UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition.
The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition".
On September 9, 2022, Lesaka Technologies, Inc., a Florida corporation (the "Company"), issued a press release setting forth its financial results for the fourth quarter and year ended June 30, 2022. A copy of the press release is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibits | Description |
| 99.1 | Press Release, dated September 9, 2022, issued by Lesaka Technologies, Inc. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
SIGNATURES
Pursuant to the requirements 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 hereunto duly authorized.
| LESAKA TECHNOLOGIES, INC. | ||
| Date: September 9, 2022 | By: | /s/ Naeem E. Kola |
| Name: | Naeem E. Kola | |
| Title: | Group Chief Financial Officer | |
Exhibit 99.1
Lesaka Reports Fourth Quarter 2022 Results
JOHANNESBURG, September 9, 2022 - Lesaka Technologies, Inc. (Nasdaq: LSAK; JSE: LSK) today released results for the fourth fiscal quarter and year ended June 30, 2022.
Highlights:
Performance for the quarter ended June 30, 2022 (Q4 2022)
Performance for the year ended June 30, 2022
1. Translated at the average exchange rate of ZAR 15.20 to $1 for fiscal 2022 and ZAR15.56 to $ for Q4 2022.
"We are delighted with the Group's achievements over the past year. The strategy set by our new Board in 2020 and communicated to the market over the past 12 months is being effectively executed. With the Connect acquisition, Lesaka now has a complete product offering to the underserved consumers and merchants in Southern Africa, which advances our vision to build the leading South African full-service fintech platform. What has been most encouraging is the way the Lesaka and Connect teams are working together to explore and execute opportunities to increase revenues, improve performance and deliver better value to our customers through our unique dual-sided ecosystem. Great progress has also been made in the Consumer segment turnaround, which is now very close to breakeven. We will continue to focus on optimizing cost structures as well as account growth and cross-selling opportunities to increase ARPU. After a year of tremendous change and transformation, the Group is well positioned to take advantage of the high growth opportunities our market presents," said Chris Meyer, Lesaka Group CEO.
Summary Financial Metrics
Three months ended
| Three months ended | ||||||||||||||||||||
| Jun 30, 2022 |
Jun 30, 2021 |
Mar 31, 2022 |
Q4 '22 vs Q4 '21 |
Q4 '22 vs Q3 '22 |
Q4 '22 vs Q4 '21 |
Q4 '22 vs Q3 '22 |
||||||||||||||
| (All figures in USD '000s except per share data) | USD '000's (except per share data) |
% change in USD | % change in ZAR | |||||||||||||||||
| Revenue | 121,789 | 34,517 | 35,202 | 253% | 246% | 288% | 245% | |||||||||||||
| GAAP operating loss | (10,122 | ) | (13,600 | ) | (9,421 | ) | (26%) | 7% | (18%) | 7% | ||||||||||
| Adjusted EBITDA (loss)(1) | 1,337 | (8,208 | ) | (2,828 | ) | nm | nm | nm | nm | |||||||||||
| GAAP (loss) income per share ($) | (0.25 | ) | 0.03 | (0.06 | ) | nm | 327% | nm | 326% | |||||||||||
| Fundamental loss per share ($)(1) | (0.09 | ) | (0.18 | ) | (0.05 | ) | (50%) | 80% | (45%) | 79% | ||||||||||
| Fully-diluted shares outstanding ('000's) | 61,619 | 56,937 | 57,791 | 8% | 7% | n/a | n/a | |||||||||||||
| Average period USD / ZAR exchange rate | 15.56 | 14.17 | 15.61 | 10% | (0%) | n/a | n/a | |||||||||||||
Year ended
| Year ended | F2022 vs F2021 |
F2022 vs F2021 |
||||||||||
| June 30, 2022 |
June 30, 2021 |
|||||||||||
| (All figures in USD '000s except per share data) | USD '000's (except per share data) |
% change in USD |
% change in ZAR |
|||||||||
| Revenue | 222,609 | 130,786 | 70% | 65% | ||||||||
| GAAP operating loss | (40,195 | ) | (53,872 | ) | (25%) | (28%) | ||||||
| Adjusted EBITDA loss(1) | (18,637 | ) | (42,907 | ) | (57%) | (58%) | ||||||
| GAAP loss per share ($) | (0.75 | ) | (0.67 | ) | 12% | 8% | ||||||
| Fundamental loss per share ($)(1) | (0.49 | ) | (0.87 | ) | (44%) | (46%) | ||||||
| Fully-diluted shares outstanding ('000's) | 58,364 | 56,898 | 3% | n/a | ||||||||
| Average period USD / ZAR exchange rate | 15.20 | 15.72 | (3%) | n/a | ||||||||
(1) Adjusted EBITDA income (loss), fundamental loss and fundamental loss per share are non-GAAP measures and are described below under "Use of Non-GAAP Measures-Operating income before depreciation and amortization and adjusted EBITDA, and -Fundamental net loss and fundamental loss per share." See Attachment B for a reconciliation of GAAP operating loss to EBITDA income (loss) and Adjusted EBITDA (loss), and GAAP net loss to fundamental net loss and loss per share.
