolving Credit Facility was ZAR
300.0
 
million (of which ZAR
215.3
 
million has
been utilized).
RMB facility, comprising indirect facilities
As of
 
June 30,
 
2024, the
 
aggregate amount
 
of the
 
Company’s
 
short-term South
 
African indirect
 
credit facility
 
with RMB
 
was
ZAR
135.0
 
million ($
7.4
 
million), which includes facilities for
 
guarantees, letters of credit
 
and forward exchange contracts. As
 
of June
30, 2024
 
and June
 
30, 2023, the
 
Company had
 
utilized approximately
 
ZAR
33.1
 
million ($
1.8
 
million) and ZAR
33.1
 
million ($
1.8
million), respectively,
 
of its indirect and derivative
 
facilities of ZAR
135.0
 
million (June 30, 2023: ZAR
135.0
 
million) to enable the
bank to issue guarantees, letters of credit and forward exchange contracts (refer
 
to Note 22).
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-47
12.
 
BORROWINGS (continued)
South Africa (continued
Nedbank facility, comprising short-term facilities
As of June 30, 2024, the aggregate amount of
 
the Company’s short-term South African credit facility with Nedbank Limited was
ZAR
156.6
 
million ($
8.6
 
million). The credit facility represents an
 
indirect and derivative facilities of up
 
to ZAR
156.6
 
million ($
8.6
million), which include guarantees, letters of credit and forward exchange
 
contracts.
On November 2, 2020, the Company amended its short-term
 
South African credit facility with Nedbank Limited to
 
increase the
indirect
 
and
 
derivative
 
facilities
 
component
 
of
 
the
 
facility
 
from
 
ZAR
150.0
 
million
 
to
 
ZAR
159.0
 
million.
 
On
 
June
 
1,
 
2021,
 
the
Company
 
further
 
amended
 
its short-term
 
South
 
African
 
credit facility
 
with Nedbank
 
Limited
 
to reduce
 
the indirect
 
and derivative
facilities component of the facility
 
from ZAR
159.0
 
million to ZAR
157.0
 
million, and to cancel its ZAR
50
 
million general banking
facility. During
 
the year ended June 30, 2022, the Company cancelled its overdraft
 
facility of up to ZAR
251
 
million ($
13.0
 
million),
which was used to fund mobile ATMs
 
as it no longer operates a mobile ATM
 
service.
The Company
 
has entered
 
into cession
 
and pledge
 
agreements with
 
Nedbank related
 
to certain
 
of its
 
Nedbank credit
 
facilities
(the general banking
 
facility and a
 
portion of the
 
indirect facility) and
 
the Company has
 
ceded and pledged
 
certain bank accounts
 
to
Nedbank and also provided a cession of Lesaka SA’s
 
shareholding in Cell C. The funds included in these bank accounts are restricted
as they may not be withdrawn without the express permission of Nedbank.
The short-term facility
 
provided Nedbank with
 
the right to set off
 
funds held in certain
 
identified Company bank
 
accounts with
Nedbank against any amounts owed to Nedbank under the facility.
 
As of June 30, 2024, these facilities were no longer available.
 
As of June
 
30, 2024 and
 
June 30, 2023,
 
the Company had
 
utilized approximately
 
ZAR
2.1
 
million ($
0.1
 
million) and ZAR
2.1
million ($
0.1
 
million), respectively,
 
of its indirect and derivative facilities of
 
ZAR
156.6
 
million (June 30, 2023: ZAR
156.6
 
million)
to enable the bank to issue guarantees, letters of credit and forward exchange
 
contracts (refer to Note 22).
On June 30,
 
2022, the Company’s
 
ZAR
60.0
 
million bank guarantee
 
issued by Nedbank
 
to a third
 
party expired and
 
on July 1,
2022, it was replaced with a ZAR
28.0
 
million bank guarantee issued by RMB to
 
the same third party. In July 2022, the Company was
able to release
 
ZAR
60.0
 
million in cash
 
held in a
 
pledged bank
 
account with Nedbank
 
which was held
 
as security against
 
the bank
guarantee issued by Nedbank, and the ZAR
28.0
 
million bank guarantee did not require a cash underpin.
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-48
12.
 
BORROWINGS (continued)
Movement in short-term credit facilities
Summarized below are the Company’s short-term facilities as of June 30, 2024, and the movement in the Company’s
 
short-term
facilities from as of June 30, 2023 to as of June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RMB
RMB
RMB
Nedbank
Facility E
Indirect
Connect
Facilities
Total
Short-term facilities available as of June
30, 2024
$
49,503
$
7,425
$
11,276
$
8,611
$
76,815
Overdraft
 
-
-
11,276
-
11,276
Overdraft restricted as to use for ATM
funding only
49,503
-
-
-
49,503
Indirect and derivative facilities
 
-
7,425
-
8,611
16,036
Movement in utilized overdraft facilities:
 
Balance as of June 30, 2022
51,338
-
14,880
-
66,218
Utilized
 
501,603
-
18,462
-
520,065
Repaid
(524,766)
-
(22,505)
-
(547,271)
Foreign currency adjustment
(1)
(5,154)
-
(1,812)
-
(6,966)
Balance as of June 30, 2023
23,021
-
9,025
-
32,046
Restricted as to use for ATM
funding only
23,021
-
-
-
23,021
No restrictions as to use
 
-
-
9,025
-
9,025
Utilized
 
182,988
-
2
-
182,990
Repaid
(199,640)
-
(2)
-
(199,642)
Foreign currency adjustment
(1)
368
-
326
-
694
Balance as of June 30, 2024
6,737
-
9,351
-
16,088
Restricted as to use for ATM
funding only
6,737
-
-
-
6,737
No restrictions as to use
 
-
-
9,351
-
9,351
Interest rate as of June 30, 2024 (%)
(2)
11.75
-
11.65
-
Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2022
-
313
-
5,654
5,967
Utilized
 
-
1,561
-
-
1,561
Guarantees cancelled
(3)
-
-
-
(5,017)
(5,017)
Foreign currency adjustment
(1)
-
(117)
-
(525)
(642)
Balance as of June 30, 2023
-
1,757
-
112
1,869
Foreign currency adjustment
(1)
-
64
-
4
68
Balance as of June 30, 2024
$
-
$
1,821
$
-
$
116
$
1,937
(1) Represents the effects of the fluctuations between the
 
ZAR and the U.S. dollar.
(2) Facility E interest set at prime and the Connect facility at prime less
0.10
%.
(3) Represents
 
the cancellation
 
of the guarantee
 
with supplier
 
amounting to
 
ZAR
90
 
million ($
5.0
 
million) which
 
is no longer
required due the reduction in the volume and value of transactions processed.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-49
12.
 
BORROWINGS (continued)
Movement in long-term borrowings
Summarized below is the movement in the Company’s
 
long-term borrowing from as of June 30, 2023, to as of June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Facilities
G & H
A&B
CCC/ K2020
Asset backed
Total
Opening balance as of June 30, 2022
$
63,354
$
64,472
$
8,346
$
5,474
$
141,646
Facilities utilized
-
10,947
7,377
6,031
24,355
Facilities repaid
(10,543)
(2,151)
(2,149)
(2,669)
(17,512)
Non-refundable fees paid
(500)
-
(100)
-
(600)
Non-refundable fees amortized
762
57
44
-
863
Capitalized interest
5,078
-
-
-
5,078
Capitalized interest repaid
(514)
-
-
-
(514)
Foreign currency adjustment
(1)
(8,672)
(8,889)
(1,716)
(921)
(20,198)
Included in current
-
-
-
3,663
3,663
Included in long-term
48,965
64,436
11,802
4,252
129,455
Opening balance as of June 30, 2023
48,965
64,436
11,802
7,915
133,118
Facilities utilized
16,445
-
2,915
4,368
23,728
Facilities repaid
(12,515)
-
(3,353)
(4,205)
(20,073)
Non-refundable fees paid
-
-
-
-
-
Non-refundable fees amortized
351
48
48
-
447
Capitalized interest
7,214
-
-
-
7,214
Capitalized interest repaid
(6,109)
-
-
-
(6,109)
Foreign currency adjustment
(1)
1,800
2,331
429
301
4,861
Closing balance as of June 30, 2024
56,151
66,815
11,841
8,379
143,186
Included in current
-
-
-
3,878
3,878
Included in long-term
56,151
66,815
11,841
4,501
139,308
Unamortized fees
(260)
(180)
(20)
-
(460)
Due within 2 years
56,411
3,438
-
3,023
62,872
Due within 3 years
-
7,563
11,861
1,108
20,532
Due within 4 years
-
55,994
-
259
56,253
Due within 5 years
$
-
$
-
$
-
$
111
$
111
Interest rates as of June 30, 2024 (%):
13.10
12.10
12.70
12.50
Base rate (%)
8.35
8.35
11.75
11.75
Margin (%)
4.75
3.75
0.95
0.75
Footnote number
(2)(3)(4)
(5)
(6)
(7)
(
1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.
(2) Prior
 
to the
 
amendment in March
 
2023, interest
 
on Facility G
 
was calculated
 
based on
 
the 3-month
 
JIBAR in
 
effect from
 
time to
time plus a margin
 
of (i)
3.00
% per annum until January
 
13, 2023; and then (ii) from
 
January 14, 2023, (x)
2.50
% per annum if the Facility
G balance outstanding
 
is less than
 
or equal to
 
ZAR
250.0
 
million, or (y)
3.00
% per annum
 
if the Facility
 
G balance is between
 
ZAR
250.0
million to
 
ZAR
450.0
 
million, or
 
(z)
3.50
% per
 
annum if
 
the Facility
 
G balance
 
is greater
 
than ZAR
450.0
 
million. The
 
interest rate
 
shall
increase by a further
2.00
% per annum in the event of default (as defined in the Loan Documents).
(3) Prior to the amendment in
 
March 2023, interest on Facility
 
H is calculated based on JIBAR
 
in effect from time to
 
time plus a margin
of
2.00
% per annum which increases by a further
2.00
% per annum in the event of default (as defined in the Loan Documents).
(4) Interest on Facility G and Facility H was calculated based on the 3-month JIBAR in effect from time to time plus a margin of, from
January 1, 2023 to September 30,
 
2023: (i)
5.50
% for as long as the aggregate
 
balance under the Facilities is greater than
 
ZAR
800
 
million;
(ii)
4.25
% if the
 
aggregate balance under
 
the Facilities is
 
equal to or
 
less than ZAR
800
 
million, but greater
 
than ZAR
350
 
million; or (iii)
2.50
% if the
 
aggregate balance under
 
the Facilities is
 
less than ZAR
350
 
million. From October
 
1, 2023, interest
 
is calculated as
 
described
above.
(5) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of
3.75
%, in effect from time to time.
(6) Interest is charged at prime plus
0.95
% per annum on the utilized balance.
(7) Interest is charged at prime plus
0.75
% per annum on the utilized balance.
Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest
 
expense
on the consolidated
 
statement of operations
 
during the years
 
ended June 30,
 
2024, 2023
 
and 2022, was
 
$
16.1
 
million, $
13.1
 
million
and $
2.3
 
million, respectively. Prepaid facility fees amortized included in interest expense during the years ended June 30,
 
2024, 2023
and 2022, was $
0.4
 
million, $
0.8
 
million and $
0.2
 
million, respectively.
 
Interest expense incurred under the
 
Company’s CCC/K2020
facility relates
 
to borrowings
 
utilized to
 
fund a portion
 
of the
 
Company’s
 
merchant finance
 
loans receivable
 
and interest expense
 
of
$
1.4
 
million, $
1.4
 
million, and $
0.2
 
million is included in the
 
caption cost of goods
 
sold, IT processing, servicing
 
and support on the
consolidated statement of operations for the years ended June 30,
 
2024, 2023 and 2022, respectively.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-50
13.
 
OTHER PAYABLES
Summarized below is the breakdown of other payables as of June 30,
 
2024 and 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Vendor
 
wallet balances
(1)
$
14,635
$
9,492
Clearing accounts
(1)
17,124
4,016
Accruals
7,173
7,078
Provisions
7,442
7,429
Payroll-related payables
922
1,038
Participating merchants' settlement obligation
1
39
Value
 
-added tax payable
1,191
1,247
Vendor
 
consideration due to sellers of Connect (Note 3)
-
-
Other
7,563
5,958
$
56,051
$
36,297
(1) Vendor
 
wallet balances
 
and clearing
 
accounts (previously
 
defined as
 
transactions-switching funds
 
payables) as
 
of June
 
30,
2023, were previously
 
included in Other
 
and have been
 
reclassified to separate
 
captions to conform
 
with presentation as
 
of June 30,
2024. Clearing accounts and
 
vendor wallet balances may
 
fluctuate due to
 
the day (weekend
 
or public holiday)
 
on which the
 
Company’s
quarter or year
 
end falls
 
because certain elements
 
of transactions
 
within these accounts
 
are not
 
settled over weekends
 
or public holidays.
Other includes deferred income, client deposits and other payables.
14.
 
COMMON STOCK
Common stock
Holders of shares of Lesaka’s common stock are entitled to receive dividends and other distributions when declared by Lesaka’s
board of
 
directors out
 
of legally
 
available funds.
 
Payment of
 
dividends and
 
distributions is
 
subject to
 
certain restrictions
 
under the
Florida Business Corporation Act, including
 
the requirement that after making
 
any distribution Lesaka must be
 
able to meet its debts
as they become due in
 
the usual course of
 
its business. Upon voluntary or
 
involuntary liquidation, dissolution or winding up
 
of Lesaka,
holders of
 
common stock
 
share ratably
 
in the
 
assets remaining
 
after payments
 
to creditors
 
and provision
 
for the
 
preference of
 
any
preferred
 
stock
 
according
 
to
 
its
 
terms.
 
There
 
are
 
no
 
pre-emptive
 
or
 
other
 
subscription
 
rights,
 
conversion
 
rights
 
or
 
redemption
 
or
scheduled installment payment provisions relating to shares
 
of common stock. All of
 
the outstanding shares of common stock
 
are fully
paid and non-assessable.
Each holder of
 
common stock is
 
entitled to one
 
vote per share
 
for the election
 
of directors and
 
for all other
 
matters to be
 
voted
on by shareholders. Holders
 
of common stock may
 
not cumulate their
 
votes in the
 
election of directors, and
 
are entitled to
 
share equally
and ratably in the dividends that may be declared by the board of directors, but only after payment of dividends required to be paid on
outstanding shares of preferred stock according to its terms. The shares of
 
Lesaka common stock are not subject to redemption.
Issue of shares to Connect sellers pursuant to April 2022 transaction
The total purchase consideration pursuant to the Connect
 
acquisition in April 2022 includes
3,185,079
 
shares of the Company’s
common stock. These shares of
 
common stock will be issued
 
in
three
 
equal tranches on each
 
of the first, second
 
and third anniversaries
of the
 
April 14,
 
2022 closing.
 
The Company
 
legally issued
1,061,693
 
shares of
 
its common
 
stock, representing
 
the first
 
and second
tranche, to
 
the Connect sellers
 
in each of
 
April 2024 and
 
2023, respectively,
 
and this had
 
no impact
 
on the number
 
of shares, net
 
of
treasury,
 
presented in
 
the consolidated
 
statement of
 
changes
 
in equity
 
during
 
the year
 
ended June
 
30, 2024
 
and 2023,
 
respectively
because the
3,185,079
 
shares are included in the number of shares, net of treasury,
 
as of June 30, 2024 and 2023.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-51
14.
 
COMMON STOCK (continued)
Common stock (continued)
Impact of non-vested equity shares on number of shares,
 
net of treasury
The Company’s
 
number of
 
shares, net
 
of treasury,
 
presented in
 
the consolidated
 
balance sheets
 
and consolidated
 
statement of
changes in
 
equity includes
 
participating non-vested
 
equity shares (specifically
 
contingently returnable
 
shares) as described
 
below in
Note
 
17
 
“—
 
Amended
 
and
 
Restated
 
Stock
 
Incentive
 
Plan—Restricted
 
Stock—General
 
Terms
 
of
 
Awards”.
 
The
 
following
 
table
presents a reconciliation
 
between the number
 
of shares, net of
 
treasury,
 
presented in the
 
consolidated statement of
 
changes in equity
and the
 
number
 
of shares,
 
net of
 
treasury,
 
excluding non-vested
 
equity shares
 
that have
 
not vested
 
during the
 
years ended
 
June 30,
2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Number of shares, net of treasury:
Statement of changes in equity – common stock
64,272,243
63,640,246
62,324,321
Less: Non-vested equity shares that have not vested as of end of year (Note 17)
2,084,946
2,614,419
2,385,267
Number of shares, net of treasury excluding non-vested equity shares that have
not vested
62,187,297
61,025,827
59,939,054
Redeemable common stock issued pursuant to transaction with the IFC Investors
Holders of redeemable common
 
stock have all the rights enjoyed by
 
holders of common stock, however,
 
holders of redeemable
common
 
stock
 
have
 
additional
 
contractual
 
rights.
 
On
 
April
 
11,
 
2016,
 
the
 
Company
 
entered
 
into
 
a
 
Subscription
 
Agreement
 
(the
“Subscription Agreement”)
 
with International
 
Finance Corporation
 
(“IFC”), IFC
 
African, Latin
 
American and
 
Caribbean Fund,
 
LP,
IFC
 
Financial
 
Institutions
 
Growth
 
Fund,
 
LP,
 
and
 
Africa
 
Capitalization
 
Fund,
 
Ltd.
 
(collectively,
 
the
 
“IFC
 
Investors”).
 
Under
 
the
Subscription Agreement,
 
the IFC Investors purchased,
 
and the Company
 
sold in the
 
aggregate, approximately
9.98
 
million shares of
the
 
Company’s
 
common
 
stock,
 
par
 
value
 
$
0.001
 
per
 
share,
 
at
 
a
 
price
 
of
 
$
10.79
 
per
 
share,
 
for
 
gross
 
proceeds
 
to
 
the
 
Company
 
of
approximately $
107.7
 
million. The Company
 
accounted for these
9.98
 
million shares as
 
redeemable common stock
 
as a result of
 
the
put option discussed below.
On May
 
19, 2020,
 
the Africa
 
Capitalization Fund,
 
Ltd sold
 
its entire
 
holding of
2,103,169
 
shares of
 
the Company’s
 
common
stock and
 
therefore the
 
additional contractual
 
rights, including
 
the put
 
option rights
 
related to
 
these
2,103,169
 
shares, expired.
 
The
Company reclassified $
22.7
 
million related to
 
these
2,103,169
 
shares sold from
 
redeemable common stock
 
to additional paid-in-capital
during the year ended June 30, 2020.
On August 19, 202
 
2, the IFC Investors
 
filed an amended Form
 
13D/A, amendment no. 2,
 
with the United
 
States Securities and
Exchange
 
Commission
 
reporting
 
that
 
in
 
October
 
2017
 
and
 
February
 
2018,
 
the
 
IFC
 
sold
 
an
 
aggregate
 
of
514,376
 
shares
 
of
 
the
Company’s
 
common
 
stock
 
and therefore
 
the
 
additional
 
contractual
 
rights,
 
including
 
the put
 
option
 
rights
 
related
 
to
 
these
514,376
shares,
 
expired.
 
The
 
Company
 
reclassified
 
$
5.6
 
million
 
related
 
to
 
these
514,376
 
shares
 
sold
 
from
 
redeemable
 
common
 
stock
 
to
additional paid-in-capital during the year ended June 30, 2022.
The Company has entered
 
into a Policy Agreement with
 
the IFC Investors (the
 
“Policy Agreement”). The
 
material terms of the
Policy Agreement are described below.
 
Board Rights
For so long as the IFC Investors in aggregate beneficially own shares representing at least
5
% of the Company’s common stock,
the IFC Investors will have the right to nominate one director to the Company’s board of directors. For so long as the IFC Investors in
aggregate beneficially
 
own shares representing
 
at least
2.5
% of the
 
Company’s
 
common stock, the
 
IFC Investors will
 
have the right
to appoint
 
an observer
 
to the
 
Company’s
 
board of
 
directors at
 
any time
 
when they
 
have not
 
designated, or
 
do not
 
have the
 
right to
designate, a director.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-52
14.
 
COMMON STOCK (continued)
Redeemable common stock issued pursuant to transaction with the IFC Investors
Put Option
Each IFC Investor will have
 
the right, upon the occurrence of specified
 
triggering events, to require the Company
 
to repurchase
all of the shares
 
of its common stock purchased by
 
the IFC Investors pursuant to
 
the Subscription Agreement (or upon exercise
 
of their
preemptive rights
 
discussed below).
 
Events triggering
 
this put
 
right relate
 
to (1)
 
the Company
 
being the
 
subject of
 
a governmental
complaint alleging, a court judgment finding or an indictment alleging that the Company (a) engaged in specified corrupt,
 
fraudulent,
coercive, collusive or obstructive practices; (b) entered into transactions with targets of economic sanctions; or (c) failed to operate its
business in compliance with anti-money laundering and anti-terrorism laws; or (2) the Company rejecting a bona fide offer to acquire
all of its outstanding Common Stock at a time when it has in place or implements a shareholder rights plan, or adopting a shareholder
rights plan triggered by a beneficial ownership
 
threshold of less than twenty percent.
 
The put price per share will be the
 
higher of the
price per
 
share paid
 
by the
 
IFC Investors
 
pursuant to
 
the Subscription
 
Agreement (or
 
paid when
 
exercising their
 
preemptive rights)
and the
 
volume weighted
 
average price
 
per share
 
prevailing for
 
the
60
 
trading days
 
preceding the
 
triggering event,
 
except that
 
with
respect to a put right triggered by rejection of a bona fide offer, the put price per share will be the highest price offered
 
by the offeror.
The Company believes that the
 
put option has no
 
value and, accordingly, has not recognized the put
 
option in its consolidated
 
financial
statements.
Registration Rights
The Company has agreed
 
to grant certain registration
 
rights to the IFC Investors
 
for the resale of their
 
shares of the Company’s
common stock, including filing a resale shelf registration statement and
 
taking certain actions to facilitate resales thereunder.
Preemptive Rights
For so long as the IFC Investors hold in
 
aggregate
5
% of the outstanding shares of common stock of
 
the Company, each Investor
will have the right to purchase its pro-rata share of new issuances of securities by the Company,
 
subject to certain exceptions.
Common stock repurchases
Executed under share repurchase authorizations
On
 
February 5, 2020,
 
the
 
Company’s
 
Board
 
of Directors
 
approved
 
the replenishment
 
of its
 
share
 
repurchase
 
authorization
 
to
repurchase
 
up
 
to
 
an
 
aggregate
 
of
 
$
100
 
million
 
of
 
common
 
stock.
 
The
 
authorization
 
has
 
no
 
expiration
 
date.
 
The
 
share
 
repurchase
authorization will be
 
used at
 
management’s discretion, subject to
 
limitations imposed by
 
SEC Rule
 
10b-18 and other
 
legal requirements
and subject to price and other internal limitations established by
 
the Board. Repurchases will be funded from the Company’s available
cash.
 
Share repurchases
 
may be
 
made
 
through open
 
market purchases,
 
privately
 
negotiated
 
transactions,
 
or both.
 
There can
 
be no
assurance
 
that
 
the
 
Company
 
will
 
purchase
 
any
 
shares
 
or
 
any
 
particular
 
number
 
of
 
shares.
 
The
 
authorization
 
may
 
be
 
suspended,
terminated or
 
modified at
 
any time
 
for any
 
reason, including
 
market conditions,
 
the cost
 
of repurchasing
 
shares, liquidity
 
and other
factors that management deems appropriate.
 
The Company did
no
t repurchase any of its shares during
 
the years ended June 30, 2024
under the
 
authorization, however,
 
it did repurchase
319,522
 
and
352,994
 
shares of its
 
common stock
 
from its employees
 
during the
years
 
ended
 
June
 
30,
 
2024
 
and
 
2023,
 
respectively,
 
refer
 
to
 
Note
 
17
 
for
 
additional
 
information
 
regarding
 
these
 
repurchases.
 
The
Company did
no
t repurchase any of its shares during the years ended June 30, 2022 either under or
 
outside of the authorization.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-53
15.
 
ACCUMULATED OTHER
 
COMPREHENSIVE (LOSS) INCOME
The table below
 
presents the change
 
in accumulated other
 
comprehensive (loss) income
 
per component during
 
the years ended
June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
foreign
currency
translation
reserve
Total
Balance as of July 1, 2021
$
(145,721)
$
(145,721)
Release of foreign currency translation reserve: liquidation of subsidiaries
468
468
Release of foreign currency translation reserve: disposal of Finbond
 
equity securities
(Note 9)
 
587
587
Movement in foreign currency translation reserve related to equity-accounted
investment
1,239
1,239
Movement in foreign currency translation reserve
 
(25,413)
(25,413)
Balance as of June 30, 2022
(168,840)
(168,840)
Release of foreign currency translation reserve: disposal of Finbond
 
equity securities
(Note 9)
 
362
362
Movement in foreign currency translation reserve related to equity-accounted
investment
3,935
3,935
Movement in foreign currency translation reserve
 
(31,183)
(31,183)
Balance as of June 30, 2023
(195,726)
(195,726)
Release of foreign currency translation reserve: disposal of Finbond
 
equity securities
(Note 9)
 
1,543
1,543
Release of foreign currency translation reserve: liquidation of subsidiaries
(952)
(952)
Movement in foreign currency translation reserve related to equity-accounted
investment
489
489
Movement in foreign currency translation reserve
 
6,291
6,291
Balance as of June 30, 2024
$
(188,355)
$
(188,355)
The movement in the
 
foreign currency translation reserve represents
 
the impact of translation
 
of consolidated entities which have
a functional currency (which is primarily ZAR) to the Company’s
 
reporting currency, which is USD.
During
 
the
 
year
 
ended
 
June
 
30,
 
2024,
 
the
 
Company
 
reclassified
 
$
1.5
 
million
 
from
 
accumulated
 
other
 
comprehensive
 
loss
(accumulated
 
foreign
 
currency
 
translation
 
reserve)
 
to
 
net
 
loss
 
related
 
to
 
the
 
disposal
 
of
 
shares
 
in
 
Finbond
 
(refer
 
to
 
Note
 
9).
 
The
Company
 
also
 
reclassified
 
a
 
gain
 
of
 
$
1.0
 
million
 
from
 
accumulated
 
other
 
comprehensive
 
loss
 
(accumulated
 
foreign
 
currency
translation reserve)
 
to net
 
loss related
 
to the
 
liquidation of
 
subsidiaries during
 
the year
 
ended June
 
30, 2024.
 
During the
 
year ended
June
 
30,
 
2023,
 
the
 
Company
 
reclassified
 
$
0.4
 
million
 
from accumulated
 
other
 
comprehensive
 
loss (accumulated
 
foreign
 
currency
translation reserve) to net loss related to the disposal
 
of shares in Finbond (refer to Note 9). During
 
the year ended June 30, 2022, the
Company reclassified $
0.6
 
million from accumulated other comprehensive loss (accumulated
 
foreign currency translation reserve) to
net loss related to the disposal of shares in Finbond (refer to Note 9).
16.
 
REVENUE
The Company
 
is a
 
provider of
 
digitized cash
 
management solutions
 
and merchant
 
acquiring services,
 
including an
 
integrated
platform for
 
the distribution
 
of value-added
 
services; transaction
 
processing services;
 
financial inclusion
 
products and
 
services, and
secure payment technology. The
 
Company operates a
 
payment processor in South
 
Africa. The Company
 
offers debit, credit
 
and prepaid
processing and issuing services for all major payment networks. In South Africa, the Company provides innovative low-cost financial
inclusion products, including banking, lending and insurance.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-54
16.
 
REVENUE
Disaggregation of revenue
The
 
following
 
table
 
represents
 
our
 
revenue
 
disaggregated
 
by
 
major
 
revenue
 
streams,
 
including
 
reconciliation
 
to
 
operating
segments for the year ended June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merchant
Consumer
Total
Processing fees
$
117,373
$
24,979
$
142,352
South Africa
111,376
24,979
136,355
Rest of world
5,997
-
5,997
Technology
 
products
9,852
45
9,897
South Africa
9,645
45
9,690
Rest of world
207
-
207
Prepaid airtime sold
357,943
233
358,176
South Africa
337,723
233
337,956
Rest of world
20,220
-
20,220
Lending revenue
-
23,849
23,849
Interest from customers
6,096
-
6,096
Insurance revenue
-
12,117
12,117
Account holder fees
-
6,048
6,048
Other
3,747
1,940
5,687
South Africa
3,543
1,940
5,483
Rest of world
204
-
204
Total revenue, derived
 
from the following geographic locations
495,011
69,211
564,222
South Africa
468,383
69,211
537,594
Rest of world
$
26,628
$
-
$
26,628
The
 
following
 
table
 
represents
 
our
 
revenue
 
disaggregated
 
by
 
major
 
revenue
 
streams,
 
including
 
reconciliation
 
to
 
operating
segments for the year ended June 30, 2023:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merchant
Consumer
Unallocated
Total
Processing fees
$
111,281
$
26,159
$
1,469
$
138,909
South Africa
105,957
26,159
1,469
133,585
Rest of world
5,324
-
-
5,324
Technology
 
products
19,017
1,253
-
20,270
South Africa
18,780
1,253
-
20,033
Rest of world
237
-
-
237
Prepaid airtime sold
322,756
45
-
322,801
South Africa
306,093
45
-
306,138
Rest of world
16,663
-
-
16,663
Lending revenue
-
19,504
-
19,504
Interest from customers
5,778
-
-
5,778
Insurance revenue
-
9,677
-
9,677
Account holder fees
-
5,610
-
5,610
Other
4,869
553
-
5,422
South Africa
4,680
553
-
5,233
Rest of world
189
-
-
189
Total revenue, derived
 
from the following geographic
locations
463,701
62,801
1,469
527,971
South Africa
441,288
62,801
1,469
505,558
Rest of world
$
22,413
$
-
$
-
$
22,413
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-55
16.
 
