Acquisitions

12 Months Ended

Jun. 30, 2024

Acquisitions [Abstract]

Acquisitions

3. ACQUISITIONS

The Company did not make any acquisitions during the year ended June 30, 2023. 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.

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. 

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.

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