Factors impacting comparability of our Q4 2022 and Q4 2021 results
• Higher revenue: Our revenues increased 288% in ZAR, primarily due to the contribution from Connect, which contributed ZAR 1,341 million in Q4 2022 compared to nil in Q4 2021 with the Connect Group acquired on April 14, 2022. On a constant currency basis the existing Merchant business grew revenue 35% in Q4 22 to ZAR304 million. Group revenue drivers in the quarter included an increase in hardware sales, an increase in merchant transaction processing fees, and a moderate increase in lending and insurance revenues;
• Lower operating losses: Operating losses decreased, delivering an improvement of 18% in ZAR compared with the prior period primarily due to contribution from Connect, the closure of the loss-making IPG operations and the implementation of various cost reduction initiatives in our Consumer business, which was partially offset by an increase in acquisition related intangible asset amortization;
• Significant transaction costs: We expensed $4.2 million of transaction costs related to the Connect acquisition; and
• Foreign exchange movements: The U.S. dollar was 10% stronger against the ZAR during the fourth quarter of fiscal 2022, which impacted our reported results.
Results of Operations by Segment and Liquidity
Consumer
Segment revenue was $15.7 million in Q4 2022, down 6% compared with Q4 2021, and down 5% compared with Q3 2022, on a constant currency basis. Segment revenue decreased primarily due to lower processing fees, partially offset by higher lending and insurance revenues and higher account holder fees. Our EBITDA loss reduced during Q4 2022 compared with the comparable periods as a result of the cost reduction initiatives, including the Q3 2022 reorganization process, embarked on during fiscal 2022 and a recalibration, in June 2022, of 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, which decreases were partially offset by an increase in insurance-related claims experience. Our EBITDA loss margin (calculated as EBITDA loss divided by revenue) for Q4 2022 and 2021 was (9%) and (38%), respectively.
Merchant
Segment revenue was $105.7 million in Q4 2022, up 632% compared with Q4 2021 and up 470% compared to Q3 2022 on a constant currency basis. Segment revenue increased due to the inclusion of Connect for two and a half months and an increase in hardware sales and processing fees. The increase in segment EBITDA is primarily due to the inclusion of Connect, which was partially offset by higher costs related to processing fees and higher employee-related expenses. Connect records a significant proportion of its airtime sales in revenue and cost of sales, while only earning a relatively small margin. This depresses the EBITDA margins shown by the business. Our EBITDA margin for Q4 2022 and 2021 was 7% and 2%, respectively.
Other
Other includes the activities of IPG in fiscal 2021 and our other legacy businesses outside South Africa, principally Botswana.
Segment revenue decreased due to lower revenue following the closure of IPG in fiscal 2021. We recorded an EBITDA contribution during the fourth quarter of fiscal 2022 following the closure of our loss-making activities performed through IPG.
Corporate/Eliminations
Our corporate expenses generally include acquisition-related intangible asset amortization; expenses incurred related to corporate actions; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non-employee directors' fees; certain employee and executive bonuses; stock-based compensation; legal fees; audit fees; directors and officer's insurance premiums; elimination entries; and from fiscal 2022 our group CEO's compensation.
Our corporate expenses for fiscal 2022 increased compared with fiscal 2021 primarily due to transaction related expenses of $4.2 million (ZAR 65.9 million) related to the Connect acquisition, legacy adjustments of clearing and settlement accounts of $1.6 million (ZAR 25.7 million) and significantly higher stock-based compensation charges due to the expansion of our senior management team. The legacy processing adjustments represents amounts we identified during the current fiscal quarter related to prior periods.
Cash flow and liquidity
At June 30, 2022, our cash and cash equivalents were $43.9 million and comprised of ZAR-denominated balances of ZAR 0.5 billion ($32.8 million), U.S. dollar-denominated balances of $9.6 million, and other currency deposits, primarily Botswana pula, of $1.5 million, all amounts translated at exchange rates applicable as of June 30, 2022. The decrease in our unrestricted cash balances from June 30, 2021 was primarily due to utilization of cash reserves to fund a portion of the Connect purchase consideration that was payable in cash, and to fund our operations and payment of reorganization costs, which was partially offset by the receipt of $11.4 million related to the sale of Bank Frick in fiscal 2021 and a $3.7 million gain on foreign currency options.
Q1 2023 Outlook
The Company expects the following for the three months ended September 2022:
Webcast and Conference Call
Lesaka will host a webcast and conference call to review results on September 12, 2022, at 8:00 a.m. Eastern Time.
The results webcast can be accessed by using the following link: https://tinyurl.com/2hbdpuew
Webcast ID: 890 1764 5390
Participants using the webcast will be able to ask questions by raising their hand and then asking the question "live."
Conference Call dial-in:
Participants using the conference call dial-in will be unable to ask questions.
A replay of the results presentation webcast will be available on the Lesaka investor relations website following the conclusion of the live event.
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 EBITDA, adjusted EBITDA, fundamental net (loss) income and fundamental (loss) earnings per share and headline (loss) earnings per share are non-GAAP measures.
Operating income before depreciation and amortization and adjusted EBITDA
Operating income before depreciation and amortization is GAAP operating (loss) income adjusted for depreciation and amortization. Adjusted EBITDA is earnings before interest, tax, depreciation and amortization ("EBITDA"), adjusted for unusual non-recurring items, costs related to acquisitions and transactions consummated or ultimately not pursued.