REVENUE (continued)
The
 
following
 
table
 
represents
 
our
 
revenue
 
disaggregated
 
by
 
major
 
revenue
 
streams,
 
including
 
reconciliation
 
to
 
operating
segments for the year ended June 30, 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merchant
Consumer
Total
Processing fees
$
55,752
$
28,982
$
84,734
South Africa
48,305
28,982
77,287
Rest of world
7,447
-
7,447
Technology
 
products
25,891
277
26,168
South Africa
25,826
277
26,103
Rest of world
65
-
65
Prepaid airtime sold
69,603
-
69,603
Lending revenue
-
21,573
21,573
Interest from customers
1,121
-
1,121
Insurance revenue
-
8,530
8,530
Account holder fees
-
5,838
5,838
Other
4,310
732
5,042
South Africa
4,259
732
4,991
Rest of world
51
-
51
Total revenue, derived
 
from the following geographic locations
156,677
65,932
222,609
South Africa
149,114
65,932
215,162
Rest of world
$
7,563
$
-
$
7,447
17.
 
STOCK-BASED COMPENSATION
Amended and Restated Stock Incentive Plan
The Company’s
 
Amended and
 
Restated 2022
 
Stock Incentive
 
Plan (“2022
 
Plan”) was
 
most recently
 
amended and
 
restated on
November 16, 2022. On April 11,
 
2024, the Company’s
 
Board amended the 2022 Plan to increase
 
the number of shares available for
issuance by
3,000,000
. On June 3, 2024, the Company’s shareholders
 
approved the amendment.
 
No evergreen provisions are included in the 2022 Plan. This means that the maximum number of
 
shares issuable under the 2022
Plan is fixed
 
and cannot
 
be increased
 
without shareholder
 
approval, the plan
 
expires by
 
its terms upon
 
a specified date,
 
and no
 
new
stock
 
options
 
are
 
awarded
 
automatically
 
upon
 
exercise
 
of
 
an
 
outstanding
 
stock
 
option.
 
Shareholder
 
approval
 
is
 
required
 
for
 
the
repricing of awards or the implementation of any award exchange program.
 
The Plan permits Lesaka to grant to its employees, directors and consultants incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock, performance-based awards
 
and other awards based on its
 
common stock. The Remuneration
Committee of the Company’s Board
 
of Directors (“Remuneration Committee”) administers the Plan.
The total number
 
of shares of common
 
stock issuable under the
 
Plan is
16,552,580
. The maximum
 
number of shares for
 
which
stock options, stock appreciation rights
 
(other than performance-based awards
 
that are not options) may be granted
 
during a calendar
year
 
to any
 
participant
 
is
600,000
 
shares. Shares
 
covered
 
by awards
 
that expire,
 
terminate or
 
lapse without
 
payment
 
will again
 
be
available for the grant of awards under the 2022 Plan, as well as shares that are delivered to us by the holder to pay withholding taxes
or as payment for
 
the exercise price of
 
an award, if permitted
 
by the Remuneration Committee.
 
The shares deliverable
 
in connection
with awards
 
granted under
 
the 2022
 
Plan may
 
consist, in
 
whole or
 
in part,
 
of authorized
 
but unissued
 
shares or
 
treasury shares.
 
To
account
 
for
 
stock
 
splits,
 
stock
 
dividends,
 
reorganizations,
 
recapitalizations,
 
mergers,
 
consolidations,
 
spin-offs
 
and
 
other
 
corporate
events, the 2022 Plan
 
requires the Remuneration Committee to
 
equitably adjust the number
 
and kind of shares
 
of common stock issued
or reserved pursuant to the plan or outstanding awards, the maximum number of shares
 
issuable pursuant to awards, the exercise price
for awards,
 
and other
 
affected terms
 
of awards
 
to reflect
 
such event.
 
No awards
 
may be
 
granted under
 
the Plan
 
after September
 
7,
2032, but awards granted on or before such date may extend to later dates.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-56
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Amended and Restated Stock Incentive Plan (continued)
Options
General Terms of
 
Awards
Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant,
with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and expire
10
 
years after the date
of grant. The options generally become exercisable in accordance with a
 
vesting schedule ratably over a period of
three years
 
from the
date of grant. The Company issues new shares to satisfy stock option award exercises but may
 
also use treasury shares.
Valuation
 
Assumptions
The
 
fair
 
value
 
of
 
each
 
option
 
is
 
estimated
 
on
 
the
 
date
 
of
 
grant
 
using the
 
Cox
 
Ross
 
Rubinstein
 
binomial
 
model
 
that
 
uses the
assumptions
 
noted
 
in
 
the
 
table
 
below.
 
The
 
estimated
 
expected
 
volatility
 
is
 
generally
 
calculated
 
based
 
on
 
the
 
Company’s
750
-day
volatility. The
 
estimated expected life of the
 
option was determined based on
 
the historical behavior of employees
 
who were granted
options with similar terms.
No
 
stock options were granted during the year ended June 30, 2023. The table below presents the range of
assumptions used to value options granted during the years ended June 30, 2024
 
and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2022
Expected volatility
 
55
%
50
%
Expected dividends
 
0
%
0
%
Expected life (in years)
 
5.0
3.0
Risk-free rate
 
2.11
%
1.61
%
Restricted Stock
General Terms of
 
Awards
Shares of restricted stock are
 
considered to be participating non-vested equity shares
 
(specifically contingently returnable shares)
for the
 
purposes of
 
calculating earnings per
 
share (refer
 
to Note
 
19) because, as
 
discussed in
 
more detail
 
below, the recipient is
 
obligated
to transfer any unvested
 
restricted stock back to
 
the Company for no
 
consideration and these shares
 
of restricted stock are
 
eligible to
receive non-forfeitable
 
dividend equivalents
 
at the
 
same rate as
 
common stock.
 
Restricted stock
 
generally vests
 
ratably over
 
a
three
year
 
period, with
 
vesting conditioned
 
upon the
 
recipient’s
 
continuous service
 
through the
 
applicable vesting
 
date and
 
under certain
circumstances, the achievement of certain performance targets,
 
as described below.
 
Recipients
 
are
 
entitled
 
to
 
all
 
rights
 
of
 
a
 
shareholder
 
of
 
the
 
Company
 
except
 
as
 
otherwise
 
provided
 
in
 
the
 
restricted
 
stock
agreements. These
 
rights include the
 
right to vote
 
and receive dividends
 
and/or other
 
distributions,
 
however, any
 
or all dividends
 
or
other
 
distributions
 
paid
 
related
 
to
 
restricted
 
stock
 
during
 
the period
 
of
 
such
 
restrictions
 
shall
 
be
 
accumulated
 
(without
 
interest)
 
or
reinvested in additional shares of common stock, which in either case shall be subject to the same restrictions as the underlying award
or such other restrictions as the Remuneration
 
Committee may determine.
 
The restricted stock agreements generally
 
prohibit transfer
of any
 
nonvested and
 
forfeitable restricted
 
stock. If a
 
recipient ceases
 
to be
 
a member
 
of the
 
Board of
 
Directors or
 
an employee
 
for
any reason,
 
all shares
 
of restricted
 
stock that
 
are not
 
then vested
 
and nonforfeitable
 
will be immediately
 
forfeited and
 
transferred to
the Company
 
for no consideration
 
,
 
except as otherwise
 
agreed between
 
the parties.
 
Forfeited shares
 
of restricted
 
stock are
 
available
for future issuances by the Remuneration Committee.
The Company issues new shares to satisfy restricted stock awards.
Valuation
 
Assumptions
The fair value
 
of restricted stock
 
is generally based
 
on the closing
 
price of the
 
Company’s stock
 
quoted on The
 
Nasdaq Global
Select Market on the date of grant.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-57
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Market Conditions - Restricted Stock Granted in September 2018 –
 
all forfeited
In September 2018, the Remuneration Committee approved an award of
148,000
 
shares of restricted stock to executive officers.
The
148,000
 
shares of restricted stock awarded to executive
 
officers in September 2018 are subject
 
to a time-based vesting condition
and a market
 
condition and vest
 
in full only
 
on the
 
date, if
 
any, that the following
 
conditions are
 
satisfied: (1) the
 
price of the
 
Company’s
common stock must equal or exceed certain agreed VWAP
 
levels (as described below) during a measurement period commencing on
the date that
 
it files its
 
Annual Report on
 
Form 10-K for
 
the fiscal year
 
ended June 30,
 
2021 and ending
 
on December 31,
 
2021 and
(2) the recipient is employed by the Company on a full-time basis when the
 
condition in (1) is met. If either of these conditions is not
satisfied,
 
then
 
none
 
of
 
the
 
shares
 
of
 
restricted
 
stock
 
will
 
vest
 
and
 
they
 
will
 
be
 
forfeited.
 
The
 
$
23.00
 
price
 
target
 
represented
 
an
approximate
55
% increase,
 
compounded annually,
 
in the
 
price of
 
the Company’s
 
common stock
 
on Nasdaq
 
over the
 
$
6.20
 
closing
price on September 7, 2018. The VWAP
 
levels and vesting percentages related to such levels are as follows:
●
Below $
15.00
 
(threshold)—
0
%
●
At or above $
15.00
 
and below $
19.00
—
33
%
●
At or above $
19.00
 
and below $
23.00
—
66
%
●
At or above $
23.00
—
100
%
 
The fair value of these shares of restricted stock was calculated using a Monte
 
Carlo simulation of a stochastic volatility process.
The choice of a stochastic volatility process as an extension to the standard Black Scholes process was driven by both observations of
larger than expected moves in the daily time series for the Company’s
 
VWAP
 
price, but also the observation of the strike structure of
volatility
 
(i.e.
 
skew
 
and
 
smile)
 
for
 
out-of-the
 
money
 
calls
 
and
 
out-of-the
 
money
 
puts
 
versus
 
at-the-money
 
options
 
for
 
both
 
the
Company’s stock and NASDAQ futures.
In scenarios where
 
the shares do not
 
vest, the final vested
 
value at maturity is
 
zero. In scenarios where
 
vesting occurs, the
 
final
vested value on maturity is the share price on
 
vesting date. In its calculation of the fair value
 
of the restricted stock, the Company used
an average volatility of
37.4
% for the VWAP
 
price, a discounting based on USD overnight indexed swap rates for
 
the grant date, and
no future dividends. The average volatility was extracted from the time series for VWAP prices as the standard deviation of log prices
for the
three years
 
preceding the grant date. The mean
 
reversion of volatility and the volatility of
 
volatility parameters of the stochastic
volatility process
 
were extracted
 
by regressing
 
log differences
 
against log
 
levels of
 
volatility from
 
the time
 
series for
 
at-the-money
options
30 day
 
volatility quotes, which were available from January 2, 2018 onwards.
During
 
the year
 
ended June
 
30, 2022,
 
an executive
 
officer forfeited
30,000
 
shares of
 
restricted
 
stock that
 
were subject
 
to the
market conditions described above because the performance conditions were not met. During the year ended June 30, 2021, executive
officers forfeited
88,000
 
shares of restricted
 
stock that were
 
subject to the
 
market conditions described above
 
following their separation
from the Company.
Performance Conditions - Restricted Stock Granted in February 2020
 
– all forfeited
The
454,400
 
shares
 
of
 
restricted
 
stock
 
awarded
 
to
 
executive
 
officers
 
in
 
February
 
2020
 
were
 
subject
 
to
 
time-based
 
and
performance-based
 
vesting
 
conditions
 
and
 
vest
 
in
 
full
 
only
 
on
 
the
 
date,
 
if
 
any,
 
that
 
the
 
following
 
conditions
 
are
 
satisfied:
 
(1)
 
the
achievement of an agreed return on average net equity per year during a measurement period commencing from July 1, 2021, through
June 30, 2023,
 
and (2) the recipient
 
is employed by the
 
Company on a full-time
 
basis when the
 
condition in (1) is
 
met. Net equity
 
is
calculated as total equity attributable to the Company’s
 
shareholders plus redeemable common stock, in conformity with GAAP.
 
The
net equity as of June 30, 2021, was set as the base year for the measurement period. The average net equity is calculated as the simple
average between
 
the opening
 
net equity
 
and closing
 
net equity
 
during each
 
fiscal year
 
within the
 
measurement period.
 
The targeted
return per year within the measurement period is derived from GAAP net income
 
attributable to the Company per fiscal year.
The performance-based awards
 
vest based on the achievement
 
of the following targeted
 
return on average net equity
 
during the
measurement period, of:
●
8
% per year:
50
% vest;
●
14
% per year:
100
% vest.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-58
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Performance Conditions - Restricted Stock Granted in February 2020
 
– all forfeited (continued)
No
 
shares of
 
restricted stock
 
vested at
 
a return
 
on average
 
net equity
 
of less
 
than
8
%. Calculation
 
of the
 
award based
 
on the
returns between
8
% and
14
% will be interpolated on a linear
 
basis. The Company’s Remuneration Committee was permitted to use its
discretion to adjust any component of the
 
calculation of the award on a fact-by-fact basis, for
 
instance, as the result of an acquisition.
During
 
the
 
year
 
ended
 
June
 
30,
 
2023,
 
an
 
executive
 
officer
 
forfeited
80,000
 
shares
 
of
 
restricted
 
stock
 
that
 
were
 
subject
 
to
 
the
performance
 
conditions
 
because
 
the
 
performance
 
conditions
 
were
 
not
 
achieved.
 
During
 
the
 
year
 
ended
 
June
 
30,
 
2021,
 
executive
officers forfeited
374,400
 
shares of
 
restricted stock that
 
were subject
 
to the
 
performance conditions described
 
following their separation
from the Company.
Market Conditions - Restricted Stock Granted in May 2021 and
 
July 2021 – all forfeited
In May
 
2021
 
and July
 
2021, respectively,
 
the Remuneration
 
Committee
 
approved
 
an award
 
of
158,734
 
and
58,652
 
shares of
restricted stock to
 
executive officers. These
 
shares of restricted
 
stock awarded to
 
executive officers were
 
subject to a
 
time-based vesting
condition and a
 
market condition and would
 
have vested in full
 
only on the date,
 
if any,
 
that the following conditions
 
were satisfied:
(1) a compounded annual
20
% appreciation in the Company’s stock price over the
 
measurement period commencing on June 30, 2021
through June 30, 2024, and (2) the recipient
 
was employed by the Company on a full-time
 
basis when the condition in (1)was met. If
either of
 
these conditions
 
was not
 
satisfied, then
 
none of
 
the shares
 
of restricted
 
stock would
 
vest and
 
they would
 
be forfeited.
 
The
stock price targets were not met and all of
 
the restricted stock granted were forfeited on June 30,
 
2024. The Company’s closing
 
stock
price on Nasdaq on June 30, 2021, was $
4.71
.
The appreciation levels (times and price) and vesting percentages as of each period ended related to such levels were as follows:
●
Prior to the first anniversary of the grant date:
0
%
●
Fiscal 2022, stock price as of June 30, 2022 is
1.2
 
times higher (i.e. $
5.65
 
or higher) than $
4.71
:
33
%;
●
Fiscal 2023, stock price as of June 30, 2023 is
1.44
 
times higher (i.e. $
6.78
 
or higher) than $
4.71
:
67
%;
●
Fiscal 2024, stock price as of June 30, 2024 is
1.728
 
times higher (i.e. $
8.14
) than $
4.71
:
100
%.
The fair value of these shares of restricted stock was calculated using a Monte
 
Carlo simulation of a stochastic volatility process.
The choice of a stochastic volatility process as an extension to the standard Black Scholes process was driven by both observations of
larger than expected moves in the daily time series for
 
the Company’s closing price, but
 
also the observation of the strike structure of
volatility
 
(i.e.
 
skew
 
and
 
smile)
 
for
 
out-of-the
 
money
 
calls
 
and
 
out-of-the
 
money
 
puts
 
versus
 
at-the-money
 
options
 
for
 
both
 
the
Company’s stock and NASDAQ futures.
In scenarios where the
 
shares do not vest, the
 
final vested value at maturity
 
is zero. In scenarios where
 
vesting occurs, the final
vested value on maturity is the share price on
 
vesting date. In its calculation of the fair value
 
of the restricted stock, the Company used
an average
 
volatility of
61.6
% for the
 
closing price
 
(for each
 
of the
 
May 2021
 
and July 2021
 
awards), a
 
discounting based
 
on USD
overnight indexed swap rates for the grant date, and no future dividends. The average volatility was extracted from the time series for
closing prices as the standard deviation of log prices for the three years preceding the grant date. The mean reversion of volatility and
the volatility of volatility parameters of the stochastic volatility process were extracted by
 
regressing log differences against log levels
of volatility from the time series for at-the-money options
30 day
 
volatility quotes, which were available for the three years preceding
May 5, 2021 (for the May 2021 awards) and July 1, 2021 (for the July 2021 award).
Performance Conditions - Restricted Stock Granted in July 2021
In July 2021, the Remuneration Committee approved an
 
award of
58,652
 
shares of restricted stock to an
 
executive officer. These
shares of restricted
 
stock were subject
 
to a time-based
 
vesting condition
 
and a performance
 
condition and
 
would vest in full
 
only on
the
 
date, if
 
any,
 
that the
 
following
 
conditions
 
were satisfied:
 
(1)
 
achievement
 
of the
 
Company’s
three year
 
financial services
 
plan
during the specific measurement period from June 30, 2021, to June 30, 2024, and (2) the
 
recipient was employed by the Company on
a full-time basis when the
 
condition in (1) is met. If
 
either of these conditions were
 
not satisfied, then none of the
 
shares of restricted
stock would
 
vest and
 
they would
 
be forfeited.
 
The fair
 
value of
 
these shares
 
of restricted
 
stock was
 
calculated based
 
on the
 
market
price on date of award.
 
The Company’s Remuneration Committee determined that the vesting
 
conditions were achieved and the
 
shares
of restricted stock vested in full on June 30, 2024.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-59
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock (continued)
Market Conditions - Restricted Stock Granted in December 2022
In December 2022, the Remuneration
 
Committee approved an award of
257,868
 
shares of restricted stock to executive
 
officers.
The
257,868
 
shares
 
of
 
restricted
 
stock
 
awarded
 
to
 
executive
 
officers
 
are
 
subject
 
to
 
a
 
time-based
 
vesting
 
condition
 
and
 
a
 
market
condition and vest
 
in full only
 
on the date,
 
if any, that the
 
following conditions are
 
satisfied: (1) a
 
compounded annual
10
% appreciation
in
 
the
 
Company’s
 
stock
 
price
 
off
 
a
 
base
 
price
 
of
 
$
4.94
 
over
 
the
 
measurement
 
period
 
commencing
 
on
 
December
 
1,
 
2022
 
through
December 1, 2025, and (2) the recipient is employed by the Company on a full-time basis when the condition in (1) is
 
met. If either of
these conditions is not satisfied, then none of the shares of
 
restricted stock will vest and they will be
 
forfeited. The Company’s closing
price on December 1, 2022, was $
4.08
.
The appreciation levels (times and price) and vesting percentages as of each
 
period ended are as follows:
●
Prior to the first anniversary of the grant date:
0
%;
●
Fiscal 2024, stock price as of December 1, 2023 is
1.1
 
times higher (i.e. $
5.43
 
or higher) than $
4.94
:
33
%;
●
Fiscal 2025, stock price as of December 1, 2024 is
1.21
 
times higher (i.e. $
5.97
 
or higher) than $
4.94
:
67
%;
●
Fiscal 2026, stock price as of December 1, 2025 is
1.331
 
times higher (i.e. $
6.57
) than $
4.94
:
100
%.
The fair value of these shares of restricted stock was calculated using a Monte Carlo
 
simulation.
 
In scenarios where
 
the shares do not
 
vest, the final vested
 
value at maturity is
 
zero. In scenarios where
 
vesting occurs, the
 
final
vested value on maturity is the share price on
 
vesting date. In its calculation of the fair value
 
of the restricted stock, the Company used
an equally
 
weighted volatility
 
of
50.1
% for
 
the closing
 
price (of
 
$
4.08
), a discounting
 
based on
 
U.S. dollar
 
overnight indexed
 
swap
rates for the grant date, and no
 
future dividends. The equally weighted
 
volatility was extracted from the
 
time series for closing prices
as the standard deviation of log prices for the three years preceding the grant date.
Market Conditions - Restricted Stock Granted in October 2023
In October 2023, the Company
 
awarded
310,916
 
shares of restricted stock to
three
 
of its executive officers
 
which are subject to
a
 
time-based
 
vesting
 
condition
 
and
 
a
 
market
 
condition
 
and
 
vest
 
in
 
full
 
only
 
on
 
the
 
date,
 
if
 
any,
 
that
 
the
 
following
 
conditions
 
are
satisfied: (1)
 
a compounded
 
annual
10
% appreciation
 
in the
 
Company’s
 
stock price
 
off a
 
base price
 
of $
4.00
 
over the
 
measurement
period commencing on September 30, 2023 through November 17, 2026, and (2) the recipient is employed by the Company on a full-
time basis when the condition in (1) is met. If either of these conditions is not satisfied, then none of the shares of restricted stock will
vest and they will be forfeited. The Company’s
 
closing price on September 30, 2023, was $
3.90
.
The appreciation levels (times and price) and vesting percentages as of each
 
period ended are as follows:
●
Prior to the first anniversary of the grant date:
0
%;
●
Fiscal
 
2025,
 
the
 
Company’s
 
30-day
 
volume
 
weighted-average
 
stock
 
price
 
(“VWAP”)
 
before
 
November
 
17,
 
2024
 
is
approximately
1.10
 
times higher (i.e. $
4.40
 
or higher) than $
4.00
:
33
%;
●
Fiscal 2026, the Company’s
 
VWAP before
 
November 17, 2025 is
1.21
 
times higher (i.e. $
4.84
 
or higher) than $
4.00
:
67
%;
●
Fiscal 2027, the Company’s
 
VWAP before
 
November 1, 2026 is
1.33
 
times higher (i.e. $
5.32
) than $
4.00
:
100
%.
The fair value
 
of these shares
 
of restricted
 
stock was calculated
 
using a Monte
 
Carlo simulation. In
 
scenarios where
 
the shares
do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share
price on
 
vesting date.
 
In its calculation
 
of the
 
fair value
 
of the
 
restricted stock,
 
the Company
 
used an
 
equally weighted
 
volatility of
48.3
% for
 
the closing
 
price (of
 
$
4.37
), a
 
discounting based
 
on U.S.
 
dollar overnight
 
indexed swap
 
rates for
 
the grant
 
date, and
 
no
future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log
prices for the three years preceding the grant date.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-60
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Amended and Restated Stock Incentive Plan (continued)
Restricted Stock Units
The Remuneration Committee
 
may approve the
 
grant of other
 
stock-based awards. In
 
April 2022, the
 
Company granted
1,250,486
shares
 
of
 
restricted
 
stock
 
to
 
employees
 
of
 
Connect
 
pursuant
 
to
 
the
 
terms
 
of
 
the
 
acquisition.
 
The
 
award
 
included
 
an
 
equalization
mechanism to
 
maintain a
 
return of
 
$
7.50
 
per share
 
of restricted
 
stock upon
 
vesting through
 
the issue
 
of restricted
 
stock units.
 
The
conversion of restricted stock units to shares cannot exceed
50
% under the terms of the award and therefore no more than
625,243
 
(or
1,250,486
 
divided by two) would be
 
issued upon vesting. During
 
the years ended June 30, 2024
 
and 2023, respectively,
388,908
 
and
412,487
 
shares of restricted
 
stock vested, and
194,454
 
and
206,239
 
restricted stock units
 
vested, the maximum amount
 
possible, and
were converted to
 
shares of common
 
stock. Employees elected
 
for
166,087
 
and
72,081
 
shares to be
 
withheld from
166,167
 
and
164,687
restricted stock units which vested, and which were converted to shares, in order to satisfy the withholding
 
tax liability on the vesting
of these and other shares. The
166,087
 
and
72,081
 
shares have been included in the Company’s
 
treasury shares.
Stock Appreciation Rights
 
The Remuneration Committee may also grant stock appreciation rights, either
 
singly or in tandem with underlying stock
 
options.
Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock
(as determined by the Remuneration Committee)
 
equal in value to the
 
excess of the fair
 
market value of the shares
 
covered by the right
over the grant price.
No
 
stock appreciation rights have been granted.
Stock option and restricted stock activity
 
Options
The following table summarizes stock option activity for the years ended
 
June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($'000)
Weighted
average
grant date
fair value
($)
Outstanding - July 1, 2021
1,294,832
3.93
7.68
1,624
1.45
Granted – August 2020
137,620
4.87
10.00
235
1.71
Exercised
(249,521)
3.05
-
470
-
Forfeited
(256,706)
4.53
-
1.69
Outstanding - June 30, 2022
926,225
4.14
6.60
1,249
1.60
Exercised
(158,659)
3.04
-
200
-
Forfeited
(94,292)
3.99
-
1.81
Outstanding - June 30, 2023
673,274
4.37
5.14
239
1.67
Granted – December 2023
500,000
3.50
5.17
880
1.76
Granted – June 2024
1,000,000
6.00
4.60
1,690
1.69
Granted – June 2024
1,000,000
8.00
4.60
1,300
1.30
Granted – June 2024
1,000,000
11.00
4.60
920
0.92
Granted – June 2024
1,000,000
14.00
4.60
685
0.69
Exercised
(54,287)
2.25
-
71
-
Forfeited
(200,739)
3.96
-
1.42
Outstanding - June 30, 2024
4,918,248
8.70
4.51
889
1.77
These options have an exercise price range of $
3.01
 
to $
14.00
.
The
 
Company
 
awarded
4,500,000
 
and
137,620
 
stock
 
options
 
to
 
employees
 
during
 
the
 
years
 
ended
 
June
 
30,
 
2024
 
and
 
2022,
respectively.
No
 
stock options were awarded during the year ended June 30, 2023.
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-61
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity (continued)
Options (continued)
The
4,500,000
 
stock options awarded
 
during the
 
year ended June
 
30, 2024,
 
were awarded to
 
Ali Mazanderani,
 
the Company’s
Executive Chairman, and
500,000
 
of these stock options were granted pursuant to the 2022 Plan and
4,000,000
 
were granted pursuant
to shareholder approval
 
which was obtained on June
 
3, 2024. The
500,000
 
options will vest on the
 
first anniversary of the
 
grant date
of December 3, 2023, provided
 
that Mr.
 
Mazandarani continues to provide
 
services as Executive Chair through
 
the vesting date. The
4,000,000
 
options will
 
vest on
 
January 31,
 
2026,
 
subject to
 
Mr.
 
Mazanderani’s
 
ongoing service
 
through
 
to this
 
date. The
500,000
options will
 
vest immediately
 
if Mr.
 
Mazanderani’s
 
employment is
 
terminated by
 
the Company
 
without cause
 
on or
 
before the
 
first
anniversary of the grant date. The
4,500,000
 
stock options may only be exercised during a period commencing from January 31, 2028
to January 31, 2029.
On August 5, 2020, the Company granted one of its then non-employee directors,
 
and now the Company’s Executive Chairman,
Mr.
 
Ali Mazanderani,
 
in his
 
capacity as
 
a consultant
 
to the Company,
150,000
 
stock options
 
with an
 
exercise price
 
of $
3.50
. These
stock
 
options
 
were
 
subject
 
to the
 
non-employee
 
director’s
 
continuous
 
service
 
through
 
the
 
applicable
 
vesting
 
date,
 
and
 
half
 
of
 
the
options vested
 
on each
 
of the
 
first and
 
second anniversaries
 
of the
 
grant date.
 
The stock
 
options expired
 
unexercised on
 
August 5,
2023.
During
 
the
 
years
 
ended
 
June
 
30,
 
2024,
 
2023
 
and
 
2022,
116,063
,
327,965
 
and
376,348
 
stock
 
options
 
became
 
exercisable,
respectively. During the year ended June 30, 2023, an employee delivered
23,934
 
shares of the Company’s common stock to exercise
37,500
 
stock options with an aggregate
 
strike price of $
0.1
 
million. These
23,934
 
shares of common stock
 
have been included in
 
the
Company’s treasury stock.
 
The employee also elected to deliver
6,105
 
shares of the Company’s common stock to settle income
 
taxes
arising upon exercise of the stock options, and
 
these shares have also been included in
 
the Company’s treasury stock. During the years
ended
 
June
 
30,
 
2024,
 
2023
 
and
 
2022,
 
the
 
Company
 
received
 
approximately
 
$
0.2
 
million,
 
$
0.5
 
million
 
and
 
$
0.8
 
million
 
from
 
the
exercise of
54,287
,
158,659
 
and
249,521
 
stock options, respectively.
 
During
 
the
 
years
 
ended
 
June
 
30,
 
2024,
 
2023
 
and
 
2022,
 
employees
 
forfeited
200,739
,
94,292
,
 
and
256,706
 
stock
 
options,
respectively. The
 
stock options forfeited had strike prices ranging from $
3.01
 
to $
11.23
.
Options (continued)
The following table presents stock options vested and expected to vest as of
 
June 30, 2024:
 
 
 
 
 
 
 
 
 
 
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Vested
 
and expecting to vest - June 30, 2024
4,918,248
8.70
4.51
889
These options have an exercise price range of $
3.01
 
to $
14.00
, and include the
4,000,000
 
options awarded in June 2024.
The following table presents stock options that are exercisable as of June
 
30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
shares
Weighted
average
exercise
price
($)
Weighted
average
remaining
contractual
term
(in years)
Aggregate
intrinsic
value
($’000)
Exercisable - June 30, 2024
391,342
4.71
5.39
299
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-62
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity
 
(continued)
Restricted stock
The following table summarizes restricted stock activity for the years
 
ended June 30, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2021
384,560
1,123
Total granted
2,168,110
11,097
Granted – July 2021
234,608
963
Granted – August 2021
44,986
192
Granted – November and December 2021
326,158
1,766
Granted – December 2021
50,300
269
Granted – February 2022
29,920
146
Granted – March 2022
207,859
1,097
Granted – April 2022
1,250,486
6,540
Granted – May 2022
23,793
124
Total granted and vested - November and December 2021
-
-
Granted - November and December 2021
71,647
393
Vested
 
- November and December 2021
(71,647)
393
Total vested
(61,861)
306
Total forfeitures
(105,542)
542
Forfeitures - employee terminations
(75,542)
382
Forfeitures – September 2018 awards with market conditions
 
(30,000)
160
Non-vested – June 30, 2022
2,385,267
11,879
Total granted
1,085,981
4,411
Granted – July 2022
32,582
172
Granted – August 2022
179,498
995
Granted - November 2022
150,000
605
Granted - December 2022
430,399
1,862
Granted - January 2023
11,806
57
Granted - June 2023
23,828
124
Granted - December 2022 - performance awards
257,868
596
Total vested
(742,464)
3,171
Vested
 
– July 2022
(78,801)
410
Vested
 
– November 2022
(59,833)
250
Vested
 
– December 2022
(7,060)
29
Vested
 
– February 2023
(19,179)
83
Vested
 
– March 2023
(69,286)
326
Vested
 
– April 2023
(418,502)
1,721
Vested
 
– May 2023
(61,861)
217
Vested
 
– June 2023
(27,942)
135
Total forfeitures
(114,365)
554
Forfeitures - employee terminations
(34,365)
138
Forfeitures – February 2020 award with market condition
(80,000)
416
Non-vested – June 30, 2023
2,614,419
11,869
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-63
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity
 
(continued)
Restricted stock (continued)
The following table summarizes restricted stock activity for the year
 
ended June 30, 2024:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares of
restricted stock
Weighted average grant
date fair value
($’000)
Non-vested – June 30, 2023
2,614,419
11,869
Total granted
1,002,241
3,942
Granted – October 2023
333,080
1,456
Granted – October 2023, with performance conditions
310,916
955
Granted – October 2023
225,000
983
Granted – January 2024
56,330
197
Granted – February 2024
9,195
31
Granted - June 2024
67,720
320
Total vested
(1,232,251)
5,208
Vested
 
– July 2023
(78,800)
302
Vested
 
– November 2023
(109,833)
429
Vested
 
– December 2023
(67,073)
234
Vested
 
– February 2024
(14,811)
53
Vested
 
– March 2024
(69,286)
256
Vested
 
– April 2024
(394,932)
1,630
Vested
 
– May 2024
(88,617)
391
Vested
 
– June 2024
(350,247)
1,639
Vested
 
– June 2024, with performance conditions
(58,652)
274
Total forfeitures
(299,463)
1,315
Forfeitures - employee terminations
(82,077)
298
Forfeitures – May and July 2021 awards with market condition
(217,386)
1,017
Non-vested – June 30, 2024
2,084,946
8,736
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity (continued)
Restricted stock
Awards granted
In October 2023, the Company
 
awarded
333,080
 
shares of restricted stock with time-based
 
vesting conditions to approximately
150
 
employees, which are subject to the employees continued employment with the Company through the applicable vesting dates. In
October 2023, the Company awarded
310,916
 
shares of restricted stock to executive officers
 
which contained time and performance-
based
 
(market
 
conditions
 
related
 
to
 
share
 
price
 
performance)
 
vesting
 
conditions.
 
The
 
Company
 
also
 
awarded
225,000
 
shares
 
of
restricted stock to an executive officer in
 
October 2023, which vest on June 30, 2025, except if the executive
 
officer is terminated for
cause, in which case the award will be forfeited. In January 2024, February 2024 and June
 
2024, the Company awarded
56,330
;
9,195
and
67,720
 
shares of restricted stock with time-based vesting conditions to employees.
In July 2022,
 
December 2022, January
 
2023 and June
 
2023, the Company
 
awarded
32,582
,
430,399
,
11,806
 
and
23,828
 
shares
of restricted stock, respectively, to employees
 
and an executive officer which have time-based vesting conditions. In December
 
2022,
the Company awarded
257,868
 
shares of restricted
 
stock to executive
 
officers which contained
 
time and performance-based
 
(market
conditions related to
 
share price performance) vesting
 
conditions. The Company
 
also agreed to match,
 
on a
one
-for-one basis, (1)
 
an
employee’s purchase of up to $
1.0
 
million worth of the Company’s shares of common stock in open market purchases, and in August
2022, the Company granted
179,498
 
shares of restricted stock to the employee, and (2) another employee’s purchase of up to
150,000
shares
 
of
 
the
 
Company’s
 
common
 
stock,
 
and
 
in
 
November
 
2022,
 
the
 
Company
 
granted
150,000
 
shares
 
of
 
restricted
 
stock
 
to
 
the
employee.
 
These
 
shares
 
of
 
restricted
 
stock
 
contain
 
time-based
 
vesting
 
conditions.
 
The
 
Company
 
awarded
300,000
 
shares
 
to
 
an
executive officer on December 31, 2022, which vested on the date
 
of the award.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-64
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Awards granted
 
(continued)
On June 30, 2021, the Company
 
entered into employment agreements with
 
Mr. Chris G.B.
 
Meyer, under which
 
Mr. Meyer was
appointed Group Chief Executive Officer of the Company effective July
 
1, 2021. Mr. Meyer was awarded
117,304
 
shares of restricted
stock on July
 
1, 2021, which were
 
subject to time-based
 
vesting and vest
 
in full on June
 
30, 2024, subject
 
to Mr.
 
Meyer’s continued
service to the
 
Company through June
 
30, 2024. In
 
addition, under the
 
terms of Mr. Meyer’s engagement,
 
the Company’s Remuneration
Committee also awarded Mr. Meyer
117,304
 
shares of restricted stock which include performance conditions and which only vest on
June 30,
 
2024 if
 
the performance
 
conditions are
 
met and
 
Mr.
 
Meyer remains
 
employed with
 
the Company
 
through June
 
30, 2024.
Vesting
 
of
 
half
 
of
 
these
 
awards,
 
or
58,652
 
shares
 
of
 
restricted
 
stock,
 
is
 
subject
 
to
 
the Company
 
achieving
 
its
three-year
 
financial
services plan during the specific measurement period from June 30, 2021, to June 30, 2024, and the other half is subject to share price
growth
 
targets,
 
and only
 
vest if
 
the Company’s
 
share price
 
is $
8.14
 
or higher
 
on June
 
30, 2024.
 
On March
 
1, 2022,
 
the Company
awarded
207,859
 
shares of restricted
 
stock to executive
 
officers and
 
vesting of these
 
awards is subject
 
to the executive’s
 
continuous
service through
 
the applicable vesting
 
date, one
 
third of which
 
vests on each
 
of the first,
 
second and third
 
anniversaries of
 
the grant
date.
On
 
April
 
14,
 
2022,
 
the
 
Company
 
granted
1,250,486
 
shares
 
of
 
restricted
 
stock
 
to
 
employees
 
of
 
Connect
 
pursuant
 
to
 
the
 
Sale
Agreement. The
 
award includes
 
an equalization
 
mechanism to
 
maintain a
 
return of
 
$
7.50
 
per share
 
of restricted
 
stock upon
 
vesting
through the issue of restricted stock units. The conversion of restricted stock units to shares cannot exceed
50
% under the terms of the
award.
Upon joining the Company, each of Messrs. Meyer and Lincoln C. Mali, were entitled to receive an award of shares of restricted
stock which were subject to them purchasing an agreed value of
 
shares (“matching awards”) in the market during a prescribed period
of time. However, these
 
executives were unable to
 
purchase shares in
 
the market during
 
that period due
 
to a Company-imposed
 
insider-
trading
 
restriction
 
placed
 
on
 
them.
 
On
 
November
 
15,
 
2021,
 
the
 
Company
 
amended
 
the
 
terms
 
of
 
these
 
awards
 
in
 
order
 
to
 
put
 
the
executives into an economically equivalent position, as follows:
(i) assume
 
that the
 
executives would
 
have purchased
 
their agreed
 
allocation within
 
their first
30
 
days post
 
commencement of
employment had they not been embargoed;
(ii) require the
 
executives to fulfill
 
their agreed allocations
 
within a short
 
period following release
 
of the Company’s
 
Quarterly
Report on Form 10-Q for the three months ended September 30, 2021;
(iii) to the
 
extent that the
 
price per share
 
actually paid is
 
greater than the
30
-day volume-weighted
 
average price (“VWAP”)
 
in
their respective first
 
months of employment, award
 
the executives a
 
top-up (“top up awards”)
 
which amounts to
 
the after-tax difference
between (a) number of shares purchased at
 
the
30
-day VWAP in their respective first months of employment and (b) number of
 
shares
purchased at the actual share price paid. The top-up will be settled as follows: (a)
55
% in shares of the Company’s common stock and
(b)
45
%, at the election of
 
the executive, as either shares
 
of the Company’s common stock or cash. The top
 
up awards were not subject
to any vesting conditions and vested immediately; and
(iv)
 
adjust the initial matching awards to the aggregate number of shares acquired in terms of (ii) and (iii). The matching awards
vest ratably over a period of
three years
 
commencing on the first anniversary of the grant of the matching awards.
The
 
executives
 
acquired
 
shares
 
during
 
November
 
and
 
December
 
2021,
 
and
 
the
 
Company
 
granted
 
the
 
executives
326,158
matching
 
awards and
71,647
 
top up
 
awards. In
 
May 2022,
 
the Company
 
amended the
 
terms of
 
these awards
 
to change
 
the vesting
dates from when the
 
shares were acquired in
 
November and December 2021
 
to the anniversary of
 
the executive’s
 
date of joining the
Company. The shares
 
continue to vest ratably over
three years
 
on the applicable vesting date.
Effective January 1,
 
2022, the Company agreed
 
to grant an advisor
 
shares in lieu of
 
cash for services provided
 
to the Company
during a contract term that will
 
expire on December 31, 2022.
 
The contract could have been terminated
 
early if certain agreed events
occur,
 
and the contract was mutually terminated in
 
November 2022 as no further services
 
were required. The advisor agreed to receive
6,481
 
shares of
 
the Company’s
 
common stock
 
per month
 
as payment
 
for services
 
rendered and
 
is not
 
entitled to
 
receive additional
shares if the contract is
 
terminated early due to the
 
occurrence of the agreed events.
 
The
6,481
 
shares granted per month
 
was calculated
using an
 
agreed monthly
 
fee of
 
$
35,000
 
divided by
 
the Company’s
 
closing market
 
price on
 
January 3,
 
2022, on
 
the Nasdaq
 
Global
Select
 
Market.
 
The
 
Company
 
and
 
the
 
advisor
 
have
 
agreed
 
that
 
the
 
Company
 
will
 
issue
 
the
 
shares
 
to
 
the
 
advisor,
 
in arrears,
 
on
 
a
quarterly basis and that the shares
 
may not be transferred until the
 
earlier of December 31, 2022, or
 
the occurrence of the agreed event.
During each
 
of the years
 
ended June 30,
 
2023
 
and 2022, respectively,
 
the Company recorded
 
a stock-based compensation
 
charge of
$
0.2
 
million and included the issuance of
32,405
 
and
38,886
 
shares of common stock in its issued and outstanding share count.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-65
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock option and restricted stock activity (continued)
Restricted stock (continued)
Awards vested
During the years
 
ended June 30,
 
2024, 2023 and
 
2022, respectively,
1,002,241
,
742,464
 
and
133,508
 
shares of restricted
 
stock
with time-based and performance-based
 
vesting conditions vested. The June 30, 2024,
 
shares of stock vesting includes
58,652
 
shares
with a performance-based condition related to the achievement of the 2021 to 2024 financial services plan. The fair
 
value of restricted
stock which vested during
 
the years ended
 
June 30, 2024,
 
2023 and 2022,
 
was $
5.2
 
million, $
3.2
 
million and $
0.4
 
million, respectively.
In May
 
2024,
55,598
 
shares of
 
restricted stock
 
granted to
 
Mr.
 
Mali vested
 
and he
 
elected for
25,020
 
shares to
 
be withheld
 
to
satisfy the withholding tax liability on the vesting of these shares. In addition, in November and
 
December 2023
 
and February, April,
May and June
 
2024, an aggregate
 
of
556,889
 
shares of restricted
 
stock granted to employees
 
vested and they elected
 
for
128,415
 
shares
to be
 
withheld to
 
satisfy the
 
withholding tax
 
liability on
 
the vesting
 
of these
 
shares. In
 
July 2022,
78,801
 
shares of
 
restricted stock
granted to Mr.
 
Meyer vested and he
 
elected for
35,460
 
shares to be withheld
 
to satisfy the withholding
 
tax liability on the
 
vesting of
these shares. In May 2023,
55,599
 
shares of restricted stock granted to
 
Mr. Mali vested and he elected for
25,020
 
shares to be withheld
to satisfy
 
the withholding
 
tax liability
 
on the
 
vesting of
 
these shares.
 
In addition,
 
in November
 
and December
 
2022 and
 
February,
April, May and June
 
2023, an aggregate of
434,279
 
shares of restricted stock
 
granted to employees vested
 
and they elected for
190,394
shares to be withheld
 
to satisfy the withholding
 
tax liability on the
 
vesting of these shares.
 
These
153,435
 
(
25,020
 
plus
128,415
) and
250,874
 
(
35,460
 
plus
25,020
 
plus
190,394
) shares
 
have been
 
included in
 
our treasury
 
shares for
 
the year
 
ended June
 
30, 2024
 
and
2023, respectively.
The
133,508
 
shares of restricted
 
stock that vested
 
during the year
 
ended June 30,
 
2022, includes the
71,647
 
top up awards
 
referred
to above
 
and
29,919
 
shares of restricted
 
stock that
 
vested following
 
the change
 
in vesting date
 
to the
 
anniversary of
 
the executive’s
date of joining the Company.
Awards forfeited
During the year
 
ended June 30,
 
2024,
217,386
 
shares of restricted
 
stock were forfeited
 
by executive officers
 
(including former
executive officers)
 
as the
 
market condition
 
(related to
 
share price
 
performance)
 
were not
 
achieved.
 
During the
 
year ended
 
June 30,
2024, employees forfeited
82,077
 
shares of restricted stock following their termination of employment with the Company.
During the year ended June 30, 2023,
80,000
 
shares of restricted stock were forfeited by an executive officer as the performance
condition (related to net asset
 
value targets) was not achieved.
 
During the year ended
 
June 30, 2023, employees
 
forfeited
34,365
 
shares
of restricted stock following their termination of employment with the Company.
During
 
the
 
year
 
ended
 
June
 
30,
 
2022,
30,000
 
shares
 
of
 
restricted
 
stock
 
were
 
forfeited
 
by
 
an
 
executive
 
officer
 
as
 
the market
condition (related to share price performance) was not achieved and the
75,542
 
shares of restricted stock were forfeited by employees
following termination of their employment.
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-66
17.
 
STOCK-BASED COMPENSATION
 
(continued)
Stock-based compensation charge and unrecognized compensation
 
cost
The Company has
 
recorded a net stock
 
compensation charge
 
of $
7.9
 
million, $
7.3
 
million and $
3.0
 
million for the
 
years ended
June 30, 2024, 2023 and 2022, respectively,
 
which comprised:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
charge
Allocated to IT
processing,
servicing and
support
Allocated to
selling, general
and
administration
Year
 
ended June 30, 2024
Stock-based compensation charge
 
$
8,045
$
-
$
8,045
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(134)
-
(134)
Total - year ended June
 
30, 2024
$
7,911
$
-
$
7,911
Year
 
ended June 30, 2023
Stock-based compensation charge
 
$
7,673
$
-
$
7,673
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(364)
-
(364)
Total - year ended June
 
30, 2023
$
7,309
$
-
$
7,309
Year
 
ended June 30, 2022
Stock-based compensation charge
 
$
3,082
$
-
$
3,082
Reversal of stock compensation charge related to stock
options and restricted stock forfeited
(120)
-
(120)
Total - year ended June
 
30, 2022
$
2,962
$
-
$
2,962
The
 
stock-based
 
compensation
 
charges
 
and
 
reversal
 
have
 
been
 
allocated
 
to
 
selling,
 
general
 
and
 
administration
 
based
 
on
 
the
allocation of the cash compensation paid to the relevant employees.
As of June
 
30, 2024, the
 
total unrecognized
 
compensation cost related
 
to stock options
 
was approximately
 
$
5.0
 
million, which
the
 
Company
 
expects
 
to
 
recognize
 
over
 
approximately
two years
.
 
As of
 
June
 
30,
 
2024,
 
the
 
total
 
unrecognized
 
compensation
 
cost
related to restricted stock awards was approximately $
4.2
 
million, which the Company expects to recognize over approximately
three
years
.
Income tax consequences
The Company
 
recorded a
 
deferred tax
 
asset of
 
approximately $
1.3
 
million and
 
$
0.6
 
million, as
 
of June
 
30, 2024
 
and June
 
30,
2023, respectively.
 
As of
 
June 30,
 
2024 and
 
2023, the
 
Company recorded
 
a valuation
 
allowance of
 
approximately $
1.3
 
million and
$
0.6
 
million respectively,
 
related to
 
the deferred
 
tax asset
 
because it
 
does not
 
believe that
 
the stock-based
 
compensation deduction
would
 
be
 
utilized
 
as
 
it
 
does
 
not
 
anticipate
 
generating
 
sufficient
 
taxable
 
income
 
in
 
the
 
United
 
States.
 
The
 
Company
 
deducts
 
the
difference between the market value on date of exercise by the option recipient and the exercise price from income subject to taxation
in the United States.
18.
 
INCOME TAX
Income tax expense
The table
 
below presents
 
the components
 
of (loss)
 
income before
 
income taxes
 
expense (benefit)
 
for the
 
years ended
 
June 30,
2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
South Africa
$
(4,405)
$
(21,308)
$
(31,266)
United States
(8,705)
(10,755)
(8,509)
Liechtenstein
-
-
(509)
Other
312
(203)
384
Loss before income tax expense (benefit)
$
(12,798)
$
(32,266)
$
(39,900)
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-67
18.
 
INCOME TAX (continued)
Income tax expense (continued)
Presented below
 
is income tax
 
expense (benefit)
 
by location of
 
the taxing
 
jurisdiction for the
 
years ended
 
June 30, 2024,
 
2023
and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Current tax expense
$
5,766
$
6,317
$
2,309
South Africa
5,634
6,317
2,309
Other
132
-
-
Deferred tax expense (benefit)
(2,712)
(7,442)
(2,044)
South Africa
(2,716)
(7,490)
(2,154)
Other
4
48
110
Foreign tax credits generated – United States
309
115
62
Change in tax rate – South Africa
-
(1,299)
-
Income tax expense (benefit)
 
$
3,363
$
(2,309)
$
327
There were
no
 
changes to the
 
enacted income tax
 
rate in the
 
years ended June
 
30, 2024 and
 
2022 in any
 
of our major
 
jurisdictions.
The South African corporate
 
income tax rate reduced
 
from
28
% to
27
%, effective from
 
July 1, 2022, for all
 
of the Company’s
 
South
African subsidiaries with
 
income tax years
 
commencing on July
 
1, 2022. The
 
change in the
 
income tax rate
 
was enacted on
 
January
5, 2023, and accordingly all deferred taxes assets and liabilities were remeasured to the new tax rate on
 
that date. This resulted. in the
inclusion of an
 
income tax benefit
 
of $
1.3
 
million in the Company’s
 
income tax expense
 
(benefit) line in
 
its consolidated statements
of operations for the
 
year ended June
 
30, 2023, as
 
a result of
 
the reversal of
 
a portion of
 
the deferred tax
 
assets and liabilities
 
recognized
as of December 31, 2022.
The Company’s current tax expense for the year ended June 30, 2024, was lower than the previous year due to the lower taxable
income generated by the Company’s
 
subsidiaries during the year ended June 30, 2024, compared with the year ended June
 
30, 2023.
The Company’s deferred tax expense (benefit) for the year ended June
 
30, 2024, was lower compared with the
 
previous year due
to the
 
inclusion of
 
the deferred
 
tax benefit
 
recorded during
 
the year
 
ended June
 
30, 2023,
 
related to
 
the amortization
 
of intangible
assets recognized
 
due to
 
the acquisition
 
of Connect.
 
Deferred tax
 
expense (benefit)
 
for the
 
year ended
 
June 30,
 
2024, also
 
includes
lower prepaid
 
expense balances
 
as of
 
June 30,
 
2024 which
 
reduces
 
the
 
deferred
 
tax benefit.
 
The Company’s
 
deferred tax
 
expense
(benefit) for the year ended June 30, 2023, was higher
 
than the previous year due to the inclusion of the deferred tax benefit
 
recorded
during the year ended June 30, 2023, related to the amortization of intangible assets recognized due to
 
the acquisition of Connect. The
amount for the
 
year ended
 
June 30,
 
2023, also includes
 
a deferred tax
 
benefit related to
 
an expense
 
paid by
 
Connect before the
 
Company
acquired the business and which was subsequently determined to be deductible
 
for tax purposes of approximately $
2.0
 
million.
 
During the years
 
ended June 30,
 
2024, 2023 and
 
2022, the Company
 
incurred net operating
 
losses through certain
 
of its South
African wholly-owned
 
subsidiaries and recorded
 
a deferred tax
 
benefit related to
 
these losses. However,
 
the Company
 
has created a
valuation allowance for certain of these net operating losses which reduced
 
the deferred tax benefit recorded.
A reconciliation
 
of income
 
taxes, calculated
 
at the
 
fully-distributed South
 
African income
 
tax rate
 
to the
 
Company’s
 
effective
tax rate, for the years ended June 30, 2024, 2023 and 2022, is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Income taxes at South African income tax rates
27.00
%
27.00
%
28.00
%
Non-deductible interest expense
(24.55)
%
-
 
-
 
-
 
-
 
Movement in valuation allowance
(22.15)
%
(17.66)
%
(22.05)
%
Non-deductible transaction costs
(5.91)
%
-
 
-
 
-
 
-
 
Capital gains tax rate differential
1.62
%
(0.51)
%
0.11
%
Prior year adjustments
(1.37)
%
7.60
%
0.01
%
Non-deductible items
(1.11)
%
(13.28)
%
(6.59)
%
Foreign tax credits
0.19
%
-
-
Foreign tax rate differential
-
(0.02)
%
0.02
%
Change in tax laws – South Africa
-
4.03
%
-
Release from FCTR
-
-
(0.33)
%
Effective tax rate
(26.28)
%
7.16
%
(0.83)
%
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-68
18.
 
INCOME TAX (continued)
Income tax expense (continued)
Percentages included in
 
the 2024
 
and 2022 columns
 
in the
 
reconciliation of income
 
taxes presented above
 
are specifically impacted
by the loss incurred by the
 
Company during the years ended June
 
30, 2024 and 2022. For instance,
 
for the year ended June 30, 2024,
income tax expense of $
3.4
 
million represents (
26.28
%) multiplied by the loss before tax expense (benefit) of $(
12,798
).
 
Movement in the
 
valuation allowance for
 
the year
 
ended June
 
30, 2024, includes
 
allowances created related
 
to certain net
 
operating
loss carryforwards generated during
 
the year. Non-deductible
 
items for the year ended June
 
30, 2024, includes transactions costs
 
and
interest expense incurred which the Company cannot deduct for income
 
tax purposes
Movement in the
 
valuation allowance for
 
the year
 
ended June
 
30, 2023, includes
 
allowances created related
 
to certain net
 
operating
losses
 
incurred
 
during
 
the
 
year.
 
Non-deductible
 
items
 
for
 
the
 
year
 
ended
 
June
 
30,
 
2023,
 
includes
 
the
 
goodwill
 
impairment
 
loss
recognized and interest expense incurred which the Company cannot deduct
 
for income tax purposes.
Movement in the valuation allowance
 
for the year ended
 
June 30, 2022, includes
 
allowances created related to
 
net operating losses
incurred during the
 
year. Non-deductible items for
 
the year ended
 
June 30,
 
2022, includes the
 
transaction costs related
 
to the acquisition
of Connect.
Deferred tax assets and liabilities
Deferred
 
taxes
 
reflect
 
the
 
temporary
 
differences
 
between
 
the financial
 
statement
 
carrying
 
amount
 
and
 
tax
 
bases
 
of
 
assets and
liabilities using
 
enacted tax
 
rates in effect
 
for the year
 
in which the
 
differences are
 
expected to reverse.
 
The primary
 
components of
the temporary differences and carryforwards that gave rise to the Company’s deferred tax assets and liabilities as of June 30, and their
classification, were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
June 30,
2024
2023
Total
 
deferred tax assets
Equity accounted investments and equity investments
$
38,039
$
36,267
Net operating loss carryforwards
42,025
39,486
Foreign tax credit carryforwards
32,527
32,599
Provisions and accruals
3,294
3,165
FTS patent
-
40
Other
4,494
4,217
Total
 
deferred tax assets before valuation allowance
120,379
115,774
Valuation
 
allowances
(114,687)
(109,120)
Total
 
deferred tax assets, net of valuation allowance
5,692
6,654
Total
 
deferred tax liabilities:
Intangible assets
29,918
32,731
Equity investments
10,354
10,354
Other
102
94
Total
 
deferred tax liabilities
40,374
43,179
Reported as
Long-term deferred tax assets, net
3,446
10,315
Long-term deferred tax liabilities, net
38,128
46,840
Net deferred tax liabilities
$
34,682
$
36,525
Decrease in total net deferred tax liabilities
Equity-accounted investments and equity investments
Equity-accounting investments and equity
 
investments as of
 
June 30, 2024
 
and 2023, comprises
 
the temporary differences arising
from the
 
difference
 
between the
 
amount paid
 
for Cell
 
C in
 
August 2017
 
and the
 
its financial
 
statements carrying
 
amount as
 
of the
respective
 
year
 
end,
 
of $
0.0
 
million,
 
difference
 
between
 
the amount
 
paid
 
for CPS
 
in 2004
 
and
 
the its
 
financial
 
statement carrying
amount as of the respective
 
year end, of $
0.0
 
million, and temporary differences
 
arising from the disposal of
 
Finbond which resulted
in the generation of capital loss carryforwards.
 
The change in Equity-accounting investments and equity investments also includes the
impact of currency changes between the South African Rand against the United
 
States dollar.
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-69
18.
 
INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Decrease in total net deferred tax liabilities (continued)
Net operating loss carryforwards
Net operating loss carryforwards have increased due
 
to losses incurred by certain of the Company’s
 
subsidiaries and the impact
of currency
 
changes between
 
the South
 
African
 
Rand against
 
the United
 
States dollar,
 
which
 
was partially
 
offset
 
by net
 
operating
losses carryforwards forfeited following the substantial liquidation
 
of certain of the Company’s subsidiaries.
Intangibles assets
Intangible assets include intangible assets recognized related to the acquisition of Connect during the year ended June 30,
2022 (refer to Note 3) and have decreased compared to June 30, 2023,
 
due to the amortization of the intangible assets.
Equity investments
Investment
 
includes
 
our
 
investment
 
in
 
MobiKwik
 
(refer
 
to
 
Note
 
9),
 
and
 
there
 
were
 
no
 
adjustments
 
to
 
the
 
carrying
 
value
 
of
investment in MobiKwik during the year ended June 30, 2024.
Increase in valuation allowance
At June
 
30,
 
2024,
 
the Company
 
had
 
deferred
 
tax assets
 
of $
5.7
 
million
 
(2023:
 
$
6.7
 
million),
 
net of
 
the valuation
 
allowance.
Management believes,
 
based on
 
the weight
 
of available
 
positive and
 
negative evidence
 
it is
 
more likely
 
than not
 
that the
 
Company
will realize
 
the benefits
 
of these
 
deductible temporary
 
differences and
 
carryforwards, net
 
of the
 
valuation allowance.
 