Fundamental net loss and fundamental loss per share
Fundamental net loss and loss per share is GAAP net loss and loss per share adjusted for the amortization of acquisition-related intangible assets (net of deferred taxes), stock-based compensation charges, and unusual non-recurring items, including costs related to acquisitions and transactions consummated or ultimately not pursued.
Fundamental net loss and loss per share for fiscal 2022 also includes adjustments for a gain related to fair value adjustments in respect of currency options, reorganization costs incurred, legacy processing adjustments, a gain on disposal of equity securities and a loss on disposal of equity-accounted investments.
Fundamental net loss and loss per share for fiscal 2021 also includes adjustments related to changes in the fair value of equity securities, loss on disposal of equity-accounted investments, impairment losses related to an equity-accounted investment and the deferred tax liability reversal related to the impairment of the equity-accounted investment.
Management believes that the EBITDA, adjusted EBITDA, fundamental net (loss) income and (loss) earnings per share metrics enhance its own evaluation, as well as an investor's understanding, of our financial performance. Attachment B presents the reconciliation between GAAP operating income and EBITDA and adjusted EBITDA; and GAAP net (loss) income and (loss) earnings per share and fundamental net (loss) income and (loss) earnings per share.
Headline (loss) earnings per share ("H(L)EPS")
The inclusion of H(L)EPS in this press release is a requirement of our listing on the JSE. H(L)EPS basic and diluted is calculated using net (loss) income which has been determined based on GAAP. Accordingly, this may differ to the headline (loss) earnings per share calculation of other companies listed on the JSE as these companies may report their financial results under a different financial reporting framework, including but not limited to, International Financial Reporting Standards.
H(L)EPS basic and diluted is calculated as GAAP net (loss) income adjusted for the impairment losses related to our equity-accounted investments and (profit) loss on sale of property, plant and equipment. Attachment C presents the reconciliation between our net (loss) income used to calculate (loss) earnings per share basic and diluted and H(L)EPS basic and diluted and the calculation of the denominator for headline diluted (loss) earnings per share.
About Lesaka (www.lesakatech.com)
Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka's mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to formal and informal retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa. The Lesaka journey originally began as "Net1" in 1997 and later rebranded to Lesaka (2022), with the acquisition of the Connect. As Lesaka, the business continues to grow its systems and capabilities to deliver meaningful fintech-enabled, innovative solutions for South Africa's merchant and consumer markets.
Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.lesakatech.com for additional information about Lesaka Technologies (Lesaka ™).
Forward-Looking Statements
This announcement contains forward-looking statements that involve known and unknown risks and uncertainties. A discussion of various factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed in such forward-looking statements are included in our filings with the Securities and Exchange Commission. We undertake no obligation to revise any of these statements to reflect future events.
Investor Relations Contact:
Partner - ICR
Email: LesakaIR@icrinc.com
Media Relations Contact:
Janine Bester Gertzen
Email: Janine@thenielsennetwork.com
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Operations
| Unaudited | (A) | |||||||||||
| Three months ended | Year ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (In thousands) | (In thousands) | |||||||||||
| REVENUE | $ | 121,789 | $ | 34,517 | $ | 222,609 | $ | 130,786 | ||||
| EXPENSE | ||||||||||||
| Cost of goods sold, IT processing, servicing and support | 100,522 | 22,353 | 168,317 | 96,248 | ||||||||
| Selling, general and administration | 21,663 | 24,546 | 74,993 | 84,063 | ||||||||
| Depreciation and amortization | 5,491 | 1,218 | 7,575 | 4,347 | ||||||||
| Reorganization costs | - | - | 5,894 | - | ||||||||
| Transaction costs related to Connect Group acquisition | 4,235 | - | 6,025 | - | ||||||||
| OPERATING LOSS | (10,122 | ) | (13,600 | ) | (40,195 | ) | (53,872 | ) | ||||