However,
 
the
amount of the deferred tax asset considered realizable could be adjusted
 
in the future if estimates of taxable income are revised.
At June
 
30, 2024,
 
the Company
 
had a
 
valuation allowance
 
of $
114.7
 
million (2023:
 
$
109.1
 
million) to
 
reduce its
 
deferred tax
assets to
 
the estimated
 
realizable
 
value. The
 
movement
 
in the
 
valuation
 
allowance for
 
the years
 
ended June
 
30, 2024
 
and
 
2023, is
presented below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
Equity-
accounting
investments
and equity
investments
Net operating
loss carry-
forwards
Foreign tax
credit carry-
forwards
Other
July 1, 2022
$
117,101
$
42,587
$
39,652
$
32,671
$
2,191
Charged to statement of operations
5,916
5
5,492
-
419
Reversed to statement of operations
(1,701)
-
(579)
(510)
(612)
Change in tax rate - South Africa
(2,351)
(1,190)
(1,161)
-
-
Foreign currency adjustment
(9,845)
(5,135)
(5,023)
438
(125)
Net change in the valuation allowance
(7,981)
(6,320)
(1,271)
(72)
(318)
June 30, 2023
109,120
36,267
38,381
32,599
1,873
Charged to statement of operations
5,061
665
3,163
-
1,233
Reversed to statement of operations
(1,865)
-
(1,793)
(72)
-
Foreign currency adjustment
2,371
1,107
1,215
-
49
Net change in the valuation allowance
5,567
1,772
2,585
(72)
1,282
June 30, 2024
$
114,687
$
38,039
$
40,966
$
32,527
$
3,155
Net operating loss carryforwards and foreign tax credit carryforwards
South Africa
Net operating loss
 
carryforwards generated
 
in South Africa are
 
carried forward indefinitely,
 
but the loss carryforward
 
that may
be used against future taxable income is limited to 80% of taxable income before
 
the net operating loss deduction.
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-70
18.
 
INCOME TAX (continued)
Deferred tax assets and liabilities (continued)
Net operating loss carryforwards and foreign tax credit carryforwards (continued
United States
Net operating
 
loss carryforwards
 
generated in
 
the United States
 
are carried
 
forward indefinitely,
 
but the loss
 
carryforward that
may be used against future taxable income is limited to 80% of taxable
 
income before the net operating loss deduction.
Lesaka had
no
 
net unused foreign
 
tax credits
 
that are more
 
likely than
 
not to
 
be realized as
 
of June
 
30, 2024 and
 
2023, respectively.
Unrecognized tax benefits
As of June 30, 2023 and 2024, the Company had
no
 
unrecognized tax benefits. The Company files income tax returns mainly in
South Africa,
 
Botswana, Namibia and in the U.S. federal jurisdiction. As of June 30, 2024, the Company’s South African subsidiaries
are no longer
 
subject to income
 
tax examination by the
 
South African Revenue Service
 
for periods before
 
June 30, 2020.
 
The Company
is subject to
 
income tax
 
in other
 
jurisdictions outside
 
South Africa,
 
none of which
 
are individually
 
material to its
 
financial position,
statement of cash flows, or results of operations.
19.
 
(LOSS) EARNINGS PER SHARE
The Company has
 
issued redeemable common
 
stock (refer to Note
 
14) which is redeemable
 
at an amount other
 
than fair value.
Redemption of a class of common stock
 
at other than fair value
 
increases or decreases the carrying amount
 
of the redeemable common
stock
 
and
 
is
 
reflected
 
in
 
basic
 
earnings
 
per
 
share
 
using
 
the
 
two-class
 
method.
 
There
 
were
no
 
redemptions
 
of
 
common
 
stock,
 
or
adjustments to the
 
carrying value of the
 
redeemable common stock during
 
the years ended
 
June 30, 2024,
 
2023 and 2022.
 
Accordingly,
the two-class method presented below does not include the impact of
 
any redemption.
 
Basic (loss) earnings per share
 
includes shares of restricted stock that
 
meet the definition of a
 
participating security because these
shares are eligible
 
to receive non
 
-forfeitable dividend
 
equivalents at the
 
same rate as
 
common stock.
 
Basic (loss) earnings
 
per share
has been calculated using the two-class method and basic (loss) earnings per share for the years ended June 30,
 
2024, 2023 and 2022,
reflects only
 
undistributed
 
earnings. The
 
computation below
 
of basic
 
(loss) earnings
 
per share
 
excludes the
 
net loss
 
attributable
 
to
shares of unvested restricted
 
stock (participating non-vested
 
restricted stock) from
 
the numerator and excludes
 
the dilutive impact of
these unvested shares of restricted stock from the denominator.
Diluted (loss)
 
earnings per
 
share have
 
been calculated
 
to give
 
effect to
 
the number
 
of shares
 
of additional
 
common stock
 
that
would have
 
been outstanding
 
if the
 
potential dilutive
 
instruments had
 
been issued
 
in each
 
period. Stock
 
options are
 
included in
 
the
calculation of diluted (loss) earnings per share utilizing the treasury
 
stock method and are not considered to be
 
participating securities,
as the
 
stock options
 
do not
 
contain non-forfeitable
 
dividend rights.
 
The calculation
 
of diluted
 
(loss) earnings
 
per share
 
includes the
dilutive effect
 
of a portion of
 
the restricted stock
 
granted to employees
 
during the current
 
and previous fiscal
 
periods as these
 
shares
of restricted
 
stock are
 
considered contingently
 
returnable shares
 
for the
 
purposes of
 
the diluted
 
(loss) earnings
 
per share
 
calculation
and the
 
vesting conditions
 
in respect
 
of a
 
portion of
 
the restricted
 
stock had
 
been satisfied.
 
The vesting
 
conditions are
 
discussed in
Note 17. The Company has excluded employee stock options to purchase
46,777
,
112,783
 
and
191,448
 
shares of common stock from
the calculation of diluted loss per share during the years ended June 30, 2024, 2023 and 2022, respectively, because the effect would 19.
be antidilutive.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-71
(LOSS) EARNINGS PER SHARE (continued)
The following
 
table presents net
 
loss attributable
 
to Lesaka
 
and the share
 
data used in
 
the basic and
 
diluted (loss)
 
earnings per
share computations using the two-class method for the years ended
 
June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
(in thousands except percent and per share data)
Numerator:
Net loss attributable to Lesaka
$
(17,440)
$
(35,074)
$
(43,876)
Undistributed loss
(17,440)
(35,074)
(43,876)
Percent allocated to common shareholders
(Calculation 1)
95%
95%
98%
Numerator for loss per share: basic and diluted
$
(16,651)
$
(33,407)
$
(43,006)
Denominator
Denominator for basic loss per share:
weighted-average common shares outstanding
61,276
60,134
57,207
Effect of dilutive securities:
Denominator for diluted loss per share: adjusted weighted average
common shares outstanding and assumed conversion
61,276
60,134
57,207
Loss per share:
Basic
 
$
(0.27)
$
(0.56)
$
(0.75)
Diluted
 
$
(0.27)
$
(0.56)
$
(0.75)
(Calculation 1)
Basic weighted-average common shares outstanding (A)
 
61,276
60,134
57,207
Basic weighted-average common shares outstanding and unvested
restricted shares expected to vest (B)
 
64,179
63,134
58,364
Percent allocated to common shareholders
 
(A) / (B)
 
95%
95%
98%
Options to
 
purchase
4,737,543
,
276,616
 
and
186,999
 
shares of
 
the Company’s
 
common stock
 
at prices
 
ranging from
 
$
4.87
 
to
$
14.00
 
(2024), $
4.87
 
to $
11.23
 
(2023) and
 
$
6.20
 
to $
11.23
 
(2022) per share
 
were outstanding
 
during the year
 
ended June 30,
 
2024,
2023 and 2022,
 
respectively, but were not included
 
in the computation
 
of diluted (loss)
 
earnings per share
 
because the options’
 
exercise
prices were greater
 
than the average
 
market price of
 
the Company’s common shares.
 
The options, which
 
expire at various
 
dates through
February 3, 2032, were still outstanding as of June 30, 2024.
20.
 
SUPPLEMENTAL CASH
 
FLOW INFORMATION
The following table presents supplemental cash flow disclosures for
 
the years ended June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Cash received from interest
 
$
2,277
$
1,841
$
2,065
Cash paid for interest
 
$
17,381
$
13,278
$
5,817
Cash paid for income taxes, net of refunds received
 
$
6,506
$
7,200
$
1,138
As discussed in Note
 
17, during the year
 
ended June 30, 2023,
 
an employee exercised stock
 
options through the delivery
 
of
23,934
shares of
 
the Company’s
 
common stock
 
at the
 
closing price
 
on March
 
7, 2023
 
of $
4.76
 
under the
 
terms of
 
their option
 
agreements.
These shares are included in
 
the Company’s total share count and the
 
amount is reflected as
 
treasury shares on the consolidated balance
sheet as of June 30, 2023 and consolidated statement of changes in equity for
 
the year ended June 30, 2023.
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-72
20.
 
SUPPLEMENTAL CASH
 
FLOW INFORMATION
 
(continued)
Disaggregation of cash, cash equivalents and restricted cash
Cash, cash equivalents
 
and restricted cash
 
included on
 
the Company’s
 
consolidated statement
 
of cash flows
 
includes restricted
cash related to
 
cash withdrawn from
 
the Company’s
 
debt facilities to fund
 
ATMs.
 
This cash may
 
only be used
 
to fund ATMs
 
and is
considered restricted
 
as to
 
use and
 
therefore is
 
classified as
 
restricted cash.
 
Cash, cash
 
equivalents and
 
restricted cash
 
also includes
cash in certain
 
bank accounts
 
that has been
 
ceded to
 
Nedbank. As this
 
cash has
 
been pledged
 
and ceded
 
it may not
 
be drawn and
 
is
considered restricted as
 
to use
 
and therefore is
 
classified as
 
restricted cash as
 
well. Refer
 
to Note
 
12 for additional
 
information regarding
the Company’s
 
facilities. The following
 
table presents the disaggregation
 
of cash, cash equivalents
 
and restricted cash as
 
of June 30,
2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
 
2023
 
2022
 
Cash and cash equivalents
$
59,065
$
35,499
$
43,940
Restricted cash
6,853
23,133
60,860
Cash, cash equivalents and restricted cash
$
65,918
$
58,632
$
104,800
Leases
The following
 
table presents
 
supplemental
 
cash flow
 
disclosure related
 
to leases
 
for the
 
years ended
 
June 30,
 
2024, 2023
 
and
2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
 
2023
 
2022
 
Cash paid related to lease liabilities
Operating cash flows from operating leases
$
3,238
$
2,866
$
3,971
Right-of-use assets obtained in exchange for lease obligations
Operating leases
$
4,800
$
983
$
6,054
21.
 
OPERATING SEGMENTS
Operating segments
The Company discloses segment information as reflected in the management
 
information systems reports that its chief operating
decision maker uses in making decisions and to report certain entity-wide disclosures about products and services, and the countries in
which the entity holds material assets or reports material revenues.
The
 
Company
 
currently
 
has
two
 
reportable
 
segments:
 
Merchant
 
and
 
Consumer.
 
The
 
Company
 
operates
 
mainly
 
within
 
South
Africa.
 
The
 
Company’s
 
reportable
 
segments
 
offer
 
different
 
products
 
and
 
services
 
and
 
require
 
different
 
resources
 
and
 
marketing
strategies but share the Company’s
 
assets.
The Merchant segment
 
includes activities related
 
to the provision
 
of goods and
 
services provided to
 
corporate and other juristic
entities. The Company
 
earns fees from
 
processing activities performed
 
for its customers
 
and revenue generated
 
from the distribution
of
 
prepaid
 
airtime.
 
The
 
Company
 
provides
 
cash
 
management
 
and
 
payment
 
services
 
to
 
merchant
 
customers
 
through
 
a
 
digital
 
vault
(valuts) which
 
is located
 
at the
 
customer’s premises
 
and through
 
which the
 
Company is
 
able to
 
provide the
 
services which
 
generate
processing
 
fee
 
revenue.
 
The
 
Company
 
provides
 
its
 
customers
 
with
 
transaction
 
processing
 
services
 
that
 
involve
 
the
 
collection,
transmittal and
 
retrieval of
 
all transaction data.
 
From July 1,
 
2023, the
 
segment includes fees
 
earned from
 
transactions performed
 
by
customers utilizing its ATM infrastructure. This segment also includes sales of hardware and licenses to customers. Hardware includes
the sale of POS devices, SIM
 
cards and other consumables which can
 
occur on an ad hoc
 
basis. Licenses include the right to
 
use certain
technology developed by the Company.
The Consumer segment
 
includes activities related
 
to the provision
 
of financial services
 
to customers,
 
including a bank
 
account,
loans and
 
insurance products.
 
The Company
 
charges monthly
 
administration fees
 
for all
 
bank accounts.
 
Customers that
 
have a
 
bank
account managed by the Company are issued cards that can be utilized to withdraw funds at an ATM or to transact at a merchant point
of sale device (“POS”). The Company earns processing fees from transactions processed
 
for these customers. The Company also earns
fees on
 
transactions
 
performed by
 
other banks’
 
customers utilizing
 
its ATM
 
(until
 
June 30,
 
2023) or
 
POS. The
 
Company
 
provides
short-term loans to customers in South
 
Africa for which it earns
 
initiation and monthly service fees.
 
The Company writes life insurance
contracts, primarily funeral-benefit policies, and policy holders pay
 
the Company a monthly insurance premium.
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-73
21.
 
OPERATING SEGMENTS
 
(continued)
The reconciliation
 
of the
 
reportable segment’s
 
revenue to
 
revenue from
 
external customers
 
for the
 
years ended
 
June 30,
 
2024,
2023 and 2022, respectively,
 
is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
Reportable
Segment
Inter-segment
Unallocated
From external
customers
Merchant
$
498,314
$
3,303
$
-
$
495,011
Consumer
69,211
-
-
69,211
Total for the year
 
ended June 30, 2024
$
567,525
$
3,303
$
-
$
564,222
Merchant
$
463,701
$
-
$
-
$
463,701
Consumer
62,801
-
-
62,801
Other
-
-
1,469
1,469
Total for the year
 
ended June 30, 2023
$
526,502
$
-
$
1,469
$
527,971
Merchant
$
156,689
$
12
$
-
$
156,677
Consumer
65,932
-
-
65,932
Total for the year
 
ended June 30, 2022
$
222,621
$
12
$
-
$
222,609
The
 
Company
 
evaluates
 
segment
 
performance
 
based
 
on
 
segment
 
earnings
 
before
 
interest,
 
tax,
 
depreciation
 
and
 
amortization
(“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”), the Company’s reportable segments’
measure of
 
profit or
 
loss. The
 
Company does
 
not allocate
 
once-off items,
 
stock-based compensation
 
charges, certain
 
lease expenses
(“Lease adjustments”), depreciation
 
and amortization, impairment of
 
goodwill or other intangible
 
assets, other items (including
 
gains
or losses on disposal of investments, fair value adjustments to equity securities), interest income, interest expense, income tax expense
or (earnings) loss from equity-accounted investments to its reportable segments. Group costs
 
generally include: employee related costs
in relation to employees specifically hired for group roles and related directly to managing the US-listed entity; expenditures related to
compliance with the Sarbanes-Oxley Act of 2002; non-employee directors’ fees; legal fees; group and US-listed
 
related audit fees; and
directors
 
and
 
officer’s
 
insurance
 
premiums.
 
Once-off
 
items
 
represent
 
non-recurring
 
expense
 
items,
 
including
 
costs
 
related
 
to
acquisitions and transactions consummated or ultimately
 
not pursued. Unrealized loss FV for currency adjustments
 
represents foreign
currency mark-to-market adjustments
 
on certain intercompany accounts.
 
The Lease adjustments reflect lease
 
expenses and the Stock-
based compensation
 
adjustments reflect
 
stock-based
 
compensation expense
 
and are
 
both excluded
 
from the
 
calculation of
 
Segment
Adjusted EBITDA
 
and are
 
therefore reported
 
as reconciling items
 
to reconcile
 
the reportable
 
segments’ Segment
 
Adjusted EBITDA
to the Company’s loss before
 
income tax expense.
 
 
 
 
 
 
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-74
21.
 
OPERATING SEGMENTS
 
(continued)
The reconciliation of the reportable segments’ measures of profit or loss to loss before income taxes for the years ended June
 
30,
2024, 2023 and 2022, respectively,
 
is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Reportable segments measure of profit or loss
 
$
48,018
$
36,845
$
(9,028)
Operating loss: Group costs
(7,844)
(9,109)
(8,587)
Once-off costs
(1,853)
(1,922)
(8,088)
Unrealized Loss FV for currency adjustments
83
(222)
-
Lease adjustments
(3,238)
(2,906)
(3,955)
Stock-based compensation charge adjustments
(7,911)
(7,309)
(2,962)
Depreciation and amortization
(23,665)
(23,685)
(7,575)
Impairment loss
-
(7,039)
-
Reversal of allowance for doubtful EMI debt receivable (Note 9)
250
-
-
Loss on disposal of equity-accounted investment (Note 9)
-
(205)
(376)
Gain related to fair value adjustment to currency options
-
-
3,691
Gain on disposal of equity securities
-
-
720
Interest income
 
2,294
1,853
2,089
Interest expense
 
(18,932)
(18,567)
(5,829)
Loss before income taxes
 
$
(12,798)
$
(32,266)
$
(39,900)
The following tables summarize segment information for the years ended
 
June 30, 2024, 2023 and 2022:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2024
2023
2022
Reportable segment revenue
Merchant
$
498,314
$
463,701
$
156,689
Consumer
69,211
62,801
65,932
Total reportable segment
 
revenue
567,525
526,502
222,621
Segment Adjusted EBITDA
Merchant
(1)
33,368
33,531
12,646
Consumer
(1)(2)
14,650
3,314
(21,674)
Total Segment Adjusted
 
EBITDA
48,018
36,845
(9,028)
Depreciation and amortization
Merchant
8,543
7,422
2,186
Consumer
734
1,114
1,660
Subtotal: Operating segments
 
9,277
8,536
3,846
Group costs
14,388
15,149
3,729
Total
 
23,665
23,685
7,575
Expenditures for long-lived assets
Merchant
11,348
12,986
2,846
Consumer
1,317
3,170
1,712
Subtotal: Operating segments
 
12,665
16,156
4,558
Group costs
-
-
-
Total
 
$
12,665
$
16,156
$
4,558
(1)
 
Segment
 
Adjusted
 
EBITDA
 
for
 
Merchant
 
includes
 
retrenchment
 
costs
 
of
 
$
0.3
 
million
 
(ZAR
4.9
 
million)
 
and
 
Consumer
 
includes
retrenchment costs of $
0.2
 
million (ZAR
3.5
 
million) for the year ended June 30, 2024; and
(2) Consumer Segment Adjusted EBITDA for the year ended June 30, 2022, includes reorganization costs of $
5.9
 
million (refer also Note 1).
 
 
 
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-75
21.
 
OPERATING SEGMENTS
 
(continued)
The segment
 
information as
 
reviewed by
 
the chief
 
operating decision
 
maker does
 
not include
 
a measure
 
of segment
 
assets per
segment as all of
 
the significant assets are
 
used in the operations
 
of all, rather than
 
any one, of the
 
segments. The Company does
 
not
have dedicated assets
 
assigned to a
 
particular operating segment.
 
Accordingly,
 
it is not meaningful
 
to attempt an arbitrary
 
allocation
and segment asset allocation is therefore not presented.
Long-lived assets based on their geographic location as of June 30, 2024,
 
2023 and 2022, are presented in the table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-lived assets
2024
2023
2022
South Africa
$
286,700
$
300,104
$
359,725
India - Investment in MobiKwik (Note 9)
76,297
76,297
76,297
Rest of world
2,548
2,197
2,811
Total
$
365,545
$
378,598
$
438,833
22.
 
COMMITMENTS AND CONTINGENCIES
Capital commitments
As
 
of
 
June
 
30,
 
2024
 
and
 
2023,
 
the
 
Company
 
had
 
outstanding
 
capital
 
commitments
 
of
 
approximately
 
$
0.3
 
million
 
and
 
$
0.1
million, respectively.
 
Purchase obligations
As of June 30,
 
2024 and 2023, the
 
Company had purchase
 
obligations totaling $
2.5
 
million and $
3.0
 
million, respectively.
 
The
purchase
 
obligations
 
as
 
of
 
June
 
30,
 
2024,
 
primarily
 
relate
 
to
 
POS
 
devices,
 
components
 
for
 
safe
 
assets
 
and
 
inventory
 
that
 
will
 
be
delivered to the Company and sold to customers in fiscal 2025.
Guarantees
The South African
 
Revenue Service and
 
certain of the
 
Company’s customers,
 
suppliers and other
 
business partners have
 
asked
the Company
 
to provide
 
them with
 
guarantees, including
 
standby letters
 
of credit,
 
issued by
 
South African
 
banks. The
 
Company is
required to procure these guarantees for these third parties to operate
 
its business.
Nedbank has
 
issued guarantees
 
to these
 
third parties
 
amounting to
 
ZAR
2.1
 
million ($
0.1
 
million, translated
 
at exchange
 
rates
applicable
 
as
 
of
 
June
 
30,
 
2024)
 
thereby
 
utilizing
 
part
 
of
 
the
 
Company’s
 
short-term
 
facilities.
 
The
 
Company
 
pays
 
commission
 
of
between
0.47
% per annum to
1.84
% per annum of the face
 
value of these guarantees and does
 
not recover any of the commission
 
from
third parties.
RMB has
 
issued
 
guarantees
 
to
 
these
 
third
 
parties
 
amounting
 
to
 
ZAR
33.1
 
million
 
($
1.8
 
million,
 
translated
 
at
 
exchange
 
rates
applicable as of June 30, 2024) thereby utilizing part of the Company’s
 
short-term facilities.
The Company has not recognized any obligation related to
 
these guarantees in its consolidated balance sheet as of
 
June 30, 2024.
The maximum potential
 
amount that the Company
 
could pay under
 
these guarantees is ZAR
35.2
 
million ($
1.9
 
million, translated at
exchange rates applicable
 
as of June 30, 2024).
 
As discussed in Note
 
12, the Company
 
has ceded and pledged
 
certain bank accounts
to Nedbank
 
as security
 
for these
 
guarantees
 
with an
 
aggregate value
 
of ZAR
2.1
 
million ($
0.1
 
million translated
 
at exchange
 
rates
applicable as
 
of June
 
30, 2024).
 
The guarantees
 
have reduced
 
the amount
 
available under
 
its indirect
 
and derivative
 
facilities in
 
the
Company’s short-term credit facility described
 
in Note 12.
Contingencies
The
 
Company
 
is
 
subject
 
to
 
a
 
variety
 
of
 
insignificant
 
claims
 
and
 
suits
 
that
 
arise
 
from
 
time
 
to
 
time
 
in
 
the
 
ordinary
 
course
 
of
business. Management
 
currently believes
 
that the
 
resolution of
 
these other
 
matters, individually
 
or in
 
the aggregate,
 
will not
 
have a
material adverse impact on the Company’s
 
financial position, results of operations or cash flows.
LESAKA TECHNOLOGIES, INC.
Notes to the consolidated financial statements
for the years ended June 30, 2024 and 2023 and 2022
(All amounts stated in thousands of United States Dollars, unless otherwise stated)
F-76
23.
 
RELATED PARTY
 
TRANSACTIONS
VCP Agreement
On March
 
22, 2022, Lesaka
 
and Lesaka SA
 
entered into
 
a Securities Purchase
 
Agreement (the
 
“VCP Agreement”)
 
with Value
Capital Partners Proprietary Limited (“VCP”) , a
 
significant shareholder,
 
whereby VCP will procure that one or more funds under
 
its
management (the “Purchasing Funds”)
 
will subscribe for, and
 
Lesaka will have
 
the obligation to
 
issue and sell
 
to the Purchasing
 
Funds,
ZAR
350.0
 
million of common stock of Lesaka
 
if (i) an event of default occurs under
 
Facility G or Facility H, (ii) Lesaka SA
 
fails to
pay all outstanding
 
amounts in respect
 
of Facility H
 
on the maturity
 
date of such
 
facility, or
 
(iii) the market
 
capitalization
 
of Lesaka
on the
 
Nasdaq Capital
 
Market (based
 
on the
 
closing price
 
on such
 
exchange) falls
 
and remains
 
below the
 
U.S. dollar
 
equivalent of
ZAR
2.6
 
billion on more than one day. The VCP Agreement contains
 
customary representations and warranties from Lesaka and VCP
and covenants from Lesaka and Lesaka SA. In connection
 
with the VCP Agreement, Lesaka SA agreed to
 
pay VCP a commitment fee
in an amount equal to ZAR
5.25
 
million.
 
On March 16, 2023, VCP,
 
Lesaka and Lesaka SA, entered into an agreement (the “VCP Amendment Agreement”) to amend the
maturity date under
 
the agreement with
 
VCP to December
 
31, 2025, in
 
order to align
 
such date with the
 
maturity date of
 
Facility H.
In connection with the VCP Amendment Agreement, Lesaka
 
SA agreed to pay VCP
 
an additional commitment fee in an
 
amount equal
to ZAR
8.9
 
million, which is
 
calculated as
1
% per annum
 
of the support
 
provided over the period
 
of the extension,
 
as a result of
 
the
amendment to the maturity date.
Additionally,
 
Lesaka, Lesaka SA
 
and VCP entered
 
into a Step-In
 
Rights Letter on
 
March 22, 2022
 
with RMB, which
 
provides
RMB with step
 
in rights to
 
perform the obligations
 
or enforce the
 
rights of Lesaka
 
and Lesaka SA
 
under the VCP
 
Agreement to the
extent that Lesaka and Lesaka SA fail to do so and do not remedy such failure within
 
two business days of notice of such failure.
*****************************
EX-14 14 ex14.htm EX-14 ex14
Exhibit 14
LESAKA TECHNOLOGIES,
 
INC.
CODE OF ETHICS.
 
 
 
CONTENTS
 
 
 
 
 
 
 
 
 
 
1.
 
EXECUTIVE SUMMARY
1.1.
 
INTRODUCTION
Lesaka Technologies,
 
Inc. and its
 
subsidiaries (hereinafter referred
 
to as “Lesaka”)
 
are committed to
 
a policy of
 
fairness
and
 
integrity
 
in
 
the
 
conducting
 
of
 
their
 
businesses.
 
This
 
commitment,
 
endorsed
 
by
 
the
 
Board
 
of
 
Directors
 
of
 
Lesaka
(hereinafter
 
referred
 
to
 
as
 
the
 
“Board”),
 
is
 
based
 
on
 
the
 
fundamental
 
belief
 
that
 
business
 
should
 
be
 
conducted
 
to
 
the
highest ethical standards of honesty,
 
fairness and legality.
 
Lesaka’s Value
 
Statement
An insurgent
 
entrepreneurial
 
spirit is
 
at our
 
core. It
 
drives our
 
innovative thinking
 
and relentless
search
 
for
 
disruptive
 
solutions.
 
It
 
is
 
a
 
spirit
 
that
 
is
 
carried
 
with
 
a
 
bone-deep
 
integrity,
 
a
 
non-
negotiable commitment to doing the right thing and always
 
doing what we say we will do.
 
This is the
 
bedrock of our
 
environment where we
 
relish open and
 
safe debate, embracing
 
all ideas,
recognising that our
 
collective wisdom will
 
find the answers
 
and allow the best
 
ideas to succeed.
Our environment is
 
driven by a
 
belief in
 
shared ownership, based
 
on a
 
commitment to performance
and accountability,
 
and an energised bias to action.
 
These are
 
our values
 
that underpin
 
our mission
 
to enable
 
Merchants to
 
compete and
 
grow,
 
and
Grant Beneficiaries to improve
 
their lives, by providing
 
innovative financial technology and
 
value-
creating solutions.
This Code
 
of Ethics
 
(hereinafter referred
 
to as
 
this “Code”)
 
is Lesaka’s
 
promise
 
that our
 
Values
 
Statement
 
and ethical
standards will form the basis for all endeavours of Lesaka. Lesaka has established this Code as part of its overall policies
and procedures. To
 
the extent that other Lesaka policies and procedures
 
conflict with this Code, this Code will prevail.
 
This Code will apply equally to all employees and other representatives of Lesaka. The term “Employees”
 
has been used
in the broadest sense and includes:
 
●
 
All staff with whom a service contract exists;
 
●
 
Management and non-management;
 
●
 
Directors including non-executive Directors;
 
and
 
●
 
Contractors, consultants and temporary staff.
 