| CHANGE IN FAIR VALUE OF EQUITY SECURITIES | - | 23,362 | - | 49,304 | ||||||||
| GAIN RELATED TO FAIR VALUE ADJUSTMENT TO CURRENCY OPTIONS | - | - | 3,691 | - | ||||||||
| LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT | 30 | - | 376 | 13 | ||||||||
| GAIN ON DISPOSAL OF EQUITY SECURITIES | - | - | 720 | - | ||||||||
| LOSS ON DISPOSAL OF EQUITY-ACCOUNTED INVESTMENT - BANK FRICK | - | - | - | 472 | ||||||||
| INTEREST INCOME | 626 | 482 | 2,089 | 2,416 | ||||||||
| INTEREST EXPENSE | 3,557 | 814 | 5,829 | 2,982 | ||||||||
| (LOSS) INCOME BEFORE INCOME TAX EXPENSE | (13,083 | ) | 9,430 | (39,900 | ) | (5,619 | ) | |||||
| INCOME TAX (BENEFIT) EXPENSE | (427 | ) | 3,011 | 327 | 7,560 | |||||||
| NET (LOSS) INCOME BEFORE LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | (12,656 | ) | 6,419 | (40,227 | ) | (13,179 | ) | |||||
| LOSS FROM EQUITY-ACCOUNTED INVESTMENTS | (2,493 | ) | (4,780 | ) | (3,649 | ) | (24,878 | ) | ||||
| NET LOSS ATTRIBUTABLE TO LESAKA | (15,149 | ) | 1,639 | (43,876 | ) | (38,057 | ) | |||||
| Net loss per share, in United States dollars: | ||||||||||||
| Basic loss attributable to Lesaka shareholders | $ | (0.25 | ) | $ | 0.03 | $ | (0.75 | ) | $ | (0.67 | ) | |
| Diluted loss attributable to Lesaka shareholders | $ | (0.25 | ) | $ | 0.03 | $ | (0.75 | ) | $ | (0.67 | ) | |
(A) Derived from audited consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
| (A) | (A) | |||||
| June 30, | June 30, | |||||
| 2022 | 2021 | |||||
| (In thousands, except share data) | ||||||
| ASSETS | ||||||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | $ | 43,940 | $ | 198,572 | ||
| Restricted cash | 60,860 | 25,193 | ||||
| Accounts receivable, net of allowance of - 2022: $509; 2021: $267 and other receivables | 28,898 | 26,583 | ||||
| Finance loans receivable, net of allowance of - 2022: $1,691; 2021: $2,349 | 33,892 | 21,142 | ||||
| Inventory | 34,226 | 22,361 | ||||
| Total current assets before settlement assets | 201,816 | 293,851 | ||||
| Settlement assets | 15,916 | 466 | ||||
| Total current assets | 217,732 | 294,317 | ||||
| PROPERTY, PLANT AND EQUIPMENT, net of acc. depr. of - 2022: $35,249; 2021: $38,535 | 24,599 | 7,492 | ||||
| OPERATING LEASE RIGHT-OF-USE | 7,146 | 4,519 | ||||
| EQUITY-ACCOUNTED INVESTMENTS | 5,861 | 10,004 | ||||
| GOODWILL | 162,657 | 29,153 | ||||
| INTANGIBLE ASSETS, net of acc. amort. of - 2022: $16,390; 2021: $16,403 | 156,702 | 357 | ||||
| DEFERRED INCOME TAXES | 3,776 | 622 | ||||
| OTHER LONG-TERM ASSETS, including reinsurance assets | 78,092 | 81,866 | ||||
| TOTAL ASSETS | 656,565 | 428,330 | ||||
| LIABILITIES | ||||||
| CURRENT LIABILITIES | ||||||
| Short-term credit facilities for ATM funding | 51,338 | 14,245 | ||||
| Short-term credit facilities | 14,880 | - | ||||
| Accounts payable | 18,572 | 7,113 | ||||
| Other payables | 34,362 | 27,588 | ||||
| Operating lease liability - current | 2,498 | 2,822 | ||||
| Current portion of long-term borrowings | 6,804 | - | ||||
| Income taxes payable | 2,140 | 256 | ||||
| Total current liabilities before settlement obligations | 130,594 | 52,024 | ||||
| Settlement obligations | 15,276 | 466 | ||||
| Total current liabilities | 145,870 | 52,490 | ||||
| DEFERRED INCOME TAXES | 54,211 | 10,415 | ||||
| OPERATING LEASE LIABILITY - LONG TERM | 4,827 | 1,890 | ||||
| LONG-TERM BORROWINGS | 134,842 | - | ||||
| OTHER LONG-TERM LIABILITIES, including insurance policy liabilities | 2,466 | 2,576 | ||||
| TOTAL LIABILITIES | 342,216 | 67,371 | ||||
| REDEEMABLE COMMON STOCK | 79,429 | 84,979 | ||||
| EQUITY | ||||||
| LESAKA EQUITY: | ||||||
| COMMON STOCK | ||||||
| Authorized: 200,000,000 with $0.001 par value; | ||||||
| Issued and outstanding shares, net of treasury: 2022: 62,324,321; 2021: 56,716,620 | 83 | 80 | ||||
| PREFERRED STOCK | ||||||
| Authorized shares: 50,000,000 with $0.001 par value; | ||||||
| Issued and outstanding shares, net of treasury: 2022: -; 2021: - | - | - | ||||
| ADDITIONAL PAID-IN-CAPITAL | 327,891 | 301,959 | ||||
| TREASURY SHARES, AT COST: 2022: 24,891,292; 2021: 24,891,292 | (286,951 | ) | (286,951 | ) | ||
| ACCUMULATED OTHER COMPREHENSIVE LOSS | (168,840 | ) | (145,721 | ) | ||
| RETAINED EARNINGS | 362,737 | 406,613 | ||||
| TOTAL LESAKA EQUITY | 234,920 | 275,980 | ||||
| NON-CONTROLLING INTEREST | - | - | ||||
| TOTAL EQUITY | 234,920 | 275,980 | ||||
| TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY | $ | 656,565 | $ | 428,330 | ||
(A) Derived from audited consolidated financial statements.
LESAKA TECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
| Unaudited | (A) | |||||||||||
| Three months ended | Year ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (In thousands) | (In thousands) | |||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | $ | (15,149 | ) | $ | 1,639 | $ | (43,876 | ) | $ | (38,057 | ) | |
| Depreciation and amortization | 5,491 | 1,218 | 7,575 | 4,347 | ||||||||
| Movement in allowance for doubtful accounts receivable | 334 | (803 | ) | 1,551 | 110 | |||||||
| Interest payable | 208 | 45 | 9 | (1 | ) | |||||||
| Fair value adjustment related to financial liabilities | 10 | (361 | ) | (466 | ) | 840 | ||||||
| Gain on disposal of equity securities | - | - | (720 | ) | - | |||||||
| Loss on disposal of equity-accounted investment | 30 | - | 376 | 13 | ||||||||
| Loss on disposal of equity-accounted investment - Bank Frick | - | - | - | 472 | ||||||||
| Loss from equity-accounted investments | 2,493 | 4,780 | 3,649 | 24,878 | ||||||||
| Movement in allowance for doubtful loans | - | 4,000 | 38 | 4,739 | ||||||||
| Change in fair value of equity securities | - | (23,362 | ) | - | (49,304 | ) | ||||||
| (Profit) Loss on disposal of property, plant and equipment | (449 | ) | (120 | ) | (2,849 | ) | 480 | |||||
| Stock-based compensation charge | 1,251 | (532 | ) | 2,962 | 344 | |||||||
| Dividends received from equity accounted investments | 18 | 69 | 155 | 194 | ||||||||
| Decrease (Increase) in accounts receivable and finance loans receivable | 12,021 | (479 | ) | 9,055 | 3,751 | |||||||
| (Increase) Decrease in inventory | (4,793 | ) | (1,363 | ) | (4,820 | ) | 1,279 | |||||
| (Decrease) Increase in accounts payable and other payables | (7,183 | ) | 4,058 | (8,851 | ) | (335 | ) | |||||
| Increase (Decrease) in taxes payable | 643 | (1,712 | ) | 1,087 | (17,210 | ) | ||||||
| (Decrease) Increase in deferred taxes | (1,866 | ) | 4,665 | (2,324 | ) | 5,089 | ||||||
| Net cash used in operating activities | (6,690 | ) | (8,258 | ) | (37,198 | ) | (58,371 | ) | ||||
| Cash flows from investing activities | ||||||||||||
| Capital expenditures | (2,837 | ) | (338 | ) | (4,558 | ) | (4,285 | ) | ||||
| Proceeds from disposal of property, plant and equipment | 688 | 226 | 4,217 | 571 | ||||||||
| Acquisition of Connect, net of cash acquired | (202,159 | ) | - | (202,159 | ) | - | ||||||
| Proceeds from disposal of equity securities | - | - | 720 | - | ||||||||
| Proceeds from disposal of equity-accounted investment | 46 | - | 865 | - | ||||||||
| Proceeds from disposal of equity-accounted investment - Bank Frick | 3,890 | - | 11,390 | 18,568 | ||||||||
| Proceeds from disposal of Net1 Korea, net of cash disposed | - | - | - | 20,114 | ||||||||
| Proceeds from disposal of DNI as equity-accounted investment | - | - | - | 6,010 | ||||||||
| Loan to equity-accounted investment | - | - | - | (1,238 | ) | |||||||
| Repayment of loans by equity-accounted investments | - | - | - | 134 | ||||||||
| Net change in settlement assets | (4,265 | ) | 1,711 | (4,163 | ) | 7,901 | ||||||
| Net cash (used in) cash provided by investing activities | (204,637 | ) | 1,599 | (193,688 | ) | 47,775 | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from bank overdraft | 164,464 | 98,324 | 570,862 | 360,083 | ||||||||
| Repayment of bank overdraft | (152,951 | ) | (97,137 | ) | (525,459 | ) | (365,440 | ) | ||||
| Long-term borrowings utilized | 78,851 | - | 78,851 | - | ||||||||
| Repayment of long-term borrowings | (5,581 | ) | - | (5,581 | ) | - | ||||||
| Guarantee fee | (1,307 | ) | - | (1,307 | ) | - | ||||||
| Proceeds from issue of shares | - | - | 759 | 53 | ||||||||
| Proceeds from disgorgement of shareholders' short-swing profits | - | - | - | 124 | ||||||||
| Net change in settlement obligations | 4,236 | (1,711 | ) | 4,134 | (7,901 | ) | ||||||
| Net cash provided by (used in) financing activities | 87,712 | (524 | ) | 122,259 | (13,081 | ) | ||||||
| Effect of exchange rate changes on cash | (11,633 | ) | 4,118 | (10,338 | ) | 14,957 | ||||||
| Net decrease in cash, cash equivalents and restricted cash | (135,248 | ) | (3,065 | ) | (118,965 | ) | (8,720 | ) | ||||
| Cash, cash equivalents and restricted cash - beginning of period | 240,048 | 226,830 | 223,765 | 232,485 | ||||||||
| Cash, cash equivalents and restricted cash - end of period | $ | 104,800 | $ | 223,765 | $ | 104,800 | $ | 223,765 | ||||
(A) Derived from audited consolidated financial statements.
Lesaka Technologies, Inc.