This Code
 
is designed
 
to inform
 
Employees of
 
policies in
 
various areas.
 
Therefore, Lesaka
 
expects all
 
Employees and
other representatives to share its commitment to high
 
moral, ethical and legal standards.
 
The most current
 
version of
 
this Code will
 
be distributed
 
to all
 
Employees, posted
 
and maintained
 
on Lesaka’s
 
website,
and filed as an exhibit to
 
Lesaka’s Annual Report on Form 10-K. Lesaka’s Annual Report on Form 10-K
 
shall disclose that
this Code is maintained on its website and shall
 
disclose that substantive amendments and waivers will also be posted on
Lesaka’s website.
Please study this Code carefully so that you understand Lesaka’s expectations and contravention of this Code, such Employee must promptly and confidentially advise their line manager, the Head of Human
your obligations.
 
 
2.
 
COMPLIANCE, WAIVERS OR AMENDMENTS
2.1.
 
COMPLIANCE WITH THIS CODE
Compliance
 
with
 
this
 
Code
 
by
 
all
 
Employees
 
is
 
mandatory.
 
If
 
any
 
Employee
 
becomes
 
aware
 
of,
 
or
 
suspects,
 
a
Capital or a member of the Compliance Department (provided
 
such person was not involved in the alleged violation).
 
Lesaka’s efforts to ensure observance of, and adherence
 
to, the goals and policies
 
outlined in this Code mandate that
 
you
must promptly
 
bring to
 
the attention
 
of your
 
line manager, the
 
Head of
 
Human
 
Capital or
 
a member
 
of the
 
Risk, Compliance
or
 
Fraud
 
Risk
 
Departments
 
(provided
 
such
 
person
 
was
 
not
 
involved
 
in
 
the
 
alleged
 
violation)
 
any
 
material
 
transaction,
relationship, act, failure to act, occurrence or practice that you believe, in good faith, is inconsistent with, in violation of, or
reasonably could be expected to give rise to a violation of,
 
this Code. In the event that an Employee feels unable to report
such
 
matters
 
via
 
the
 
aforementioned
 
channels,
 
then
 
the
 
Lesaka
 
Whistleblowing
 
Hotline
 
is
 
available
 
for
 
safe
 
and
anonymous reporting of any potential breaches of this
 
policy.
The matter will be investigated and dealt with according to the Lesaka’s Whistleblowing Policy. Failure to report violations
of this Code will itself be considered a serious violation
 
of this Code.
 
It is Lesaka’s policy that no retaliation or other adverse action will be taken against any Employee for
 
good-faith reports of
Code violations.
 
Persons who
 
discriminate, retaliate or
 
harass may
 
be subject
 
to civil,
 
criminal and
 
administrative penalties,
as well as disciplinary action, up to and including termination
 
of employment for cause.
 
Managers set
 
an example
 
for other Employees
 
and are
 
often responsible for
 
directing the actions
 
of others.
 
Every manager
and supervisor is expected to
 
take necessary actions to ensure
 
compliance with this Code, to
 
provide guidance and assist
Employees
 
in
 
resolving
 
questions
 
concerning
 
this
 
Code
 
and
 
to
 
permit
 
Employees
 
to
 
express
 
any
 
concerns
 
regarding
compliance with this Code.
No one has the authority to order another Employee to
 
act in a manner that is contrary to this Code.
2.2.
 
WAIVERS OF OR AMENDMENTS TO THIS CODE
 
Any waivers of or amendments to this Code must be
 
in writing and must be approved in advance by the Board.
 
Waivers and amendments, and the reason therefore, shall be disclosed as required under applicable law
 
and regulations.
If Employees are in
 
doubt about the application
 
of this Code, they
 
should discuss the
 
matter with their
 
line manager,
 
the
Head of Human Capital,
 
or the Compliance Department.
 
 
3.
 
COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Employees must comply with all
 
applicable laws, rules and regulations
 
which relate to their activities
 
for and on behalf of
Lesaka. Lesaka
 
will not
 
tolerate any
 
violation
 
of the
 
law or
 
unethical business
 
dealing by
 
any Employee,
 
including any
payment for, or other participation
 
in, an illegal act, such as bribery.
 
Lesaka is committed
 
to full
 
compliance with
 
the laws,
 
rules and
 
regulations of
 
the cities,
 
states and countries
 
in which it
operates. You
 
must comply with all applicable laws, rules and regulations
 
in performing your duties for Lesaka.
 
Numerous
 
federal,
 
state
 
and
 
local
 
laws,
 
rules
 
and
 
regulations
 
define
 
and
 
establish
 
obligations
 
with
 
which
 
Lesaka,
 
its
Employees
 
and
 
agents
 
must
 
comply.
 
Under
 
certain
 
circumstances,
 
local
 
country
 
law
 
may
 
establish
 
requirements
 
that
differ from this Code.
 
You
 
are
 
expected
 
to
 
comply
 
with
 
all
 
local
 
country
 
laws
 
in
 
conducting
 
Lesaka’s
 
business.
 
If
 
you
 
violate
 
these
 
laws
 
or
regulations in performing your duties for Lesaka,
 
you not only risk individual indictment, prosecution and
 
penalties, as well
as civil actions and penalties, but also subject Lesaka to
 
the same risks and penalties.
 
If you violate these laws in
 
performing duties for Lesaka, you
 
will be subjected to immediate
 
disciplinary action, including
possible termination of your employment or affiliation
 
with Lesaka.
 
Employees
 
must
 
ensure
 
that
 
their
 
conduct
 
cannot
 
be
 
interpreted
 
as
 
being
 
in
 
any
 
way
 
in
 
contravention
 
of
applicable laws, rules and regulations governing the operations
 
of
Lesaka
.
3.1.
 
FOREIGN CORRUPT PRACTICES ACT
Lesaka Employees are expressly prohibited from,
 
directly or indirectly,
 
offering payment, promising to pay,
 
or authorizing
the payment of any
 
money,
 
or offering any
 
gift or non-monetary
 
offer or benefit,
 
promising to give a
 
gift or non-monetary
offer
 
or benefit,
 
or authorizing
 
the
 
giving of
 
anything
 
of value
 
to
 
any foreign
 
and/or
 
local official
 
or any
 
foreign political
party, official
 
of any foreign political party,
 
or candidate for governmental or political office
 
for purposes of:
 
●
 
Influencing any act or decision of that foreign and/or local official, political party or candidate in his/ her/ its official
capacity;
 
●
 
Inducing that foreign and/or
 
local official, candidate
 
or political party to
 
do or omit to do
 
any act in violation of
 
the
lawful duty of that official, candidate or party,
 
or
 
●
 
Securing any improper advantage; or
 
●
 
Inducing that foreign and/or local official, candidate
 
or political party to use his/ her/ its influence with
 
local and/or
foreign
 
government
 
or
 
instrumentality
 
to
 
affect
 
or
 
influence
 
any
 
act
 
or
 
decision
 
of
 
that
 
government
 
or
instrumentality, in order to assist Lesaka or its employee in obtaining or retaining business for or with, or directing
business to, Lesaka.
 
Various
 
countries
 
also
 
have
 
laws
 
that
 
prohibit
 
commercial
 
bribery.
 
Accordingly,
 
these
 
laws
 
are
 
not
 
limited
 
in
 
scope
 
to
bribery of
 
foreign and/or local
 
officials
 
and typically
 
prohibit bribes or
 
inducements to an
 
individual or
 
business to improperly
influence decision-making.
 
As such, it
 
is Lesaka’s policy
 
that nothing
 
of value should
 
be provided to
 
any person for
 
the purpose
 
of improperly obtaining
or
 
retaining
 
business
 
or
 
otherwise
 
gaining
 
an
 
improper
 
business
 
advantage.
 
Violations
 
of
 
this
 
policy
 
are
 
taken
 
very
seriously,
 
as
 
they
 
can
 
subject
 
both
 
Lesaka
 
and
 
the
 
individual
 
to
 
criminal
 
and
 
civil
 
penalties,
 
up
 
to
 
and
 
including
imprisonment. Therefore,
 
any contravention of such laws and regulations will
 
result in disciplinary action as detailed in the
Code of Conduct.
3.2.
 
COPYRIGHTED OR LICENSED MATERIAL
 
It is both illegal and unethical to engage in practices that violate
 
copyright laws or licensing agreements.
 
Lesaka requires
 
that all
 
employees respect
 
the rights
 
conferred by
 
such laws
 
and agreements
 
and refrain
 
from making
unauthorized copies of protected
 
materials, including but
 
not limited to printed
 
matter, musical
 
recordings, and computer
software.
 
Any Employee who is found to have violated copyright
 
laws will be subject to a disciplinary action.
3.3.
 
COMPETITIVE RELATIONSHIPS
 
It is unethical
 
and unlawful to
 
collaborate with competitors or
 
their agents or
 
representatives for the purpose
 
of establishing
or maintaining rates or prices at any particular level, or
 
to collaborate in any way in the restraint of trade.
It is prohibited and unlawful
 
to collaborate or collude with competitors
 
that are in a horizontal relationship
 
with Lesaka for
the purposes of substantially preventing or lessening competition in a market. Any Employee of Lesaka who is found to Employees are expected to perform their duties conscientiously, honestly and in accordance with the best interests of
 
 
have
 
violated
 
the
 
Competition
 
laws
 
in
 
any
 
of
 
the
 
jurisdictions
 
in
 
which
 
Lesaka
 
operates,
 
will
 
be
 
subject
 
to
 
disciplinary
action.
4.
 
CONFLICT OF INTEREST
Lesaka to optimize business objectives.
 
Employees
 
must
 
not
 
use
 
their
 
positions,
 
or
 
knowledge
 
gained
 
through
 
their
 
employment
 
with
 
Lesaka,
 
for
 
private
 
or
personal advantage or in such a manner that a conflict or an appearance of conflict arises between Lesaka’s interest and
their personal interests.
 
A conflict could arise where
 
an Employee’s family, or a business with which an
 
Employee or his or her
 
family is associated
obtains a gain, advantage
 
or profit, or there
 
is the appearance of a
 
gain, advantage or profit,
 
by virtue of the
 
Employee’s
position with Lesaka or knowledge gained through that position.
 
Every Employee must promptly inform Lesaka of any business
 
opportunities that come to his or her attention through
 
the
use of Lesaka assets, property or information or that relate
 
to the existing or prospective business of Lesaka.
 
If
 
Employees
 
feel
 
that
 
a
 
course
 
of
 
action
 
which
 
they
 
have
 
pursued,
 
are
 
pursuing
 
or
 
are
 
contemplating
 
pursuing,
 
may
involve them in a conflict of interest situation or a perceived conflict of interest situation, they should immediately make all
the facts known to the person to whom they report and
 
the Head of Human Capital, or Compliance Department.
4.1.
 
OUTSIDE ACTIVITIES, EMPLOYMENT AND
 
DIRECTORSHIP
We
 
all
 
share
 
a
 
very
 
real
 
responsibility
 
to
 
contribute
 
to
 
our
 
local
 
communities,
 
and
 
Lesaka
 
encourages
 
Employees
 
to
participate in religious, charitable, educational and civic activities.
 
Employees should,
 
however,
 
avoid acquiring
 
any business
 
interest or
 
participating in
 
any activity
 
outside Lesaka
 
which
would create, or appear to create:
 
●
 
An excessive demand
 
upon their time,
 
attention and
 
energy which would
 
deprive Lesaka
 
of their best
 
efforts on
the job; or
 
●
 
A conflict of interest - that is, an obligation, interest
 
or distraction which would interfere or appear to
 
interfere with
their independent exercise of judgment in Lesaka’s
 
best interest.
 
Employees other than
 
outside directors may not
 
take up outside
 
employment without the
 
prior written approval of
 
the Head
of Human Capital.
Employees who hold, or have been invited to hold, outside directorships should take particular care to ensure compliance
with
 
all
 
provisions
 
of
 
this
 
Code.
 
When
 
outside
 
business
 
directorships
 
are
 
being
 
considered
 
by
 
Employees
 
other
 
than
outside directors, prior written approval must be
 
obtained from the Chief Executive Officer of Lesaka
 
or Executive Director
responsible for the division.
 
4.2.
 
RELATIONSHIPS WITH CLIENTS, CUSTOMERS AND SUPPLIERS
Lesaka recognizes
 
that relationships
 
with clients,
 
customers and
 
suppliers give
 
rise to
 
many potential
 
situations where
conflicts of interest, real or perceived, may arise.
 
Employees should
 
ensure that
 
they are
 
independent, and
 
are seen
 
to be
 
independent, from
 
any business
 
organization
having
 
a
 
contractual
 
relationship
 
with
 
Lesaka
 
or
 
providing
 
goods
 
or
 
services
 
to
 
Lesaka,
 
if
 
such
 
a
 
relationship
 
might
influence or create the impression of influencing their decisions
 
in the performance of their duties on behalf of Lesaka.
 
In such
 
circumstances,
 
Employees
 
should not
 
invest in,
 
or acquire
 
a financial
 
interest, directly
 
or indirectly,
 
in such
 
an
organization.
4.3.
 
GIFTS, HOSPITALITY AND FAVOURS
Conflicts
 
of interest
 
can arise
 
where Employees
 
are offered
 
gifts,
 
hospitality
 
or other
 
favours
 
which
 
might,
 
or could
 
be
perceived to, influence their judgment in relation to business
 
transactions such as the placing of orders and contracts.
An Employee should not accept gifts, hospitality or other favours from suppliers
 
of goods or services to Lesaka. However,
the acceptance of the following would not be considered contrary
 
to such policy:
●
 
Promotional matter of limited commercial value;
●
 
Occasional business entertaining such as lunches, cocktail
 
parties or dinners; and
●
 
Occasional personal hospitality such as tickets to sporting
 
events or theatres.
Any bribe or attempted bribe must be reported to the Employee’s line manager as soon as possible. It is the intention that
dealings with any supplier that offers bribes will
 
be terminated.
Certain
 
functions
 
or
 
operating
 
areas
 
may
 
have
 
more
 
detailed
 
rules
 
governing
 
the
 
receipt
 
of
 
gifts,
 
hospitality
 
or
 
other
favours.
In addition,
 
no
 
bribes
 
of
 
any
 
kind should
 
be
 
made
 
by any
 
Lesaka
 
Employee
 
to
 
any
 
customer
 
or
 
potential
 
customer
 
to
secure business.
Providing the occasional gifts to customers, as set out
 
below, would not be considered
 
contrary to such a policy:
●
 
Advertising matter of limited commercial value;
●
 
Occasional business entertaining such as lunches, cocktail
 
parties or dinners; and
●
 
Occasional personal hospitality such as tickets to sporting
 
events or theatres.
Employees of the Lesaka Group may accept gifts from Third Parties (other than Government Officials) that are of modest
value ($100 USD or less), provided the gift and entertainment
 
guidelines stated in the Gifts and Entertainment policy,
 
are
satisfied.
 
4.4.
 
PERSONAL INVESTMENTS
 
Lesaka
 
respects
 
the
 
right
 
of
 
all
 
Employees
 
to
 
make
 
personal
 
investment
 
decisions
 
as
 
they
 
see
 
fit,
 
as
 
long
 
as
 
these
decisions
 
do
 
not
 
contravene
 
any
 
provisions
 
of
 
this
 
Code,
 
any
 
applicable
 
legislation,
 
or
 
any
 
policies
 
or
 
procedures
established by the various operating areas of Lesaka, and provided these decisions
 
are not made on the basis of
 
material
non-public information acquired by reason of an Employee’s
 
connection with Lesaka.
Employees should not permit
 
their personal investment
 
transactions to have
 
priority over transactions
 
for Lesaka and
 
its
clients.
When considering
 
the application
 
of this
 
section, Employees
 
should ensure
 
that no
 
investment decision
 
made for
 
their
own account could reasonably be expected to adversely influence
 
their judgment or decisions in the performance of their
duties on behalf of Lesaka.
Employees involved in performing investment activities on behalf of Lesaka and those who by the nature of their duties or
positions are exposed to
 
price-sensitive information relating
 
to Lesaka are subject
 
to additional rules governing
 
personal
investments. These may be imposed
 
by the Companies Act, the
 
Stock Exchange of Johannesburg,
 
Banks Act, Financial
Sector Conduct
 
Authority,
 
Securities Regulation
 
Panel,
 
the Securities
 
and Exchange
 
Commission, NASDAQ
 
and other
regulatory bodies, industry associations and management.
The rules include requirements for all Employees to:
●
 
Obtain
 
prior
 
written
 
approval
 
from
 
their
 
line
 
manager
 
and
 
the
 
Compliance
 
Officer
 
for,
 
and
 
to
 
report
 
on,
 
their
personal investment activity
 
and the
 
investment activity of
 
those persons
 
with whom they
 
have a
 
close relationship;
and
●
 
Refrain from
 
dealing in
 
the shares
 
of entities
 
that Lesaka
 
deals with
 
during certain
 
restricted/closed periods,
 
as
well as Lesaka subsidiaries and associates.
 
4.5.
 
INSIDER INFORMATION AND INSIDER TRADING
Employees may
 
receive
 
information concerning
 
Lesaka or
 
one of
 
its affiliates,
 
business partners,
 
clients,
 
or customers
that is
 
confidential and not
 
generally known by
 
the public. If
 
that information is
 
“material” (i.e., publication
 
of that information
is likely
 
to affect
 
the market
 
price of
 
the stock
 
of the
 
entity to
 
which the
 
information relates),
 
then the
 
Employee has
 
an
ethical and legal obligation not to:
 
●
 
Act on that information (i.e., buy or sell stock based on
 
that information);
 
●
 
Disclose that information to others; or
 
●
 
Advise others to buy
 
or sell the stock
 
of the entity to
 
which that information relates, until
 
such information becomes
public.
 
An
 
Employee’s
 
direct
 
or
 
indirect
 
use
 
of
 
or
 
sharing
 
of
 
such
 
confidential,
 
privileged,
 
or
 
otherwise
 
proprietary
 
business
information of Lesaka or its partners, clients, or customers for financial gain, including investment by the Employee
 
or the
transmission of this
 
information to others
 
so that they
 
can use this
 
information for
 
their financial gain,
 
constitutes insider
trading, which is a criminal offense. Please refer to
 
Lesaka’s Insider Trading
 
Policy for more information.
 
4.6.
 
REMUNERATION
 
 
 
 
 
No Employee
 
may receive
 
commissions
 
or other
 
remuneration
 
related
 
to the
 
sale of
 
any product
 
or service
 
of Lesaka
except
 
as
 
specifically
 
provided
 
under
 
an
 
individual’s
 
terms
 
of
 
employment
 
or
 
as
 
specifically
 
agreed
 
with
 
the
 
Lesaka
CEO/Group CFO or relevant Executive.
 
No employee,
 
director or any committee member of
 
Lesaka shall receive any compensation
 
not permitted by the rules of
the Securities and
 
Exchange Commission (hereinafter
 
referred to as
 
the “SEC”), The
 
NASDAQ Stock Market,
 
and other
applicable law.
 
Employees may
 
not receive
 
any money
 
or anything
 
of value
 
(other than
 
Lesaka’s regular remuneration
 
or other
 
incentives),
either directly
 
or indirectly, for negotiating,
 
procuring, recommending or
 
aiding in
 
any transaction made
 
on behalf
 
of Lesaka,
nor have any direct or indirect financial interest in such a transaction.
5.
 
EMPLOYMENT EQUITY, ENVIRONMENTAL
 
RESPONSIBILITY AND POLITICAL SUPPORT
5.1.
 
EMPLOYMENT EQUITY
 
Lesaka
 
supports
 
employment
 
equity
 
in
 
the
 
workplace
 
and
 
seeks
 
to
 
identify,
 
develop
 
and
 
reward
 
each
 
employee
 
who
demonstrates
 
the
 
qualities
 
of
 
individual
 
initiative,
 
enterprise,
 
hard
 
work
 
and
 
loyalty
 
in
 
their
 
job.
 
Lesaka
 
supports
 
and
complies with the Basic Conditions of Employment Act and the
 
Employment Equity Act.
 
All employees have the right to work in an environment which is free from any form of discrimination, directly or indirectly,
on any arbitrary
 
ground, including,
 
but not limited
 
to race, gender,
 
sex, ethnic or
 
social origin, colour,
 
sexual orientation,
age, disability, religion,
 
conscience, belief, political opinion, culture,
 
language, marital status or family responsibility.
 
Employees should
 
report any
 
cases of
 
actual or
 
suspected discrimination
 
to their
 
line managers
 
or the
 
Head of
 
Human
Capital.
 
Employees
 
with
 
illnesses
 
or
 
disabilities
 
may
 
continue
 
to
 
work,
 
provided
 
that
 
they
 
are
 
able
 
to
 
continue
 
to
 
perform
satisfactorily the essential duties of their jobs and do not
 
present a safety or health hazard to themselves or
 
others.
5.2.
 
HEALTH AND SAFETY
 
Lesaka is committed to taking every reasonable precaution
 
to ensure a safe work environment for all employees.
 
Employees who become aware
 
of circumstances relating to
 
Lesaka’s operations or activities
 
which pose a
 
real or potential
health or safety
 
risk should
 
report the
 
matter to
 
their line manager
 
and the Head
 
of Human
 
Capital.
 
It is Lesaka’s
 
policy
that no retaliation or other adverse action will be taken
 
against any employee for good-faith reports.
 
5.3.
 
ENVIRONMENTAL MANAGEMENT
 
Lesaka is
 
committed
 
to
 
developing
 
operating
 
policies to
 
address
 
the
 
environmental
 
impact
 
of
 
its business
 
activities
 
by
integrating pollution control, waste management and rehabilitation activities into operating procedures. Employees should
give appropriate
 
and timely attention to environmental issues.
 
5.4.
 
POLITICAL SUPPORT
 
Lesaka accepts
 
the personal
 
participation
 
of its
 
Employees
 
in the
 
political process
 
and respects
 
their right
 
to absolute
privacy with regard to personal political activity.
 
Lesaka will not attempt to influence any such activity provided there is
 
no
disruption to workplace activities, and it does not contribute
 
to industrial unrest.
 
Lesaka funds, goods or services, however,
 
may not be used as contributions to political parties or their
 
candidates.
 
6.
 
LESAKA’S FUNDS, PROPERTY AND RECORDS
 
6.1.
 
FUNDS AND PROPERTY
 
Lesaka has developed a number of internal controls to safeguard its assets and imposes strict standards to prevent fraud
and dishonesty. It
 
is every Employee’s responsibility to implement, maintain
 
and enhance the effectiveness of the control
environment in which they operate.
 
All Employees who
 
have access to
 
Lesaka’s funds in
 
any form must
 
at all
 
times follow prescribed
 
procedures for recording,
handling and protecting such funds.
Operating
 
areas
 
may
 
implement
 
policies
 
and
 
procedures
 
relating
 
to
 
the
 
safeguarding
 
of
 
Lesaka
 
property,
 
including
computer software and intellectual property.
 
 
 
 
 
Employees
 
must
 
at
 
all
 
times
 
ensure
 
that
 
Lesaka’s
 
funds
 
and
 
property
 
are
 
used
 
only
 
for
 
legitimate
 
Lesaka
 
business
purposes. Where an
 
Employee requires Lesaka
 
funds to be
 
spent, it is
 
the Employee’s responsibility to
 
use good judgment
on Lesaka’s behalf and to ensure that appropriate
 
value and authorization is received for such expenditure.
 
All payments
 
made by
 
or on
 
behalf of
 
Lesaka for
 
any purpose
 
must be
 
fully and
 
accurately described
 
in the
 
documents
and records supporting the payment. No false, improper,
 
or misleading entries shall be made in the books and records of
Lesaka.
 
Complete and
 
accurate information
 
is to
 
be given
 
in response
 
to inquiries
 
from Lesaka’s
 
Compliance Department
 
and,
independent auditors.
 
If Employees become
 
aware of any
 
evidence that Lesaka
 
funds or property
 
may have been
 
or are likely
 
to be used
 
in a
fraudulent or improper manner they
 
should immediately and confidentially advise Lesaka
 
as set out in
 
the compliance with
this Code section of this document.
 
It is Lesaka’s policy that no retaliation or other adverse
 
action will be taken against any employee for good-faith
 
reports.
 
6.2.
 
RECORDS
 
Accurate and reliable
 
records of many
 
kinds are necessary to
 
meet Lesaka’s legal and
 
financial obligations and to
 
manage
the
 
affairs
 
of
 
Lesaka.
 
Lesaka’s
 
books
 
and
 
records
 
should
 
reflect
 
all
 
business
 
transactions
 
in
 
an
 
accurate
 
and
 
timely
manner.
 
Undisclosed or unrecorded revenues,
 
expenses, assets or liabilities
 
are not permissible, and the
 
Employees responsible
for accounting and record-keeping functions are expected
 
to be diligent in enforcing proper practices.
7.
 
EMPLOYMENT MATTERS
 
7.1.
 
SUPERVISION OF RELATIVES AND OTHERS
 
Close relatives
 
and domestic
 
partners shall
 
not work
 
directly or
 
indirectly under
 
the supervision
 
of one
 
another without
prior written approval from the Head of Human Capital.
 
The aforementioned may be allowed on an exceptional basis.
 
●
 
“Close relative” means, but is not limited to, a spouse, sister,
 
brother, sister-in-law,
 
brother-in-law, father,
 
mother,
father-in-law, mother-in-law,
 
step-parent, aunt, uncle, first cousin, child, step-child,
 
foster child, or grandparent.
 
●
 
“Domestic partner” means, but is not limited to, husband, wife, or a person the
 
employee currently resides with in
an intimate, romantic or sexual relationship.
 
If such a situation should arise, it should be immediately
 
brought to the attention of a direct manager of Human
 
Capital.
 
Lesaka
 
also
 
requires
 
that
 
employees
 
disclose
 
to
 
Human
 
Capital
 
the
 
existence
 
of
 
an
 
intimate,
 
romantic
 
or
 
sexual
relationship
 
between
 
employees
 
where
 
there
 
exists
 
a
 
direct
 
chain
 
of
 
command
 
and/
 
or
 
supervisor/
 
subordinate
relationship. Decisions concerning such employees will be made
 
on a case-by-case basis by Human Capital.
 
7.2.
 
RESTRICTIONS ON FORMER GOVERNMENT
 
EMPLOYEES
 
Former U.S. Government employees or U.S. military
 
officers are generally prohibited from representing Lesaka in matters
in which the government has substantial interest and where the
 
employee had prior responsibility.
 
Retired
 
senior
 
U.S.
 
Government
 
officials
 
and
 
regular
 
military
 
officers
 
are
 
further
 
restricted
 
from
 
selling
 
to,
 
or
 
in
 
some
instances, contacting their former agency or military service.
 
The
 
duration
 
of
 
these
 
prohibitions
 
and
 
the
 
matters
 
to
 
which
 
they
 
apply
 
depend
 
on
 
the
 
type
 
of
 
previous
 
government
employment. Lesaka’s legal department should be
 
contacted to help identify which restrictions apply.
 
8.
 
DEALING WITH OUTSIDE PERSONS AND ORGANISATIONS
 
8.1.
 
PROMPT COMMUNICATIONS
 
Lesaka strives to achieve complete, accurate, fair,
 
understandable and timely communications with all parties
 
with whom
it conducts
 
business, as
 
well as
 
government authorities
 
and the
 
public. All
 
Employees must
 
take all
 
steps necessary
 
to
assist
 
Lesaka
 
in
 
fulfilling
 
these
 
disclosure
 
responsibilities.
 
In
 
addition,
 
prompt
 
and
 
effective
 
internal
 
communication
 
is
encouraged.
 
A prompt,
 
courteous and
 
accurate response
 
should be
 
made to
 
all reasonable
 
requests for
 
information and
 
other client
communications.
 
Any
 
complaints
 
should
 
be
 
dealt
 
with
 
in
 
accordance
 
with
 
internal
 
procedures
 
established
 
by
 
various
operating areas of Lesaka and applicable laws.
 
 
8.2.
 
MEDIA RELATIONS
 
In addition
 
to everyday
 
communications with
 
outside persons
 
and organizations,
 
Lesaka will,
 
on occasion,
 
be asked
 
to
express its views to the media on certain issues.
Unless
 
specifically
 
designated
 
to
 
do
 
so,
 
no
 
employee
 
may
 
provide
 
advice
 
or
 
comment
 
on/respond
 
to
customer/media/public queries or any business/product related queries as a representative
 
of the organisation/operate in
any official capacity via social or other public platforms/media
 
spaces.
Employees approached
 
by the media
 
should immediately
 
contact the department
 
or individual responsible
 
for corporate
communications.
 
An Employee, when dealing with anyone outside Lesaka,
 
including public officials, must take care not to compromise
 
the
integrity or damage the reputation of any outside individual, business,
 
or government body,
 
or that of Lesaka.
 