Attachment A
Operating segment revenue, operating (loss) income and operating (loss) margin:
Three months ended June 30, 2022 and 2021 and March 31, 2022
| Three months ended | Change - actual | Change - constant exchange rate(1) |
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| Key segmental data, in '000, except margins | Jun 30, 2022 | Jun 30, 2021 | Mar 31, 2022 | Q4 '22 vs Q4 '21 |
Q4 '22 vs Q3 '22 |
Q4 '22 vs Q4 '21 |
Q4 '22 vs Q3 '22 |
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| Revenue: | ||||||||||||||||||||||||
| Consumer | $ | 15,700 | $ | 18,282 | $ | 16,429 | (14%) | (4%) | (6%) | (5%) | ||||||||||||||
| Merchant | 105,714 | 15,855 | 18,478 | 567% | 472% | 632% | 470% | |||||||||||||||||
| Other | 475 | 463 | 397 | 3% | 20% | 13% | 19% | |||||||||||||||||
| Subtotal: Operating segments | 121,889 | 34,600 | 35,304 | 252% | 245% | 287% | 244% | |||||||||||||||||
| Intersegment eliminations | (100 | ) | (83 | ) | (102 | ) | 20% | (2%) | 32% | (2%) | ||||||||||||||
| Consolidated revenue | $ | 121,789 | $ | 34,517 | $ | 35,202 | 253% | 246% | 288% | 245% | ||||||||||||||
| Segment Adjusted EBITDA | ||||||||||||||||||||||||
| Consumer | $ | (1,361 | ) | $ | (6,908 | ) | $ | (6,866 | ) | (80%) | (80%) | (78%) | (80%) | |||||||||||
| Merchant | 7,354 | 257 | 1,271 | 2,761% | 479% | 3,043% | 477% | |||||||||||||||||
| Other | 150 | (89 | ) | 87 | nm | 72% | nm | 72% | ||||||||||||||||
| Total Segment Adjusted EBITDA | 6,143 | (6,740 | ) | (5,508 | ) | nm | nm | nm | nm | |||||||||||||||
| Corporate/Eliminations | (9,466 | ) | (4,485 | ) | (2,560 | ) | 111% | 270% | 132% | 269% | ||||||||||||||
| Subtotal | (3,323 | ) | (11,225 | ) | (8,068 | ) | (70%) | (59%) | (67%) | (59%) | ||||||||||||||
| Less: Lease adjustments | 1,308 | 1,157 | 890 | 13% | 47% | 24% | 47% | |||||||||||||||||
| Less: Depreciation and amortization | 5,491 | 1,218 | 463 | 351% | 1,086% | 395% | 1,082% | |||||||||||||||||
| Consolidated operating loss | $ | (10,122 | ) | $ | (13,600 | ) | $ | (9,421 | ) | (26%) | 7% | (18%) | 7% | |||||||||||
| Segment Adjusted EBITDA (loss) margin (%) | ||||||||||||||||||||||||
| Consumer | (8.7%) | (37.8%) | (41.8%) | |||||||||||||||||||||
| Merchant | 7.0% | 1.6% | 6.9% | |||||||||||||||||||||
| Other | 31.6% | (19.2%) | 21.9% | |||||||||||||||||||||
| Consolidated EBITDA (loss) margin | (8.3%) | (39.4%) | (26.8%) | |||||||||||||||||||||
(1) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during Q4 2022 also prevailed during Q4 2021 and Q3 2022.
Year ended June 30, 2022 and 2021
| Change - actual |
Change - constant exchange rate(2) |
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| Year ended June 30, |
F2022 vs F2021 |
F2022 vs F2021 |
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| Key segmental data, in '000, except margins | 2022 | 2021 | |||||||||||
| Revenue: | |||||||||||||
| Consumer | $ | 65,932 | $ | 66,149 | (0%) | (4%) | |||||||
| Merchant | 155,366 | 61,478 | 153% | 144% | |||||||||
| Other | 1,695 | 3,318 | (49%) | (51%) | |||||||||
| Subtotal: Operating segments | 222,993 | 130,945 | 70% | 65% | |||||||||
| Intersegment eliminations | (384 | ) | (159 | ) | 142% | 134% | |||||||
| Consolidated revenue | $ | 222,609 | $ | 130,786 | 70% | 65% | |||||||
| Segment Adjusted EBITDA | |||||||||||||
| Consumer(1) | $ | (22,232 | ) | $ | (26,303 | ) | (15%) | (18%) | |||||
| Merchant | 11,305 | 4,728 | 139% | 131% | |||||||||
| Other | 503 | (10,374 | ) | nm | nm | ||||||||
| Total Segment Adjusted EBITDA | (10,424 | ) | (31,949 | ) | (67%) | (68%) | |||||||
| Corporate/Eliminations | (18,241 | ) | (13,428 | ) | 36% | 31% | |||||||
| Subtotal | (28,665 | ) | (45,377 | ) | (37%) | (39%) | |||||||
| Less: Lease adjustments | 3,955 | 4,148 | (5%) | (8%) | |||||||||
| Less: Depreciation and amortization | 7,575 | 4,347 | 74% | 69% | |||||||||
| Consolidated operating loss | $ | (40,195 | ) | $ | (53,872 | ) | (25%) | (28%) | |||||
| Segment Adjusted EBITDA (loss) margin (%) | |||||||||||||
| Consumer | (33.7%) | (39.8%) | |||||||||||
| Merchant | 7.3% | 7.7% | |||||||||||
| Other | 29.7% | (312.7%) | |||||||||||
| Consolidated EBITDA (loss) margin | (18.1%) | (41.2%) | |||||||||||
(1) - Consumer Segment Adjusted EBITDA for fiscal 2022, includes reorganization costs of $5.9 million.
(2) - This information shows what the change in these items would have been if the USD/ ZAR exchange rate that prevailed during fiscal 2022 also prevailed during fiscal 2021.