As
 
a
 
general
 
rule,
 
Lesaka’s
 
position
 
on
 
public
 
policy
 
or
 
industry
 
issues
 
will
 
be
 
dealt
 
with
 
by
 
the
 
Board
 
of
 
Lesaka
 
and
existing policies in this regard must be adhered to. The text of the articles for publication, public speeches and addresses
about Lesaka and its business should be reviewed
 
in advance with the individual responsible for public relations.
Employees
 
should
 
separate
 
their
 
personal
 
roles
 
from
 
Lesaka’s
 
position
 
when
 
communicating
 
on
 
matters
 
not
 
involving
Lesaka
 
business.
 
They
 
should
 
be
 
especially
 
careful
 
to
 
ensure
 
that
 
they
 
are
 
not
 
identified
 
with
 
Lesaka
 
when
 
pursuing
personal or political activities, unless this identification has
 
been specifically authorized in advance by Lesaka.
If your
 
personal social
 
media activity
 
is/can be
 
linked in
 
any way
 
or could
 
be deemed
 
related to
 
Lesaka (or
 
our related
business entities and brands), we have a legitimate
 
interest in the content being published by you.
 
This includes but is not
limited to posting any confidential or sensitive information (either as text, video, audio or image content), discriminatory or
offensive
 
comments,
 
critical
 
comments
 
about
 
Lesaka,
 
our
 
employees,
 
our
 
customers
 
or
 
competitors
 
or
 
any
 
other
information that may put Lesaka
 
and its associated brands and entities at risk.
 
9.
 
PRIVACY AND CONFIDENTIALITY
In the regular course of business, Lesaka accumulates a considerable amount of information. The following principles are
to be observed:
 
9.1.
 
OBTAINING AND SAFEGUARDING INFORMATION
 
Information necessary
 
for Lesaka’s business
 
should be
 
reliable, accurate
 
and its
 
confidentiality maintained. When
 
personal
information is
 
needed, wherever
 
possible, it should
 
be obtained directly
 
from the
 
person concerned.
 
Only reputable
 
and
reliable sources should be used to supplement this information.
 
Information should only be retained as long as it is needed or as required by law, and it is every employee’s responsibility
to ensure that such information is physically secured and protected.
 
9.2.
 
ACCESS TO INFORMATION
 
Any information
 
with respect
 
to any
 
product, plan
 
or business
 
transaction of
 
Lesaka, or
 
personal information
 
regarding
employees, including their salaries, must be kept strictly confidential (hereinafter referred to as “Confidential Information”)
and must not be disclosed or used for improper purposes by any employee unless
 
and until proper authorization for such
disclosure has been obtained.
 
Once
 
authorization
 
has
 
been
 
obtained,
 
all
 
information
 
required
 
by
 
stakeholders
 
either
 
on
 
request
 
or
 
due
 
to
 
statutory
requirements must be accurately disclosed.
 
In addition,
 
operating areas
 
may implement
 
policies and
 
procedures to
 
prevent improper
 
transmission within
 
Lesaka of
material non-public information.
 
9.3.
 
TERMINATION OF EMPLOYMENT
 
The obligation to
 
preserve the confidentiality of
 
Confidential Information acquired in
 
the course of
 
employment with Lesaka
does not end upon termination of employment. The obligation continues indefinitely until Lesaka authorizes disclosure, or
until the Confidential Information legally enters the public
 
domain.
 
Immediately upon the termination of employment for
 
any reason, or when otherwise requested
 
by Lesaka, Employees are
required to return to Lesaka all above -mentioned Confidential Information, including documents, information and other New Employees will not be assigned to work where they might be required to use or disclose trade secrets or confidential
property.
 
9.4.
 
FORMER EMPLOYMENT
 
 
 
 
 
information
 
belonging
 
to
 
their
 
former
 
employers.
 
New
 
Employees
 
should
 
not
 
take
 
away
 
from
 
their
 
former
 
place
 
of
employment any information that might be considered
 
proprietary or confidential.
10.
 
EMPLOYEE OBLIGATIONS
 
It is of paramount importance to Lesaka that all
 
disclosure in reports and documents that Lesaka
 
files with, or submits to,
the SEC, and in other public communications made by
 
Lesaka is full, fair, accurate,
 
timely and understandable.
You must take all steps available to assist Lesaka
 
in fulfilling these responsibilities consistent with
 
your role within Lesaka.
In particular,
 
you are
 
required
 
to
 
provide
 
prompt
 
and
 
accurate
 
answers to
 
all inquiries
 
made to
 
you
 
in connection
 
with
Lesaka’s preparation of its public reports and disclosure.
All Employees must perform their duties diligently,
 
effectively and efficiently,
 
and in particular:
●
 
Support and assist Lesaka to fulfil its commercial and ethical obligations
 
and objectives as set out in this Code;
●
 
Avoid any waste of resources, including time;
●
 
Be committed to improving
 
productivity, achieving
 
the maximum quality standards,
 
reducing ineffectiveness, and
avoiding unreasonable disruption of activities at work;
●
 
Commit to honouring their agreed terms and conditions
 
of employment;
●
 
Not act in any way that may jeopardize the shareholders’
 
rights to a reasonable return on investment;
●
 
Act honestly and in good faith at all times and report any
 
harmful activity they observe in the workplace;
●
 
Recognize fellow Employees’ rights to freedom of association
 
and not intimidate fellow employees;
●
 
Pay due regard to environmental, public health and safety conditions
 
in and around the workplace; and
●
 
Act within their powers and not carry on the business of
 
Lesaka recklessly.
Each Employee who
 
contributes in any
 
way to the
 
preparation or verification
 
of the Company's
 
financial statements
 
and
other financial information must:
●
 
Ensure that the Company's books, records and accounts
 
are accurately maintained;
●
 
Be familiar with
 
and comply
 
with the Company's
 
disclosure controls
 
and procedures and
 
its internal control
 
over
financial reporting; and
●
 
Take
 
all necessary
 
steps to
 
ensure that
 
all filings
 
with the
 
SEC and
 
all other
 
public communications
 
about the
financial and business condition of
 
the Company provide full,
 
fair, accurate, timely and understandable disclosure.
Each
 
Employee
 
must
 
cooperate
 
fully
 
with
 
the
 
Company's
 
accounting
 
and
 
internal
 
audit
 
departments,
 
as
 
well
 
as
 
the
Company's independent auditors and counsel.
Each employee acknowledges that Lesaka
 
shall be the owner of the
 
copyright in any work which
 
is eligible for copyright,
and which is
 
created or executed
 
by such employee,
 
whether alone or
 
with others, in
 
the course and
 
scope of employment.
All work
 
created or
 
executed by
 
the employee
 
and for
 
which copyright
 
exists shall
 
unless the
 
employee established
 
the
contrary, be deemed
 
to have been created or executed in the course
 
and scope of employment with Lesaka.
Non-compliance with the guidelines set herein, may result in
 
the institution of disciplinary action and potential dismissal
.
 
11.
 
POLICY REVIEW
 
The
 
Audit
 
Committee
 
of
 
the
 
Company
 
will
 
periodically
 
(preferably
 
annually)
 
review
 
the
 
policy
 
and
 
may
 
recommend
changes from time to time for the consideration of the
 
Board.
 
Any proposed changes to this Policy where indicated, shall be referred
 
to the Board for appropriate action.
BOARD APPROVAL RECEIVED: SEPTEMBER 2024
EX-21 15 ex21.htm EX-21 ex21
Exhibit 21
SUBSIDIARIES OF REGISTRANT
 
The
 
following
 
is
 
a
 
list
 
of
 
subsidiaries
 
of
 
the
 
Company
 
as
 
of
 
June
 
30,
 
2024,
 
omitting
 
subsidiaries
 
which,
 
considered
 
in
 
the
aggregate, would not constitute a significant subsidiary.
 
 
NAME
WHERE ORGANIZED
Cash Connect Capital Proprietary Limited
 
Republic of South Africa
Cash Connect Management Solutions (Pty) Ltd
Republic of South Africa
Cash Connect Rentals Proprietary Limited
 
Republic of South Africa
Deposit Manager Proprietary Limited
Republic of South Africa
EasyPay (Pty) Ltd
Republic of South Africa
EasyPay Cash (Pty) Ltd
 
Republic of South Africa
EasyPay Financial Services (Pty) Ltd
Republic of South Africa
EasyPay Insurance (Pty) Ltd
Republic of South Africa
K2021477132 (South Africa) Proprietary Limited
Republic of South Africa
K2020 Connect Proprietary Limited
Republic of South Africa
Kazang Prepaid Proprietary Limited
Republic of Botswana
Kazang Prepaid Namibia (Pty)
Republic of Namibia
Kwande Group (Pty) Ltd
Republic of South Africa
Main Street 1723 Proprietary Limited
Republic of South Africa
Manje Mobile Electronic Payment Services (Pty) Ltd
Republic of South Africa
Lesaka Technologies
 
(Pty) Ltd
Republic of South Africa
Net1 Finance Holdings (Pty) Ltd
Republic of South Africa
Net1 Mobile Solutions (Pty) Ltd
Republic of South Africa
Net1 Universal Electronic Technological
 
Solutions (Pty) Ltd
Republic of South Africa
Prism Holdings (Pty) Ltd
Republic of South Africa
Prism Payment Technologies
 
(Pty) Ltd
Republic of South Africa
Masterpayment GmbH
Federal Republic of Germany
 
Touchsides (Pty)
 
Ltd
Republic of South Africa
Transact24 Limited
Hong Kong Special Administrative Region of the People's DESCRIPTION OF THE REGISTRANT’S SECURITIES
Republic of China
SmartSwitch Netherlands Holdings BV
Netherlands
Net1 Applied Technologies
 
Netherlands BV
Netherlands
NUEP Holdings S.a.r.l.
Luxembourg
EX-4.2 16 ex42.htm EX-4.2 ex42
Exhibit 4.2
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
As
 
of
 
September
 
11,
 
2024,
 
Lesaka
 
Technologies,
 
Inc.
(“Lesaka”
 
or
 
the
 
“Company”)
 
had
 
one
 
class
 
of
 
securities
(“common
stock”)
registered under Section 12 of the Securities Exchange Act of 1934, as amended.
 
 
DESCRIPTION OF COMMON STOCK
 
The following
 
description of
 
the Company’s
 
common stock
 
is a
 
summary and
 
does not
 
purport to
 
be complete.
 
It is
 
subject to
 
and
qualified
 
in
 
its
 
entirety
 
by
 
reference
 
to
 
the
 
Company’s
 
Amended
 
and
 
Restated
 
Articles
 
of
 
Incorporation
(“Articles
 
of
Incorporation”)
 
and its
 
Amended
 
and Restated By-laws
(“Bylaws”)
, each of
 
which are
 
incorporated by
 
reference as
 
an exhibit
 
to
the Company’s
 
most recent
 
Annual Report
 
on Form 10-K. Lesaka
 
encourages you
 
to read
 
its Articles
 
of Incorporation,
 
Bylaws and
the applicable provisions of the Florida Business Corporation Act
 
(“FBCA”)
 
for additional information.
General
Lesaka’s Articles
 
of Incorporation currently
 
authorizes the issuance of two
 
hundred million shares of
 
its common stock, with
 
$0.001
par value.
 
Lesaka’s
 
common stock
 
is listed
 
and principally
 
traded on
 
the Nasdaq
 
Stock Exchange,
 
Global Select
 
Market, under
 
the
symbol “LSAK.” Lesaka’s common
 
stock is also listed on the Johannesburg Stock Exchange, under
 
the symbol “LSK”.
All outstanding shares of common stock are fully paid and nonassessable
Dividend rights
Holders
 
of
 
shares
 
of
 
Lesaka’s
 
common
 
stock
 
are
 
entitled
 
to
 
receive
 
dividends
 
and
 
other
 
distributions
 
when
 
declared
 
by
 
Lesaka’s
board of
 
directors out
 
of legally
 
available funds.
 
Payment of
 
dividends and
 
distributions is
 
subject to
 
certain restrictions
 
under the
FBCA, including the requirement
 
that after making any
 
distribution Lesaka must be
 
able to meet its
 
debts as they become
 
due in the
usual course of its business.
 
Voting
 
rights
Each holder of common
 
stock is entitled to one vote
 
per share for the election
 
of directors and for all other
 
matters to be voted on
 
by
shareholders. Holders of common stock may not cumulate their votes in the election
 
of directors.
Liquidation and other rights
Upon voluntary or
 
involuntary liquidation, dissolution
 
or winding up
 
of Lesaka, holders of
 
common stock share
 
ratably in the assets
remaining
 
after payments
 
to creditors
 
and
 
provision
 
for the
 
preference
 
of any
 
preferred stock
 
according
 
to its
 
terms.
 
There
 
are no
pre-emptive
 
or
 
other
 
subscription
 
rights,
 
conversion
 
rights
 
or
 
redemption
 
or
 
scheduled
 
installment
 
payment
 
provisions
 
relating
 
to
shares of common stock. The shares of Lesaka common stock are
 
not subject to redemption.
Transfer Agent
The Company’s
 
transfer agent in the
 
United States is Computershare
 
Shareowner Services LLC,
 
480 Washington
 
Blvd, Jersey City,
New Jersey, 07310, and
 
the Company’s transfer agent in
 
South Africa is JSE Investor Services South Africa (Pty) Ltd.
EX-10.4 17 ex104.htm EX-10.4 ex104
 
 
 
 
 
 
 
 
INDEMNIFICATION AGREEMENT
This Indemnification Agreement
 
(this “Agreement”) is
 
made as of [
 
], by and between
 
Lesaka Technologies,
 
Inc., a Florida
corporation
 
(the
 
“Corporation”),
 
and
 
[
 
]
 
(“Indemnitee”).
 
Capitalized
 
terms
 
used,
 
but
 
not
 
otherwise
 
defined
 
herein,
 
shall
 
have
 
the
meanings set forth in Section 1.
RECITALS
A.
Highly competent and
 
qualified persons have
 
become more reluctant
 
to serve corporations
 
as directors, officers
 
or
in other capacities unless they are provided with adequate protection
 
through insurance coverage or adequate indemnification against
risks of claims and actions against them arising out of their service to and activities
 
on behalf of the corporation.
B.
The Board of Directors
 
of the Corporation (the
 
“Board”) has determined that,
 
in order to
 
attract and retain competent
and qualified individuals,
 
the Corporation will
 
seek to maintain
 
on an ongoing
 
basis, at its
 
sole expense, directors’
 
and officers’ liability
insurance to protect persons serving the Corporation and its subsidiaries from certain liabilities. However, as a result of changes in
 
the
marketplace for insurance it has become increasingly difficult
 
to obtain directors’ and officers’ liability insurance
 
on terms providing
reasonable
 
protection at
 
reasonable cost.
 
The uncertainties
 
relating to
 
directors’ and
 
officers’
 
liability insurance
 
have increased
 
the
difficulty of attracting and retaining such persons.
C.
The Board has determined that the potential inability to attract and retain highly competent and qualified persons to
serve the Corporation would
 
be detrimental to the
 
best interests of
 
the Corporation and its
 
shareholders and that the
 
Corporation should
act to assure such persons that there will be increased certainty of adequate protection against risks of claims and actions against them
arising out of their service to and activities on behalf of the Corporation in the future.
D.
The Board has determined that
 
it is reasonable, prudent
 
and necessary for the Corporation to
 
contractually obligate
itself to indemnify,
 
and to advance
 
expenses on behalf
 
of, such persons
 
to the fullest extent
 
permitted by applicable
 
law so that they
will serve or continue to serve the Corporation free from undue concern
 
that they will not be so indemnified.
E.
Indemnitee has
 
agreed to
 
serve the
 
Corporation in
 
an officer
 
and/or director
 
capacity provided
 
that Indemnitee
 
is
provided
 
the
 
protections
 
available
 
under
 
this
 
Agreement,
 
the
 
Corporation’s
 
Amended
 
and
 
Restated
 
Articles
 
of
 
Incorporation
 
(as
amended
 
and
 
restated
 
from
 
time
 
to
 
time,
 
the
 
“Articles
 
of
 
Incorporation”),
 
the
 
Corporation’s
 
Amended
 
and
 
Restated
 
Bylaws
 
(as
amended and restated from time to time, the “Bylaws”) and directors’ and officers’ liability insurance coverage that is adequate in the
present circumstances.
F.
This Agreement is a supplement
 
to and in furtherance of any
 
protections provided by the Articles of
 
Incorporation,
the Bylaws
 
and any
 
resolutions adopted
 
pursuant thereto,
 
and shall
 
not be deemed
 
a substitute
 
therefor,
 
nor to diminish
 
or abrogate
any
 
rights
 
of
 
Indemnitee
 
thereunder.
 
In
 
addition,
 
Indemnitee
 
will
 
be
 
entitled
 
to
 
indemnification
 
pursuant
 
to
 
the
 
Florida
 
Business
Corporation Act.
NOW THEREFORE, in consideration of the foregoing and the covenants, promises and representations set forth herein, and
for other good
 
and valuable consideration,
 
including Indemnitee’s
 
agreement to serve
 
as a director
 
and/or officer of
 
the Corporation
after the date hereof, and intending to be legally bound hereby,
 
the parties hereto agree as follows:
1.
Certain Definitions
 
for Purposes of
 
this Agreement.
 
The following
 
terms as used
 
in this Agreement
 
shall have the
meanings set forth below.
(a)
“Change in Control” shall have occurred if, during any period
 
of two consecutive years, individuals who at
the beginning of that
 
period constitute the Board
 
of the Corporation cease
 
for any reason to constitute
 
at least a majority
 
of it, unless
the election of each new Director
 
was approved in advance by a
 
vote of at least a
 
majority of the Directors then still
 
in office who were
Directors at the beginning of the period.
(b)
“Corporation” includes any domestic or foreign predecessor
 
entity of the Corporation in a merger
 
or other
transaction in which the predecessor’s existence ceased on consummation
 
of the transaction.
(c)
“Director” means an
 
individual who is
 
or was a
 
director of the
 
Corporation or an
 
individual who, while
 
a
director of the Corporation, is or was serving at the Corporation’s
 
request as a director, officer,
 
partner, trustee, employee, or agent of
another foreign
 
or domestic
 
corporation, partnership,
 
limited liability
 
company,
 
joint venture,
 
trust, employee
 
benefit plan,
 
or other
entity.
 
A Director
 
is considered
 
to be
 
serving an
 
employee benefit
 
plan at
 
the Corporation’s
 
request if
 
that Director’s
 
duties
 
to the
Corporation also impose duties on, or otherwise involve services by,
 
him or her to the plan or to participants in or beneficiaries of the
plan. The term includes, unless the context otherwise requires, the estate, heirs, executors, administrators, and personal representatives “Disinterested Director” or “Disinterested Officer” means a Director or Officer, respectively, who at the
of a director.
 
Exhibit 10.4
 
 
(d)
time of a vote or selection referred to in Section 4(b) or 5(c) is not a party to the Proceeding.
(e)
“Enterprise”
 
means
 
(i)
 
the
 
Corporation,
 
(ii)
 
any
 
other
 
corporation,
 
partnership,
 
joint
 
venture,
 
trust,
employee benefit plan
 
or other enterprise that
 
is an affiliate or
 
wholly or partially owned
 
subsidiary of the Corporation
 
and of which
Indemnitee is or was serving as a
 
director, trustee, general
 
partner, managing member,
 
officer, employee, agent
 
or fiduciary,
 
and (iii)
any other corporation,
 
partnership, limited liability
 
company,
 
joint venture, trust,
 
employee benefit plan
 
or other enterprise
 
of which
Indemnitee is or was
 
serving at the express
 
written request of the
 
Corporation as a director, trustee, general
 
partner, managing member,
officer, employee, agent or
 
fiduciary.
(f)
“Expenses”
 
includes
 
all
 
reasonable
 
counsel
 
fees,
 
retainers,
 
court
 
costs,
 
transcript
 
costs,
 
fees
 
of
 
experts,
witness fees, travel
 
expenses, duplicating
 
costs, printing and
 
binding costs, telephone
 
charges, postage, delivery
 
service fees, and
 
all
other disbursements or
 
expenses of the types
 
customarily incurred in connection
 
with prosecuting, defending, preparing
 
to prosecute
or
 
defend,
 
investigating,
 
being
 
or preparing
 
to be
 
a
 
witness in,
 
or otherwise
 
participating
 
in,
 
a Proceeding,
 
including any
 
appeals.
Expenses also shall include
 
Expenses incurred in connection with
 
any appeal resulting from any
 
Proceeding, including the premium,
security for,
 
and other costs relating
 
to any cost bond,
 
supersede as bond, or
 
other appeal bond or
 
its equivalent. Expenses,
 
however,
shall not include amounts paid in settlement by Indemnitee or the amount of judgments
 
or fines against Indemnitee.
(g)
“Independent Legal Counsel” means
 
a law firm, or a member
 
of a law firm, that is
 
experienced in matters
of corporation law
 
and neither presently
 
is, nor in
 
the past five
 
years has been,
 
retained to represent:
 
(i) the Corporation,
 
(ii) Indemnitee,
(iii) any
 
affiliate of
 
the Corporation
 
or Indemnitee,
 
(iv) any
 
member of
 
Indemnitee’s
 
immediate family,
 
(v) any
 
company of
 
which
Indemnitee is an
 
executive officer,
 
in each case in
 
any matter material to
 
such party,
 
or (vi) any other
 
party to the Proceeding
 
giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
 
the term “Independent Legal Counsel” shall not include
any
 
person
 
who,
 
under
 
the
 
applicable
 
standards
 
of
 
professional
 
conduct
 
then
 
prevailing,
 
would
 
have
 
a
 
conflict
 
of
 
interest
 
in
representing either the Corporation or Indemnitee in an action to determine
 
Indemnitee’s rights under this Agreement.
(h)
“Liability”
 
includes
 
the
 
obligation
 
to
 
pay
 
a
 
judgment,
 
settlement,
 
penalty,
 
fine
 
(including
 
an
 
excise
 
tax
assessed with respect to an employee benefit plan), or reasonable Expenses
 
actually incurred with respect to a Proceeding.
(i)
“Officer” means
 
an individual who is
 
or was an officer
 
of the Corporation or
 
an individual who,
 
while an
officer of the
 
Corporation, is or was serving
 
at the Corporation’s
 
request as a director,
 
officer, partner,
 
trustee, employee, or agent
 
of
another foreign
 
or domestic
 
corporation, partnership,
 
limited liability
 
company,
 
joint venture,
 
trust, employee
 
benefit plan,
 
or other
entity.
 
An Officer
 
is considered
 
to be
 
serving
 
an employee
 
benefit
 
plan
 
at
 
the Corporation’s
 
request
 
if that
 
Officer’s
 
duties
 
to
 
the
Corporation also impose duties on, or otherwise involve services by,
 
him or her to the plan or to participants in or beneficiaries of the
plan.
 
The term includes, unless
 
the context otherwise requires,
 
the estate, heirs,
 
executors, administrators, and personal
 
representatives
of an officer.
(j)
“Proceeding”
 
includes
 
any
 
threatened,
 
pending
 
or
 
completed
 
action,
 
suit,
 
arbitration,
 
alternate
 
dispute
resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether
brought
 
by
 
or
 
in
 
the
 
right
 
of
 
the
 
Corporation
 
or
 
other
 
Enterprise
 
or
 
otherwise
 
and
 
whether
 
civil,
 
criminal,
 
administrative
 
or
investigative, in which Indemnitee
 
was, is or will be
 
involved as a party
 
or otherwise, by reason
 
of the fact that Indemnitee
 
is or was
an officer
 
or director of
 
the Corporation, by
 
reason of any
 
action taken by
 
Indemnitee or of
 
any inaction on
 
Indemnitee’s
 
part while
acting
 
as an
 
officer
 
or director
 
of the
 
Corporation,
 
or by
 
reason of
 
the fact
 
that Indemnitee
 
is or
 
was serving
 
at the
 
request
 
of the
Corporation as a director, officer, employee, agent or fiduciary of another Enterprise; in each case whether or not Indemnitee is acting
or serving in
 
any such capacity
 
at the time
 
any liability or
 
expense is incurred
 
for which indemnification
 
can be provided
 
under this
Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by Indemnitee pursuant to this
Agreement to enforce Indemnitee’s rights
 
under this Agreement.
(k)
“Reviewing
 
Party”
 
shall
 
mean
 
the
 
person
 
or
 
persons
 
making
 
the
 
entitlement
 
determination
 
pursuant
 
to
Section 5 of this Agreement, and shall not include a court making any determination
 
under this Agreement or otherwise.
2.
Basic Indemnification Arrangement.
(a)
Obligation to Indemnify;
 
Standard of Conduct. Except
 
as provided in Sections
 
2(e), 2(f), 2(g) or
 
7 below,
the Corporation shall indemnify Indemnitee and hold harmless Indemnitee,
 
to the fullest extent authorized or permitted by applicable
law, in the event Indemnitee is
 
made a party
 
to a Proceeding because
 
he or she
 
is or was
 
a Director or Officer, against Liability
 
incurred
in the Proceeding if:
(1)
Indemnitee acted in good faith;
(2)
Indemnitee acted
 
in a manner
 
he or she
 
reasonably believed to
 
be in, or
 
not opposed
 
to, the best
interests of the Corporation; and
(3)
in the case of any criminal Proceeding, Indemnitee had no reasonable cause to believe his or her Service with Respect to Employee Benefit Plan.
conduct was unlawful.
 
 
 
 
 
 
 
 
(b)
Indemnitee’s conduct with respect to an employee benefit
plan for a purpose he or she believed to be in the
 
interests of the participants in, and beneficiaries of, the plan
 
is conduct that satisfies
the requirement of Section 2(a)(2).
(c)
Reliance as Safe Harbor. For purposes
 
of any determination hereunder, Indemnitee shall
 
be deemed to have
acted in good faith and
 
in a manner reasonably believed to
 
be in or not
 
opposed to the best interests
 
of the Corporation, or, with respect
to any criminal
 
Proceeding, to have
 
had no reasonable
 
cause to believe
 
Indemnitee’s
 
conduct was unlawful,
 
if Indemnitee’s
 
conduct
was based primarily
 
on: (i) the
 
records or books
 
of account of
 
the Corporation
 
or relevant entity,
 
including financial
 
statements, (ii)
information supplied to Indemnitee by the officers of the Corporation or relevant entity in the course of their duties, (iii) the advice of
legal counsel for the Corporation or relevant entity, or (iv) information or records given or reports made to
 
the Corporation or relevant
entity by an
 
independent certified public
 
accountant, or by
 
an appraiser or
 
other expert selected
 
with reasonable care
 
by the Corporation
or relevant entity. The provisions of
 
this Section 2(c) shall
 
not be deemed to
 
be exclusive or to
 
limit in any
 
way the other circumstances
in which Indemnitee may be deemed to have met the relevant standard of conduct
 
set forth in this Agreement.
(d)
Termination
 
of
 
Proceeding
 
Not
 
Determinative.
 
The
 
termination
 
of
 
a
 
Proceeding
 
by
 
judgment,
 
order,
settlement, or conviction,
 
or upon
 
a plea
 
of nolo
 
contendere or
 
its equivalent shall
 
not, of
 
itself, create a
 
presumption or be
 
determinative
that Indemnitee is not entitled to indemnification or reimbursement
 
of Expenses hereunder or otherwise.
(e)
Limits on Indemnification. Unless, and then only to the extent
 
that, a court of competent jurisdiction acting
pursuant to Section 6 of this Agreement or Section 607.0854
 
of the Florida Business Corporation Act, determines that,
 
in view of the
circumstances
 
of
 
the
 
case,
 
Indemnitee
 
is
 
fairly
 
and
 
reasonably
 
entitled
 
to
 
indemnification,
 
the
 
Corporation
 
shall
 
not
 
indemnify
Indemnitee under this Agreement:
(1)
in
 
connection
 
with
 
a
 
Proceeding
 
by
 
or
 
in
 
the
 
right
 
of
 
the
 
Corporation,
 
except
 
for
 
reasonable
Expenses (including an
 
excise tax assessed
 
with respect to
 
an employee
 
benefit plan) and amounts
 
paid in settlement
 
not exceeding,
in the
 
judgment of
 
the Board,
 
the estimated
 
expense of
 
litigating the
 
Proceeding to
 
conclusion, actually
 
and reasonably
 
incurred in
connection with the defense or settlement of the Proceeding, including
 
any appeal thereof; or
(2)
in connection
 
with a
 
Proceeding by
 
or in
 
the right
 
of the
 
Corporation with
 
respect to
 
any claim,
issue or matter as to which Indemnitee shall have been adjudged liable to the Corporation.
(f)
Proceeding
 
Brought by
 
Indemnitee. Notwithstanding
 
any other
 
provision of
 
this Agreement,
 
Indemnitee
shall not
 
be entitled
 
to indemnification
 
or advancement
 
of Expenses
 
under this
 
Agreement with
 
respect to
 
any Proceeding
 
or claim
brought or
 
made by
 
Indemnitee against
 
the Corporation
 
or its
 
Directors, Officers,
 
employees or
 
other indemnitees,
 
other than
 
(i) a
Proceeding or claim seeking or defending Indemnitee’s right to indemnification
 
or advancement of Expenses pursuant to Section 6 of
this Agreement or otherwise, or (ii) a Proceeding authorized by the Board
 
prior to its initiation.
(g)
Settlements. The
 
Corporation acknowledges
 
that a settlement
 
or other disposition
 
short of final
 
judgment
may be successful if it
 
permits a party to avoid expense,
 
delay, distraction, disruption and uncertainty. In the event that any Proceeding
to which Indemnitee is a party is
 
resolved in any manner other than
 
by adverse judgment against Indemnitee
 
(including settlement of
such Proceeding with or
 
without payment of money
 
or other consideration) it
 
shall be presumed that
 
Indemnitee has been successful
on the merits or
 
otherwise in such
 
Proceeding. Anyone seeking
 
to overcome this presumption
 
shall have the burden
 
of proof and the
burden of persuasion by clear and convincing evidence.
(h)
Mandatory Indemnification.
 
The Corporation
 
shall indemnify
 
Indemnitee to
 
the extent
 
that he
 
or she
 
has
been wholly successful,
 
on the merits or
 
otherwise, in the
 
defense of any Proceeding
 
to which Indemnitee
 
was a party,
 
or in defense
of any claim, issue or matter, because Indemnitee is or was a Director or Officer, against reasonable Expenses incurred by Indemnitee
in connection with the Proceeding.
3.
Contribution.
(a)
Whether or not the indemnification provided hereunder is available, in respect of any Proceeding in which
the Corporation is
 
jointly liable with
 
Indemnitee (or would
 
be if joined
 
in such Proceeding),
 
the Corporation shall
 
pay the entire
 
amount
of
 
any
 
Expenses,
 
judgments,
 
penalties,
 
fines
 
or
 
amounts
 
paid
 
or
 
to
 
be
 
paid
 
in
 
settlement
 
of
 
such
 
Proceeding
 
without
 
requiring
Indemnitee to
 
contribute to such
 
payment and the
 
Corporation hereby
 
waives and relinquishes
 
any right of
 
contribution it may
 
have
against Indemnitee.
 
The Corporation
 
shall not enter
 
into any settlement
 
of any
 
Proceeding in
 
which the Corporation
 
is jointly liable
with Indemnitee
 
(or would be
 
if joined
 
in such Proceeding)
 
unless such
 
settlement provides
 
for a
 
full and
 
final release of
 
all claims
asserted against Indemnitee without any injunction or other equitable
 
relief being imposed against Indemnitee.
(b)
Without
 
diminishing
 
or
 
impairing
 
the
 
obligations
 
of
 
the
 
Corporation
 
set
 
forth
 
in
 
the
 
preceding
subparagraph, if, for
 
any reason, Indemnitee
 
shall elect or be
 
required to pay
 
all or any portion
 
of any judgment or
 
settlement in any
Proceeding in which the Corporation is
 
jointly liable with Indemnitee (or would
 
be if joined in such
 
Proceeding), the Corporation shall
contribute to the amount of Expenses, judgments, penalties, fines
 
and amounts paid in settlement actually and reasonably incurred and
paid or payable by
 
Indemnitee in proportion to
 
the relative benefits received
 
by the Corporation and
 
all officers, directors or
 
employees
of the Corporation, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the
 
 
 
 
 
 
 
proportion determined on the basis of relative benefit may,
 
to the extent necessary to conform to law, be further adjusted by reference
to the relative fault
 
of the Corporation and
 
all officers, directors or employees
 
of the Corporation other than
 
Indemnitee who are jointly
liable with Indemnitee (or would
 
be if joined in such Proceeding),
 
on the one hand, and Indemnitee,
 
on the other hand, in connection
with
 
the
 
events
 
that
 
resulted
 
in
 
such
 
Expenses,
 
judgments,
 
penalties,
 
fines
 
or
 
settlement
 
amounts,
 
as
 
well
 
as
 
any
 
other
 
equitable
considerations which the Florida Business Corporation Act may require to be considered. The relative fault of the Corporation and all
officers,
 
directors
 
or employees
 
of the
 
Corporation,
 
other
 
than Indemnitee,
 
who are
 
jointly liable
 
with Indemnitee
 
(or would
 
be if
joined in
 
such Proceeding),
 
on the
 
one hand,
 
and Indemnitee,
 
on the
 
other hand,
 
shall be
 
determined
 
by reference
 
to, among
 
other
things,
 
the
 
degree
 
to
 
which
 
their
 
actions
 
were
 
motivated
 
by
 
intent
 
to
 
gain
 
personal
 
profit
 
or
 
advantage,
 
the
 
degree
 
to
 
which
 
their
liability is primary or secondary and the degree to which their conduct is active or
 
passive.
(c)
The Corporation hereby agrees
 
to indemnify and hold
 
harmless Indemnitee from any
 
claims of contribution
which may be
 
brought by officers,
 
directors or employees
 
of the Corporation,
 
other than Indemnitee,
 
who may be jointly
 
liable with
Indemnitee.
4.
Advances for Expenses.
(a)
Obligations and
 
Requirements. The
 
Corporation shall
 
advance, to
 
the extent not
 
prohibited by
 
applicable
law,
 
the Expenses
 
incurred by
 
or on
 
behalf of
 
Indemnitee in
 
connection with
 
any Proceeding,
 
and such
 
advancement shall
 
be made
within thirty
 
(30) days after
 
the receipt by
 
the Corporation
 
of any
 
statement requesting
 
such advances
 
(which shall include
 
invoices
received by Indemnitee in connection with such Expenses but,
 
in the case of invoices in connection with
 
legal services, any references
to legal work performed or to expenditures made that
 
would cause Indemnitee to waive any privilege accorded by
 
applicable law shall
not be included with the invoice) from time to time, whether
 
prior to or after final disposition of any Proceeding.
 
Any such statement
shall reasonably
 
evidence the
 
Expenses
 
incurred by
 
Indemnitee. Advances
 
shall be
 
unsecured
 
and interest
 
free.
 
Advances shall
 
be
made
 
without
 
regard
 
to
 
Indemnitee’s
 
ability
 
to
 
repay
 
the
 
expenses
 
and
 
without
 
regard
 
to
 
Indemnitee’s
 
ultimate
 
entitlement
 
to
indemnification
 
under
 
the
 
other
 
provisions
 
of
 
this
 
Agreement.
 
Advances
 
shall
 
include
 
any
 
and
 
all
 
reasonable
 
Expenses
 
incurred
pursuing
 
an
 
action
 
to
 
enforce
 
this
 
right
 
of
 
advancement,
 
including
 
Expenses
 
incurred
 
preparing
 
and
 
forwarding
 
statements
 
to
 
the
Corporation to support the
 
advances claimed. Indemnitee shall
 
qualify for advances upon
 
the execution and
 
delivery to the
 
Corporation
of this Agreement, subject to the condition that if and to the extent that it
 
is ultimately determined by a court of competent jurisdiction
in
 
a
 
final
 
judgment,
 
not
 
subject
 
to
 
appeal,
 
that
 
Indemnitee
 
is
 
not
 
entitled
 
to
 
be
 
indemnified
 
by
 
the
 
Corporation,
 
Indemnitee
 
shall
undertake to
 
the fullest
 
extent permitted
 
by law
 
to repay
 
the advance.
 
Such undertaking
 
shall be
 
an unlimited
 
general obligation
 
of
Indemnitee but need not be secured and shall be accepted without
 
reference to Indemnitee’s financial
 
ability to make repayment. The
right
 
to
 
advances
 
under
 
this Section
 
4
 
shall
 
in
 
all
 
events
 
continue
 
until
 
final
 
disposition
 
of
 
any
 
Proceeding,
 
including
 
any
 
appeal
thereof.
(b)
Evaluation of Reasonableness
 
of Expenses. Evaluation
 
as to reasonableness of
 
Expenses of Indemnitee
 
in
the specific case shall be made in the same manner as the determination
 
that indemnification is permissible, as described in Section 5
below,
 
except that if
 
the determination is
 
made by Independent
 
Legal Counsel, evaluation
 
as to reasonableness
 
of Expenses shall
 
be
made
 
by
 
those
 
entitled
 
under
 
Section
 
5(c)(3)
 
to
 
select
 
Independent
 
Legal
 
Counsel.
 
Notwithstanding
 
the
 
foregoing
 
sentence,
 
any
Expenses claimed by Indemnitee
 
shall be deemed
 
reasonable if the Reviewing
 
Party fails to
 
make the reasonableness evaluation within
thirty (30) days following the Corporation’s
 
receipt of invoices for specific Expenses to be reimbursed or advanced.
5.
Authorization of and Determination of Entitlement to Indemnification
 
.
(a)
Entitlement
 
Determination.
 
The
 
Corporation
 
and
 
Indemnitee
 
acknowledge
 
that
 
indemnification
 
of
Indemnitee
 
under
 
Section
 
2
 
of
 
this
 
Agreement
 
has
 
been
 
pre-authorized
 
by
 
the
 
Corporation
 
as
 
permitted
 
by
 
the
 
Florida
 
Business
Corporation Act.
 
Nevertheless, the
 
Corporation shall
 
not indemnify
 
Indemnitee under
 
Section 2 unless
 
a separate determination
 
has
been made in the specific case that indemnification of Indemnitee is permissible in the circumstances because Indemnitee has met the
relevant standard of conduct set forth in Section 2(a);
 
provided, however, that: (i) no
 
such entitlement decision need be made prior to
the advancement of
 
Expenses; and (ii) regardless
 
of the result or
 
absence of any such
 
determination, the Corporation
 
shall make any
indemnification mandated by Section 2(h) above.
(b)
Request for Indemnification or Advance. To
 
obtain indemnification (including advancement of Expenses)
under this Agreement, Indemnitee
 
shall submit to the
 
Corporation a written request,
 
including therein or therewith
 
such documentation
and
 
information
 
as
 
is
 
reasonably
 
available
 
to
 
Indemnitee
 
and
 
is
 
reasonably
 
necessary
 
to
 
determine
 
whether
 
and
 
to
 
what
 
extent
Indemnitee
 
is
 
entitled
 
to
 
indemnification.
 
The
 
Secretary
 
of
 
the
 
Corporation
 
shall,
 
promptly
 
upon
 
receipt
 
of
 
such
 
a
 
request
 
for
indemnification, advise the Board in writing that Indemnitee has requested
 
indemnification.
(c)
Reviewing Party. The
 
determination referred to in Section 5(a) shall be made, at the election of the Board,
by any of
 
the following Reviewing
 
Parties (unless a
 
Change in Control
 
shall have occurred
 
after Indemnitee first
 
began serving
 
as a
Director or Officer, in which case Indemnitee shall be entitled to designate that the determination shall be made by Independent Legal
Counsel selected in the manner set forth in Section 5(d) below):
(1)
If
 
there
 
are
 
two
 
or
 
more
 
Disinterested
 
Directors,
 
by
 
the
 
Board
 
by
 
majority
 
vote
 
of
 
all
 
of
 
the
Disinterested Directors, a majority of whom shall for such purposes constitute a quorum; or by a majority vote of a committee consisting of two or more Disinterested Directors designated
 
 
 
(2)
by the Board pursuant to a vote in accordance with Section 5(c)(1);
 
or
(3)
by Independent
 
Legal Counsel:
 
(A) Selected
 
in the manner
 
prescribed in
 
paragraph (1)
 
or (2)
 
of
this Section 5(c); or (B) if
 
there are fewer than two (2)
 
Disinterested Directors,
 
selected by the Board, in which
 
selection directors who
do not qualify as Disinterested Directors may participate; or
(4)
by the shareholders of the Corporation, by a majority vote of a quorum consisting of shareholders
who were not Parties to
 
that Proceeding or,
 
if no such quorum is obtainable,
 
by a majority vote of shareholders
 
who were not Parties
to that Proceeding.
(d)
Selection
 
of
 
Counsel
 
after
 
Change
 
in
 
Control.
 
If
 
a
 
Change
 
in
 
Control
 
shall
 
have
 
occurred,
 
Independent
Legal
 
Counsel
 
shall
 
be
 
selected
 
by
 
Indemnitee
 
(unless
 
Indemnitee
 
requests
 
that
 
the
 
selection
 
be
 
made
 
in
 
the
 
manner
 
described
 
in
Section
 
5(c)(3)),
 
and
 
Indemnitee
 
shall
 
give
 
written
 
notice
 
to
 
the
 
Corporation
 
advising
 
it
 
of
 
the
 
identity
 
of
 
the
 
Independent
 
Legal
Counsel so selected. In either event, Indemnitee or the Corporation, as the case may be, may, within fifteen (15) days after the written
notice of selection has been given, deliver to the Corporation
 
or to Indemnitee, as the case may be, a written
 
objection to the selection;
provided, however, that the objection may
 
be asserted only on the ground that the counsel so selected does not meet the requirements
of “Independent Legal Counsel” as
 
defined in Section 1 of this Agreement.
 
The objection shall set forth with
 
particularity the factual
basis of
 
the assertion. If
 
a written objection
 
is made
 
and substantiated, the
 
counsel selected may
 
not serve as
 
Independent Legal Counsel
unless and until
 
the objection is
 
withdrawn or
 
a court has
 
determined that
 
the objection is
 
without merit.
 
If, within
 
fifteen (15) days
after submission by
 
Indemnitee of a written
 
request for indemnification,
 
no Independent Legal
 
Counsel shall have been
 
selected and
not objected to, either the Corporation or Indemnitee may petition the court conducting the Proceeding, or another court of competent
jurisdiction,
 
for resolution
 
of any
 
objection that
 
shall have
 
been made
 
by the
 
Corporation or
 
Indemnitee to
 
the other’s
 
selection of
Independent Legal Counsel and/or
 
for the appointment as Independent
 
Legal Counsel of a person
 
selected by the court or by
 
another
person that
 
the court
 
shall designate,
 
and the
 
person with
 
respect to
 
whom all
 
objections are
 
so resolved
 
or the
 
person so
 
appointed
shall act as Independent Legal Counsel under Section 5(c).
(e)
Cooperation
 
by
 
Indemnitee.
 
Indemnitee
 
shall
 
cooperate
 
with
 
the
 
Reviewing
 
Party
 
with
 
respect
 
to
 
its
determination
 
of
 
Indemnitee’s
 
entitlement
 
to
 
indemnification,
 
including
 
providing
 
to
 
the
 
Reviewing
 
Party
 
on
 
reasonable
 
advance
request
 
any documentation
 
or information
 
which
 
is not
 
privileged
 
or otherwise
 
protected
 
from disclosure
 
and
 
which is
 
reasonably
available to Indemnitee and
 
reasonably necessary to the determination.
 
Any Expenses incurred by Indemnitee
 
in so cooperating with
the
 
Reviewing
 
Party
 
shall
 
be
 
borne
 
by
 
the
 
Corporation,
 
regardless
 
of
 
the
 
determination
 
as
 
to
 
Indemnitee’s
 
entitlement
 
to
indemnification.
(f)
If
 
the
 
Reviewing
 
Party
 
shall
 
not
 
have
 
made
 
a
 
determination
 
within
 
sixty
 
(60)
 
days
 
after
 
receipt
 
by
 
the
Corporation of the request
 
therefor, the
 
requisite determination of entitlement
 
to indemnification shall be deemed
 
to have been made
and Indemnitee shall be entitled to such indemnification
 
absent (i) a misstatement by Indemnitee of a material
 
fact, or an omission of
a material fact
 
necessary to make
 
Indemnitee’s statement not materially misleading, in
 
connection with the
 
request for indemnification,
or (ii)
 
a prohibition
 
of such
 
indemnification under
 
applicable law;
 
provided, however,
 
that (x)
 
such 60-day
 
period may
 
be extended
for a reasonable time,
 
not to exceed an
 
additional thirty (30) days,
 
if the Reviewing Party
 
in good faith requires
 
such additional time
to obtain or evaluate documentation and/or information relating thereto; and (y) that the foregoing provisions of this Section 5(f) shall
not apply
 
if the determination
 
of entitlement
 
to indemnification
 
is to be
 
made by
 
the shareholders
 
pursuant to Section
 
5(c)(4) and if
(A)
 
within
 
fifteen
 
(15)
 
days after
 
receipt
 
by
 
the Corporation
 
of
 
the request
 
for
 
such determination,
 
the Board
 
or
 
the Disinterested
Directors, if appropriate, resolve to submit such determination to the shareholders for their consideration at an annual meeting thereof
to
 
be
 
held
 
within
 
seventy-five
 
(75)
 
days
 
after
 
such
 
receipt
 
and
 
such
 
determination
 
is
 
made
 
thereat,
 
or
 
(B)
 
a
 
special
 
meeting
 
of
shareholders is
 
called within fifteen
 
(15) days after
 
such receipt for
 
the purpose of
 
making such determination,
 
such meeting is
 
held
for such purpose within sixty (60) days after having been so called and
 
such determination is made thereat.
(g)
Other.
(i)
In making a
 
determination with respect
 
to entitlement
 
to indemnification hereunder, the
 
Reviewing
Party
 
shall
 
presume
 
that
 
Indemnitee
 
is
 
entitled
 
to
 
indemnification
 
under
 
this
 
Agreement,
 
and
 
anyone
 
seeking
 
to
 
overcome
 
this
presumption shall have the burden
 
of proof and the burden of
 
persuasion by clear and convincing
 
evidence. Neither the failure of the
Corporation (including
 
by its directors
 
or Independent
 
Legal Counsel)
 
to have made
 
a determination
 
prior to
 
the commencement
 
of
any action pursuant to this
 
Agreement that indemnification is proper
 
in the circumstances because Indemnitee
 
has met the applicable
standard of
 
conduct, nor
 
an actual
 
determination by
 
the Corporation
 
(including by
 
its directors
 
or Independent
 
Legal Counsel)
 
that
Indemnitee has
 
not met
 
such applicable
 
standard of
 
conduct, shall
 
create a
 
presumption that
 
Indemnitee has
 
not met
 
the applicable
standard of conduct.
(ii)
The
 
Reviewing
 
Party,
 
however
 
chosen,
 
shall
 
make
 
the
 
requested determination
 
as promptly
 
as
reasonably practicable after a request for indemnification is presented.
(iii)
Any determination
 
by Independent
 
Legal Counsel
 
under this
 
Section 5
 
shall be
 
delivered in
 
the
form of a written opinion to the Board with a copy to Indemnitee.
 
 
 
 
 
 
 
(iv)
The Corporation shall pay any
 
and all reasonable fees and
 
expenses of Independent Legal Counsel
incurred by
 
the counsel
 
in connection
 
with acting
 
pursuant to
 
this Section
 
5, and
 
the Corporation
 
shall pay
 
all reasonable
 
fees and
expenses incident to the procedures of this Section 5, regardless of
 
the manner in which such Independent Legal Counsel was selected
or appointed.
(v)
On
 
the
 
due
 
commencement
 
of
 
any
 
action
 
to
 
seek
 
court-ordered
 
indemnification
 
pursuant
 
to
Section 6 of this Agreement, Independent
 
Legal Counsel shall be discharged and relieved
 
of any further responsibility in that
 
capacity,
subject to the applicable standards of professional conduct then prevailing.
6.
Court-Ordered Indemnification and Advances for Expenses.
(a)
Procedure. If Indemnitee is
 
a party to
 
a Proceeding, he
 
or she may
 
apply for indemnification
 
or for advances
for Expenses to the court conducting the Proceeding
 
or to another court of competent jurisdiction. For
 
purposes of this Agreement, the
Corporation consents to personal jurisdiction and venue in any court in which is pending a Proceeding to which Indemnitee is a party.
Regardless
 
of
 
any
 
determination
 
by
 
the
 
Reviewing
 
Party
 
that
 
Indemnitee
 
is
 
not
 
entitled
 
to
 
indemnification
 
or
 
to
 
advancement
 
of
Expenses or as to the reasonableness of Expenses, and regardless of any failure by the Reviewing Party to make a determination as to
the entitlement
 
or the
 
reasonableness of
 
Expenses, the
 
court’s
 
review shall
 
be a
 
de novo
 
review.
 
After receipt
 
of an
 
application and
after giving any notice it considers necessary,
 
the court may:
(1)
order indemnification
 
or the
 
advance for
 
Expenses if
 
it determines
 
that Indemnitee
 
is entitled
 
to
indemnification or to advance for Expenses under this Agreement, the
 
Florida Business Corporation Act or otherwise; or
(2)
order indemnification or the advance for Expenses if it determines that, in view of all the relevant
circumstances,
 
it
 
is
 
fair
 
and
 
reasonable
 
to
 
indemnify
 
Indemnitee,
 
or
 
to
 
advance
 
Expenses
 
to
 
Indemnitee,
 
regardless
 
of
 
whether
Indemnitee
 
has the
 
relevant
 
standard of
 
conduct, complied
 
with the
 
requirements
 
for
 
advancement
 
of Expenses,
 
or been
 
adjudged
liable in a Proceeding referred to in Section 2(e) above
 
(in which case any court-ordered indemnification may be subject to limitations
under the Florida Business Corporation Act).
(b)
Payment of
 
Expenses to
 
Seek Court-Ordered
 
Indemnification.
 
If the
 
court determines
 
that Indemnitee
 
is
entitled
 
to
 
indemnification
 
or to
 
advance
 
for
 
Expenses,
 
the
 
Corporation
 
shall
 
pay
 
Indemnitee’s
 
reasonable
 
Expenses
 
to
 
obtain
 
the
court-ordered indemnification or advance for Expenses.
7.
Limitations on Indemnification. Regardless of whether
 
Indemnitee has met the
 
relevant standard of conduct
 
set forth
in Section 2(a), nothing in
 
this Agreement shall require or
 
permit indemnification of Indemnitee for any
 
Liability or Expenses incurred
in a Proceeding in which a judgment or other
 
final adjudication establishes that Indemnitee’s actions or omissions to act were material
to the cause of action so adjudicated and constitute:
(a)
a violation of criminal
 
law, unless Indemnitee had reasonable
 
cause to believe
 
his or her
 
conduct was lawful
or had no reasonable cause to believe his or her conduct was unlawful;
(b)
a transaction
 
from which
 
Indemnitee derived
 
an improper
 
personal benefit,
 
including, without
 
limitation,
any benefits received through the
 
purchase and sale by
 
Indemnitee of securities of
 
the Corporation within the
 
meaning of Section 16(b)
of the Securities
 
Exchange Act of 1934, as amended, or similar provisions of state statutory law or
 
common law;
(c)
in the
 
case of
 
a Director,
 
a circumstance
 
under which
 
the liability
 
provisions of
 
Section 607.0834
 
of the
Florida Business Corporation Act are applicable; or
(d)
willful
 
or
 
intentional
 
misconduct
 
or
 
a
 
conscious
 
disregard
 
for
 
the
 
best
 
interests
 
of
 
the
 
Corporation
 
in
 
a
Proceeding by or in the right of
 
the Corporation to procure a judgment in
 
its favor or in a Proceeding
 
by or in the right of
 
a shareholder
of the Corporation.
8.
Vested
 
Rights; Specific Performance. No amendment to the Articles of Incorporation
 
or Bylaws of the Corporation
or any
 
other corporate
 
action shall
 
in any
 
way limit
 
Indemnitee’s
 
rights under
 
this Agreement.
 
In any
 
Proceeding brought
 
by or
 
on
behalf of
 
Indemnitee
 
to specifically
 
enforce
 
the provisions
 
of this
 
Agreement,
 
the Corporation
 
waives the
 
claim or
 
defense in
 
that
Proceeding that the plaintiff or claimant has an adequate remedy at law, and the Corporation shall not urge in any such Proceeding the
claim or defense that an adequate
 
remedy at law exists. The provisions
 
of this Section 8, however,
 
shall not prevent Indemnitee from
seeking a remedy at law in connection with any breach of this Agreement.
9.
Liability Insurance. To
 
the extent the Corporation
 
maintains an insurance policy
 
or policies providing directors’
 
or
officers’ liability
 
insurance, Indemnitee shall
 
be covered by that
 
policy or those
 
policies, in accordance
 
with its or their
 
terms, to the
maximum
 
extent
 
of
 
the
 
coverage
 
provided
 
under
 
that
 
policy
 
or
 
those
 
policies
 
in
 
effect
 
for
 
any
 
other
 
Director
 
or
 
Officer
 
of
 
the
Corporation, as the case may be.
10.
Witness Fees. Notwithstanding any other provision in this Agreement, to the extent that Indemnitee is made a witness indemnifies and holds harmless Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s
in
 
any
 
Proceeding
 
to
 
which
 
Indemnitee
 
is
 
not
 
a
 
party,
 
because
 
he
 
or
 
she
 
is
 
or
 
was
 
a
 
Director
 
or
 
Officer,
 
the
 
Corporation
 
hereby
 
 
 
 
 
 
 
 
 
 
behalf in connection therewith.
11.
Security for Indemnification
 
Obligations. The Corporation
 
may at any time
 
and in any manner,
 
at the discretion of
the Board, secure the Corporation’s
 
obligations to indemnify or advance Expenses to Indemnitee pursuant to this Agreement.
12.
Non-exclusivity,
 
No Duplication of
 
Payments. The rights
 
of Indemnitee under
 
this Agreement shall
 
be in addition
to any other
 
rights with respect
 
to indemnification, advancement of
 
Expenses or otherwise
 
that Indemnitee may have
 
under the Articles
of Incorporation or Bylaws,
 
the Florida Business Corporation
 
Act or otherwise; provided,
 
however, that
 
the Corporation shall not
 
be
liable under this Agreement to make any payment to
 
Indemnitee under this Agreement to the extent Indemnitee has
 
otherwise actually
received
 
payment (under
 
any insurance
 
policy,
 
provision
 
of the
 
Articles of
 
Incorporation
 
or Bylaws,
 
or otherwise)
 
of the
 
amounts
otherwise payable
 
under this
 
Agreement.
 
The Corporation’s
 
obligation
 
to indemnify
 
or advance
 
expenses under
 
this Agreement
 
to
Indemnitee who
 
is or
 
was serving
 
at the
 
request of
 
the Corporation
 
as a
 
director,
 
officer,
 
partner,
 
trustee, employee
 
or agent
 
of any
other entity
 
shall be
 
reduced by
 
any amount
 
Indemnitee has
 
actually received
 
as indemnification
 
or advancement
 
of expenses
 
from
that other entity.
13.
Amendments.
 
To the
 
extent that the provisions of this
 
Agreement are held to be inconsistent
 
with the provisions of
the Florida Business Corporation Act
 
(including Section 607.0859(1) thereof), the provisions
 
of that statute shall
 
govern. To the extent
that the Florida Business Corporation Act is later amended to permit a Florida corporation, without the need for shareholder approval,
to provide
 
to its
 
directors
 
greater rights
 
to indemnification
 
or advancement
 
of Expenses
 
than
 
those specifically
 
set forth
 
here,
 
this
Agreement shall be deemed
 
amended to require the greater
 
indemnification or more liberal
 
advancement of Expenses to
 
Indemnitee,
in
 
each
 
case
 
consistent
 
with
 
the
 
Florida
 
Business
 
Corporation
 
Act
 
as
 
so
 
amended
 
from
 
time
 
to
 
time.
 
Otherwise,
 
no
 
supplement,
modification or amendment of this Agreement shall be binding unless executed
 
in writing by the Corporation and Indemnitee.
14.
Subrogation. In the event of payment
 
under this Agreement, the Corporation shall be
 
subrogated to the extent of that
payment
 
to all
 
of the
 
rights of
 
recovery
 
of Indemnitee,
 
who shall
 
execute
 
all papers
 
required
 
and
 
shall do
 
everything that
 
may
 
be
necessary to secure those rights, including the execution of documents necessary to enable the Corporation effectively
 
to bring suit to
enforce those rights; provided, however, that any rights of recovery of Indemnitee pursuant to
 
any liability insurance policy separately
paid for by Indemnitee shall not be subject to subrogation under this Section
 
14 except that any amounts recovered under such policy
shall be subject to Section 12 hereof.
15.
Waiver.
 
No waiver of
 
any of the
 
provisions of
 
this Agreement shall
 
be deemed or
 
shall constitute a
 
waiver of
 
any
other provisions of this Agreement (whether or not similar) nor shall such
 
a waiver constitute a continuing waiver.
16.
Binding Effect, Etc. This Agreement shall be binding
 
on and inure to the
 
benefit of and be enforceable by
 
the parties
to this Agreement and their respective successors or assigns (including any direct or indirect successor or assign by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or assets of the Corporation), spouses, heirs, and personal and
legal representatives.
17.
Applicability
 
of
 
Agreement.
 
This
 
Agreement
 
shall
 
apply
 
retroactively
 
with
 
respect
 
to
 
acts
 
or
 
omissions
 
of
Indemnitee occurring
 
since the
 
date that
 
Indemnitee first
 
became a
 
Director or
 
Officer,
 
and this
 
Agreement shall
 
continue in
 
effect
regardless of whether
 
Indemnitee continues to
 
serve as a Director
 
or Officer,
 
but only in respect
 
of acts or omissions
 
occurring prior
to the termination of Indemnitee’s service
 
as a Director or Officer.
18.
Severability.
 