(Loss) Earnings from equity-accounted investments:
The table below presents the relative (loss) earnings from our equity-accounted investments:
| Three months ended June 30, |
Nine months ended March 31, |
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| 2022 | 2021 | % change | 2022 | 2021 | % change | ||||||||||||||||
| Finbond | $ | (2,509 | ) | $ | (1,742 | ) | 44% | $ | (3,665 | ) | $ | (22,009 | ) | (83%) | |||||||
| Share of net loss | (2,509 | ) | (1,742 | ) | 44% | (3,665 | ) | (4,359 | ) | (16%) | |||||||||||
| Impairment | - | - | nm | - | (17,650 | ) | nm | ||||||||||||||
| Bank Frick | - | - | nm | - | 1,156 | nm | |||||||||||||||
| Share of net income | - | - | nm | - | 1,156 | nm | |||||||||||||||
| Other | 16 | (3,038 | ) | nm | 16 | (4,025 | ) | nm | |||||||||||||
| Share of net income (loss) | 16 | (92 | ) | nm | 16 | (531 | ) | nm | |||||||||||||
| Impairment | - | (2,946 | ) | nm | - | (3,494 | ) | nm | |||||||||||||
| Loss from equity-accounted investments | $ | (2,493 | ) | $ | (4,780 | ) | (48%) | $ | (3,649 | ) | $ | (24,878 | ) | (85%) | |||||||
Lesaka Technologies, Inc.
Attachment B
Reconciliation of GAAP operating loss to EBITDA loss and adjusted EBITDA loss:
Three and twelve months ended June 30, 2022 and 2021
| Three months ended June 30, |
Year ended June 30, |
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| 2022 | 2021 | 2022 | 2021 | |||||||||
| Operating loss - GAAP | $ | (10,122 | ) | $ | (13,600 | ) | $ | (40,195 | ) | $ | (53,872 | ) |
| Depreciation and amortization | 5,491 | 1,218 | 7,575 | 4,347 | ||||||||
| Operating loss before depreciation and amortization | (4,631 | ) | (12,382 | ) | (32,620 | ) | (49,525 | ) | ||||
| Legacy processing adjustments | 1,629 | - | 1,629 | - | ||||||||
| Reorganization costs | - | - | 5,894 | - | ||||||||
| Allowance for doubtful EMI loans receivable | - | - | - | 4,739 | ||||||||
| Transaction costs | 4,339 | 337 | 6,460 | 1,879 | ||||||||
| Adjusted EBITDA (loss) | $ | 1,337 | $ | (12,045 | ) | $ | (18,637 | ) | $ | (42,907 | ) | |
Reconciliation of GAAP net loss and loss per share, basic, to fundamental net loss and loss per share, basic:
Three months ended June 30, 2022 and 2021
| Net (loss) income (USD '000) |
(L)PS, basic (USD) |
Net (loss) income (ZAR '000) |
(L)PS, basic (ZAR) |
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| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| GAAP | (15,149 | ) | 1,639 | (0.25 | ) | 0.03 | (235,783 | ) | 23,223 | (3.83 | ) | 0.40 | ||||||||||||
| Transaction costs | 4,339 | 174 | 67,533 | 2,465 | ||||||||||||||||||||
| Intangible asset amortization, net | 2,664 | 70 | 41,462 | 990 | ||||||||||||||||||||
| Stock-based compensation charge | 1,251 | (532 | ) | 19,471 | (7,538 | ) | ||||||||||||||||||
| Legacy processing adjustments, net | 1,173 | - | 18,539 | - | ||||||||||||||||||||
| Loss on sale of equity-accounted investment | 30 | - | 467 | - | ||||||||||||||||||||
| Change in fair value of equity securities, net | - | (18,456 | ) | - | (261,497 | ) | ||||||||||||||||||
| Impairment of equity method investment | - | 2,946 | - | 41,741 | ||||||||||||||||||||
| Allowance for doubtful EMI loans receivable | - | 4,000 | - | 56,675 | ||||||||||||||||||||
| Fundamental | (5,692 | ) | (10,159 | ) | (0.09 | ) | (0.18 | ) | (88,311 | ) | (143,941 | ) | (1.43 | ) | (2.54 | ) | ||||||||
Twelve months ended June 30, 2022 and 2021
| Net (loss) income (USD '000) |
(L) EPS, basic (USD) |
Net (loss) income (ZAR '000) |
(L)EPS, basic (ZAR) |
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| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||
| GAAP | (43,876 | ) | (38,057 | ) | (0.75 | ) | (0.67 | ) | (666,818 | ) | (598,111 | ) | (11.43 | ) | (10.54 | ) | ||||||||
| Transaction costs | 6,460 | 1,879 | 98,178 | 29,531 | ||||||||||||||||||||
| Reorganization costs, net of tax | 5,894 | - | 89,576 | - | ||||||||||||||||||||
| Gain related to fair value adjustment to currency options | (3,691 | ) | - | (56,095 | ) | - | ||||||||||||||||||
| Stock-based compensation charge | 2,962 | 344 | 45,016 | 5,406 | ||||||||||||||||||||
| Intangible asset amortization, net | 2,765 | 253 | 42,012 | 3,961 | ||||||||||||||||||||
| Legacy processing adjustments, net | 1,173 | - | 18,539 | - | ||||||||||||||||||||
| Gain on disposal of equity securities | (720 | ) | - | (10,942 | ) | - | ||||||||||||||||||
| Loss on sale of equity-accounted investment | 376 | 13 | 5,714 | 204 | ||||||||||||||||||||
| Change in fair value of equity securities, net | - | (38,950 | ) | - | (612,149 | ) | ||||||||||||||||||
| Impairment of equity method investments | - | 21,144 | - | 327,140 | ||||||||||||||||||||
| Reversal of deferred taxes related to impairment of equity method investment | - | (1,353 | ) | - | (22,633 | ) | ||||||||||||||||||
| Allowance for doubtful EMI loans receivable | - | 4,739 | - | 74,479 | ||||||||||||||||||||
| Loss on disposal of equity-accounted investment - Bank Frick | - | 472 | - | 7,418 | ||||||||||||||||||||
| Fundamental | (28,657 | ) | (49,516 | ) | (0.49 | ) | (0.87 | ) | (434,820 | ) | (784,754 | ) | (7.45 | ) | (13.82 | ) | ||||||||
Lesaka Technologies, Inc.