If any provision
 
or provisions
 
of this Agreement
 
shall be held
 
to be invalid,
 
illegal, or unenforceable
for any reason whatsoever:
(a)
the validity,
 
legality, and
 
enforceability of the remaining
 
provisions of this Agreement
 
(including without
limitation, each portion
 
of any Section of
 
this Agreement containing
 
any such provision held
 
to be invalid,
 
illegal, or unenforceable,
that is not itself invalid, illegal, or unenforceable) shall not in any way be affected
 
or impaired by it;
(b)
the provision or provisions shall be deemed reformed
 
to the extent necessary to conform to applicable law
and to give the maximum effect to the intent of the parties to this Agreement;
 
and
(c)
to the fullest extent possible, the
 
provisions of this Agreement (including,
 
without limitation, each portion
of any Section of this Agreement containing any
 
provision held to be invalid, illegal,
 
or unenforceable, that is not itself invalid,
 
illegal,
or unenforceable) shall be construed so as to give effect to the intent
 
manifested by it.
19.
Governing Law.
 
This Agreement shall
 
be governed by
 
and construed and
 
enforced in accordance
 
with the laws
 
of
the State of Florida applicable
 
to contracts made and to
 
be performed in Florida without giving
 
effect to the principles of conflicts
 
of
laws.
20.
Headings. The headings of
 
the Sections of this
 
Agreement are inserted for
 
convenience only and shall
 
not be deemed
to constitute part of this Agreement or to affect the construction
 
of this Agreement.
 
 
 
21.
Inducement. The Corporation expressly confirms and agrees that
 
it has entered into this
 
Agreement and assumed the
obligations imposed on it
 
under this Agreement
 
in order to
 
induce Indemnitee to
 
serve or continue to
 
serve as a
 
Director and/or Officer,
and the Corporation acknowledges that Indemnitee is relying on this Agreement in serving as a director, officer, employee or agent of
the Corporation or,
 
at the request
 
of the Corporation,
 
as a director,
 
officer,
 
partner, trustee,
 
employee, or agent
 
of another foreign
 
or
domestic corporation, partnership, limited liability company,
 
joint venture, trust, employee benefit plan or other entity.
22.
Notice by Indemnitee. Indemnitee agrees promptly to notify the Corporation
 
in writing upon being served with any
summons, citation, subpoena, complaint, indictment, information,
 
or other document relating to any Proceeding or matter which
 
may
be subject to
 
indemnification or advancement
 
of Expenses covered
 
under this Agreement.
 
The failure of
 
Indemnitee so to
 
notify the
Corporation shall not relieve the Corporation of any obligation that it may have
 
to Indemnitee under this Agreement or otherwise.
23.
Notices. All
 
notices, requests,
 
demands,
 
and other
 
communications under
 
this Agreement
 
shall be
 
in writing
 
and
shall
 
be
 
deemed
 
to
 
have
 
been
 
duly
 
given
 
if:
 
(i)
 
delivered
 
by
 
hand
 
and
 
receipted
 
for
 
by
 
the
 
party
 
to
 
whom
 
the
 
notice
 
or
 
other
communication shall have been
 
directed; or (ii) mailed by certified
 
or registered mail with postage
 
prepaid, on the third business day
after the date on
 
which it is so
 
mailed if to
 
the Corporation, to the
 
principal office address
 
of the Corporation,
 
or if to Indemnitee,
 
to
the address of Indemnitee last on file with the Corporation, or to any other address that may have been furnished to Indemnitee by the
Corporation or to the Corporation by Indemnitee, as the case may be.
The parties hereto have entered into this Agreement effective as of
 
the date first above written.
The Corporation:
LESAKA TECHNOLOGIES, INC.
By:
 
____________________________________
Title:
 
____________________________________
Indemnitee:
__________________________________________
[ ]
Address:
 
[ ]
 
EX-23.1 18 ex231.htm EX-23.1 ex231
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
 
FIRM
We
 
consent to
 
the incorporation
 
by reference
 
in Registration
 
Statement Nos.
 
333-268414, 333-208324,
 
333-126958, 333-140042
and 333-170395
 
on Form
 
S-8 and
 
in Registration
 
Statement Nos.
 
333-211968
 
and 333-267371
 
on Form
 
S-3 of
 
our reports
 
dated
September
 
11,
 
2024,
 
relating
 
to
 
the
 
financial
 
statements
 
of
 
Lesaka
 
Technologies,
 
Inc.
 
and
 
the
 
effectiveness
 
of
 
Lesaka
Technologies,
 
Inc.’s
 
internal control
 
over financial
 
reporting appearing
 
in this
 
Annual Report
 
on Form
 
10-K
 
for
 
the year
 
ended
June 30, 2024.
/s/ KPMG
KPMG
Registered Auditor
Johannesburg, South Africa
September 11, 2024
EX-23.2 19 ex232.htm EX-23.2 ex232
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
 
FIRM
We
 
consent to
 
the incorporation
 
by reference
 
in Registration
 
Statement Nos.
 
333-268414, 333-208324,
 
333-126958, 333-140042
and 333-170395
 
on Form
 
S-8 and
 
in Registration
 
Statement Nos.
 
333-211968
 
and 333-267371
 
on Form
 
S-3 of
 
our report
 
dated
September
 
12, 2023,
 
relating to
 
the financial
 
statements of
 
Lesaka Technologies,
 
Inc. appearing
 
in this
 
Annual Report
 
on Form
10-K for the year ended June 30, 2024.
/s/ Deloitte & Touche
Deloitte & Touche
Registered Auditor
Johannesburg, South Africa
September 11, 2024
EX-31.1 20 ex311.htm EX-31.1 ex311
 
Exhibit 31.1
CERTIFICATION
 
OF PRINCIPAL
 
EXECUTIVE OFFICER
 
PURSUANT TO RULES 13A-14(A) AND 15D-14(A)
 
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
 
I, Ali Mazanderani,
 
certify that:
 
1.
 
I have reviewed this annual report on Form 10-K of Lesaka Technologies,
 
Inc. (“Lesaka”) for the year ended June 30, 2024;
 
2.
 
Based on
 
my knowledge,
 
this report
 
does not
 
contain any
 
untrue statement
 
of a
 
material fact
 
or omit
 
to state
 
a material
 
fact
necessary
 
to
 
make
 
the
 
statements
 
made,
 
in
 
light
 
of
 
the
 
circumstances
 
under
 
which
 
such
 
statements
 
were
 
made,
 
not
 
misleading
with respect to the period covered by this report;
 
3.
 
Based on my
 
knowledge, the financial
 
statements, and other
 
financial information
 
included in this
 
report, fairly present
 
in all
material respects the financial condition, results of
 
operations and cash flows of Lesaka as of,
 
and for, the periods
 
presented in this
report;
 
4.
 
Lesaka’s other
 
certifying officer and
 
I are responsible
 
for establishing and
 
maintaining disclosure controls
 
and procedures (as
defined in Exchange Act Rules
 
13a-15(e) and 15d-15(e)) and internal
 
control over financial reporting (as defined
 
in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for Lesaka and have:
 
 
(a)
 
Designed
 
such
 
disclosure
 
controls
 
and
 
procedures,
 
or
 
caused
 
such
 
disclosure
 
controls
 
and
 
procedures
 
to
 
be
designed under
 
our supervision,
 
to ensure
 
that material
 
information relating
 
to Lesaka,
 
including its
 
consolidated subsidiaries,
 
is
made known to us by others within those entities, particularly during the period
 
in which this report is being prepared;
 
 
(b) Designed
 
such internal
 
control over
 
financial reporting,
 
or caused
 
such internal
 
control over
 
financial reporting
 
to
be
 
designed
 
under
 
our
 
supervision,
 
to
 
provide
 
reasonable
 
assurance
 
regarding
 
the
 
reliability
 
of
 
financial
 
reporting
 
and
 
the
preparation of financial statements for external purposes in accordance
 
with generally accepted accounting principles;
 
(c)
 
Evaluated
 
the
 
effectiveness
 
of
 
Lesaka’s
 
disclosure
 
controls
 
and
 
procedures
 
and
 
presented
 
in
 
this
 
report
 
our
conclusions
 
about the
 
effectiveness
 
of the
 
disclosure
 
controls and
 
procedures,
 
as of
 
the end
 
of the
 
period covered
 
by this
 
report
based on such evaluation; and
 
 
(d)
 
Disclosed
 
in
 
this
 
report
 
any
 
change
 
in
 
Lesaka’s
 
internal
 
control
 
over
 
financial
 
reporting
 
that
 
occurred
 
during
Lesaka’s most recent fiscal quarter
 
(Lesaka’s fourth fiscal quarter
 
in the case of an annual report) that has materially affected,
 
or is
reasonably likely to materially affect, Lesaka’s
 
internal control over financial reporting; and
 
5.
 
Lesaka’s
 
other certifying
 
officer and
 
I have
 
disclosed, based
 
on our
 
most recent
 
evaluation of
 
internal control
 
over financial
reporting,
 
to
 
Lesaka’s
 
auditors
 
and
 
the
 
Audit
 
Committee
 
of
 
Lesaka’s
 
Board
 
of
 
Directors
 
(or
 
persons
 
performing
 
the
 
equivalent
functions):
 
 
(a)
 
All
 
significant
 
deficiencies
 
and
 
material
 
weaknesses
 
in
 
the
 
design
 
or
 
operation
 
of
 
internal
 
control
 
over
 
financial
reporting
 
which
 
are
 
reasonably
 
likely
 
to
 
adversely
 
affect
 
Lesaka’s
 
ability
 
to
 
record,
 
process,
 
summarize
 
and
 
report
 
financial
information; and
 
 
(b)
 
Any fraud,
 
whether or
 
not material,
 
that involves
 
management
 
or other
 
employees who
 
have a
 
significant role
 
in
Lesaka’s internal control over financial
 
reporting.
 
Date: September 11, 2024
 
 
/s/ Ali Mazanderani
 
 
 
Ali Mazanderani
 
 
 
Executive Chairman
 
EX-31.2 21 ex312.htm EX-31.2 ex312
 
Exhibit 31.2
CERTIFICATION
 
OF PRINCIPAL
 
FINANCIAL OFFICER
 
PURSUANT TO RULES 13A-14(A) AND 15D-14(A)
 
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
 
I, Naeem E. Kola, certify that:
 
1.
 
I have reviewed this annual report on Form 10-K of Lesaka Technologies,
 
Inc. (“Lesaka”) for the year ended June 30, 2024;
 
2.
 
Based on
 
my knowledge,
 
this report
 
does not
 
contain any
 
untrue statement
 
of a
 
material fact
 
or omit
 
to state
 
a material
 
fact
necessary
 
to
 
make
 
the
 
statements
 
made,
 
in
 
light
 
of
 
the
 
circumstances
 
under
 
which
 
such
 
statements
 
were
 
made,
 
not
 
misleading
with respect to the period covered by this report;
 
3.
 
Based on my
 
knowledge, the financial
 
statements, and other
 
financial information
 
included in this
 
report, fairly present
 
in all
material respects the financial condition, results of
 
operations and cash flows of Lesaka as of,
 
and for, the periods
 
presented in this
report;
 
4.
 
Lesaka’s other
 
certifying officer and
 
I are responsible
 
for establishing and
 
maintaining disclosure controls
 
and procedures (as
defined in Exchange Act Rules
 
13a-15(e) and 15d-15(e)) and internal
 
control over financial reporting (as defined
 
in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for Lesaka and have:
 
 
(a)
 
Designed
 
such
 
disclosure
 
controls
 
and
 
procedures,
 
or
 
caused
 
such
 
disclosure
 
controls
 
and
 
procedures
 
to
 
be
designed under
 
our supervision,
 
to ensure
 
that material
 
information relating
 
to Lesaka,
 
including its
 
consolidated subsidiaries,
 
is
made known to us by others within those entities, particularly during the period
 
in which this report is being prepared;
 
 
(b) Designed
 
such internal
 
control over
 
financial reporting,
 
or caused
 
such internal
 
control over
 
financial reporting
 
to
be
 
designed
 
under
 
our
 
supervision,
 
to
 
provide
 
reasonable
 
assurance
 
regarding
 
the
 
reliability
 
of
 
financial
 
reporting
 
and
 
the
preparation of financial statements for external purposes in accordance
 
with generally accepted accounting principles;
 
(c)
 
Evaluated
 
the
 
effectiveness
 
of
 
Lesaka’s
 
disclosure
 
controls
 
and
 
procedures
 
and
 
presented
 
in
 
this
 
report
 
our
conclusions
 
about the
 
effectiveness
 
of the
 
disclosure
 
controls and
 
procedures,
 
as of
 
the end
 
of the
 
period covered
 
by this
 
report
based on such evaluation; and
 
 
(d)
 
Disclosed
 
in
 
this
 
report
 
any
 
change
 
in
 
Lesaka’s
 
internal
 
control
 
over
 
financial
 
reporting
 
that
 
occurred
 
during
Lesaka’s most recent fiscal quarter
 
(Lesaka’s fourth fiscal quarter
 
in the case of an annual report) that has materially
 
affected, or is
reasonably likely to materially affect, Lesaka’s
 
internal control over financial reporting; and
 
5.
 
Lesaka’s
 
other certifying
 
officer and
 
I have
 
disclosed, based
 
on our
 
most recent
 
evaluation of
 
internal control
 
over financial
reporting,
 
to
 
Lesaka’s
 
auditors
 
and
 
the
 
Audit
 
Committee
 
of
 
Lesaka’s
 
Board
 
of
 
Directors
 
(or
 
persons
 
performing
 
the
 
equivalent
functions):
 
 
(a)
 
All
 
significant
 
deficiencies
 
and
 
material
 
weaknesses
 
in
 
the
 
design
 
or
 
operation
 
of
 
internal
 
control
 
over
 
financial
reporting
 
which
 
are
 
reasonably
 
likely
 
to
 
adversely
 
affect
 
Lesaka’s
 
ability
 
to
 
record,
 
process,
 
summarize
 
and
 
report
 
financial
information; and
 
 
(b)
 
Any fraud,
 
whether or
 
not material,
 
that involves
 
management
 
or other
 
employees who
 
have a
 
significant role
 
in
Lesaka’s internal control over financial
 
reporting.
 
Date: September 11, 2024
 
 
/s/ Naeem E. Kola
 
 
 
Naeem E. Kola
 
 
 
Chief Financial Officer
 
EX-32 22 ex32.htm EX-32 ex32
 
 
Exhibit 32
CERTIFICATION
 
PURSUANT TO 18 U.S.C. SECTION 1350,
 
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Lesaka Technologies,
 
Inc. (“Lesaka”) on Form 10-K for the year
 
ended June 30,
2024,
 
as
 
filed
 
with
 
the
 
Securities
 
and
 
Exchange
 
Commission
 
on
 
the
 
date
 
hereof
 
(the
 
“Report”),
 
Ali
 
Mazanderani
 
and
 
Naeem
 
E.
Kola, Executive
 
Chairman and
 
Chief Financial
 
Officer,
 
respectively,
 
of Lesaka,
 
certify,
 
pursuant
 
to 18
 
U.S.C. § 1350, that
 
to their
knowledge:
 
 
1.
 
The
 
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
 
Act of
1934, as amended;
 
and
 
 
2.
 
The information contained in the Report fairly presents, in all material respects, the financial
 
condition and results
of operations of Lesaka.
 
 
Date: September 11, 2024
/ s/: Ali Mazanderani
 
Name: Ali Mazanderani
 
Executive Chairman
 
 
Date: September 11, 2024
/s/: Naeem E. Kola
 
Name: Naeem E. Kola
 
Chief Financial Officer
 
 
 
 
EX-97 23 ex97.htm EX-97 ex97
Exhibit 97
LESAKA TECHNOLOGIES,
 
INC.
the “Company”
COMPENSATION
 
CLAWBACK POLICY
 
 
CONTENTS
 
 
 
 
 
1.
 
PURPOSE
 
The Company has adopted
 
this Policy to comply
 
with Section 954 of
 
the Dodd-Frank Wall
 
Street Reform and Consumer
Protection Act of 2010, as codified by Section 10D of the Exchange Act, and Nasdaq Listing Rule 5608, which require the
recovery of certain forms
 
of executive compensation in the
 
case of accounting restatements resulting from
 
a material error
in
 
an
 
issuer’s
 
financial
 
statements
 
or
 
material
 
noncompliance
 
with
 
financial
 
reporting
 
requirements
 
under
 
the
 
federal
securities laws.
2.
 
ADMINISTRATION
 
This Policy shall be
 
administered by the Board
 
or, if so, designated by the
 
Board to the Remuneration
 
Committee, in which
case references herein to the Board shall be deemed
 
references to the Remuneration Committee.
 
 
 
 
 
 
 
3.
 
DEFINITIONS
 
For purposes of this Policy,
 
the following capitalized terms shall have the meanings
 
set forth below.
a.
 
“
Acknowledgement Form
” shall mean the acknowledgment form attached hereto as Annex
 
A.
(a)
 
“
Board
” shall mean the Board of Directors of the Company.
 
b.
 
“
Commission
” shall mean the U.S. Securities and Exchange Commission.
c.
 
“
Covered Executive
” shall
 
mean the
 
Company’s current
 
and former
 
executive officers,
 
and such
 
other employees
who may from time to
 
time be deemed subject
 
to this Policy by the
 
Board. For purposes of this
 
Policy, an
 
executive
officer means an officer as defined in
 
Rule 16a-1(f) under the Exchange Act.
d.
 
“
Erroneously Awarded
 
Compensation
” shall
 
mean, with
 
respect to
 
each Covered
 
Executive in
 
connection with
 
a
Restatement,
 
the
 
amount
 
of
 
Incentive-based
 
Compensation
 
that
 
exceeds
 
the
 
amount
 
of
 
Incentive-based
Compensation
 
that
 
would
 
have
 
been
 
received
 
by
 
the
 
Covered
 
Executive
 
had
 
it
 
been
 
determined
 
based
 
on
 
the
restated amounts, without regard to any taxes paid by
 
the Covered Executive.
e.
 
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended.
f.
 
“
Financial Reporting
 
Measures
” shall
 
mean measures
 
that are
 
determined and
 
presented in
 
accordance with
 
the
accounting
 
principles
 
used
 
in
 
preparing
 
the
 
Company’s
 
financial
 
statements,
 
and
 
any
 
measures
 
that
 
are
 
derived
wholly
 
or
 
in
 
part
 
from
 
such
 
measures.
 
Stock
 
price
 
and
 
total
 
shareholder
 
return
 
shall
 
also
 
constitute
 
“Financial
Reporting
 
Measures.”
 
A
 
Financial
 
Reporting
 
Measure
 
need
 
not
 
be
 
presented
 
within
 
the
 
Company’s
 
financial
statements or included in a filing with the Commission.
 
g.
 
“
Incentive-based Compensation
” shall mean any compensation that is granted,
 
earned, or vested based wholly or
in part
 
upon the
 
attainment
 
of a
 
Financial Reporting
 
Measure. Incentive
 
-based Compensation
 
shall be
 
deemed to
have been received
 
during the fiscal
 
period in which
 
the Financial Reporting
 
Measure specified in
 
the Incentive-based
Compensation award is attained, even if
 
such Incentive-based Compensation is paid or granted after
 
the end of such
fiscal
 
period.
 
For
 
the
 
avoidance
 
of
 
doubt,
 
Incentive-based
 
Compensation
 
does
 
not
 
include
 
annual
 
salary,
compensation awarded
 
based on
 
completion
 
of a
 
specified period
 
of service,
 
or compensation
 
awarded based
 
on
subjective standards, strategic measures, or operational measures.
h.
 
“
Nasdaq
” shall mean the Nasdaq Stock Market LLC.
i.
 
“
Policy
” shall mean this compensation clawback policy,
 
as may be amended or restated from time to time.
j.
 
“
Restatement
”
 
shall
 
mean
 
an
 
accounting
 
restatement
 
due
 
to
 
material
 
noncompliance
 
by
 
the
 
Company
 
with
 
any
financial reporting
 
requirement under
 
the federal
 
securities laws,
 
including any
 
required accounting
 
restatement to
correct an error
 
in previously issued financial
 
statements that is material
 
to the previously
 
issued financial statements,
or that would result
 
in a material misstatement
 
if the error were
 
corrected in the current
 
period or left uncorrected
 
in
the current period.
k.
 
“
Restatement Date
” shall
 
be the
 
earlier of
 
(i) the date
 
the Board, a
 
committee of the
 
Board, or
 
officer(s) are authorized
to take
 
such action if
 
Board action is
 
not required, concludes,
 
or reasonably should
 
have concluded,
 
that the
 
Company
is required
 
to prepare
 
a Restatement
 
or (ii)
 
the date
 
a court,
 
regulator,
 
or other
 
legally authorized
 
body directs
 
the
Company to prepare a Restatement.
4.
 
EFFECTIVE DATE
This Policy shall
 
be effective
 
as of the
 
date it is
 
adopted by the
 
Board and shall
 
apply to Incentive
 
-based Compensation
that is approved, awarded, or granted to Covered Executives on
 
or after that date.
5.
 
SCOPE
5.1.
 
This Policy applies to all Incentive-based Compensation
 
received by the Covered Executives
 
i.
 
after beginning service as an executive officer,
 
ii.
 
who
 
served
 
as
 
an
 
executive
 
officer
 
at
 
any
 
time
 
during
 
the
 
performance
 
period
 
for
 
such
 
Incentive-based
Compensation, and
 
iii.
 
during the three (3) completed fiscal years immediately
 
preceding a Restatement Date.
 
 
 
 
 
 
 
 
 
 
 
5.2.
 
In addition
 
to these
 
last three
 
(3) completed
 
fiscal years,
 
the Policy
 
applies to
 
any transition
 
period that
 
results
from a change in the
 
Company’s fiscal year within or immediately following those
 
three (3) completed fiscal years,
provided, however,
 
that a transition
 
period between
 
the last
 
day of
 
the Company’s
 
previous fiscal
 
year end
 
and
the first day
 
of its
 
new fiscal
 
year that comprises
 
a period of
 
nine (9)
 
to twelve
 
(12) months
 
would be
 
deemed a
completed fiscal year for
 
purposes of this Policy.
 
For the avoidance of
 
doubt, the Company’s obligation to
 
recover
Erroneously Awarded Compensation is not dependent
 
on if or when the restated financial statements are filed.
6.
 
RECOVERY
6.1.
 
In the event
 
the Company is
 
required to prepare
 
a Restatement, the
 
Company shall,
 
as promptly as
 
reasonably
possible, recover any Erroneously Awarded Compensation
 
received by a Covered Executive during the three (3)
completed fiscal years
 
immediately preceding
 
the Restatement Date.
 
For Incentive-based
 
Compensation based
on
 
stock
 
price
 
or
 
total
 
shareholder
 
return,
 
the
 
Board
 
shall
 
determine
 
the
 
amount
 
of
 
Erroneously
 
Awarded
Compensation
 
based
 
on
 
a
 
reasonable
 
estimate
 
of
 
the
 
effect
 
of
 
the
 
Restatement
 
on
 
the
 
stock
 
price
 
or
 
total
shareholder return upon
 
which the
 
Incentive-based Compensation was
 
received and the
 
Company shall
 
document
such reasonable estimate and provide such documentation
 
to Nasdaq.
6.2.
 
Subsequent
 
changes
 
in
 
a
 
Covered
 
Executive’s
 
employment
 
status,
 
including
 
retirement
 
or
 
termination
 
of
employment, do not
 
affect the Company’s rights to
 
recover Incentive-based Compensation pursuant to
 
this Policy.
6.3.
 
The Board
 
shall determine,
 
in its
 
sole discretion,
 
the method
 
of recovering
 
any Incentive-based
 
Compensation
pursuant to this Policy.
 
Such methods may include, but are not limited to:
 
i.
 
direct recovery by reimbursement;
 
ii.
 
set-off against future compensation;
iii.
 
forfeiture of equity awards;
 
iv.
 
set-off or cancelation against planned future awards;
v.
forfeiture
 
of
 
deferred
 
compensation
 
(subject
 
to
 
compliance
 
with
 
the
 
Internal
 
Revenue
 
Code
 
and
 
related
regulations); and/or
 
vi.
 
any other recovery action approved by the Board and permitted
 
under applicable law
.
7.
 
IMPRACTABILITY
The Board
 
shall recover
 
any Erroneously
 
Awarded
 
Compensation
 
in accordance
 
with this
 
Policy
 
unless such
 
recovery
would
 
be
 
impracticable,
 
as determined
 
by
 
the
 
Board
 
in
 
accordance
 
with
 
Rule
 
10D-1
 
under
 
the
 
Exchange
 
Act
 
and
 
the
listing standards of Nasdaq.
8.
 
NO INDEMNIFICATION
The
 
Company
 
shall
 
not
 
indemnify
 
any
 
current
 
or
 
former
 
Covered
 
Executive
 
against
 
the
 
loss
 
of
 
Erroneously
 
Awarded
Compensation, and shall not pay, or reimburse any Covered Executives,
 
for any insurance policy to fund
 
such executive’s
potential recovery obligations.
 
9.
 
ACKNOWLEDGEMENT
 
9.1.
 
Each Covered Executive shall sign and return to the Company,
 
within 30 calendar days following the later of
 
i.
 
the effective date of this Policy first set forth above
 
or
 
ii.
 
the date the individual becomes a Covered Executive,
 
the Acknowledgement Form,
 
pursuant to which
 
the Covered Executive agrees
 
to be bound
 
by, and to comply with,
the terms and conditions of this Policy.
10.
 
AMENDMENT AND INTERPRETATION
 
The Board may amend this Policy from time to time in its
 
discretion and shall amend this Policy as it deems necessary
 
to
reflect the regulations adopted by the Commission and to comply with any rules or standards adopted by Nasdaq or such
other national
 
securities
 
exchange
 
on which
 
the Company’s
 
securities
 
are then
 
listed. It
 
is intended
 
that this
 
Policy be
interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act and any applicable Company’s securities are then listed.
 
 
 
 
 
 
 
 
 
 
rules
 
or
 
standards
 
adopted
 
by
 
the
 
Commission
 
and
 
Nasdaq,
 
or
 
such
 
other
 
national
 
securities
 
exchange
 
on
 
which
 
the
11.
 
OTHER RECOUPMENT RIGHTS
 
The Board may
 
require that any
 
employment agreement,
 
equity award agreement,
 
or similar agreement
 
entered into on
or after the effective date shall require a Covered Executive
 
to agree to abide by the terms of this Policy as a condition
 
to
the grant of
 
any benefit.
 
Any right of
 
recoupment under
 
this Policy is
 
in addition to,
 
and not in
 
lieu of, any
 
other rights
 
of
recoupment
 
or remedies
 
that
 
may be
 
available
 
to the
 
Company
 
pursuant
 
to
 
the terms
 
of any
 
employment
 
agreement,
equity award agreement, similar agreement, or policy
 
and any other legal remedies available to the Company.
12.
 
SUCCESORS
 
This
 
Policy
 
shall
 
be
 
binding
 
and
 
enforceable
 
against
 
all
 
Covered
 
Executives
 
and
 
their
 
administrators,
 
beneficiaries,
executors, heirs, or other legal representatives.
13.
 
GOVERNING LAW
This Policy shall be governed by and construed in accordance with the internal laws of the State of Florida, without giving
effect to any choice or conflict of law provision
 
or rule (whether of the State of Florida or any other jurisdiction).
14.
 
POLICY REVIEW
 
14.1.
 
THE POLICY IS SUBJECT TO REVISION
 
a.
 
The
 
Remuneration
 
Committee
 
of
 
the
 
Company
 
will
 
review
 
this
 
policy
 
annually
 
and
 
may
 
recommend
changes from time to time for the consideration of the
 
Board.
 
LESAKA BOARD APPROVAL
 
RECEIVED: SEPTEMBER 2024
ANNEXURE A: ACKNOWLEDGEMENT FORM
By signing below,
 
the undersigned
 
acknowledges and
 
confirms that the
 
undersigned has received
 
and reviewed
 
a copy
of the Lesaka Technologies,
 
Inc. (the “Company”)
 
Compensation Clawback
 
Policy (the “Policy”).
 
Capitalized terms used
but not defined
 
in this
 
Acknowledgement Form
 
(this “Acknowledgement
 
Form”) shall
 
have the
 
meanings set
 
forth in
 
the
Policy.
By
 
signing
 
this
 
Acknowledgement
 
Form,
 
the
 
undersigned
 
acknowledges
 
and
 
agrees
 
that
 
the
 
undersigned
 
is
 
and
 
will
continue to be subject to the Policy
 
and that the Policy will apply both
 
during and after the undersigned’s employment with
the Company.
 
Further,
 
by signing
 
below,
 
the undersigned
 
agrees to
 
abide by
 
the terms
 
of the
 
Policy,
 
including, without
limitation, by
 
returning
 
any Incentive
 
-based Compensation
 
subject
 
to recovery
 
under the
 
Policy to
 
the Company
 
to the
extent required by,
 
and in a manner consistent with, the Policy.
_____________________________
Signature
_____________________________
Print Name
_____________________________Date