Attachment C
Reconciliation of net loss used to calculate loss per share basic and diluted and headline loss per share basic and diluted:
Three months ended June 30, 2022 and 2021
| 2022 | 2021 | |||||
| Net (loss) income (USD'000) | (15,149 | ) | 1,639 | |||
| Adjustments: | ||||||
| Loss on sale of equity-accounted investment | 30 | - | ||||
| Impairment of equity method investments | - | 2,946 | ||||
| Profit on sale of property, plant and equipment | (449 | ) | (120 | ) | ||
| Tax effects on above | 126 | 34 | ||||
| Net (loss) income used to calculate headline loss (USD'000) | (15,442 | ) | 4,499 | |||
| Weighted average number of shares used to calculate net (loss) income per share basic and headline (loss) income per share basic ('000) | 61,619 | 56,678 | ||||
| Weighted average number of shares used to calculate net (loss) income per share diluted and headline (loss) income per share diluted loss ('000) | 61,619 | 56,937 | ||||
| Headline (loss) income per share: | ||||||
| Basic, in USD | (0.25 | ) | 0.08 | |||
| Diluted, in USD | (0.25 | ) | 0.08 |
Twelve months ended June 30, 2022 and 2021
| 2022 | 2021 | |||||
| Net loss (USD'000) | (43,876 | ) | (38,057 | ) | ||
| Adjustments: | ||||||
| Gain on disposal of equity securities | (720 | ) | - | |||
| Loss on sale of equity-accounted investment | 376 | - | ||||
| Impairment of equity method investments | - | 21,144 | ||||
| Loss on disposal of equity-accounted investment - Bank Frick | - | 430 | ||||
| (Profit) Loss on sale of property, plant and equipment | (2,849 | ) | 480 | |||
| Tax effects on above | 798 | (134 | ) | |||
| Net loss used to calculate headline loss (USD'000) | (46,271 | ) | (16,137 | ) | ||
| Weighted average number of shares used to calculate net loss per share basic loss and headline loss per share basic loss ('000) | 58,364 | 56,765 | ||||
| Weighted average number of shares used to calculate net loss per share diluted loss and headline loss per share diluted loss ('000) | 58,364 | 56,898 | ||||
| Headline loss per share: | ||||||
| Basic, in USD | (0.79 | ) | (0.28 | ) | ||
| Diluted, in USD | (0.79 | ) | (0.28 | ) |
Calculation of the denominator for headline diluted loss per share
| Three months ended June 30, |
Year ended | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Basic weighted-average common shares outstanding and unvested restricted shares expected to vest under GAAP | 61,619 | 56,678 | 58,364 | 56,765 | ||||||||
| Effect of dilutive securities under GAAP | - | 259 | - | 133 | ||||||||
| Denominator for headline diluted loss per share | 61,619 | 56,937 | 58,364 | 56,898 | ||||||||
Weighted average number of shares used to calculate headline diluted loss per share represents the denominator for basic weighted-average common shares outstanding and unvested restricted shares expected to vest plus the effect of dilutive securities under GAAP. We use this number of fully-diluted shares outstanding to calculate headline diluted loss per share because we do not use the two-class method to calculate headline diluted loss per share.
Document and Entity Information Document |
Sep. 09, 2022 |
|---|---|
| Document Information [Line Items] | |
| Document Type | 8-K |
| Document Creation Date | Sep. 09, 2022 |
| Document Period End Date | Sep. 09, 2022 |
| Amendment Flag | false |
| Entity Registrant Name | Lesaka Technologies, Inc. |
| Entity Address, Address Line One | President Place, 4th Floor, Cnr. |
| Entity Address, Address Line Two | Jan Smuts Avenue and Bolton Road |
| Entity Address, City or Town | Rosebank, Johannesburg |
| Entity Address, Country | ZA |
| Entity Address, Postal Zip Code | |
| Entity Incorporation, State Country Name | FL |
| City Area Code | 11 |
| Region code of country | 27 |
| Local Phone Number | 343-2000 |
| Entity File Number | 000-31203 |
| Entity Central Index Key | 0001041514 |
| Entity Emerging Growth Company | false |
| Entity Tax Identification Number | 98-0171860 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Shares |
| Trading Symbol | LSAK |
| Security Exchange Name | NASDAQ |
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